Deflation in Hong Kong Sar

26 Pages Posted: 21 Dec 2007

Multiple version iconThere are 2 versions of this paper

Date Written: July 2000

Abstract

This paper examines the causes of deflation in Hong Kong SAR, exploring whether it reflects a prolonged process of adjustment to cyclical shocks or whether it results from price equalization pressures arising from structural integration with mainland China. To gauge the relative importance of these factors, the paper provides both an econometric and a qualitative analysis of the price dynamics between Hong Kong SAR and Shenzhen, a neighboring city in mainland China. It finds that the role of price equalization as a source of deflation is minor. Deflation in Hong Kong SAR is best explained by successive cyclical shocks which have been amplified by balance-sheet and wealth effects.

Keywords: Deflation, Hong Kong SAR, Price stabilization

Suggested Citation

Schellekens, Philip, Deflation in Hong Kong Sar (July 2000). IMF Working Paper No. 03/77, Available at SSRN: https://ssrn.com/abstract=1075883

Philip Schellekens (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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