An Analysis of China's Phillips Curve based on Nonparametric Estimation

In this paper the fixed effects nonparametric and semiparametic models on the China's output gap and inflation are estimated with the panel data of 30 provinces from 1978 to 2010.The empirical analysis shows that,China's output gap has positive impact to the inflation rate during the economic growth stage,while it has negative effect on the inflation rate when the real output is more than 10%of potential output.China's output gap also has positive effect on the inflation rate during economic recession when the real output is not less than a certain level of potential output,but the relationship between the output gap and inflation rate change alternately between the positive and negative when the output gap is beyond that range.