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Role Of Economic Structural Adjustment For Long‐Term Economic Stability In China: Estimation Based On Variance Decomposition


  • Hongsheng Fang
  • Xiangrong Jin


Based on the variance decomposition method of Eggers and Ioannides, the sources of long-term stability of the Chinese economy since the mid‐1990s are estimated and the potential influence of structural optimization is predicted. Results show that: (i) the contribution of industrial structural adjustment was a negative 46.38%; and (ii) if the share of the expenditure structure was adjusted to the average level in the early period, the contribution of structural optimization would be approximately 38.25%. Moreover, it is believed that a reasonable economic structure can be achieved only through the implementation of a development strategy that takes comparative advantage into consideration.

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  • Hongsheng Fang & Xiangrong Jin, 2010. "Role Of Economic Structural Adjustment For Long‐Term Economic Stability In China: Estimation Based On Variance Decomposition," Pacific Economic Review, Wiley Blackwell, vol. 15(5), pages 637-652, December.
  • Handle: RePEc:bla:pacecr:v:15:y:2010:i:5:p:637-652

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    References listed on IDEAS

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    Cited by:

    1. Du, Julan & Fang, Hongsheng & Jin, Xiangrong, 2014. "The “growth-first strategy” and the imbalance between consumption and investment in China," China Economic Review, Elsevier, vol. 31(C), pages 441-458.

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