Empirical Analysis of the Correlation between Inflation and Economic Growth of China

There is close relationship between inflation and economic development. In this article, the author will use the consumer price index(CPI) to measure inflation and empirical analyze the relationship between the inflation and economic growth of China. The results show that a long-term stable and balanced relationship exists between the inflation and economic growth, which is the inflation in the short term can contribute to economic growth, however, if inflation continues to spread and aggravation will bring adverse effects to economic growth. How to coordinate the relationship between inflation and economic growth require us to seek balance between inflation and economic growth. We need to prevent high inflation while maintain a reasonable economic growth.