The Factors of a Large Change in Consumer Price Inflation and the Implications for Policy in China
Abstract
This essay is broadly divided into three parts. The first part analyzes the argument that China’s rapid inflation spike is caused by investment and property prices and verifies this result with a complete series of Granger Causality tests. The second part critiques and adds to the arguments of the paper that government fiscal and monetary policies stimulated a spike in investment and property prices, which in turn led to a significant rise and fall in inflation over a 15 years period. Linking CPI to GDP, the 15 years are divided into three time periods and the causes of inflation are analyzed explicitly in the context of current policies, thus validating the argument.
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DOI: http://dx.doi.org/10.18686/fm.v7i3.4501
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