The Subnational Penn Effect: Evidence from China

Huayi Yu (), Xiang Tang () and Rui Wu ()
Additional contact information
Huayi Yu: Department of Land & Real Estate Management, School of Public Administration, Renmin University of China, Beijing 100872, China
Xiang Tang: School of Economics, Peking University, Beijing 100871, China
Rui Wu: Department of Land & Real Estate Management, School of Public Administration, Renmin University of China, Beijing 100872, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2012, vol. 7, issue 4, 627-650

Abstract: In this paper we estimate relative consumer price levels as of 2008 for 36 major Chinese cities, using an innovative method purposely designed to rectify three main defects of the existing literature, which are (1) the under-representation of marketized services in the sample data, (2) biased consumption weights, and (3) a mismatch between sample classification and consumption weights. Our estimation results show the ¡°subnational Penn effect¡± as defined by Tang (2012), i.e., strong inter-city correlations among population size, the relative price level, per capita nominal and real income, and human capital stock, thereby showing that the theoretical model of inter-city price dispersion proposed by Tang (2012) is applicable in China. Our conclusion, methodology, and estimation results have important implications for various aspects of the Chinese economy including the regional, urban and real-estate economies.

Keywords: regional price dispersion; subnational Penn effect; agglomeration economies (search for similar items in EconPapers)
JEL-codes: E25 F41 R12 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://journal.hep.com.cn/fec/EN/10.3868/s060-001-012-0029-9 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:7:y:2012:i:4:p:627-650

Access Statistics for this article

Frontiers of Economics in China-Selected Publications from Chinese Universities is currently edited by LONG Jie

More articles in Frontiers of Economics in China-Selected Publications from Chinese Universities from Higher Education Press
Bibliographic data for series maintained by Frank H. Liu ().