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Regional output spillovers in China: Estimates from a VAR model

  • Nicolaas Groenewold
  • Lee Guoping
  • Chen Anping

Inter-regional spillover effects are central to China's growth policy; yet relatively little is known about the strength and duration of these spillovers and whether their characteristics have changed over time. This article examines the spillover of output between the three commonly considered regions of China: coastal, central and western regions. We find that there are strong spillovers from the coastal region to both other regions, from the central region to the western region, but that shocks to the western region have no flow-on effect on the other two regions. Thus, a policy of developing the coastal region is likely to indirectly benefit the other two regions. Our results suggest surprisingly little change in the pattern of spillovers over the period 1953-2003, although parameter instability in the beginning of the period limits the extent of possible analysis of this issue. Copyright (c) 2007 the author(s). Journal compilation (c) 2007 RSAI.

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Article provided by Wiley Blackwell in its journal Papers in Regional Science.

Volume (Year): 86 (2007)
Issue (Month): 1 (03)
Pages: 101-122

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Handle: RePEc:bla:presci:v:86:y:2007:i:1:p:101-122
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  1. Brian A. Cromwell, 1992. "Does California drive the West? an econometric investigation of regional spillovers," Economic Review, Federal Reserve Bank of San Francisco, pages 13-23.
  2. Gerald Carlino & Robert DeFina, 1993. "Regional income dynamics," Working Papers 93-1, Federal Reserve Bank of Philadelphia.
  3. Clark, Todd E, 1998. "Employment Fluctuations in U.S. Regions and Industries: The Roles of National, Region-Specific, and Industry-Specific Shocks," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 202-29, January.
  4. Chang, Gene H., 2002. "The cause and cure of China's widening income disparity," China Economic Review, Elsevier, vol. 13(4), pages 335-340, December.
  5. Cooley, Thomas F. & Leroy, Stephen F., 1985. "Atheoretical macroeconometrics: A critique," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 283-308, November.
  6. Cai, Fang & Wang, Dewen & Du, Yang, 2002. "Regional disparity and economic growth in China: The impact of labor market distortions," China Economic Review, Elsevier, vol. 13(2-3), pages 197-212.
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