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Deflation in China

Author

Listed:
  • Sylviane GUILLAUMONT JEANNENEY

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Samuel GUERINEAU

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

This article investigates the causes of the deflation which occurs in China since 1998. The analysis is based on a theoretical model which addresses supply shocks as well as demand shocks and on the estimation of a reduced equation of consumer prices variations for the period 1986-2002, the results of which corroborate the theoretical assumptions. The main conclusion is that the slowing down of inflation and the fall of prices are chiefly explained by China economic policy. Moreover and contrary to the current opinion we show that deflation is partly due to the deceleration of productivity growth.

Suggested Citation

  • Sylviane GUILLAUMONT JEANNENEY & Samuel GUERINEAU, 2003. "Deflation in China," Working Papers 200323, CERDI.
    • Handle: RePEc:cdi:wpaper:449
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    References listed on IDEAS

    as
    1. Guillaumont Jeanneney, S. & Hua, P., 2001. "How does real exchange rate influence income inequality between urban and rural areas in China?," Journal of Development Economics, Elsevier, vol. 64(2), pages 529-545, April.
    2. Guillaumont Jeanney, Sylviane & HUA, Ping, 2002. "The Balassa-Samuelson effect and inflation in the Chinese provinces," China Economic Review, Elsevier, vol. 13(2-3), pages 134-160.
    3. Geneviève BOYREAU-DEBRAY, 2000. "Politique économique locale et inflation en Chine," Working Papers 200001, CERDI.
    4. Sachs, Jeffrey D, 1996. "Economic Transition and the Exchange-Rate Regime," American Economic Review, American Economic Association, vol. 86(2), pages 147-152, May.
    5. Geneviève Boyreau-Debray, 2000. "Politique économique locale et inflation en Chine," Revue Économique, Programme National Persée, vol. 51(3), pages 713-724.
    6. Loren Brandt & Xiaodong Zhu, 2000. "Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 422-451, April.
    7. Fry, M.J., 1995. "Estimating Money Demand for Monetary Control in China: A review of Some Technical Issues Raised by the Research Department of the Poeple's Bank of China," Papers 95-02, University of Birmingham - International Financial Group.
    8. Samuel Guérineau & Sylviane Guillaumont Jeanneney, 2002. "Un indicateur d'ancrage nominal par le taux de change : illustration par le cas polonais," Économie et Prévision, Programme National Persée, vol. 154(3), pages 139-155.
    9. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-836, July.
    10. Brandt, Loren & Zhu, Xiaodong, 2001. "Soft budget constraint and inflation cycles: a positive model of the macro-dynamics in China during transition," Journal of Development Economics, Elsevier, vol. 64(2), pages 437-457, April.
    11. Samuel Guérineau & Sylviane Guillaumont Jeanneney, 2003. "Politique de change et inflation en Chine," Revue d'économie politique, Dalloz, vol. 113(2), pages 199-232.
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    Cited by:

    1. Narayan, Paresh Kumar & Narayan, Seema & Smyth, Russell, 2009. "Understanding the inflation-output nexus for China," China Economic Review, Elsevier, vol. 20(1), pages 82-90, March.

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