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China's Business Cycles: Perspectives from an AD-AS Model

  • Zhang, Yin
  • Wan, Guanghua

The present paper represents a first attempt to study China's business cycles using a formal analytical framework; namely, a structural VAR model. It is found that (i) demand shocks were the dominant source of macroeconomic fluctuations, but supply shocks had gained more importance over time; (ii) driving forces of demand shocks were consumption and fixed investment in the first cycle of 1985-1990, but shifted to fixed investment and world demand in the second cycle of 1991-1996 and the post-1997 deflation period; and (c) macroeconomic policies did not play an important part either in initiating or counteracting cyclical fluctuations. Copyright 2005 East Asian Economic Association.

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File URL: http://www.wider.unu.edu/sites/default/files/rp2004-54.pdf
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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper RP2004/54.

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Length: 24 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:unu:wpaper:rp2004-54
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  1. Dolado, Juan J & Jenkinson, Tim & Sosvilla-Rivero, Simon, 1990. " Cointegration and Unit Roots," Journal of Economic Surveys, Wiley Blackwell, vol. 4(3), pages 249-73.
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  11. Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
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  14. Robert J. Gordon, 1998. "Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 297-346.
  15. Yu, Qiao, 1997. "Economic Fluctuation, Macro Control, and Monetary Policy in the Transitional Chinese Economy," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 180-195, October.
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  17. S. E. Oppers, 1997. "Macroeconomic Cycles in China," IMF Working Papers 97/135, International Monetary Fund.
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