Fiscal Policy, Monetary Targets, and the Price Level in a Centrally Planned Economy: An Application to the Case of China

Posted: 8 Jun 2006

See all articles by Andrew Feltenstein

Andrew Feltenstein

Georgia State University - Department of Economics

Ziba Farhadian-Lorie

affiliation not provided to SSRN

Abstract

A key task of government policy makers is to determine suitable targets for the macroeconomic variables under their control. In this paper we demonstrate how, in the case of China, the use of official price indices can, with standard estimation procedures, cause these targets to be seriously misspecified. In developing a technique for correctly determining the price level and money supply in a planned economy of this type, we shall also obtain an estimate of the degree to which repressed inflation has exsted in China during the time period of our study, 1954-83.

Keywords: China, price level, repressed inflation

JEL Classification: E31, P22

Suggested Citation

Feltenstein, Andrew and Farhadian-Lorie, Ziba, Fiscal Policy, Monetary Targets, and the Price Level in a Centrally Planned Economy: An Application to the Case of China. Journal of Money, Credit, and Banking, Vol. 19, No. 2, May 1987, Available at SSRN: https://ssrn.com/abstract=906859

Andrew Feltenstein (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-4130093 (Phone)

Ziba Farhadian-Lorie

affiliation not provided to SSRN

No Address Available

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