Is there a unit root in the inflation rate? Evidence from 29 Chinese provinces

This paper investigates the stationarity of inflation rates in 29 Chinese provinces by using a large battery of recently developed panel unit root tests. Overall, our confirmatory analysis provides overwhelming evidence to support that the inflation rates in 29 Chinese provinces are mean reverting. The results suggest that any shock to inflation rates does not have a permanent effect and aggregate demand policies may not be over-implemented.