Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212610 
Year of Publication: 
2007
Series/Report no.: 
BOFIT Discussion Papers No. 19/2007
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
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 forward-looking 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
inflation
regional
New Keynesian Philips Curve
GMM
JEL: 
E31
C22
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-885-3
Document Type: 
Working Paper

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