Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153263
Authors: 
Mehrotra, Aaron N.
Peltonen, Tuomas A.
Santos Rivera, Alvaro
Year of Publication: 
2007
Series/Report no.: 
ECB Working Paper 829
Abstract: 
We model provincial inflation in China during the reform period. In particular, we are interested in the ability of the hybrid New Keynesian Phillips Curve (NKPC) to capture the inflation process at the provincial level. The study highlights differences in inflation formation and shows that the NKPC provides a reasonable description of the inflation process only for the coastal provinces. A probit analysis suggests that the forwardlooking inflation component and the output gap are important inflation drivers in provinces that have advanced most in marketisation of the economy and have most likely experienced excess demand pressures. These results have implications for the relative effectiveness of monetary policy across the Chinese provinces.
Subjects: 
China
GMM
inflation
New Keynesian Phillips curve
Regional
JEL: 
E31
C22
Document Type: 
Working Paper

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