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Modeling China Inflation Persistence

Author

Listed:
  • Chengsi Zhang

    (School of Finance, Renmin University of China)

  • Joel Clovis

    (School of Economics, and INTO, University of East Anglia)

Abstract

This paper employs the recently developed structural stability tests with unknown break point and two median unbiased estimation methods to model China inflation persistence over the most recent quarter of a century. Our empirical results suggest that the persistence of both consumer price inflation and retail price inflation has witnessed declines over the most recent period of low inflation, with the reduction in consumer price inflation being more pronounced. The reduced inflation persistence helps to explain the remarkable phenomenon of high economic growth under the low inflation environment in China during the recent decade.

Suggested Citation

  • Chengsi Zhang & Joel Clovis, 2009. "Modeling China Inflation Persistence," Annals of Economics and Finance, Society for AEF, vol. 10(1), pages 89-110, May.
  • Handle: RePEc:cuf:journl:y:2009:v:10:i:1:p:89-110
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    References listed on IDEAS

    as
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    Cited by:

    1. repec:eme:jespps:jes-10-2015-0190 is not listed on IDEAS
    2. Zhang, Chengsi, 2011. "Inflation persistence, inflation expectations, and monetary policy in China," Economic Modelling, Elsevier, vol. 28(1), pages 622-629.
    3. Giorgio Canarella & Stephen Miller, 2016. "Inflation persistence and structural breaks: the experience of inflation targeting countries and the US," Journal of Economic Studies, Emerald Group Publishing, vol. 43(6), pages 980-1005, November.
    4. J. James Reade & Ulrich Volz, 2011. "From the General to the Specific," Discussion Papers 11-18, Department of Economics, University of Birmingham.
    5. Tianfeng Li & June Wei, 2015. "Multiple Structural Breaks and Inflation Persistence: Evidence from China," Asian Economic Journal, East Asian Economic Association, vol. 29(1), pages 1-20, March.
    6. Koivu, Tuuli, 2012. "Monetary policy, asset prices and consumption in China," Economic Systems, Elsevier, vol. 36(2), pages 307-325.

    More about this item

    Keywords

    Inflation; Inflation persistence; Structural break; Monetary policy;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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