Advanced Search
MyIDEAS: Login

Has trade with China affected UK inflation?

Contents:

Author Info

  • Wheeler, Tracy

    ()
    (Monetary Policy Committee Unit, Bank of England)

Registered author(s):

    Abstract

    This paper investigates empirically whether the level or growth of cheap imports from China has had an impact on UK inflation. We use two methods; the first calculates UK weighted world export price inflation as the sum of the effect of the inflation level in the UK's trading partners and the effect of substituting imports from more expensive countries with imports from countries with lower price levels. The second estimates these two effects on UK inflation using panel regressions. The results from the first method suggest that the substitution of imports from more expensive countries with imports from China reduced UK weighted world export price inflation by an average of -0.75 percentage points per annum from 2000 to 2004. Similarly, the panel regressions suggest that over the 1997-2005 period this substitution had a small but significant downward impact on UK CPI inflation. However, the same regressions also suggest that higher inflation in imports from China than in imports from other countries has put upward pressure on some components of UK CPI inflation. As this upward 'inflation effect' is likely to have outweighed the downward 'substitution effect' the regressions suggest that the overall effect of Chinese imports on UK CPI inflation from 1997-2005 was positive.

    Download Info

    If 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.
    File URL: http://www.bankofengland.co.uk/publications/externalmpcpapers/extmpcpaper0022.pdf
    Our checks indicate that this address may not be valid because: 404 Not Found (http://www.bankofengland.co.uk/publications/externalmpcpapers/extmpcpaper0022.pdf [301 Moved Permanently]--> http://www.bankofengland.co.uk/publications/Documents/externalmpcpapers/extmpcpaper0022.pdf). If this is indeed the case, please notify (William Naughton)
    File Function: Full text
    Download Restriction: no

    Bibliographic Info

    Paper provided by Monetary Policy Committee Unit, Bank of England in its series Discussion Papers with number 22.

    as in new window
    Length: 54 pages
    Date of creation: Feb 2008
    Date of revision:
    Handle: RePEc:mpc:wpaper:0022

    Contact details of provider:
    Postal: Threadneedle Street, London, EC2R 8AH
    Phone: +44 (020) 7601 4444
    Fax: +44 (020) 7601 5460
    Email:
    Web page: http://www.bankofengland.co.uk/publications/externalmpcpapers/index.htm
    More information through EDIRC

    Related research

    Keywords: Inflation; China; Imports;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:mpc:wpaper:0022. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (William Naughton) The email address of this maintainer does not seem to be valid anymore. Please ask William Naughton to update the entry or send us the correct address.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.