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Inflation in Mainland China - Modelling a Roller Coaster Ride

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  • Michael Funke

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Abstract

The New Keynesian Phillips curve (NKPC) posits the dynamics of inflation as forward looking and related to marginal costs. In this paper we examine the empirical relevance of the NKPC for mainland China. The empirical results indicate that an augmented (hybrid) NKPC gives results that are consistent with the data generating process. It is in this respect that the NKPC provides useful insights into the nature of inflation dynamics in mainland China as well as useful insights for the conduct of monetary policy.

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Paper provided by Hamburg University, Department of Economics in its series Quantitative Macroeconomics Working Papers with number 20507.

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Date of creation: Jul 2005
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Handle: RePEc:ham:qmwops:20507

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Keywords: China; Inflation; New Keynesian Phillips Curve;

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Cited by:
  1. Michael Funke, 2005. "Inflation in Mainland China - Modelling a Roller Coaster Ride," Quantitative Macroeconomics Working Papers 20507, Hamburg University, Department of Economics.
  2. Mehrotra, Aaron & Peltonen, Tuomas & Santos Rivera, Alvaro, 2010. "Modelling inflation in China--A regional perspective," China Economic Review, Elsevier, vol. 21(2), pages 237-255, June.
  3. Ronald I. McKinnon, 2005. "China's New Exchange Rate Policy: Will China Follow Japan into a Liquidity Trap?," Discussion Papers 05-002, Stanford Institute for Economic Policy Research.
  4. Jisheng Yang, 2010. "Expectation, excess liquidity and inflation dynamics in China," Frontiers of Economics in China, Springer, vol. 5(3), pages 412-429, September.

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