The international transmission mechanism of inflation, what methods to stop 5

Actually, I don't agree that China's inflation is caused by international transmission, but I won't be verbose, only what you ask. Our country is currently a very big beneficiary of the modern system of internationalization in the trend of internationalization, you are benefiting at the same time, you must bear some things you don't like, and this dislike includes the international transmission of inflation, the higher your dependence on foreign countries, the greater the impact of this transmission mechanism on you, then the current dependence of our country on foreign countries is very, very high, therefore, the international transmission mechanism of inflation is inevitable, and there is no way to stop it, because of the international A basic condition is the free flow of commodities and capital, and we have very strict control over capital, but there is no way to do it in this part of commodities, so in the current situation that it cannot be stopped, what we have to do is to minimize the damage of this transmission mechanism to China's economy as much as possible, which is a more pragmatic approach. This requires the state to adopt comprehensive means such as fiscal policy, monetary policy, and tax policy to mediate.

1. **Approach, which can be summarized as **level of foreign countries**-> **level of open sector in small countries** - wage level of open sector in > small countries** - wage level of non-open sector in > small countries** - level of non-open sector in > small countries ** - overall **level of > small countries**. Here is just an example of small countries, through the oil **** we can also see that large countries will also be imported inflation.

2. Demand pathway. Under the conditions of external economy or foreign inflation, foreign demand will be released through an increase in import demand for products, and a large amount of external import demand will lead to a rise in the domestic level, so as to be consistent with the international market level.

3. Exchange rate approach. Under a fixed exchange rate regime, inflation in a foreign country will lead to a depreciation of its currency, and the domestic currency will tend to appreciate in relative terms. In order to maintain the stability of the country's exchange rate, the country's central bank will increase the money supply, which will lead to the country's prices**, inflation.

From the above three ways, it is obvious that an open country cannot avoid international inflation, unless it is closed to the country, but this is impossible, due to the scarcity of resources, an independent country cannot be self-sufficient.

As shown in the figure below:

Inputs, manufacturers' production costs rise, profits decrease, output decreases, and AS shifts to the left, resulting in an increase in production and a decrease in output Q. When the price level rises, income will be redistributed, enterprises that produce resources will benefit, and their inputs will increase, while enterprises that mainly invest in resources will lose their profits due to rising costs, and their products will rise as a result, and the interests of consumers will be damaged. In the long run, it can be pointed out that there may be cost-push inflation.

Aggregate Demand-Aggregate Supply Model (AD-AS Model): Aggregate demand and aggregate supply are combined on a coordinate chart to explain the determination of national income and the level of national income, and to examine the reasons for the changes in the past few years and how the social economy achieves the equilibrium between aggregate demand and aggregate supply.

Based on Keynes's income-expenditure model and Hicks's IS-LM model, this model further combines aggregate demand and aggregate supply to explain the determination of national income and related economic phenomena, which is a supplement and correction to the one-sidedness of the first two models that only emphasize the aspect of aggregate demand. Therefore, the theory on which the aggregate demand-aggregate supply model is based is no longer a standard or purely Keynesian theory.

The formation, manifestations and response to inflation.

1. Tighten monetary policy, reduce the amount of money, or raise interest rates.

2. The austerity fiscal policy is mainly to increase revenue and reduce expenditure, reduce deficit, increase revenue measures mainly to increase taxes, and reduce expenditure measures mainly to reduce the expenses of institutions, curb investment in public utilities, and reduce welfare expenditures such as subsidies and relief.

Singapore** helps the poor cope with the ...... of price increases through tax-free cash, decorating subsidies and other subsidies. At the same time, ** also strictly controls prices and adjusts the prices of daily necessities to slow down the impact of price increases on consumers. In addition, the implementation of tax increase policies, resident income tax, personal foreign exchange income tax, corporate income tax, etc., to adjust the social justice of high-income groups.

In addition, it has also implemented preferential lending policies, ignited markets such as regular housing price reviews, and issued employment protection measures to help vulnerable groups and ordinary people cope with price increases. ......

Singapore's set of measures can serve as a reference for other countries to follow. First, other countries can also put in place effective policies to help vulnerable groups and ordinary people cope with price increases, such as tax-free cash, price subsidies, subsidies for public spending, and interest rate reductions. Secondly, other countries can also follow Singapore's example and increase taxes on high-income groups through the implementation of tax increase policies, such as resident income tax, personal foreign exchange income tax, corporate income tax, etc., so as to increase income and achieve social equity.

In addition, other countries can adopt preferential lending policies similar to Singapore's, monitor price and house price fluctuations, and introduce job protection measures for different groups to protect consumers from rising prices. In short, the measures issued by Singapore are worth learning from and emulating for other countries.

With regard to the theory of inflation, the following questions are asked about the causes of inflation:

1. Demand-pulled: demand exceeds the supply of commodities and causes inflation;

2. Cost push: rising production costs cause inflation;

3. Structural imbalance: the country's industrial structure is out of balance and causes the inflation of the lead stool;

4. Insufficient supply: inflation caused by insufficient aggregate supply under the condition that the aggregate demand of the society remains unchanged;

5. Pessimistic expectations: negative view of inflation, resulting in persistent inflation;

6. Institutional problems: The imperfection of the national system causes inflation.

Data Extension:

Inflation is the level of prices that have an additional character or state: it is not entirely expected; It leads to further price increases; It has not increased employment and real production; It is faster than a certain "safe" rate; It is caused "by the monetary side"; It is measured in terms of a real price consisting of indirect taxes and subsidies; It is irreversible.

The consumer** index is the retail price index, which in some countries is also called the cost of living index. The Consumer Price Index** is a measure of changes in goods and services** consumed by households and individuals. It is a weighted average of many (usually hundreds) consumer goods and services** indices.

Producer** Index. The producer index is a wholesale index. The formula is basically the same as the consumer index, but the price here refers to the wholesale price rather than the retail price, and the quantity and variety of goods and services included are also different from the consumer index.

Inflation causes a redistribution of income. During inflation, the growth of some people's nominal income will be less than the magnitude of ****, which will reduce their real income and living standards.

But for others, nominal incomes will rise more than prices, raising their real incomes and their standard of living. The losses are offset against the gains, and the overall and average levels of real income remain the same.

If you want to go down, you can see for yourself first.18