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Globalization and Changing Inflation Dynamics in China

Chengsi Zhang and Huidong He

Emerging Markets Finance and Trade, 2016, vol. 52, issue 3, 625-638

Abstract: This article investigates the changing impact of economic globalization on inflation in China over the post-reform era. We construct an inflation dynamics model with globalization factors from microeconomic foundations. Empirical results with quarterly data spanning from 1984 to 2012 show that in 1994 there was a significant structural change in the inflation dynamics model, after which China’s inflation responded more significantly to foreign economic slack while the slope of the inflation-domestic slack relation reduced substantively.

Date: 2016
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DOI: 10.1080/1540496X.2014.998565

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