Farm to Market: Food Inflation Dynamics in China
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| Title | Farm to Market: Food Inflation Dynamics in China
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| Author | Yang Jisheng and Xu Juan |
| Organization | School of Economics, Huazhong University of Science and Technology |
| Email | yangjisheng770@sohu.com；xujuan2009@qq.com |
| Key Words | Food Inflation; Vertical Price Transmission; Spatial Difference; Output Fluctuation; Interactive |
| Abstract | Food price is the main force behind the inflation in China. Based on the panel data of provinces in China, this paper analyzes the pricing mechanism of food by combing the vertical price transmission from agricultural means of production and agricultural products with the horizontal price transmission from output fluctuation and monetary shock. It shows that the response of food inflation to monetary shock is much different among provinces, and the contribution of monetary to food inflation varies from 60% in western regions to 20% in eastern regions. In the absence of monetary shock, about 60% of food price volatility is contributed to inertia, with 22%~23% to the vertical price transmission and less than 20% to the output fluctuation. The cumulative response of food inflation to price shock of agricultural means of production is near to 0, but the impulse response is significant in first half a year, while the cumulative response of food inflation to price shock of agricultural products is significantly positive with the action period less than a year. The transmission path of food inflation pressure is from eastern developed regions to western developing regions. The main force behind food inflation is demand shock, including monetary and expectation, but not output fluctuation and vertical price transmission. |
| Serial Number | WP369 |
| Time | 2012-09-27 |
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