The Balassa-Samuelson effect and inflation in the Chinese provinces

Sylviane Guillaumont Jeanneney () and HUA Ping ()
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HUA Ping: Centre National de la Recherche Scientifique

No 200106, Working Papers from CERDI

Abstract: The Balassa-Samuelson effect is employed to explain the observed differences in inflation between the Chinese provinces. A three-good model is proposed to better take account of the specific features of China. This model which includes, besides Balassa-Samuelson effect, demand side factors, is tested for 29 Chinese provinces using cross-sectional and panel data for the 1992-1999 period. The econometric results show that the hypothesis that the Balassa-Samuelson effect explains the durable differences in inflation between provinces is not refuted. This suggests that the Chinese economy broadly works as a market economy.

Keywords: Balassa-Samuelson effect; inflation; real effective exchange rate and China. (search for similar items in EconPapers)
Date: 2001
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Persistent link: http://EconPapers.repec.org/RePEc:cdi:wpaper:154

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