Tracking Chinese CPI inflation in real time

BOFIT Discussion Papers
Tracking Chinese CPI inflation in real time
Michael Funke, Aaron Mehrotra and Hao Yu
2011. 35 pages / sivua.
Suomen Pankki - Finlands Bank
(Web publication)

Published in: Empirical Economics (forthcoming)

With recovery from the global financial crisis in 2009 and 2010, inflation emerged as a major concern for many central banks in emerging Asia. We use data observed at mixed frequencies to estimate the movement of Chinese headline inflation within the framework of a state-space model, and then take the estimated indicator to nowcast Chinese CPI inflation. The importance of forward-looking and high-frequency variables in tracking inflation dynamics is highlighted and the policy implications discussed.