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Inflation in Mainland China - Modelling a Roller Coaster Ride

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  • Michael Funke

    (Hamburg University)

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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Bibliographic Info

Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 152005.

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Length: 21 pages
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:hkm:wpaper:152005

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Keywords: China; inflation; New Keynesian Phillips curve;

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Citations

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Cited by:
  1. Mehrotra, Aaron N. & Peltonen, Tuomas A. & Santos Rivera, Alvaro, 2007. "Modelling inflation in China - a regional perspective," Working Paper Series 0829, European Central Bank.
  2. Funke, Michael, 2005. "Inflation in mainland China – modelling a roller coaster ride," BOFIT Discussion Papers 6/2005, Bank of Finland, Institute for Economies in Transition.
  3. Ronald I. McKinnon, 2005. "China's New Exchange Rate Policy: Will China Follow Japan into a Liquidity Trap?," Discussion Papers, Stanford Institute for Economic Policy Research 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, Springer, vol. 5(3), pages 412-429, September.

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