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A Structural Investigation into the Price and Wage Dynamics in Hong Kong

Michael Cheng and Wai-Yip Alex Ho
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Michael Cheng: Research Department, Hong Kong Monetary Authority

No 920, Working Papers from Hong Kong Monetary Authority

Abstract: This paper estimates the degree of wage and price flexibility of the Hong Kong economy with the use of a stylised dynamic stochastic general equilibrium (DSGE) model developed for the Hong Kong economy. It also studies the factors contributing to deflation in Hong Kong following the Asian financial crisis (i.e. during the period from 1998 to 2003) and finds that declining import prices were the main culprit. Consistent with earlier studies on the subject and anecdotal evidence, wages and prices in Hong Kong are found to be (relatively) flexible.

Keywords: DSGE; Bayesian Estimation; Nominal Rigidities (search for similar items in EconPapers)
JEL-codes: F30 G01 G15 G12 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2009-12
New Economics Papers: this item is included in nep-dge and nep-sea
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