Inflation, Output, and Welfare in the Laboratory

Jiang, Janet Hua; Puzzello, Daniela; Zhang, Cathy

doi:10.1016/j.euroecorev.2022.104351

Cited by 4 publications

(1 citation statement)

References 60 publications

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Rapid economic growth coincides with high inflation in general (Cruz, 2022;Jiang et al, 2023). This is not the case in China though.

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confidence: 91%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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China’s constantly rapid economic growth accompanying by a low overall inflation has long been mysterious in macroeconomics. The core purpose of this paper is to solve this puzzle. Therefore, we integrate overdetermined set of equations into a MUCSVO model to explore the volatility mechanism of the overall inflation from a sectoral perspective. Our key findings include: 1) the hedging effect of sectoral inflation fluctuations principally accounts for China’s long-run stable overall inflation; 2) the main contradiction of China’s inflation has been shifting from high price levels in the traditional food and residence categories to rising prices in the health care category; 3) as the proportions of inflation in the food and residence categories fall steadily, sectoral inflation weights become more evenly distributed. In conclusion, China’s overall inflation and deflation will be much less likely to occur, while inflation is still of sectoral imbalance. Unusual price fluctuations in the food and health care categories, which are highly relevant to basic living standards of the low-income group, deserve close attention in particular. Overall, besides solving the puzzle of China’s low inflation, our model is applicable to economies that do not publish inflation weights, which is a useful extension of core inflation measurement.

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“…

Rapid economic growth coincides with high inflation in general (Cruz, 2022;Jiang et al, 2023). This is not the case in China though.

…”

mentioning

confidence: 91%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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The essentiality of money in a trading post economy with random matching

Marchesiani

2023

Oxford Economic Papers

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This article studies how the structure of centralized markets can affect efficient allocation in anonymous decentralized trades. In line with previous studies, we show that efficiency in decentralized markets can be sustained in a moneyless finite-number-of-agents setting if agents are patient enough and the price is observed with noise. We additionally show that, if there are no gains from trade, then the price associated with an inactive centralized market is zero irrespective of the noise. Thus, the non-essentiality-of-money result is a more robust phenomenon when the centralized market acts only as a coordination device.

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The Friedman Rule: Experimental Evidence

Duffy¹,

Puzzello

2021

Int Economic Review

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We evaluate the Friedman rule for optimal monetary policy in a laboratory economy based on Lagos-Wright (Journal of Economic Theory 145 (2010), 1508. We explore two implementations of Friedman's rule: one involving deflationary monetary policy and another where interest is paid on money. We compare the welfare consequences of the Friedman rule with two other policies: a constant money supply regime and a regime where the money supply grows at a constant k%. Counter to theory, we find that the Friedman rule is not welfare-improving, performing no better than the constant money regime. By one welfare measure, the k% money growth rate regime performs best.

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Inflation, Output, and Welfare in the Laboratory

Cited by 4 publications

References 60 publications

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

The essentiality of money in a trading post economy with random matching

The Friedman Rule: Experimental Evidence

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