On the Trade Openness,Regional Market Size and the Provincial Inflation Volatility in China
利用1976-2010年中国省级面板数据，研究发现区域市场规模扩大通过竞争效应缓解了通胀波动，而贸易开放度增加则因外部冲击加剧了通胀波动。
Using provincial panel data of China from 1976 to 2010,this paper empirically studies the effect of international trade openness and regional market size on inflation volatility at provincial level.We construct a regional market size index based on the theory of market potential from the New Economic Geography,and apply multiple IV method to deal effectively with the endogeneity problem of international trade openness.As our study shows,the competition effect induced by the expansion of regional market size helps alleviating provincial inflation volatility,while international trade openness exposes provinces to more external shocks and thus leads to more inflation volatility.This finding is consistent under several robustness tests.