IDEAS home Printed from https://ideas.repec.org/p/hkm/wpaper/372009.html
   My bibliography  Save this paper

Feast and Famine: Explaining Big Swings in the Hong Kong Economy between 1981 and 2007

Author

Listed:
  • Chak Hung J. Cheng

    (The University of North Carolina at Chapel Hill)

  • Michael K. Salemi

    (The University of North Carolina at Chapel Hill ,Hong Kong Institute for Monetary Research)

Abstract

On average between 1981 and 2007, output per capita in Hong Kong grew at an annual rate of 3.2 percent. But economic performance over the period was far from even. Between 1987 and 1997, output per capita averaged 9.7 percent above its long run growth path. In 1997, the feast ended and the famine began. Over the next 11 years, output per capita averaged 5.2 percent below its long run path. This paper attempts to explain this big swing. We use two types of analysis. First, we use a nine-variable Bayesian Vector Autoregression and summarize the results as a set of stylized facts. Chief among these is the finding that economic activity in Hong Kong is highly sensitive to shocks of foreign origin. Second, we set our and estimate a dynamic, general equilibrium model which is able to account, at least qualitatively, for our stylized facts. We use the model to infer the relative importance of different shocks in accounting for feast and famine in Hong Kong.

Suggested Citation

  • Chak Hung J. Cheng & Michael K. Salemi, 2009. "Feast and Famine: Explaining Big Swings in the Hong Kong Economy between 1981 and 2007," Working Papers 372009, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:372009
    as

    Download full text from publisher

    File URL: http://www.hkimr.org/uploads/publication/111/ub_full_0_2_232_wp-no-37_2009.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Olaf Unteroberdoerster & Cynthia Leung, 2008. "Hong Kong SAR as a Financial Center for Asia; Trends and Implications," IMF Working Papers 08/57, International Monetary Fund.
    2. di Giovanni, Julian, 2005. "What drives capital flows? The case of cross-border M&A activity and financial deepening," Journal of International Economics, Elsevier, pages 127-149.
    3. Loungani, Prakash & Mody, Ashoka & Razin, Assaf, 2002. "The Global Disconnect: The Role of Transactional Distance and Scale Economies in Gravity Equations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 526-543, December.
    4. Simon Evenett, 2004. "The Cross-Border Mergers and Acquisitions Wave of the Late 1990s," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 411-470 National Bureau of Economic Research, Inc.
    5. Rabin Hattari & Ramkishen S. Rajan, 2008. "Trends and Drivers of Bilateral FDI Flows in Developing Asia," Working Papers 112008, Hong Kong Institute for Monetary Research.
    6. David T Coe & Arvind Subramanian & Natalia T Tamirisa, 2007. "The Missing Globalization Puzzle: Evidence of the Declining Importance of Distance," IMF Staff Papers, Palgrave Macmillan, vol. 54(1), pages 34-58, May.
    7. Head, Keith & Ries, John, 2008. "FDI as an outcome of the market for corporate control: Theory and evidence," Journal of International Economics, Elsevier, vol. 74(1), pages 2-20, January.
    8. Gugler, Klaus & Mueller, Dennis C. & Weichselbaumer, Michael, 2012. "The determinants of merger waves: An international perspective," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 1-15.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hkm:wpaper:372009. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (HKIMR). General contact details of provider: http://edirc.repec.org/data/hkimrhk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.