Inflation Transmission in Greater China
Ming-Hua Liu1; Dimitris Margaritis2; Yang Zhang1
Source PublicationChina and World Economy
ABS Journal Level1

This paper examines inflation dynamics in Greater China. Using an asymmetric error correction model, we investigate how inflation in Hong Kong and Macao are related to inflation in Chinese Mainland. Our results based on data from July 1997 to December 2012 reveal that a long-term equilibrium relation exists between inflation in Chinese Mainland and inflation in both Hong Kong and Macao, the two Special Administrative Regions of China. The degree of inflation pass-through is higher for Macao than for Hong Kong. Moreover, we find no evidence of asymmetries in either Hong Kong and Macao's adjustment speeds towards long-run equilibrium or in the short-run pass-through of accelerating or decelerating inflation in the Mainland. Collectively, our results show a close relationship among price dynamics of the three economies and call for a reconsideration of the exchange rate anchor in the Greater China Region.

KeywordAsymmetric Adjustment Greater China Inflation Pass-through
URLView the original
Indexed BySSCI
WOS Research AreaBusiness & Economics
WOS SubjectEconomics
WOS IDWOS:000366043900005
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Cited Times [WOS]:0   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
Corresponding AuthorYang Zhang
Affiliation1.Faculty of Business Administration, University of Macau, Macao, China
2.University of Auckland Business School, Auckland, New Zealand
First Author AffilicationFaculty of Business Administration
Corresponding Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Ming-Hua Liu,Dimitris Margaritis,Yang Zhang. Inflation Transmission in Greater China[J]. China and World Economy,2015,23(6):79-99.
APA Ming-Hua Liu,Dimitris Margaritis,&Yang Zhang.(2015).Inflation Transmission in Greater China.China and World Economy,23(6),79-99.
MLA Ming-Hua Liu,et al."Inflation Transmission in Greater China".China and World Economy 23.6(2015):79-99.
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