This paper studies the relationship between the exchange rate and inflation within China and the United States using the bootstrap rolling-window approach. We provide robust evidence to show that the ...purchasing power parity (PPP) theory is invalid for the whole period. The impact of the China-US exchange rate on relative inflation is greater than the effect of relative inflation on the exchange rate. The negative effect of the China-US exchange rate on inflation is more evident from 2006 to 2014, and inflation is more affected by the exchange rate in the US than that in China. The positive effect of US inflation on the China-US exchange rate only exists from January to July 2019 and the negative effect of China’s inflation on the exchange rate merely exists from August 2008 to July 2010 and from September 2010 to May 2011. These findings have important implications for maintaining the stability of prices and currency values in the trade market.
•This paper considers the relationship between the exchange rate and inflation from a nonlinear perspective.•We find that the purchasing power parity theory is invalid for the whole period.•The impact of China-US exchange rate on relative inflation is greater than that of relative inflation on the exchange rate.•Inflation is more affected by the exchange rate in the US than that in China.
Global convergence of inflation rates Liu, Tie-Ying; Lee, Chien-Chiang
The North American journal of economics and finance,
November 2021, 2021-11-00, Letnik:
58
Journal Article
Recenzirano
•Focus on the convergence order and factors of world’s inflation rates from the nonlinear view.•Most of the countries’ inflation rates have been convergent during 1970–2016.•The countries with high ...inflation or high-income level are convergent faster than the other countries.•Find the globalization and per capital GDP will improve the convergence.
This research analyzes the convergence of the world’s inflation rates, spanning 98 countries during the 1970–2016 period. Compared to previous studies, this study’s contribution is its analysis of the convergence sequence of different countries from a nonlinear perspective and its examination of the factors influencing the convergence order. We find that most countries’ inflation rates tend to converge with one another, with the exceptions of Japan, Poland, Chile, Sweden, and Burundi. The results also show that the inflation levels of high-income countries converge faster to the mean value than those of low-income countries. We show that countries that have volatile inflation rates are more likely to converge earlier than other countries. The robust results of the econometric analysis show that countries with improving per capita Gross Domestic Product (GDP) levels and growing globalization levels are more prone to earlier convergence than countries with lower level per capita GDP values or lower globalization levels. The results demonstrate that most of the countries in the world conform to the law of one price, and the money illusion hypothesis is invalid in the long run.
This study applies a bootstrap panel Granger causality test to determine the relationship between urbanisation and economic growth for China. We find that the patterns of interaction between ...urbanisation and economic growth vary across different regions. The empirical results show that in urbanisation of the northern coastal region and most of the inland region Granger causes economic growth, whereas economic growth does not have a significant effect on urbanisation, except in the southern coastal region and the inland region. One-fourth of China's provinces, primarily in the southern coastal region, do not show a Granger causality relationship between urbanisation and economic growth. This finding indicates that urbanisation has promoted economic growth by expanding demand and that economic growth's effect on urbanisation is restricted by administrative intervention rather than market mechanisms. Thus, the findings for three-fourths of the provinces in China conform to the urbanised economy theory. These results may help regional governments undergoing urbanisation to create fair economic growth policies.
Better is the Neighbor? Liu, Tie-Ying; Su, Chi-Wei; Tao, Ran ...
Defence and peace economics,
09/2019, Letnik:
30, Številka:
6
Journal Article
Recenzirano
This study applies the Sequential Panel Selection Method (SPSM), to investigate the convergence properties of the military expenditure of the North Atlantic Treaty Organization (NATO) during the ...period of 1990-2015. Compared to the traditional methods, SPSM considers fundamentally general spatial homogeneous and heterogeneous relationships with countries and examines the evolution of military expenditure. We find that four-fifths of NATO member countries have been convergent with the UK, but no country's military expenditure is convergent with the US. This means that there is no significant linkage effect in the US for NATO military expenditure. While they are allies of the US, the majority of NATO member countries' military expenditures are consistent with UK military expenditure. The main reasons are due to the geographical space layout and the international relationship convergence. The results indicate that more than four-fifths of NATO member countries have been coordinated with convergence theory and spillover effect.
This paper applies panel cointegration tests and panel vector error correction models to investigate the interrelationship among the banking sector, insurance market, and regional output based on the ...samples from 25 Chinese provinces. We first find that there is a fairly strong long-run cointegrating relationship among real GDP, banking credit, and real insurance premiums. Second, both insurance markets (life and non-life) and the banking sector have a positive effect on real output. Third, we determine that banking activities and economic growth exhibit long-run and short-run bidirectional causalities. Fourth, there is fairly strong evidence in favor of the hypothesis for the long-run bidirectional causal relationships between insurance premiums and economic growth, taking into account the critical channel of the banking sector. Finally, we provide some beneficial suggestions for investors and policy-makers.
This study applies a non-linear threshold unit-root test to test the validity of purchasing power parity (PPP) to assess the non-stationary properties of the convergence of real exchange rates (RERs) ...based on Taylor rules for ten Central Eastern European countries. We find that the non-linear threshold unit-root test has greater power than the linear method suggested by Caner and Hansen (2001) if the true data generating process of RER convergence is a stationary non-linear process. We examine the validity of Taylor rules from the non-linear perspective and provide robust evidence that clearly indicates that PPP holds true for seven Central Eastern European countries. These results imply that the choices and effectiveness of the monetary policies in Central Eastern European economies are highly influenced by external factors that originate from the United States. Additionally, our findings highlight that these countries' RER convergence is a mean reversion towards the equilibrium values of Taylor rules in a non-linear manner. Our findings mean capital mobility, exchange rate market efficiency and monetary integration are non-linear in these Central Eastern European countries.
This paper examines the beginning and end of potentially speculative explosive public debt patterns occurring in 29 major OECD countries. The method we use is most appropriate for practical ...implementation with a time series and delivers a consistent date-stamping strategy for the origination and termination of multiple explosive behaviors. Our results also test that most OECD countries, except for Israel, Luxembourg, and Turkey, have experienced periods of explosive public debt. The stationarity of public debt varies by country. Approximately two-thirds of the explosive periods occurred prior to 2012. Based on the scale, structure, and safety of government debt for dynamic monitoring and evaluation, governments can improve risk management measures.
This paper constructs an economic model to study the emergence of marriage based on a new infra-marginal general equilibrium analysis. By depicting the commonness and complementarity of marriage, we ...explain how a single person shifts from being single to being married based on the division of labor. Meanwhile, reduced learning costs will make an individual more willing to abandon the single status, and the number of families in the marriage market will increase. The model reveals the necessary conditions for the existence of marriage and marital stability and explains the dynamic changes in the relative population and the prices of parties in the marriage market.
China's housing bubble burst? Liu, Tie-Ying; Chang, Hsu-Ling; Su, Chi-Wei ...
The economics of transition,
April 2016, Letnik:
24, Številka:
2
Journal Article
In this paper, we developed the recursive unit root tests to identify the beginning and end of potential speculative bubbles in the Chinese housing price cycles during 2006–2013 for the 70 major ...cities of China. The method is best suited for a practical implementation with a time series and delivers a consistent date‐stamping strategy for the origination and termination of multiple bubbles. Simulations demonstrate that the test significantly improves discriminatory power and leads to distinct power gains when multiple bubbles occur. Overall, the results indicate that the speculative housing price bubbles in China are not bursting, and they indicate that the stationarity of the housing price level varies across the different city sizes. Between the cities, approximately one‐fourth of the bubbles have burst up to December 2013, while the first‐tier city bubble may not burst due to the urbanization process.
In this paper, we developed the recursive unit root tests proposed by Phillips et al. (2013) to identify the beginning and end of speculative bubbles in Chinese consumer price index (CPI). This ...method is best suited for practical implementation and delivers a consistent date-stamping strategy to identify the multiple bubbles. The results show four inflationary periods exist in China from 2006–2014 based on CPI bubbles in urban and rural regions. The bubbles are similar between rural and urban regions, indicating consistency with the law of one price. Our test can analyze inflation’s fluctuations from the repetition of the CPI bubble.
