nach oben

2024 | Buch

Kapitel lesen Erstes Kapitel lesen

The Inflation Mechanism and Expectations

Evidence from China

verfasst von: Laya Li

Verlag: Springer Nature Singapore

Buchreihe : Understanding China

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

Inhaltsverzeichnis

Über dieses Buch

This book reflects China's experience, model and theory of successful inflation control. The idea of Stabilization of Expectations emphasized by the Chinese government was primarily proposed in this book with systematic theoretical support. The theory framework initiated in this book has been about 10 years earlier than that of the European and American economists.

The core theory of this work is Sticky Expectation Theory, which breaks through the framework of neoclassical economic theory, denies the fundamental preconditions of neoclassical economic theory to establish a new theoretical framework so as to understand people's economic behavior and explain the operating mechanism of economy. This book establishes the Chinese version of flexible inflation targeting system, policy transparency, policy rules, and expectation management as the means to prevent and manage inflation and macro-control.

Readers will gain a better understanding of the research achievements of Chinese scholars in the field of inflation management as well as the theory of expectations. Readers can further understand the Chinese approach in tackling inflation issue and other macro-economic control measures proposed by this book.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

For a considerable period, inflation has been deemed to be a forbidden zone in theoretical research in the socialist economy. Inflation is seemingly only a product of the capitalist economy. It seems that inflation never occurred in any socialist economy because it has been developed in a planned and proportionate approach. That inflation occurred over history in socialist countries has been viewed as merely a consequence of policy failure, thus accidental.

Laya Li

Theoretical Foundation of Inflation

Frontmatter

Chapter 2. Analysis on Flow and Stock Variables in the Economic System

Abstract

The physical objects of study in this book are the main economic flow variables and stock variables of the national economic system and their economic and technological relations. The focus of the study is on inflation caused by these relations.

Laya Li

Chapter 3. Basic Concepts of Aggregate Supply and Aggregate Demand

Abstract

A few years ago, Chinese economics began to use aggregate supply and aggregate demand to replace the traditional analysis of national income produced and national income spent, which is an in-depth development of the macroeconomic theory.

Laya Li

Intrinsic Formation Mechanisms of Inflation

Frontmatter

Chapter 4. Formation Processes of the Aggregate Demand and Aggregate Supply Function

Abstract

The relationship between the initial distribution income and the final expenditure incurred after redistribution income has been explored in Chap. 2. The initial distribution income is equal to the amount of national income produced, and the final expenditure is equal to the amount of national income spent.

Laya Li

Chapter 5. The Formation Processes of the Aggregate Supply and Aggregate Supply Function

Abstract

Aggregate supply is determined by two categories of factors.

The first is the production technical factor, which denotes the output level with a certain input of raw materials, labor, and corresponding fixed assets. Such input–output relationships are usually demonstrated by various production functions.

Laya Li

Operational Mechanisms of Inflation

Frontmatter

Chapter 6. The General Inflation Gap and Its Formation Mechanism

Abstract

The general inflation gap is formed when aggregate demand exceeds aggregate supply. It can be categorized in two components i.e. the rise in the price level and shortages. This chapter only analyzes the formation mechanism of this gap and the relationship between prices and shortages will be explored in next chapter.

Laya Li

Chapter 7. The Money Demand and Supply

Abstract

Inflation is a problem related with both the product market and money market. In previous chapters, through the phenomenon of money, inflation has been directly analyzed from the gap between aggregate supply and aggregate demand. Namely, the problem in the product market has been primarily analyzed.

Laya Li

Chapter 8. The Dual-Gap Model of Inflation

Abstract

Inflation takes two forms in China. One is the increase in the price level, which is reflected in the increase of the national income deflator and the social general retail price index. The other is the existence of a shortage, which drives money into forced savings. It is not appropriate to use equilibrium theory only to analyze inflation in China, because it is unable to reflect on the shortage problem.

Laya Li

Chapter 9. The General Model of Inflation Theory

Abstract

The general model of inflation theory includes three aspects: (1) the commodity market model; (2) the money market model; (3) the rule of regulation (or the policy rule). The supply and demand in the commodity market and money market, as well as the unified equilibrium between these two markets, have been discussed respectively in the previous chapters. In this chapter, the regulation of the commodity market and the money market will be integrated through the policy rule to formulate a unified theoretical and regulatory system so as to construct the general model of inflation theory.

Laya Li

Chapter 10. The Theory of Sticky Expectations

Abstract

In previous chapters, a repeated emphasis has been put upon the influence of expectations on the economic system, and the term “expectation” has been used to explain the economic phenomena that are hardly ever possible to be decoded by traditional economic theories.

Laya Li

Policy Theory to Manage Inflations

Frontmatter

Chapter 11. Anti-inflationary Policy

Abstract

Policy making should be based on theory, and theory should correspondingly serve policy making. This requires that theory must face economic reality and objectively analyze problems existing in practice to search solutions rather than avoid contradictions. Economic theorists should not only emphasize achievements but also strive to detect problems and have them solved in economic work.

Laya Li

Chapter 12. Effect of Inflation and Costs for Managing Inflation

Abstract

Since inflation carries both positive and negative effects on the economy and the control of them bears certain costs, governments have to weigh the tradeoffs when combating inflation. It then becomes especially difficult for governments to curb inflation at its mild stage because enterprises and households are used to indulging in money illusions. Rational governments, neither from the West nor the East, are in favor of inflation, as they all wish to maintain stable economic climates. The common problem bothering the governments lies in the costs to decrease such inflation. As a result, the evaluation of the positive and negative effects and the costs of controlling inflation will become a critical referencing index for governments to formulate an anti-inflation policy.

Laya Li

Backmatter

Titel: The Inflation Mechanism and Expectations
verfasst von: Laya Li
Verlag: Springer Nature Singapore
Electronic ISBN: 978-981-9725-70-0
Print ISBN: 978-981-9725-69-4
DOI: https://doi.org/10.1007/978-981-97-2570-0