http://www.nytimes.com/2013/01/14/business/global/as-chinas-economy-revives-so-do-fears-of-inflation.html?hp&_r=0
Interesting points on the real rate of inflation and the overall economic signs of the Economy in China.
"Part of the increase in inflation reflects rising prices for fruits and vegetables, as extremely cold weather in China over the past couple weeks has damaged winter crops. At the fruit stand where Zeng Xiandan, 25, was stacking tangerines Saturday, prices had just jumped 10 percent to 20 percent for a wide range of produce, including tangerines, which were up 15 percent. Mr. Zeng said the increases had drawn surprisingly little criticism."
Influence of climate change? What types of policy decisions are influenced by agricultural uncertainty? A parallel to the destruction of cherry crop in Michigan this past summer.
I think that this goes farther than just climate change. Yes it does play a major factor in the short run but in the long run I think it shows us that China's economy can not sustain growing at the pace it has.
ReplyDeleteI really appreciate the focus on China that this blog has brought along; as one of the world’s fastest growing economies it is fascinating to see the changes happening as we speak. China’s agriculture prices have increased in reaction to climate change, as highlighted in Caroline’s description. The article discusses that in conjunction with climate changes inflation is occurring because the economy is rapidly growing. It seems that people are making more, thus consuming more. We know as demand increases, so do prices. As stated by the article, “Retailers like Ms. Liu are finding their shelves too empty and are starting to place more orders with suppliers, keeping factories busy.”
ReplyDeleteIn regards to reactions from the increase in food costs, people understand that in the winter their produce will be more expensive. Though the cause of the increase may not be 100% depend on the climate, people are making that assumption for the time being. It will be interesting to see if high prices continue, even into the harvest seasons. This is where the government might need to make efforts to control inflation. Possible solution to controlling inflation might be through contracting the money supply.
I don't believe that climate change has anything to do with our economics class...so I will ignore that question for the time being.
ReplyDeleteIn terms of policy decisions, agricultural uncertainty is directly tied to increased risk regarding future projections within the industry. 'Uncertainty' means that speculation begins to trumps 'accuracy' in the stakes of agricultural economics. Policy decisions to be made by the Chinese government will thereby become increasingly risky, regardless of the following agenda that is chosen.
A parallel can certainly be drawn to the failure of various crops around Michigan. The prices of each good have certainly risen, following the Economics 101 model that necessitates this following declining supply stocks. Less supply, means higher demand, and a higher overall price value. This same logic applies regardless of country. This curve will also raise inflation, as we've seen in the models of "Macroeconomic Policy, Chapter 3".
Yes when supply decreases prices go up, but what happens when supply is severely shocked by natural events? Overall climate change is directly affecting much of the world's agriculture production. For example, the droughts we saw in the Midwest this past summer were the worst since the 1950's. Overall climate patterns are directly affecting production, this is overall an important issue where we subsidize and insure farmers for much of their crop yields. I would argue that supply shocks like these, along with their policy implications play a great role in Macro-Econimic policy and especially in this class.
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