Inflation Expectations Transmission Channels And The Effect Of Empirical Research

Public inflation is expected to affect the economic behavior of the public through the influence of the public, and thus affect the macroeconomic operation. Because of this, the Central Bank of various countries pay more and more attention to the management of inflation expectations. In this context, many scholars have studied the effect of inflation expectations on the real inflation, however,the specific channels of inflation expectations are rarely studied. In this paper, we systematically analyze the various channels of inflation expectations, and carry out empirical test on these channels.In the theoretical analysis part, we analyze the impact of inflation expectation on consumption,investment, net exports and money demand, and get the IS-LM model of inflation expectations, and then analyze the impact of inflation expectation on wage decision and raw material price. Finally,the AD-AS model is derived, which contains the expected inflation rate. In the empirical analysis part, this paper first uses the C-P probability method to analyze the inflation expectations of the people’s Bank of China. Then we construct the empirical regression model, and use the E-G cointegration test and Granger causality test to empirically test the inflation expectation and the general effect of inflation expectation on economic growth and real inflation.The results show that:(1) the inflation expectation has positive significant effect on the consumption behavior, investment behavior and net exports of the economic agents. From the perspective of total supply, the average wages and raw material prices of employees have a positive effect on inflation expectations.(2) inflation expectations have a negative impact on the money demand of our country;(3) from the general effect, the residents’ inflation expectations have a role in promoting economic growth and real inflation. Generally speaking, China’s inflation expectation is not only influenced by the economic agent’s consumption behavior, investment behavior, net exports and money demand, but also affects the social aggregate supply through the behavior of the wages and the price of raw materials.The innovation of this paper is:(1) the existing research mainly focuses on the formation and nature of inflation expectations, little attention is paid to the expected transmission channel, this paper studies the specific channels of inflation expectations from two aspects of total demand and total supply.(2) in this paper, the inflation expectation is introduced into the behavior decision-making function of economic agents, and the consumption function, investment function,net export function, money demand function and wage decision function are obtained.