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Deflation in Hong Kong SAR

Author

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  • Mr. Philip Schellekens

Abstract

This paper examines the causes of deflation in Hong Kong SAR, exploring whether it reflects a prolonged process of adjustment to cyclical shocks or whether it results from price equalization pressures arising from structural integration with mainland China. To gauge the relative importance of these factors, the paper provides both an econometric and a qualitative analysis of the price dynamics between Hong Kong SAR and Shenzhen, a neighboring city in mainland China. It finds that the role of price equalization as a source of deflation is minor. Deflation in Hong Kong SAR is best explained by successive cyclical shocks which have been amplified by balance-sheet and wealth effects.

Suggested Citation

  • Mr. Philip Schellekens, 2003. "Deflation in Hong Kong SAR," IMF Working Papers 2003/077, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/077
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    References listed on IDEAS

    as
    1. Mr. Christoph Duenwald, 2000. "Property Prices and Speculative Bubbles: Evidence From Hong Kong SAR," IMF Working Papers 2000/002, International Monetary Fund.
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    Citations

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    Cited by:

    1. Hans Genberg, 2005. "External Shocks, Transmission Mechanisms and Deflation in Asia," Working Papers 062005, Hong Kong Institute for Monetary Research.
    2. Paul D. McNelis, 2009. "Structural Change and Counterfactual Inflation-Targeting in Hong Kong," Working Papers 232009, Hong Kong Institute for Monetary Research.
    3. Mehrotra, Aaron N., 2007. "Exchange and interest rate channels during a deflationary era--Evidence from Japan, Hong Kong and China," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 188-210, March.
    4. Claudio Borio & Magdalena Erdem & Andrew Filardo & Boris Hofmann, 2015. "The costs of deflations: a historical perspective," BIS Quarterly Review, Bank for International Settlements, March.
    5. Boon Lee, 2011. "Distribution Trade Sector Output and Productivity Performance: A Case Study of Singapore and Hong Kong 2001-2008," School of Economics and Finance Discussion Papers and Working Papers Series 270, School of Economics and Finance, Queensland University of Technology.
    6. repec:zbw:bofitp:2005_017 is not listed on IDEAS
    7. Jiming Ha & Kelvin Fan, 2004. "One Country, Two Prices? A Study of the Deflationary Effect of Price Convergence on Hong Kong," Asian Economic Journal, East Asian Economic Association, vol. 18(4), pages 405-421, December.
    8. Mehrotra, Aaron N., 2007. "Exchange and interest rate channels during a deflationary era--Evidence from Japan, Hong Kong and China," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 188-210, March.

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