Regional inflation and monetary policy in China

This paper empirically examines developments in price and inflation in China. Unlike most previous studies, their determinants were investigated in the panel data context, and the author's findings are as follows. First, using the panel cointegration method, the study confirms a long-run relationship between price, money and output. Secondly, the author provides evidence that inflation can be explained by economic fundamentals such as money, credits, productivity, and exchange rate growth. While an increased concern about regional discrepancies in recent years, this relationship is more sensitive to the sample period than to the region type. Notably money does not seem to be closely associated with inflation over recent years.