Authors

Hiroyuki IMAI

Document Type

Paper Series

Publication Date

11-1995

No.

25

Abstract

The high growth and wide fluctuations of fixed investment are the main driving forces of the rate of inflation in China in the reform period. Investment expansion generates strong demand pressures in the consumption goods market. Its inflationary impact is magnified further as it brings about higher wage costs during a boom. An implied short-run tradeoff is derived from dynamic simulation of a small macroeconomics model. In a given year, each additional percentage point of economic growth or investment growth leads to, respectively, a 2.7 or a 0.9 percent increase in the rate of inflation that year.

Comments

CAPS Working Paper Series No.25 (10/95)

Recommended Citation

Imai, H. (1995). Growth-inflation tradeoff in China (CAPS Working Paper Series No.25). Retrieved from Lingnan University website: http://commons.ln.edu.hk/capswp/49