Munich Personal RePEc Archive

Business Cycle Accounting for the Chinese Economy

Gao, Xu (2007): Business Cycle Accounting for the Chinese Economy.

[img]
Preview
PDF
MPRA_paper_7050.pdf

Download (883kB) | Preview

Abstract

We evaluate sources of business cycle fluctuations in China after 1978 with business cycle accounting method developed by Chari, Kehoe, and McGrattan (2007). We find that efficiency wedge, which represents institutional change and technology advance, was the main source of economic fluctuations in 1978 - 2006. The amplitude of it fluctuation declined after 1992, which resulted in moderation of business cycle fluctuations. We also find that distortions manifest themselves as taxes on investment, which represents frictions in the capital market, became another economic fluctuation source after 1992, which is different from results of business cycle accounting on US and Japan data. Our results also show that government consumption and net exports played minor roles in generating business cycles. Our results point out several promising directions for future research on China’s business cycle.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.