Monetary Liquidity and Food Price Dynamics: Evidence from China’s Mutton Price

Xiong Zheng, Adrian Daud (), Shairil Izwan Taasim and Anita Rosli
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Xiong Zheng: Department of Social Science and Management, Faculty of Humanities, Management and Science, Universiti Putra Malaysia Sarawak, Bintulu 97000, Sarawak, Malaysia
Adrian Daud: Department of Social Science and Management, Faculty of Humanities, Management and Science, Universiti Putra Malaysia Sarawak, Bintulu 97000, Sarawak, Malaysia
Shairil Izwan Taasim: Department of Social Science and Management, Faculty of Humanities, Management and Science, Universiti Putra Malaysia Sarawak, Bintulu 97000, Sarawak, Malaysia
Anita Rosli: Department of Social Science and Management, Faculty of Humanities, Management and Science, Universiti Putra Malaysia Sarawak, Bintulu 97000, Sarawak, Malaysia

Economies, 2025, vol. 13, issue 10, 1-18

Abstract: Mutton prices in China carry significant economic and social implications, yet their macro-financial drivers remain insufficiently understood. Based on monthly data from 2003 to 2025, this paper employs Ensemble Empirical Mode Decomposition, Vector Autoregression, and wavelet coherence analysis to identify the multi-frequency transmission effects of broad money supply on price dynamics. The results show that broad money supply has limited impact on high-frequency volatility but exerts a strong and persistent influence on medium- and low-frequency trends, particularly after 2010, when stable structural coherence becomes evident. Findings suggest that monetary expansion affects food prices through cost-push channels and expectation adjustments across different time scales. The study highlights the importance of incorporating frequency dimensions into inflation management and food price regulation frameworks to improve the precision and timeliness of policy responses.

Keywords: China; mutton prices; frequency decomposition; wavelet coherence; inflation transmission (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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