Business Cycle Accounting for the Chinese Economy

Xu Gao

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Business cycle fluctuations; Business cycle accounting; Chinese economy (search for similar items in EconPapers)
JEL-codes: E32 E37 O47 O53 (search for similar items in EconPapers)
Date: 2007-11, Revised 2007-12
New Economics Papers: this item is included in nep-cna, nep-dev, nep-dge, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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