Coastal Provinces Lead in Understanding China's Inflation Patterns
The article models inflation in different regions of China. The researchers used a hybrid New Keynesian Phillips Curve to study how inflation happens at the provincial level. They found that this model works well for coastal provinces but not as well for others. In provinces with more marketization, looking ahead at inflation and the output gap are important factors driving inflation. This has implications for how effective monetary policy is in different parts of China.