China: Importing Disinflation

Again from the same Turkfinans group I had mentioned in a recent post- and even the same person:

Turkey's trade deficit with China has been soaring in the last few years, as someone noted in the group a couple of days ago:

So the person who is interested in the soaring trade deficit with China is wondering on the impact on employment and inflation (or rather disinflation) and she has already been conducted preliminary analysis.

One problem towards testing inflation is that the official TURKSTAT statistics are not released at the depth that would allow for a proper statistical test on whether goods imported from China have seen more disinflation, controlling for other stuff, of course.

But Turkey is also part of the EU's  Harmonized Index of Consumer Prices (HICPs), which offer much more detail. As for the actual methodology, there is quite a work like this done for the US, so making use of those should not be a problem.

As for unemployment, it is possible to make use of the TOBB and SPO firm inventories to see if the provinces/industries that were competing with Chinese goods had the least favorable employment outcomes in the last few years. As seen from the graph below, you can also make the case if these provinces did see the least employment losses during the crisis, but again, the key is controlling for other stuff.

Stealing ideas is not a habit of mine, and I don't have time anyway, so I will not attempt to do this analysis, but wait for the person who posed the question to finish her work.