Output gaps and inflation in mainland China
By: by Stefan Gerlach and Wensheng Peng
Contributors: Peng, Wensheng, Dr; Bank for International Settlements. Monetary and Economic Department
Series: BIS working papers -- no. 194; BIS working papers (Online) -- no. 194.
Publisher: Bank for International Settlements
Published: 2006
Place of publication: Basel, Switzerland
Language: eng
Format: [electronic resource] /
Description: We estimate output gaps using three methods for Mainland China on annual data panning 1982-2003. The estimates are similar and appear to co-move with inflation. Standards Phillips curves, however, do not fit the data well. This may reflect the omission of some important variable(s) such as the effect of price deregulation, trade liberalisation and /or changes in the exchange rate regime. We reestimate the Phillips curves assuming that there is an unobserved variable that follows an AR(2) process. The modified model fits the data much better and accounts for some of the surprising features of the simple Phillips curve estimates.
Notes: Title from PDF file (viewed on May 31, 2006).

"Monetary and Economic Department."

"February 2006."

Includes bibliographical references.

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