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Trends and Cycles in China's Macroeconomy

In: NBER Macroeconomics Annual 2015, Volume 30

Author

Listed:
  • Chun Chang
  • Kaiji Chen
  • Daniel F. Waggoner
  • Tao Zha

Abstract

We make four contributions in this paper. First, we provide a core of macroeconomic time series usable for systematic research on China. Second, we document, through various empirical methods, the robust findings about striking patterns of trend and cycle. Third, we build a theoretical model that accounts for these facts. Fourth, the model's mechanism and assumptions are corroborated by institutional details, disaggregated data, and banking time series, all of which are distinctive Chinese characteristics. We argue that preferential credit policy for promoting heavy industries accounts for the unusual cyclical patterns as well as the post-1990s economic transition featured by the persistently rising investment rate, the declining labor income share, and a growing foreign surplus. The departure of our theoretical model from standard ones offers a constructive framework for studying China's modern macroeconomy.
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Suggested Citation

  • Chun Chang & Kaiji Chen & Daniel F. Waggoner & Tao Zha, 2015. "Trends and Cycles in China's Macroeconomy," NBER Chapters,in: NBER Macroeconomics Annual 2015, Volume 30, pages 1-84 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13592
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Chen, Kaiji & Ren, Jue & Zha, Tao, 2016. "What we learn from China's rising shadow banking: exploring the nexus of monetary tightening and banks' role in entrusted lending," FRB Atlanta Working Paper 2016-1, Federal Reserve Bank of Atlanta.
    2. Jia, Pengfei & Lim, King Yoong, 2018. "Tax Policy and Toxic Housing Bubbles in China," MPRA Paper 86576, University Library of Munich, Germany.
    3. İmrohoroğlu, Ayşe & Zhao, Kai, 2018. "The chinese saving rate: Long-term care risks, family insurance, and demographics," Journal of Monetary Economics, Elsevier, vol. 96(C), pages 33-52.
    4. Chow, Gregory C, 2016. "Important laws governing China's macro-economy," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 289-294.
    5. Chen, Kaiji & Waggoner, Daniel F. & Higgins, Patrick C. & Zha, Tao, 2016. "Impacts of Monetary Stimulus on Credit Allocation and Macroeconomy: Evidence from China," FRB Atlanta Working Paper 2016-9, Federal Reserve Bank of Atlanta, revised 01 Oct 2017.
    6. Higgins, Patrick & Zha, Tao & Zhong, Wenna, 2016. "Forecasting China's economic growth and inflation," China Economic Review, Elsevier, vol. 41(C), pages 46-61.
    7. Steven Lugauer & Jinlan Ni & Zhichao Yin, 2014. "Micro-Data Evidence on Family Size and Chinese Saving Rates," Working Papers 023, University of Notre Dame, Department of Economics, revised Jun 2014.
    8. repec:eee:inecon:v:109:y:2017:i:c:p:43-67 is not listed on IDEAS
    9. Nadav Ben Zeev, 2017. "Exchange Rate Regimes And Sudden Stops," Working Papers 1712, Ben-Gurion University of the Negev, Department of Economics.
    10. Salzmann, Leonard, 2018. "China's Economic Slowdown and International Inflation Dynamics," EconStor Preprints 176757, ZBW - German National Library of Economics.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G1 - Financial Economics - - General Financial Markets

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