Performance of China’s Core Inflation Measures for Monetary Policy

Hu, Yushan; Zhang, Penglong

doi:10.1142/s0217590821500168

Cited by 3 publications

(5 citation statements)

References 30 publications

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“…The strongest influences take place during 2007M7-2007M12 and 2008M9-2009M3, which strongly coincides with trending changes in the overall core inflation in Figure 3. It shows that the co-movement of sectoral price will shape the overall core inflation, which is consistent with the conclusions of Hu and Zhang (2021). As a result, China's monetary authority promptly responds to these rounds of inflation and deflation by carrying out counter-cyclical monetary policy.…”

Section: Sectoral Core Inflation Decomposition and Contribution Measu...supporting

confidence: 82%

“…Nevertheless, the MUCSVO method is subject to several application constraints, such as the requirement of published sectoral core inflation weights (Mazumder, 2014;Chan et al, 2018;Fasanya & Awodimila, 2020). While the MUCSVO method is usually applicable to developed economies including the U.S., Western European countries and Japan, it fails to apply to the nations (e.g., developing economies including China and Brazil) that do not publish complete sectoral inflation weights (Hu & Zhang, 2021;Fan et al, 2022), which severely limits the application of the MUCSVO method. Thus, it is prerequisite to estimate sectoral inflation weights in order to precisely measuring core inflation in nations that do not publish them.…”

Section: Literature Reviewmentioning

confidence: 99%

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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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Section: Sectoral Core Inflation Decomposition and Contribution Measu...supporting

confidence: 82%

Section: Literature Reviewmentioning

confidence: 99%

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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“…Thus, all firms, including foreign firms, tend to control their consumption of raw coal. Second, higher demand due to FDI growth has driven up energy prices, especially coal prices, during the sample period (Fan, Hu, Zhang 2021; Hu and Zhang 2021a). Higher coal price has in return curbed the coal consumption growth.…”

Section: Channel Analysismentioning

confidence: 99%

Foreign Direct Investment and Air Pollution in China: Evidence from the Global Financial Crisis

Liu

Zhang

2021

The Developing Economies

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China has been notable for both its rapidly growing foreign direct investment (FDI) and environmental pollution in recent decades. Using the exogenous shock of the 2008 financial crisis as a natural experiment, we construct instrumental variables for FDI by distinguishing between the decrease in FDI in coastal cities and non‐coastal cities. Based on panel data from Chinese prefecture‐level cities, we study the impact of FDI on air pollution in China. The results show that FDI has significantly worsened air quality in China and that the effect is more significant in big cities. FDI in China worsens air quality through increased pollution emissions and resource depletion.

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“…They are different from the information disclosure of central government that mainly focuses on fiscal and monetary policies. See Hu and Zhang (2021a) and Fan et al. (2021) for more discussion on monetary information disclosure in China.…”

Section: Notesmentioning

confidence: 99%

“…mainly focuses on fiscal and monetary policies. See Hu and Zhang (2021a) and Fan et al (2021) for more discussion on monetary information disclosure in China.…”

mentioning

confidence: 99%

Internet access and irrigation adoption in China

Wang

Zhang

2022

CAER

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PurposeThis study aims to examine the effect of the Internet on irrigation system adoption. The authors implement the most extensive household survey of irrigation arrangements ever conducted in rural China and also exploit a public program to improve the quality of distance education in rural middle schools, which has led to plausibly exogenous variation in Internet access across rural districts.Design/methodology/approachThe authors present a conceptual framework highlighting the transmission mechanisms whereby Internet access may affect irrigation system selection and identify direct effects through agricultural production and an indirect effect through non-agricultural production. To examine the effect of the Internet on irrigation system adoption, we implement the most extensive household survey of irrigation arrangements ever conducted in rural China. We also exploit a public program to improve the quality of distance education in rural middle schools, which has led to plausibly exogenous variation in Internet access across rural districts.FindingsThe authors find evidence to suggest that Internet access can effectively reduce information frictions and searching costs in the non-agricultural labor market, thus increasing rural households' participation in non-farm work. To save more hours from agricultural production, rural households select more labor-saving irrigation systems.Originality/valueThis study’s findings have important implications for the ongoing policy debate over government investment in Internet infrastructure to improve agricultural development in rural and isolated areas.

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Performance of China’s Core Inflation Measures for Monetary Policy

Cited by 3 publications

References 30 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

Foreign Direct Investment and Air Pollution in China: Evidence from the Global Financial Crisis

Internet access and irrigation adoption in China

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