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Inflation Targeting in China?

Author

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  • Shu-ki Tsang

    (Hong Kong Baptist University)

Abstract

This paper looks at the possibility of applying inflation targeting as a policy in China. It argues that despite the appeal of discipline, there is a host of problems concerning the feasibility and optimality of such a policy. Difficulties abound in the transmission mechanisms involving intermediate variables, the reforming and constantly changing institutional setup, uncontrollable price components, regional diversities, as well as the country's multiple objectives in its development strategy. An FCI is proposed instead as a "focus of nominal attention" that may induce behavioural changes in the government agencies and the market participants.

Suggested Citation

  • Shu-ki Tsang, 2002. "Inflation Targeting in China?," Working Papers 192002, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:192002
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    References listed on IDEAS

    as
    1. McCallum, Bennett T. & Nelson, Edward, 1999. "Nominal income targeting in an open-economy optimizing model," Journal of Monetary Economics, Elsevier, vol. 43(3), pages 553-578, June.
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