Estimating a modified nonlinear Hicks model: evidence from the Chinese economy (1970‐2007)

Purpose - The purpose of this paper is to present a non‐linear Hicks model of the cycle, based on Keynesian theory and economic dynamics. Design/methodology/approach - Using the proposed approach, the paper puts forward a simple method for its empirical estimation based on nonlinear least squares and other relevant techniques. Findings - An example is given to prove the feasibility and the increased validity of the non‐linear dynamic Hicks model. Analytically, an empirical application for the Chinese economy (1970‐2007) demonstrates the almost ideal performance of the modified model and of the proposed method. Research limitations/implications - If research is reported on in the paper, this section must be completed and should include suggestions for future research and any identified limitations in the research process. Practical implications - What outcomes and implications for practice, applications and consequences are identified? Not all papers will have practical implications but most will. What changes to practice should be made as a result of this research/paper? Social implications - What will be the impact on society of this research? How will it influence public attitudes? How will it influence (corporate) social responsibility or environmental issues? How could it inform public or industry policy? How might it affect quality of life? Not all papers will have social implications. Originality/value - To the best of the authors' knowledge, there has not been any attempt in the literature to formally estimate the famous nonlinear Hicks model of the cycle because of a lack of the appropriate methodology.