The Relationship between Foreign Exchange Reserves and Inflation in China——Empirical Analysis Based on Bounds Testing Technique
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Abstract With the help of Lucas aggregate supply model, the paper empirically studies the relationship between foreign exchange reserves growth and inflation rate by sampling data from January 1997 to December 2010 with ARDL model. The empirical results show that foreign exchange reserves in long-term and short-term has significantly positive effects on inflation; Averagely,21.3% of inflation rate is caused by the foreign exchange reserves. Therefore we should strengthen the management of Chinese foreign exchange reserve to control the growth speed of foreign exchange reserves to reduce its impacts on inflation.
BO Fang-Hui. The Relationship between Foreign Exchange Reserves and Inflation in China——Empirical Analysis Based on Bounds Testing Technique. Economic Survey, 2013, 1(4): 0123.
2013, Vol. 1 
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