Abstract
In recent years, there have been several serious inflation problems in China. Western theorists believe that there is a certain relationship between the independence of the central bank and inflation in China (Chen, 2019). In this paper, LS measure method is used to measure the independence of the central bank, and the inflation rate of 1994-2017 in China is calculated. Based on the collected data, the time series analysis of the independence of the central bank and the inflation in China is carried out. It holds that the independence of the central bank is negatively related to inflation, and aims to improve the independence of the central bank in China and lay the foundation for stabilizing the price level.
Highlights
Over the past 40 years, China has experienced several periods of severe inflation and asset bubble pressure
In 1995, the growth rate of broad money was as high as 29%
The growth rate of broad money has declined in general, it remains at a high level
Summary
Over the past 40 years, China has experienced several periods of severe inflation and asset bubble pressure. China’s CPI index has maintained a relatively high level of growth. In 1995, the growth rate of broad money was as high as 29%. The growth rate of broad money has declined in general, it remains at a high level. The monetary policy of the central bank can help to stabilize prices and curb inflation. The central bank’s monetary policy aiming at stabilizing prices is often disturbed by various factors, which will affect the inflation of our country. This paper studies the relationship between the independence of the central bank and China’s inflation, in order to strengthen the independence of the central bank and ensure the stability of monetary policy and macroeconomic
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