Analysis of the relationship of Chinese price index and foreign exchange reserve

摘要

This paper used the data of CPI and foreign exchange reserves from January 2003 to July 2010 to, makes cointegration test. The author discusses excess liquidity and its representation in the condition of excessive foreign exchange reserve, and according to the principle mechanism of the supply and demand model of economics, makes a theoretical analysis of the causes of excess liquidity and inflation in the condition of excessive foreign ex change reserve.