Business Cycle Accounting for the Chinese Economy
AbstractWe evaluate sources of business cycle fluctuations in China after 1978 with business cycle accounting method developed by Chari, Kehoe, and McGrattan (2007). We find that efficiency wedge, which represents institutional change and technology advance, was the main source of economic fluctuations in 1978 - 2006. The amplitude of it fluctuation declined after 1992, which resulted in moderation of business cycle fluctuations. We also find that distortions manifest themselves as taxes on investment, which represents frictions in the capital market, became another economic fluctuation source after 1992, which is different from results of business cycle accounting on US and Japan data. Our results also show that government consumption and net exports played minor roles in generating business cycles. Our results point out several promising directions for future research on China’s business cycle.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7050.
Date of creation: Nov 2007
Date of revision: Dec 2007
Business cycle fluctuations; Business cycle accounting; Chinese economy;
Find related papers by JEL classification:
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-16 (All new papers)
- NEP-CNA-2008-02-16 (China)
- NEP-DEV-2008-02-16 (Development)
- NEP-DGE-2008-02-16 (Dynamic General Equilibrium)
- NEP-MAC-2008-02-16 (Macroeconomics)
- NEP-TRA-2008-02-16 (Transition Economics)
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