Business Cycles, Consumption and Risk-Sharing: How Different Is China?
AbstractCan standard business-cycle methodology be applied to China? In this chapter, we address this question by examining the macroeconomic time series and identifying dimensions in which China differs from economies (such as Canada and the U.S.) that are typically the subject of business-cycle research. We show that naively applying the standard business-cycle tools to China is no more ridiculous than applying it to Canada, although the dimensions along which the model struggles is different. For China, the model cannot account for the low level of consumption (or high saving) as a proportion of income observed in the data. An examination of provincial level consumption data suggests that the absence of channels for intranational consumption risk sharing may be an important reason why the business-cycle model has trouble accounting for Chinese consumption and saving behavior.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16154.
Date of creation: Jul 2010
Date of revision:
Publication status: published as Business Cycles, Consumption and Risk-Sharing: How Different is China” (with C. Curtis), in Yin-Wong Cheung, Vikas Kakkar, and Guonan Ma, eds., The Evolving Role of Asia in Global Finance, forthcoming.
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-10 (All new papers)
- NEP-BEC-2010-07-10 (Business Economics)
- NEP-CBA-2010-07-10 (Central Banking)
- NEP-CNA-2010-07-10 (China)
- NEP-DEV-2010-07-10 (Development)
- NEP-DGE-2010-07-10 (Dynamic General Equilibrium)
- NEP-MAC-2010-07-10 (Macroeconomics)
- NEP-TRA-2010-07-10 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schmitt-Grohe, Stephanie & Uribe, Martin, 2003.
"Closing small open economy models,"
Journal of International Economics,
Elsevier, vol. 61(1), pages 163-185, October.
- Stephanie Schmitt-Grohe & Martin Uribe, 2002. "Closing Small Open Economy Models," NBER Working Papers 9270, National Bureau of Economic Research, Inc.
- Stephanie Schmitt-Grohe & Martin Uribe, 2001. "Closing Small Open Economy Models," Departmental Working Papers 200115, Rutgers University, Department of Economics.
- Schmitt-Grohé, Stephanie & Uribe, Martín, 2002. "Closing Small Open Economy Models," CEPR Discussion Papers 3096, C.E.P.R. Discussion Papers.
- Tara M. Sinclair, 2012. "Characteristics and Implications of Chinese Macroeconomic Data Revisions," Working Papers 2012-09, The George Washington University, Institute for International Economic Policy.
- Lai, Jennifer T. & McNelis, Paul D. & Yan, Isabel K.M., 2013. "Regional capital mobility in China: Economic reform with limited financial integration," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 493-503.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.