Money and Inflation in China
AbstractRecent debates on monetary condition and inflation pressures on the Mainland call for an analysis on the inflation dynamics and their main determinants. A natural starting point for the econometric analysis of monetary and inflation developments is the notion of monetary equilibrium. This paper presents an estimate of the long-run demand for money in China. The estimated long-run income elasticity is rather stable over time and consistent with that estimated in earlier studies. The difference between the estimated demand for money and the actual money stock provides an estimate of monetary disequilibria. These seem to provide leading information about CPI inflation in the sample period. At the current conjuncture, the measure suggests that monetary conditions have tightened since the macroeconomic adjustment started in early 2004. Additionally, an error-correction model based on the long-run money demand function offers insights into the short-run and long-run inflation dynamics.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Hong Kong Monetary Authority in its series Working Papers with number 0504.
Length: 23 pages
Date of creation: Mar 2005
Date of revision:
Contact details of provider:
Postal: 55th Floor, Two International Finance Centre, 8 Finance Street, Central
Web page: http://www.info.gov.hk/hkma/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Mehrotra, Aaron, 2006.
"Demand for money in transition: Evidence from China's disinflation,"
BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition
10/2006, Bank of Finland, Institute for Economies in Transition.
- Aaron Mehrotra, 2008. "Demand for Money in Transition: Evidence from China’s Disinflation," International Advances in Economic Research, Springer, Springer, vol. 14(1), pages 36-47, February.
- Glick, Reuven & Hutchison, Michael, 2009.
"Navigating the trilemma: Capital flows and monetary policy in China,"
Journal of Asian Economics, Elsevier,
Elsevier, vol. 20(3), pages 205-224, May.
- Reuven Glick & Michael Hutchison, 2008. "Navigating the Trilemma: Capital Flows and Monetary Policy in China," Working Papers, Hong Kong Institute for Monetary Research 252008, Hong Kong Institute for Monetary Research.
- Reuven Glick & Michael Hutchison, 2008. "Navigating the trilemma: capital flows and monetary policy in China," Working Paper Series, Federal Reserve Bank of San Francisco 2008-32, Federal Reserve Bank of San Francisco.
- Mehrotra , Aaron & Sánchez-Fung, José R., 2008. "Forecasting Inflation in China," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 2/2008, Bank of Finland, Institute for Economies in Transition.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Simon Chan).
If references are entirely missing, you can add them using this form.