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Li, X.D. and Ji, Y.C. (2011) An Empirical Research on the Money-Supply Effect of Inflation Expectation When Managing Inflation Expectation in China-Based on Cagan Model and Lucas Microeconomic Rational Expectation Equation. IEEE 2011 International Conference on Management and Service Science (MASS), Wuhan, 12-14 August 2011, 1-4.

has been cited by the following article:

• TITLE: Cagan Effect and the Money Demand by Firms in China: A Nonlinear Panel Smooth Transition Approach

  AUTHORS: Fangping Peng, Kai Zhan, Yujun Lian

  KEYWORDS: Cagan Hypothesis, Panel Smooth Transition, Money Demand, Firm Level

  JOURNAL NAME: Journal of Mathematical Finance, Vol.5 No.2, May 5, 2015

  ABSTRACT: This paper examines the Cagan effect in China by using a panel smooth transition approach on the firm-level data. Our results reveal that the demand for money by firms relatively decreases for the high inflation period, because the firm anticipates further price increase that it seeks a substitute for money, supporting the presence of the Cagan effect in firms in China. A policy implication of our finding is that efficiently managing Inflation Expectation is necessary in China in stimulating the economy through expansion of the money supply.