China’s Internal Borders: Evidence from the Business Cycle Correlations across Chinese Cities

Ying Fang, Li Qi and Zhongjian Lin
Authors registered in the RePEc Author Service: Li Qi () and Qi Li

No 2013-10-14, Working Papers from Wang Yanan Institute for Studies in Economics (WISE), Xiamen University

Abstract: We measure the correlations between two cities’ real GDP growth rates (a measure of business cycle correlations) to capture the degree of segmentation across China’s provincial and regional borders. This type of segmentation can be caused by local protectionism as well as other economic and geographic factors that affect business cycle correlations between two cities. After controlling these other factors, we are able to pin down the border effect that is due to local protectionism: administrative border effect. We find that the inter-provincial administrative border effect first rose and then gradually declined in the period between 1991 and 2007. Further, its increase coincided with the introduction of the Tax Sharing System reform, which started in 1994. This administrative border effect declined steadily in recent years as the tax reform was fully instituted. Our analysis shows that China’s reform path (under market-preserving federalism) did not create a persistent provincial “administrative border effect” that debilitated market forces.

Keywords: Border effect; Market integration; Business cycle correlation (search for similar items in EconPapers)
Date: 2013-10-14
New Economics Papers: this item is included in nep-tra and nep-ure
References: Add references at CitEc
Citations:

Published

Downloads: (external link)
https://econpub.xmu.edu.cn/research/repec/upload/201072693537055475115776.pdf (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:wyi:wpaper:002016

Access Statistics for this paper

More papers in Working Papers from Wang Yanan Institute for Studies in Economics (WISE), Xiamen University
Bibliographic data for series maintained by WISE Technical Team ().