IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

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

  • 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)

Registered author(s):

    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.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 372009.

    in new window

    Length: 73 pages
    Date of creation: Dec 2009
    Date of revision:
    Handle: RePEc:hkm:wpaper:372009
    Contact details of provider: Postal: 55th Floor , Two International Finance Centre , 8 Finance Street , Central, Hong Kong
    Phone: (852)2878 1978
    Fax: (852)2878 7006
    Web page:

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. 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.
    2. 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.
    3. Julian di Giovanni & Contact:, 2003. "What Drives Capital Flows? The Case of Cross-Border M&A Activity and Financial Deepening," International Trade 0303002, EconWPA.
    4. Gugler, Klaus & Mueller, Dennis C. & Weichselbaumer, Michael, 2008. "The Determinants of Merger Waves: An International Perspective," ZEW Discussion Papers 08-076, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. 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.
    6. 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.
    7. 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 526-43, December.
    8. 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.
    9. Rabin Hattari & Ramkishen S. Rajan, 2012. "Sources Of Foreign Direct Investment Flows To Developing Asia: The Importance Of Time Zone," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 1250013-1-1.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    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)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.