Inflation in China : Modelling a Roller Coaster Ride

  title={Inflation in China : Modelling a Roller Coaster Ride},
  author={M ICHAEL F UNKE},
  • Published 2006
The New Keynesian Phillips curve (NKPC) posits the dynamics of inflation as forward looking and related to marginal costs. In this paper we examine the empirical relevance of the NKPC for China. The empirical results indicate that an augmented (hybrid) NKPC gives results that are consistent with the data generating process. It is in this respect that the NKPC provides useful insights into the nature of inflation dynamics in China as well as useful insights for the conduct of monetary policy. 

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