Financial Integration between China and Asia Pacific Trading Partners: Parities Evidence from the First- and Second-generation Panel Tests

Tze-Haw Chan () and Ahmad Zubaidi Baharumshah ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents a joint investigation of the international parity conditions between China and her 13 major trading partners in the Asia Pacific over globalization era. Several advanced tests of unit root for univariate and panel series are utilized in the analyses. Our findings reveal that first, RIP holds stronger than PPP among APEC-China. Second, both parities tend to hold better as one move to the recent years, attributed not only to the financial liberalization process among APEC economies, but also to the Chinese trade policy and the regional commitment for the ASEAN+3+2+1 cooperation. Third, China and APEC have improved the ability to absorb regional shocks as indicated by the shortened half-life reported over time, especially when the post-Asia crisis era is included.

Keywords: PPP; RIP; Panel Unit Root Tests; Mean Reversion; Half-life; Financial Integration (search for similar items in EconPapers)
JEL-codes: C33 F36 G15 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-cwa, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37801

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