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Rigid wage-setting and the effect of a supply shock, fiscal and monetary policies on Chinese economy by a CGE analysis

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  • Li, Meng
  • Yang, Liang

Abstract

The purpose of this paper is to present a computable general equilibrium (CGE) model of the Chinese economy which includes rigid wage-setting and integration of real and financial sectors, and to apply it to a quantitative evaluation of the oil price changes and the fiscal and monetary policies. The policy simulation shows whether the wage rate is flexible or rigid is crucial for the evaluation of various policy measures. Furthermore, the fields of application of the model are extended from the industry-related problems to the macroscopic ones such as inflation, stabilization policies and so on.

Suggested Citation

  • Li, Meng & Yang, Liang, 2012. "Rigid wage-setting and the effect of a supply shock, fiscal and monetary policies on Chinese economy by a CGE analysis," Economic Modelling, Elsevier, vol. 29(5), pages 1858-1869.
    • Handle: RePEc:eee:ecmode:v:29:y:2012:i:5:p:1858-1869
    DOI: 10.1016/j.econmod.2012.05.031
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    References listed on IDEAS

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    1. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-1051, September.
    2. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    3. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, September.
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    Cited by:

    1. Hamdi-Cherif, Meriem & Waisman, Henri, 2014. "Economic Globalization, Global energy issues and Climate Change China in global perspective," Conference papers 332522, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Haqiqi , Iman & Bahalou Horeh , Marziyeh, 2013. "Macroeconomic Impacts of Export Barriers in a Dynamic CGE Model," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(3), pages 117-150, July.
    3. Li, Meng & Yang, Liang, 2013. "Modeling the volatility of futures return in rubber and oil—A Copula-based GARCH model approach," Economic Modelling, Elsevier, vol. 35(C), pages 576-581.
    4. Wei, Xiahai & Jiang, Feng & Chen, Yu, 2023. "Who pays for environmental protection? The impact of green tax reform on labor share in China," Energy Economics, Elsevier, vol. 125(C).

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    More about this item

    Keywords

    Rigid wage-setting; Inflation; CGE model; Economic system; Policy simulation;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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