Abstract
Economic systems are very complex. Furthermore, economic operation is influenced by many factors, namely, taxes, interest rates, and price levels. How can we analyze the impact of these factors on the economic operation? This chapter discusses the relationship between the comprehensive price level and GDP. This is known as the GDP-P model. It studies the relationship between the rate of change of the consumer price index (CPI) and GDP growth, which is known as the GDP-CPI model. This chapter also studies the relationship between the price level and electricity consumption based on the principle that electricity consumption and GDP are positively correlated. This is known as the P-E model. We will also study the relationship between the rate of change in the CPI and electricity growth, known as the E-CPI model. This chapter also studies trends in the economic performance of China between 2011 and 2012, as well as the impact of fiscal and monetary policies on economic operation using these models. In other words, we will be looking at the role that macroeconomic policies play on supply and demand curves, equilibrium points, and the moving trajectory form.
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- 1.
Because China’s Spring Festival sometimes falls in January and sometimes in February, enterprises generally take a holiday and do not produce for 7–10 days during the Spring Festival. However, electricity consumption may be affected. Therefore, year-on-year growth in electricity consumption will show a strange variation. In order to make the growth rate of electricity consumption comparable, we usually adopt an approach that combines the data from January and February. This allows us to conduct a common analysis of the growth rate in electricity consumption.
- 2.
The data of January and February 2012 are put together as one equilibrium point since the Chinese Spring Festival is in the period.
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Hu, Z., Hu, Z. (2013). Macroeconomic and Policy Models. In: Electricity Economics: Production Functions with Electricity. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40757-4_12
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DOI: https://doi.org/10.1007/978-3-642-40757-4_12
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