Please wait a minute...
Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2018, Vol. 13 Issue (3) : 458-483
Orginal Article |
Purchasing Power Parity and Price Fluctuations in China before July 1937
Liuyan Zhao1(), Yan Zhao2()
1. School of Economics, Peking University, Beijing 100871, China
2. School of Software & Microelectronics, Peking University, Beijing 100871, China
 Download: PDF(1000 KB)  
 Export: BibTeX | EndNote | Reference Manager | ProCite | RefWorks

In this paper, we provide an empirical investigation of the purchasing power parity (PPP) hypothesis for China before July 1937. Using the monthly data from 1922 to 1937, we find clear and consistent evidence in favor of the purchasing power parity relationship. This naturally leads to the conclusion that the degree of Chinese market integration with the West was substantial before July 1937. These findings offer an empirical interpretation of the rise and fall of the Chinese price level during the Great Depression. It also has further implications of the impact of the American Silver Purchase Act of 1934 and the assessment of the 1935 currency reform on the Chinese economy.

Keywords purchasing power parity (PPP)      silver standard      market integration      1935 currency reform      deflation      inflation     
Issue Date: 30 September 2018
 Cite this article:   
Liuyan Zhao,Yan Zhao. Purchasing Power Parity and Price Fluctuations in China before July 1937[J]. Front. Econ. China, 2018, 13(3): 458-483.
[1] Yafang Yu. Testing Commitment Models of Monetary Policy in China[J]. Front. Econ. China, 2016, 11(4): 668-693.
[2] Yang Ji,Ran Li,Jingxian Zou. Is the Phillips Curve Valid in China?[J]. Front. Econ. China, 2015, 10(2): 335-364.
[3] Hongmei Zhao, Vincent Hogan. Measuring the NAIRU — A Structural VAR Approach[J]. Front Econ Chin, 2011, 6(1): 76-91.
[4] Jisheng Yang. Expectation, Excess Liquidity and Inflation Dynamics in China[J]. Front Econ Chin, 2010, 5(3): 421-429.
[5] FAN Zhiyong, . Is China’s inflation pushed by wages? An empirical research based on excess wages[J]. Front. Econ. China, 2009, 4(4): 572-587.
[6] ZHANG Chengsi. Structural instability of China inflation dynamics[J]. Front Econ Chin, 2009, 4(1): 30-45.
[7] BEI Duoguang , ZHU Xiaoli. A new monetary phenomenon: An analysis of the co-existence of the external appreciation and the domestic inflation of RMB[J]. Front. Econ. China, 2008, 3(3): 327-355.
[8] LIU Jinquan , ZHENG Tingguo , SUI Jianli. Dual long memory of inflation and test of the relationship between inflation and inflation uncertainty[J]. Front. Econ. China, 2008, 3(2): 240-254.
[9] NING Guangjie. Wage forming mechanism in the market transitional process of China (1993—2005): Evidence from the provincial panel data[J]. Front. Econ. China, 2008, 3(2): 312-326.
[10] CHEN Yanbin, MA Lili. Study of the welfare cost of infl ation in China[J]. Front. Econ. China, 2007, 2(4): 490-519.
[11] SONG Bo, GAO Bo. Impact of international capital flows on real estate market: The empirical test in China from 1998 to 2006[J]. Front. Econ. China, 2007, 2(4): 520-531.
[12] ZHAO Liuyan, WANG Yiming. Determinates of the decline in the income-velocity of money in China: a new perspective[J]. Front. Econ. China, 2006, 1(2): 256-271.
Full text