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Growth-cycle phases in China�s provinces: A panel Markov-switching approach

Author

Listed:
  • Roberto Casarin

    () (Department of Economics, University of Venice C� Foscari)

  • Komla Mawulom Agudze

    (Department of Economics, University of Venice C� Foscari)

  • Monica Billio

    (Department of Economics, University of Venice C� Foscari)

  • Eric Girardin

    (Aix-Marseille University, CNRS & EHESS)

Abstract

This paper analyses features of 28 provincial growth-cycles in China�s economy from March 1989 to July 2009. We study the multivariate synchronization of provincial cycles and the selection of the number of cycles phases� by means of panel Markov-switching models. We obtain evidence that growth cycles in China and its provinces� are characterized by distinct episodes of �growth-recession�, �normal-growth� and �rapid-growth�. We find a demarcation between coastal and interior provinces in term of level of �normal-growth� and �rapid-growth� rates. The results, also, show evidence supporting interior provinces catching up on coastal provinces proving efficient economic policy coordination to reduce the gap between the Chinese coastal and interior. However, in terms of concordance, coastal provinces have cycles that are more synchronized with the national cycle than the interior provinces. Thus, China�s national and subnational officials have to take further effective measures to achieve high degree of concordance between national and interior provinces. The geographic pattern of the national growth-recessions and rapid-growth periods have substantially changed over time. The number of provinces experiencing growth-recession at the middle of the nation�s growth-recession has reduced over time while the number of provinces in rapid-growth at the middle of the nation�s rapid-growth has increased over time.

Suggested Citation

  • Roberto Casarin & Komla Mawulom Agudze & Monica Billio & Eric Girardin, 2014. "Growth-cycle phases in China�s provinces: A panel Markov-switching approach," Working Papers 2014:19, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2014:19
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    References listed on IDEAS

    as
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    Keywords

    Bayesian inference; China�s provinces; growth-cycles; multivariate-synchronization; panel Markov-switching.;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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