Zhou Xiaochuan, former governor of the peoples Bank of China

category:Finance
 Zhou Xiaochuan, former governor of the peoples Bank of China


Zhou Xiaochuan pointed out in the article that the traditional inflation measurement will face four deficiencies and challenges. At present, many countries monetary policies are faced with the problem that they can not achieve the inflation target effectively.

First, less including asset prices will lead to distortion, especially the distortion of long-term comparison.

Zhou Xiaochuan believes that there are problems in the long-term measurement of inflation, especially how asset prices reflect the quality of life and expenditure structure. In addition, there is the problem that long-term investment returns should be discounted into current inflation.

Second, what income is used as the expenditure basket for calculating inflation.

Zhou Xiaochuan pointed out that the measurement of income and what income is used to define the expenditure basket and calculate the price level will affect the inflation perception and expectation of specific people. The basket of household disposable income is smaller, while the price of contents outside the basket rises more. From the perspective of macroeconomic model, it is clear and indisputable that the average net income of classified workers is equal to the marginal contribution of labor to GDP.

The paper points out that the concept of pay / utility is obviously related to inflation. We should understand the inflation effect of living standard from two aspects (or the ratio of the two) of the generalized price and the income (or the ratio of the two), that is, to exchange more labor for the same consumption effect means inflation.

The fourth aspect is benchmark, comparability and reference frame.

Zhou Xiaochuan believes that in the past, the prices of investment products and assets could be considered separately, but Im afraid it cant be done now. In the future, pension and medical expenses are very large, which depend on return on investment and have long-term characteristics. Asset prices not only affect the expansion and reproduction of enterprises, but also involve infrastructure, environmental protection and other public consumption issues. It is no longer possible to take inflation into consideration, but how to include it still needs to be studied. Inflation and its measurement face a number of challenges. Inflation measures that used to look mature are not ideal now. The current measurement obviously has the problem of neglecting the price of investment goods and assets. At present, many countries monetary policies are faced with the problem that they can not effectively achieve the inflation target, whether it is headline inflation or nominal inflation. Zhou Xiaochuan pointed out that it is necessary to clarify the objectives to be achieved and how to measure them. The measurement of inflation is quite complex for the economy and society, which may require a broader concept of inflation. How to measure inflation is worth further research. Source: surging news editor: Chen Hequn_ NB12679

Zhou Xiaochuan believes that in the past, the prices of investment products and assets could be considered separately, but Im afraid it cant be done now. In the future, pension and medical expenses are very large, which depend on return on investment and have long-term characteristics. Asset prices not only affect the expansion and reproduction of enterprises, but also involve infrastructure, environmental protection and other public consumption issues. It is no longer possible to take inflation into consideration, but how to include it still needs to be studied. Inflation and its measurement face a number of challenges. Inflation measures that used to look mature are not ideal now. The current measurement obviously has the problem of neglecting the price of investment goods and assets.

At present, many countries monetary policies are faced with the problem that they can not effectively achieve the inflation target, whether it is headline inflation or nominal inflation. Zhou Xiaochuan pointed out that it is necessary to clarify the objectives to be achieved and how to measure them. The measurement of inflation is quite complex for the economy and society, which may require a broader concept of inflation. How to measure inflation is worth further research.