Ljungwall, Christer () (China Economic Research Center) Gao, Xu (World Bank, China Group, Beijing Office)
Abstract
This paper investigates the sources of business cycle fluctuations in China and India since 1978/81. Under the framework of a standard neoclassical open economy model with time-varying frictions (wedges), we study the relative importance of efficiency, labor, investment and government consumption wedges on the business cycle phenomenon. This enables us to contrast and compare the two countries’ experience in a way remarkably different from previous studies. The results for both China and India show that efficiency wedge is the main source of economic fluctuations, while the investment wedge and government consumption wedge played minor roles in generating business cycles.
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Publisher Info
Paper provided by China Economic Research Center, Stockholm School of Economics in its series Working Paper Series with number
2009-7.
Length: 23 pages Date of creation: 01 May 2009 Date of revision: Handle: RePEc:hhs:hacerc:2009-007
Contact details of provider: Postal: China, Economic Research Center, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden Phone: +46-8-736 90 00 Fax: +46-8-31 81 86 Web page: http://www.hhs.se/CERC/ More information through EDIRC
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