Economics at your fingertips  

Exploring the sources of inflation dynamics: New evidence from China

Shu-Hen Chiang, Chien-Chiang Lee and Ying Liao

Economic Analysis and Policy, 2021, vol. 70, issue C, 313-332

Abstract: The purpose of this paper is to introduce the idea of shift-share analysis, where local inflation is decomposed into the national factor, structural stickiness (with sectoral and regional aspects), and a localized pricing power effect in order to gain a better understanding of the inflation dynamics. We apply price-level data in China as a dual economy, which has historically been separated into urban and rural areas. The results show that sectoral differences in inflation are the most important factor explaining inflation in China, while local pricing power must be seriously considered in many sectors in rural areas.

Keywords: Inflation; Structural stickiness; Structural VAR; Rural–urban divide; Pricing power (search for similar items in EconPapers)
JEL-codes: C32 E31 O18 P24 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.eap.2021.03.001

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2024-03-31
Handle: RePEc:eee:ecanpo:v:70:y:2021:i:c:p:313-332