East Asian Economic Review

  • 제28권2호
  • /
  • Pages.175-219
  • /
  • 2024
  • /
  • 2508-1640(pISSN)
  • /
  • 2508-1667(eISSN)
대외경제정책연구원 (Korea Institute for International Economic Policy)
권호 표지
DOI QR코드

DOI QR Code

Two-Sided Mirror: An Analysis of Inflation's Dual Impact on China's Economic Growth

  • 투고 : 2024.02.07
  • 심사 : 2024.04.17
  • 발행 : 2024.06.30
PDF 다운로드
⟨ 이전 논문 다음 논문 ⟩

초록

This study investigates the impact of inflation rate fluctuations on economic growth in China, with a particular focus on potential non-linear characteristics. The global economic impact of the COVID-19 pandemic notably heightens the study's relevance. The research that the unidirectional causal relationship from inflation to economic growth in China first strengthens and then weakens over time. Furthermore, there is an inflation rate threshold effect on economic growth, identified at 2%. Below this threshold, inflation positively influences economic growth, whereas above it, the impact turns negative. This finding underscores the importance of balancing economic growth with inflation control in the formulation of monetary policy.

키워드

참고문헌

  1. Arce-Alfaro, G. and B. Blagov. 2023. "Monetary policy uncertainty and inflation expectations." Oxford Bulletin of Economics and Statistics, vol. 85, no. 1, pp. 70-94.
  2. Baker, S. R., Bloom, N. and S. J. Davis. 2016. "Measuring economic policy uncertainty." Quarterly Journal of Economics, vol. 131, no. 4, pp. 1593-1636.
  3. Barro, R. J. 1990. "Government spending in a simple model of endogeneous growth." Journal of Political Economy, vol. 98, no. 5, pp. S103-S125.
  4. Bernanke, B. S., Laubach, T., Mishkin, F. S. and A. S. Posen. 1997. Inflation Targeting: Lessons from the International Experience. Princeton University Press.
  5. Brandt, L. and X. Zhu. 2000. "Redistribution in a decentralized economy: Growth and inflation in China under reform." Journal of Political Economy, vol. 108, no. 2, pp. 422-439. https://doi.org/10.1086/262124
  6. Bruno, M. and W. Easterly. 1998. "Inflation crises and long-run growth." Journal of Monetary Economics, vol. 41, no. 1, pp. 3-26. https://doi.org/10.1016/S0304-3932(97)00063-9
  7. Cameron, N., Hum, D. and W. Simpson. 1996. "Stylized facts and stylized illusions: inflation and productivity revisited." Canadian Journal of Economics, vol. 29, no. 1, pp. 152-162. https://doi.org/10.2307/136156
  8. Chen, J., Jin, F., Ouyang, G., Ouyang, J. and F. Wen. 2019. "Oil price shocks, economic policy uncertainty and industrial economic growth in China." PLoS ONE. https://doi.org/10.1371/journal.pone.0215397
  9. Christoffersen, P. F. and P. Doyle. 1998. "From inflation to growth: eight years of transition." IMF Working Papers, no. 1998/100. International Monetary Fund. https://www.imf.org/external/pubs/ft/wp/wp98100.pdf
  10. Eggertsson, G. B. and N. R. Mehrotra. 2014. "A model of secular stagnation." NBER Working Papers, no. 20574. National Bureau of Economic Research. https://www.nber.org/system/files/working_papers/w20574/w20574.pdf
  11. Eggoh, J. C. and M. Khan. 2014. "On the nonlinear relationship between inflation and economic growth." Research in Economics, vol. 68, no. 2, pp. 133-143. https://doi.org/10.1016/j.rie.2014.01.001
  12. Eichengreen, B. 2015. "Secular stagnation: the long view." American Economic Review, vol. 105, no. 5, pp. 66-70. https://doi.org/10.1257/aer.p20151104
  13. Fakhri, H. 2011. "Relationship between inflation and economic growth in Azerbaijani economy: is there any threshold effect?" Asian Journal of Business and Management Sciences, vol. 1, no. 1, pp. 1-11.
  14. Finck, D. and P. Tillmann. 2022. "The role of global and domestic shocks for inflation dynamics: Evidence from Asia." Oxford Bulletin of Economics and Statistics, vol. 84, no. 5, pp. 1181-1208.
  15. Frimpong, J. M. and E. F. Oteng-Abayie. 2010. "When is inflation harmful? Estimating the threshold effect for Ghana." American Journal of Economics and Business Administration, vol. 2, no. 3, pp. 232-239. https://doi.org/10.3844/ajebasp.2010.232.239
  16. Fischer, S. 1993. "The Role of Macroeconomic Factors in Growth." Journal of Monetary Economics, vol. 32, no. 3, pp. 485-512.
  17. Gordon, R. J. 1997. "The Natural Rate of Unemployment: Reflections on 25 Years of the Hypothesis." Journal of Economic Perspectives, vol. 11, no. 1, pp. 11-32.
  18. Hansen, B. E. 2000. "Sample splitting and threshold estimation." Econometrica, vol. 68, no. 3, pp. 575-603.
  19. Hu, Y. and T. Reardon. 2014. "The Emergence of Supermarkets with Chinese Characteristics: Challenges and Opportunities for China's Agricultural Development." Development Policy Review, vol. 32, no. 5, pp. 499-518.
  20. Khan, M. S. and A. S. Senhadji. 2001. "Threshold effects in the relationship between inflation and growth." IMF Staff papers, vol. 48, no. 1, 1-21.
  21. Kim, S. J. and Y. H. Lee. 2014. "The Interface between Inflation and Major Economic Variables in Korea Using VECM." Journal of Industrial Economics and Business, vol. 27, no. 3, pp. 1139-1155. (in Korean)
  22. Kraay, A. 2000. "Household saving in China." World Bank Economic Review, vol. 14, no. 3, pp. 545-570. https://doi.org/10.1093/wber/14.3.545
  23. Lardy, N. R. 1998. China's unfinished economic revolution. Brookings Institution Press.
  24. Lardy, N. R. 2002. Integrating China into the Global Economy. Brookings Institution Press.
  25. Luo, X., Hong, B. and S. Ma. 2012. "Research on the factors influencing the real estate prices based on VAR model" Journal of Central South University (Social Science), vol. 18, no. 4. https://caod.oriprobe.com/articles/30551088/ji_yu__var__mo_xing_de_fang_di_chan_jia_ge_ying_xi.htm (in Chinese) 1088/ji_yu__var__mo_xing_de_fang_di_chan_jia_ge_ying_xi.htm
  26. Lutkepohl, H. 2005. New Introduction to Multiple Time Series Analysis. Springer Science & Business Media.
  27. Miranda-Agrippino, S. and H. Rey. 2020. "US monetary policy and the global financial cycle." Review of Economic Studies, vol. 87, no. 6, pp. 2754-2776.
  28. Mohseni, M. and F. Jouzaryan. 2016. "Effects of Inflation and Employment Inverse on Economic Growth in Iran (1992-2012)." Journal of Management and Accounting Studies, vol. 4, no. 1, pp. 78-84. https://doi.org/10.24200/jmas.vol4iss01pp78-84
  29. Mubarik, Y. A. and R. Riazuddin. 2005. "Inflation and growth: An estimate of the threshold level of inflation in Pakistan." State Bank of Pakistan Research Bulletin, vol. 1, no. 1, pp. 35-44.
  30. Mundell, R. A. 1965. "Growth, stability, and inflationary finance." Journal of Political Economy, vol. 73, no. 2. pp. 97-109. https://doi.org/10.1086/258999
  31. Ngoc, B. H. 2020. "The asymmetric effect of inflation on economic growth in Vietnam: Evidence by nonlinear ARDL approach." The Journal of Asian Finance, Economics and Business, vol. 7, no. 2, pp. 143-149. https://doi.org/10.13106/jafeb.2020.vol7.no2.143
  32. Phiri, A. 2018. "Nonlinear impact of inflation on economic growth in South Africa: a smooth transition regression analysis." International Journal of Sustainable Economy, vol. 10, no. 1, pp. 1-17. https://doi.org/10.1504/IJSE.2018.088624
  33. Rawski, T. G. 1994. "Chinese industrial reform: accomplishments, prospects, and implications." American Economic Review, vol. 84, no. 2, pp. 271-275.
  34. Rey, H. 2015. "Dilemma not trilemma: the global financial cycle and monetary policy independence." NBER Working Papers, no. 21162. National Bureau of Economic Research.
  35. Scarfe, B. L. 1973. "A model of the inflation cycle in a small open economy." Oxford Economic Papers, vol. 25, no. 2, pp. 192-203. https://doi.org/10.1093/oxfordjournals.oep.a041253
  36. Sidrauski, M. 1967. "Inflation and economic growth." Journal of Political Economy, vol. 75, no. 6, pp. 796-810. https://doi.org/10.1086/259360
  37. Stockman, A. C. 1981. "Anticipated inflation and the capital stock in a cash in-advance economy." Journal of Monetary Economics, vol. 8, no. 3, pp. 387-393. https://doi.org/10.1016/0304-3932(81)90018-0
  38. Summers, L. H. 2016. "The age of secular stagnation: What it is and what to do about it." Foreign Affairs, February 15. https://www.foreignaffairs.com/articles/united-states/2016-02-15/age-secular-stagnation
  39. Svensson, L. E. O. 1997. "Monetary Policy under Uncertainty." Journal of Economic Perspectives, vol. 11, no. 4, pp. 51-65.
  40. Tobin, J. 1965. "Money and economic growth." Econometrica, vol. 33, no. 4, pp. 671-684. https://doi.org/10.2307/1910352
  41. Vinayagathasan, T. 2013. "Inflation and economic growth: A dynamic panel threshold analysis for Asian economies." Journal of Asian Economics, vol. 26, pp. 31-41. https://doi.org/10.1016/j.asieco.2013.04.001
  42. Wang, S. 2009. "A study on the relationship between inflation and economic growth with a var model." Economic Theory and Business Management, vol. 29, no. 1, pp. 21-27. http://jjll.ruc.edu.cn/EN/Y2009/V/I1/21 (in Chinese)
  43. Wu, J. and E. Zhang. 2012. "Does there exist threshold effects of inflation on economic growth in China-Empirical analysis on dynamic panel smooth transition model." Economic Theory and Business Management, vol. 31, no. 7, pp. 38-48.
  44. Yang, X. and M. N. Shafiq. 2020. "The impact of foreign direct investment, capital formation, inflation, money supply and trade openness on economic growth of Asian countries." iRASD Journal of Economics, vol. 2, no. 1, pp. 25-34. https://doi.org/10.52131/joe.2020.0101.0013
  45. Yao, S. and Z. Zhang. 2001. "On Regional Inequality and Diverging Clubs: A Case Study of Contemporary China." Journal of Comparative Economics, vol. 29, no. 3, pp. 466-484.
  46. Zhang, X. and K. Daly. 2011. "The determinants of China's outward foreign direct investment." Emerging Markets Review, vol. 12, no. 4, pp. 389-398.