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The Balassa-Samuelson effect and inflation in the Chinese provinces

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Author Info

  • Sylviane GUILLAUMONT JEANNENEY

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Ping HUA

    ()
    (Centre National de la Recherche Scientifique)

Abstract

The Balassa-Samuelson effect is employed to explain the observed differences in inflation between the Chinese provinces. A three-good model is proposed to better take account of the specific features of China. This model which includes, besides Balassa-Samuelson effect, demand side factors, is tested for 29 Chinese provinces using cross-sectional and panel data for the 1992-1999 period. The econometric results show that the hypothesis that the Balassa-Samuelson effect explains the durable differences in inflation between provinces is not refuted. This suggests that the Chinese economy broadly works as a market economy.

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File URL: http://publi.cerdi.org/ed/2001/2001.06.pdf
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Bibliographic Info

Paper provided by CERDI in its series Working Papers with number 200106.

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Length: 36
Date of creation: 2001
Date of revision:
Publication status: Published in China Economic Review, 2002, pages 134-160
Handle: RePEc:cdi:wpaper:154

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Keywords: real effective exchange rate and China.; inflation; Balassa-Samuelson effect;

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Cited by:
  1. Stephen G Hall & Qian Guo, 2008. "A Test of the Balassa-Samuelson Effect Applied to Chinese Regional Data," Discussion Papers in Economics 08/8, Department of Economics, University of Leicester.
  2. Zhicheng LIANG & Ping HUA & Sylviane GUILLAUMONT JEANNENEY, 2006. "Financial Development, Economic Efficiency and Productivity Growth: Evidence from China," Working Papers 200625, CERDI.
  3. Andrea Saayman, 2007. "The Real Equilibrium South African Rand/US Dollar Exchange Rate: A Comparison of Alternative Measures," International Advances in Economic Research, Springer, vol. 13(2), pages 183-199, May.
  4. Valérie Mignon & Amina Lahrèche-Révil & Agnès Bénassy-Quéré, 2004. "Le yuan et le G20," Revue d'Économie Financière, Programme National Persée, vol. 77(4), pages 127-146.
  5. Shu-ki Tsang, 2002. "From "One Country, Two Systems" to Monetary Integration?," Working Papers 152002, Hong Kong Institute for Monetary Research.
  6. Nagayasu, Jun, 2009. "Regional Inflation in China," MPRA Paper 24722, University Library of Munich, Germany.

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