Inflation Pressure Measurement Based on Output Gap Estimates

The author uses HP filter wave to estimate the output gap in China in recent years and establishes Philips curve equation which describes the relationship between inflation and the output gap in China's macro economy and makes an empirical study with the measurement method.It is found that the continuously quick economic growth rate is the leading reason for the inflation in China in recent years.Therefore the Chinese authority should insist on the single control target that monetary policy stabilizes price and control the speed of economic growth to avoid serious inflation in macro economy.