Nonlinearity Analysis Of Phillips Curve In China

China is at an important stage of transition of economic development which from high-speed growth to medium-to-high-speed growth.As China's economy enters the"new normal",Various phenomena such as changes in the labor market and adjustment of industrial structure indicate that the characteristics of China's economic development have been different.In the past,China once became a "world factory"with its low-cost and infinite labor force.However,with the gradual disappearance of China's "demographic dividend(?),its economic growth momentum has also changed,and the industrial structure that China faces is unreasonable.To solve this,it means that relying solely on the traditional aggregate supply and demand theory is not enough to provide a good guide for China's economic development.At the same time,since China joined the WTO in 2001,China's economic development has been increasingly affected by the world economic environment.The role of international shocks has had an increasing impact on China's inflation level.Under this background,China is studying under closed conditions.The dynamic mechanism of inflation is not comprehensive enough.The Phillips curve is an important tool to study the relationship between output and price level.It puts inflation and economic cycle within the same analytical framework,and can better describe the relationship between inflation and output in China.Therefore,during the period of China's economic development and change,the research on China's Phillips curve can not be limited to closed linear model.It is necessary to construct a Phillips curve in accordance with the current state of China's economic development under open economic conditions and study its morphological characteristics.In this paper,the consumer price index,actual output,international crude oil price and RMB effective exchange rate from the first quarter of 2001 to the fourth quarter of 2018 will be used as the original data,We will make use of some ways to get the time series data of the inflation,inflation expectations,output gap,and crude oil price and the exchange rate.Based on the New Keynes Phillips curve,we will incorporate the adaptive inflation expectation and external supply shock of multi-order lag,constructing a high-order mixed four-factor new Keynes Phillips curve model.Then we will adopt the STR model to verify and analyze the shape of China's Phillips curve.The results show that the STR1 model can better fit the development of China's economy,combined with the current situation of China's current economic development is in transition and based on a certain theoretical analysis,we believe that the Chinese economy has obvious structural mutation characteristics,China Phillips The curve is likely to be a variable coefficient,and the guess of its time-varying characteristics is confirmed.This paper is divided into five parts,the main content and structure are as follows:The first part is the introduction.This part introduces the background and research significance of this paper,then combs and comments on the existing domestic and foreign literatures,and on the basis of previous scholars' research,we puts forward the innovation of the research and expounds the shortcomings in the research process.The second part is the phenomenon analysis of the time-varying characteristics of China's Phillips curve.From the perspective of the formation mechanism of inflation,the transformation of economic growth mode and the transformation of the relationship between the twc,it shows that the current economic environment in China has changed.The traditional Phillips curve may not be able to fit the current situation of China's economic development.A Phillips curve that fits the current Chinese economy should be constructed to better guide inonetary policy.The third part is model setting and data processing.This section describes the specific form,setting process and data processing process of the high-order lag New Keynes Phillips curve model,which provides the basis for the empirical part.The fourth part is the fitting of the nonlinear Phillips curve model.Based on the high-order lag New Keynes Phillips curve,the STR model is used to derive the specific forms of the linear and nonlinear parts of the Phillips curve,and the results are analyzed and economically explained.The empirical results show that the conversion variable is the fourth order of inflation.Lag terms,adaptive inflation expectations,output gaps,and international crude oil prices have significant nonlinear effects on inflation,while the rational expectations of inflation and the impact of exchange rates on inflation are only reflected in the linear portion.It is proved that the slope of the Phillips curve in China will change under different circumstances.The fifth part is the conclusion of this paper.From the research results,the slope of the Phillips curve will change with the changes of China's economy,changes of expected and changes in the international situation.The Chinese Phillips curve has the typical characteristics of time-varying.In response to the empirical results,combined with the development status of China's economy in the transition period,we propose the following policy recommendations:First,we should promote the transformation of monetary policy from quantity to price.On the one hand,we must unblock the transmission mechanism of monetary policy and accelerate the process of interest rate marketization.On the other hand,we must steadily deepen the market-oriented reform of the RMB exchange rate and maintain the stability of the RMB currency.Second,we must promote the transformation of macroeconomic strategies from total regulation to structural regulation.While continuing to deepen supply-side structural reforms,accelerate structural reforms on the financial supply side,enhance the capacity of financial service entities,and look for possible Pareto improvements.Third,accelerate technological innovation and foster new kinetic energy growth.Fourth,accelerate the construction of the energy system and improve the ability to cope with the impact of crude oil prices.Fifth,strengthen the expected management and effectively respond to abnormal price changes.