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Monetary easing policy and long-run food prices: Evidence from China

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  • Yu, Xiaohua

Abstract

The money easing policy in the past decade incurred a significant impact on food prices through channels of both demand and supply, and leads to a problem of welfare distribution in China. Through the construction of a theoretical model, this paper empirically studies the impact of money supply on 7 major food products in China. We find that except for the price of rice which is stable and the price of wheat flour which slightly increases, all other food prices including soybean oil, poultry meat, pork, beef and mutton, decline in response to money expansion. This mainly results from a relatively larger stimulating effect of money expansion on supply to that on demand. The governments should make precautionary policies to protect farmers from welfare loss.

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  • Yu, Xiaohua, 2014. "Monetary easing policy and long-run food prices: Evidence from China," Economic Modelling, Elsevier, vol. 40(C), pages 175-183.
  • Handle: RePEc:eee:ecmode:v:40:y:2014:i:c:p:175-183
    DOI: 10.1016/j.econmod.2014.03.029
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