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http://hdl.handle.net/10419/53282
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| Title: | | Inflationary effect of oil-price shocks in an imperfect market: A partial transmission input-output analysis  |
| Authors: | | Wu, Libo Li, Jing Zhang, ZhongXiang |
| Issue Date: | | 2011 |
| Series/Report no.: | | Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 29.2011 |
| Abstract: | | This paper aims to examine the impacts of oil-price shocks on China's price levels. To that end, we develop a partial transmission input-output model that captures the uniqueness of the Chinese market. We hypothesize and simulate price control, market factors and technology substitution - the three main factors that restrict the functioning of a price pass-through mechanism during oil-price shocks. Using the models of both China and the U.S., we separate the impact of price control from those of other factors leading to China's price stickiness under oil-price shocks. The results show a sharp contrast between China and the U.S., with price control in China significantly preventing oil-price shocks from spreading into its domestic inflation, especially in the short term. However, in order to strengthen the economy's resilience to oil-price shocks, the paper suggests a gradual relaxing of price control in China. |
| Subjects: | | Oil-price Shocks Price Transmission Price Control Input-output Analysis Inflation Industrial Structure China the United States |
| JEL: | | Q43 Q41 Q48 O13 O53 P22 E31 |
| Document Type: | | Working Paper |
| Appears in Collections: | | FEEM Working Papers, Fondazione Eni Enrico Mattei
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