The Fluctuations of China’s Consumer Price:Sticky Price, Price Setting and Policy Experiments
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| Title | The Fluctuations of China’s Consumer Price:Sticky Price, Price Setting and Policy Experiments
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| Author | Qu Shenning, Wu Lixue and Xia Jiechang |
| Organization | Graduate School, Chinese Academy of Social Science;Institute of Industry Economics, Chinese Academy of Social Science;National Academy of Economics Strategy, Chinese Academy of Social Science |
| Email | qushenning@yahoo.com.cn,wulixue@sina.com,xiajiechang@126.com |
| Key Words | Sticky Price; Time-dependent Pricing; State-dependent Pricing; Market Liberalization |
| Abstract | By examining the stylized facts on fluctuations of China’s consumer prices, the paper finds consumer prices are sticky. Compared with the food, industrial consumer goods, stickiness in services price is more obvious. And the evidences preferring China’s consumer price is state-dependent as a whole are found by testing two price setting models. Nevertheless, service prices are time-dependent while food prices and industrial consumer goods prices are state-dependent. This means that the process of market liberalization in various sectors is different, which goes faster in food and industrial goods than service sector, though China has owned market-oriented economy. By looking for "non-sensitive range" in all kinds of goods and services and verifying the robustness of CPI decomposition, the paper confirms higher degree of market liberalization is conducive to the stability of industries. Finally, the empirical results support the state-dependent pricing hypothesis, which means SDP is more in line with China's economic realities than TDP. |
| Serial Number | WP362 |
| Time | 2012-09-18 |
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