Wage and Price Dynamics in a Large Emerging Economy:: The Case of China

26 Pages Posted: 18 Aug 2016  

Carsten A. Holz

Hong Kong University of Science & Technology (HKUST)

Aaron N. Mehrotra

Bank for International Settlements (BIS)

Date Written: 2014

Abstract

This study finds that the growth in labour costs in China is not passed through fully to final prices in China, neither in the tradable goods sector nor in the economy as a whole. This probably reflects the strong pressure on profit margins from a highly competitive environment, especially in manufactured goods. The potential implications of labour cost increases in China for global inflation pressures are also discussed. Keywords: labour costs, inflation, China, global economic slack, globalization JEL Classification: E31; F42; J30

Keywords: E31, F42, J30

Suggested Citation

Holz, Carsten A. and Mehrotra, Aaron N., Wage and Price Dynamics in a Large Emerging Economy:: The Case of China (2014). BOFIT Discussion Paper No. 3/2014. Available at SSRN: https://ssrn.com/abstract=2825436

Carsten A. Holz (Contact Author)

Hong Kong University of Science & Technology (HKUST)

Clearwater Bay
Kowloon
Hong Kong

Aaron N. Mehrotra

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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