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The diminishing influences of agricultural output changes on general price changes in China

Author

Listed:
  • Xiaoyun Liu
  • Wanchun Luo
  • Xuefeng Mao
  • Xiuqing Wang
  • Xian Xin

Abstract

Purpose - The paper aims to assess the impact of agricultural output changes on the general price level over time with China as an example. Design/methodology/approach - A simple numerical global general equilibrium (GE) model of two regions (China and the rest of the world) and three commodities (agriculture, manufacturing goods, and services) is used to assess the impacts of agricultural output changes on the overall economy price changes. The numerical GE model of this paper consists of production, final consumption, and market clear conditions. The results are generated with the GE model calibrated to aggregated China's input‐output tables of 1987, 1997, and 2005. Findings - The results suggest that China witnessed a declining influence of agricultural output changes on general price changes. The contribution of given agricultural output change on the general price change in 2005 was merely less than 60 percent of that in 1987, which in turn implies that macro policies targeting to curb general inflation via boosting agricultural output will be less effective as those of 20 years ago. Practical implications - China's policy makers should rely less and less on promoting agricultural output policies to fight against general inflation and should resort to non‐agricultural policies. Originality/value - The paper argues that the influence of agriculture on the China's general price indices has been weakening along with China's economic development with a numerical GE model calibrated to aggregated China's input‐output tables of 1987, 1997, and 2005.

Suggested Citation

  • Xiaoyun Liu & Wanchun Luo & Xuefeng Mao & Xiuqing Wang & Xian Xin, 2010. "The diminishing influences of agricultural output changes on general price changes in China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 2(3), pages 345-355, September.
    • Handle: RePEc:eme:caerpp:v:2:y:2010:i:3:p:345-355
    DOI: 10.1108/17561371011078453
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    References listed on IDEAS

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    1. Ardeni, Pier Giorgio & Freebairn, John, 2002. "The macroeconomics of agriculture," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 28, pages 1455-1485, Elsevier.
    2. Xiwen Chen, 2009. "Review of China's agricultural and rural development: policy changes and current issues," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 1(2), pages 121-135, January.
    3. Anonymous, 1965. "International Monetary Fund," International Organization, Cambridge University Press, vol. 19(4), pages 1052-1056, October.
    4. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
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    Cited by:

    1. Wenlang Zhang & Gaofeng Han & Steven Chan, 2014. "How Strong are the Linkages between Real Estate and Other Sectors in China?," Working Papers 112014, Hong Kong Institute for Monetary Research.
    2. Chan, Steven & Han, Gaofeng & Zhang, Wenlang, 2016. "How strong are the linkages between real estate and other sectors in China?," Research in International Business and Finance, Elsevier, vol. 36(C), pages 52-72.

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    More about this item

    Keywords

    Agriculture; Inflation; Equilibrium methods; China; Input/output analysis;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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