INFLATION, CORRUPTION, AND INCOME-DISTRIBUTION - THE RECENT PRICE REFORM IN CHINA

This paper determines the effects of price deregulation and analyzes the theoretical relationship between price increases, corruption, and income distribution. Price deregulation does not necessarily cause a jump in the general price level, but partial price deregulation call be a root of corruption. Widespread corruption generally leads to further price increases and creates severe income distribution problems. Because of its recent economic reform and experiences, China was chosen as a case study, while the analysis can be extended to other countries.