Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72660
Authors: 
Fidrmuc, Jan
Fidrmuc, Jarko
Huang, Shuo
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4220
Abstract: 
This paper investigates the changing nature of economic integration in China. Specifically, we consider business-cycle synchronization (correlation of demand and supply shocks) among Chinese provinces during the period 1955-2007. We find that the symmetry of supply shocks has declined after the liberalization initiated in 1978. In contrast, the correlation of demand shocks has increased during the same period. We then seek to explain these correlations by relating them to factors that proxy for interprovincial trade and vulnerability of regions to idiosyncratic shocks. Interprovincial trade and similarity in factor endowments tend to make shocks more symmetric. Surprisingly, foreign trade and inward FDI have little effect on the symmetry of shocks.
Subjects: 
VAR model
business cycle synchronization
China
reform
JEL: 
E32
F15
H77
Document Type: 
Working Paper

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