Goods Financialization and Inflation in China
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| Title | Goods Financialization and Inflation in China
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| Author | Zhang Chengsi and Liu Zehao |
| Organization | School of Finance, Renmin University of China |
| Email | zhangcs@ruc.edu.cn |
| Key Words | Financialization of Goods; Capital Switching; Inflation |
| Abstract | The phenomenon that goods manifests a similar pattern in capital intensity and price volatility is called the financalization of goods. This paper introduces capital switching into the Multiplier-Accelerator model to explain the price-driving mechanism of goods at different levels of financialization. The paper combines factor analysis with VAR model and finds that the price changes of goods at different levels of financialization exhibit different effects on consumer price inflation. The prices of goods at high and medium financial levels have bilateral and unilateral causal relationships with consumer price inflation, respectively, while the prices of goods at low financial level have no causal relationship with consumer price inflation. The findings provide useful information for macro policy. |
| Serial Number | WP528 |
| Time | 2013-10-15 |
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