Is China "exporting deflation"?
By: Steven B. Kamin, Mario Marazzi, John W. Schindler.
Contributors: Marazzi, Mario.; Schindler, John W.
Series: International finance discussion papers ;; no. 791; International finance discussion papers (Online) ;; no. 791.
Publisher: Federal Reserve Board
Published: 2004
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Description: "In the past few years, observers increasingly have pointed to China as a source of downward pressure on global prices.  This paper evaluates the theoretical and empirical evidence bearing on the question of whether China's buoyant export growth has led to significant changes in the inflation performance of its trading partners.  This evidence suggests that the impact of Chinese exports on global prices has been, while non-negligible, fairly modest.  On a priori grounds, our theoretical analysis suggests that China's economy is still too small relative to the world economy to have much effect on global inflation: a back-of-the-envelope calculation puts that effect at about 1/3 percentage point in recent years.  In terms of the empirical evidence, we identify a statistically significant effect of U.S.  imports from China on U.S.  import prices, but given the size of this effect and the relatively low share of imports in U.S.  GDP, the ultimate impact on the U.S.  consumer prices has likely been quite small.  Moreover, imports from China had little apparent effect on U.S.  producer prices.  Finally, using a multi-country database of trade transactions, we estimate that since 1993, Chinese exports lowered annual import inflation in a large set of economies by 1/4 percentage point or less on average, similar to the prediction of our theoretical model"--Federal Reserve Board web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 9/2/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.