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Deflationary Expansion : an Overshooting Perspective to the Recent Business Cycle in China

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  • Gang Gong

    (China Center for Economic Research)

  • Justin Yifu Lin

Abstract

Deflationary expansion has puzzled economists both in and outside China. We study this business cycles phenomenon within a model of discrete time dynamics. We find that deflationary expansion could be possible if driven by an overshooting in investing and if the state of the economy maintains high rate of growth. This expression is consistent with the recent variables. The high steady state of growth could be explained by the current institutional environment of China.

Suggested Citation

  • Gang Gong & Justin Yifu Lin, 2005. "Deflationary Expansion : an Overshooting Perspective to the Recent Business Cycle in China," Macroeconomics Working Papers 21959, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:macroe:21959
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    12. Francesco Macheda, 2020. "Il ruolo delle imprese a conduzione statale nella lotta della Cina contro il COVID-19 (The role of State-Owned Enterprises in China's fight against the coronavirus disease)," Moneta e Credito, Economia civile, vol. 73(290), pages 111-139.
    13. Krzysztof Piotr Pawłowski & Wawrzyniec Czubak & Jagoda Zmyślona, 2021. "Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland," Energies, MDPI, vol. 14(11), pages 1-20, June.
    14. He, Qing & Tai-Leung Chong, Terence & Shi, Kang, 2009. "What accounts for Chinese Business Cycle?," China Economic Review, Elsevier, vol. 20(4), pages 650-661, December.
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    16. Gang Gong, 2016. "Two Stages of Economic Development," ADBI Working Papers 628, Asian Development Bank Institute.
    17. Laurenceson, James & Rodgers, Danielle, 2010. "China's macroeconomic volatility -- How important is the business cycle?," China Economic Review, Elsevier, vol. 21(2), pages 324-333, June.
    18. James Laurenceson & Corrine Dobson, "undated". "China’s business cycles since 1979: a chronology and comparative analysis," EAERG Discussion Paper Series 1705, School of Economics, University of Queensland, Australia.
    19. GONG Gang & GAO Jian, 2008. "Monetary policy under fixed exchange regime: A study on the future monetary policy in China," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 3(2), pages 169-208, June.
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    21. Li, Cheng, 2010. "Government Size and Macroeconomic Stability: Sub-National Evidence from China," MPRA Paper 28226, University Library of Munich, Germany.

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    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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