Literature Review And Theoretical Analysis Of Imported Inflation

Inflation is undeniable one of most leading and dynamics macroeconomics issuesconfronting almost all economies of the world. The rapid rise in internationalcommodity prices and the quantitative easing monetary police introduced by theUnited States have impact on the price inflation in China in recent years. Theeconomic concept related to this phenomenon is "imported inflation". Conductionproblem is the core issue of imported inflation research.Paper reviews literature on the four kinds of imported inflation in terms ofKeynesian International Payments School, Currency School, small open economy andStructuralism School, and general theory of imported inflation is analyzed. Itsummarizes international trade, capital flows and exchange rate changes from theperspective of one-way mechanism of transmission. The analysis of internationaltrade channels are based on commodity prices, commodity supply and demand, tradebalance. The analysis of international capital flows are based on the investment in thereal economy, and asset prices.Chapter four analyzes the experience of the1970s Japan`s imported inflation andprovides some recommendations and comments about current tightening monetarypolicy which has clear inflation targeting feature.