Modelling inflation in China - a regional perspective
Tuomas Peltonen () and
Alvaro Santos Rivera
No 829, Working Paper Series from European Central Bank
We model provincial inflation in China during the reform period. In particular, we are interested in the ability of the hybrid New Keynesian Phillips Curve (NKPC) to capture the inflation process at the provincial level. The study highlights differences in inflation formation and shows that the NKPC provides a reasonable description of the inflation process only for the coastal provinces. A probit analysis suggests that the forwardlooking inflation component and the output gap are important inflation drivers in provinces that have advanced most in marketisation of the economy and have most likely experienced excess demand pressures. These results have implications for the relative effectiveness of monetary policy across the Chinese provinces. JEL Classification: E31, C22
Keywords: China; GMM; inflation; new Keynesian Phillips curve; Regional (search for similar items in EconPapers)
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Journal Article: Modelling inflation in China--A regional perspective (2010)
Working Paper: Modelling inflation in China: a regional perspective (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2007829
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