Work

Wage-price Dynamics and Deflation in Hong Kong

Year: 2005

Type: article

Abstract: . We provide empirical evidence on the dynamics of prices and wages in Hong Kong. The results suggest that the post-1997 deflation can be understood using a conventional macroeconomic framework wherein foreign influences constitute the basic underlying shocks, and adjustment processes in domestic wages and prices determine the details of the transmission mechanism. We find that the decline in local nominal prices owes much to declining prices of imported intermediate goods. The negative output gap and increase in unemployment during the deflation period also have their origin in foreign shocks, but the domestic wage adjustment process is an important contributing factor.

Source: Pacific Economic Review

DOI: 10.1111/j.1468-0106.2005.00268.x

Authors: Hans Genberg, Laurent L. Pauwels

Institutions: University of Geneva, Graduate Institute of International Studies

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funders: National Science Foundation, Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung, Hong Kong Institute for Monetary Research