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Identifying the Shocks Driving Inflation in China

Pierre Siklos () and Yang Zhang ()
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Yang Zhang: University of Ottawa, Canada

Working Paper series from Rimini Centre for Economic Analysis

Abstract: The time profile of inflation in China resembles the one experienced in major industrial countries. Given the uncertainty surrounding the sources of economic shocks, this paper compares results from three sets of alternative identification conditions, namely the standard Blanchard-Quah approach, the approach of Cover, Enders, and Hueng (2006), as well as the model considered by Bordo, Landon-Lane and Redish (2004). Our principal finding is that inflation in China has been primarily driven by monetary factors. While aggregate supply factors may have pushed inflation to cross the threshold leading to deflation, monetary policy is primarily responsible for Chinese inflationary outcomes.

JEL-codes: E31 E32 C32 C52 (search for similar items in EconPapers)
Date: 2007-07
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http://www.rcea.org/RePEc/pdf/wp34_07.pdf

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Journal Article: IDENTIFYING THE SHOCKS DRIVING INFLATION IN CHINA (2010) Downloads
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