Intro -- Contents -- I. INTRODUCTION -- II. THEORETICAL UNDERPINNINGS -- III. EMPIRICAL RESULTS -- A. A Simple Model of Inflation -- B. VAR Models -- C. Variable Coefficient Models -- D. Using Subcomponents of CPI -- IV. CONCLUSIONS -- References.

With China''s share in global trade increasing rapidly, some argued in 2002-03 that China was exporting deflation to other countries as it was dumping cheap goods in mature markets. Later, others argued that China was sucking in commodities and thus causing sharp increases in global prices. The...