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Has China's Economy Become More Stable and Inertial? Nonlinear Investigations Based on Structural Break and Duration Dependent Regime Switching Models

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  • Angang Hu

    (School of Public Policy and Management, Tsinghua University)

  • Jie Lu

    (School of Public Policy and Management, Tsinghua University)

  • Zhengyan Xiao

    (The Center for Applied Statistics, Renmin University of China)

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    Abstract

    In this study we use both the structural break model and duration dependent transition model to study the characteristics of China's GDP growth from 1953 to 2009. The empirical results show that China's economic growth had become more stable since the economic reform in the end of the 1970s, and had transformed from a "low growth rate, high volatility" state to a "high growth rate, low volatility" state. In contrast to other transitional countries, China's structural break did not happen immediately, but rather it experienced a long transition period (1977-1992) which shows that China's economic development has a strong "growth inertia".

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    Bibliographic Info

    Article provided by Society for AEF in its journal Annals of Economics and Finance.

    Volume (Year): 12 (2011)
    Issue (Month): 1 (May)
    Pages: 157-181

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    Handle: RePEc:cuf:journl:y:2011:v:12:i:1:p:157-181

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    Related research

    Keywords: Structural break; Duration dependent transition; Growth inertia;

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    1. Eric Girardin, 2005. "Growth-cycle features of East Asian countries: are they similar?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(2), pages 143-156.
    2. Gabriel Perez-Quiros & Margaret M. McConnell, 2000. "Output Fluctuations in the United States: What Has Changed since the Early 1980's?," American Economic Review, American Economic Association, vol. 90(5), pages 1464-1476, December.
    3. J. Michael Durland & Thomas H. McCurdy, 1993. "Duration Dependent Transitions in a Markov Model of U.S. GNP Growth," Working Papers 887, Queen's University, Department of Economics.
    4. Marmer, Vadim, 2009. "Testing the null hypothesis of no regime switching with an application to GDP growth rates," Microeconomics.ca working papers vadim_marmer-2009-59, Vancouver School of Economics, revised 03 Nov 2009.
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    10. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-84, March.
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    13. Charles R. Nelson, 2000. "Output fluctuations in the United States: what has changed since the early 1980s? comments," Proceedings, Federal Reserve Bank of San Francisco.
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