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China's Business Cycles: Perspectives from an AD-AS Model

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  • Yin Zhang
  • Guanghua Wan

Abstract

The present paper represents a first attempt to study China's business cycles using a formal analytical framework; namely, a structural VAR model. It is found that (i) demand shocks were the dominant source of macroeconomic fluctuations, but supply shocks had gained more importance over time; (ii) driving forces of demand shocks were consumption and fixed investment in the first cycle of 1985-1990, but shifted to fixed investment and world demand in the second cycle of 1991-1996 and the post-1997 deflation period; and (c) macroeconomic policies did not play an important part either in initiating or counteracting cyclical fluctuations. Copyright 2005 East Asian Economic Association.

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Bibliographic Info

Article provided by East Asian Economic Association in its journal Asian Economic Journal.

Volume (Year): 19 (2005)
Issue (Month): 4 (December)
Pages: 445-469

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Handle: RePEc:bla:asiaec:v:19:y:2005:i:4:p:445-469

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Cited by:
  1. James Laurenceson & Corrine Dobson, . "China’s business cycles since 1979: a chronology and comparative analysis," EAERG Discussion Paper Series 1705, School of Economics, University of Queensland, Australia.
  2. Min Gong & Wenpu Li, 2010. "Assessing the role of aggregate demand and supply shocks in China’s macroeconomic fluctuation," Frontiers of Economics in China, Springer, vol. 5(3), pages 464-488, September.
  3. Li, Cheng, 2010. "Government Size and Macroeconomic Stability: Sub-National Evidence from China," MPRA Paper 28226, University Library of Munich, Germany.
  4. Gao, Xu, 2007. "Business Cycle Accounting for the Chinese Economy," MPRA Paper 7050, University Library of Munich, Germany, revised Dec 2007.

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