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A Novel End to the Big Inflation in China in 1950

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  • Richard Burdekin
  • Fang Wang

Abstract

The Chinese inflation of 1949-1950 was fueled by large budget deficits but was ended in March 1950 before significant deficit reduction occurred. We discuss the fiscal strains that gave rise to this inflation and consider the role played by early Communist market-based anti-inflationary measures such as the 'economic warfare' against speculators conducted by the government's state trading companies. While later monetary and fiscal tightening sustained the stabilization achieved in March – at considerable cost to the real economy – the Chinese experience seems to confirm that there is more to inflation stabilization than fiscal balance alone. Copyright Kluwer Academic Publishers 1999

Suggested Citation

  • Richard Burdekin & Fang Wang, 1999. "A Novel End to the Big Inflation in China in 1950," Economic Change and Restructuring, Springer, vol. 32(3), pages 211-229, October.
    • Handle: RePEc:kap:ecopln:v:32:y:1999:i:3:p:211-229
    DOI: 10.1023/A:1003616005474
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    References listed on IDEAS

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    1. Thomas J. Sargent, 1982. "The Ends of Four Big Inflations," NBER Chapters, in: Inflation: Causes and Effects, pages 41-98, National Bureau of Economic Research, Inc.
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    3. Eckstein,Alexander, 1977. "China's Economic Revolution," Cambridge Books, Cambridge University Press, number 9780521291897.
    4. Carl Blumstein & Paul Komor, 1996. "Another look at the strategic petroleum reserve: Should its oil holdings be privatized?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(2), pages 271-275.
    5. Robert E. Hall, 1982. "Inflation: Causes and Effects," NBER Books, National Bureau of Economic Research, Inc, number hall82-1, March.
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