A key task of government policy makers is to determine suitable targets for the macroeconomic variables under their control. In this paper we demonstrate how, in the case of China, the use of official price indices can, with standard estimation procedures, cause these targets to be seriously...

This paper presents a planned-economy monetary model of China. A money supply equation links changes in broad money to government transactions evaluated at official prices. The demand for real money balances by consumers equals the nominal demand for money deflated by an unobserved true price...