Publication

This paper examines the impacts of oil-price shocks on China’s price levels, and develops a partial transmission input-output model that captures the uniqueness of the Chinese market. The author hypothesize and simulate price control, market factors and technology substitution. Using the models of both China and the US, they separate the impact of price control from those of other factors leading to China’s price stickiness under oil-price shocks. The results show a sharp contrast between China and the US, with price control in China significantly preventing oil-price shocks from spreading into its domestic inflation, especially in the short term.