Growth-Cycle Phases in China's Provinces: A Panel Markov-Switching Approach

47 Pages Posted: 9 Dec 2014

See all articles by Komla Mawulom Agudze

Komla Mawulom Agudze

Independent

Monica Billio

Ca Foscari University of Venice - Dipartimento di Economia

Roberto Casarin

University Ca' Foscari of Venice - Department of Economics

Eric Girardin

University Aix-Marseille 2 - GREQAM

Date Written: November 25, 2014

Abstract

This paper analyses features of 28 provincial growth-cycles in China’s economy from March 1989 to July 2009. We study the multivariate synchronization of provincial cycles and the selection of the number of cycles phases’ by means of panel Markov-switching models. We obtain evidence that growth cycles in China and its provinces’ are characterized by distinct episodes of ‘growth-recession’, ‘normal-growth’ and ‘rapid-growth’. We find a demarcation between coastal and interior provinces in term of level of ‘normal-growth’ and ‘rapid-growth’ rates. The results, also, show evidence supporting interior provinces catching up on coastal provinces proving efficient economic policy coordination to reduce the gap between the Chinese coastal and interior. However, in terms of concordance, coastal provinces have cycles that are more synchronized with the national cycle than the interior provinces. Thus, China’s national and subnational officials have to take further effective measures to achieve high degree of concordance between national and interior provinces. The geographic pattern of the national growth-recessions and rapid-growth periods have substantially changed over time. The number of provinces experiencing growth-recession at the middle of the nation’s growth-recession has reduced over time while the number of provinces in rapid-growth at the middle of the nation’s rapid-growth has increased over time.

Keywords: Bayesian inference, China’s provinces, growth-cycles, multivariate-synchronization, panel Markov-switching

JEL Classification: C1, C11, C15, C32, E32, E37

Suggested Citation

Agudze, Komla Mawulom and Billio, Monica and Casarin, Roberto and Girardin, Eric, Growth-Cycle Phases in China's Provinces: A Panel Markov-Switching Approach (November 25, 2014). University Ca' Foscari of Venice, Dept. of Economics Working Paper Series No. 19/WP/2014, Available at SSRN: https://ssrn.com/abstract=2535275 or http://dx.doi.org/10.2139/ssrn.2535275

Komla Mawulom Agudze

Independent

Monica Billio

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

HOME PAGE: http://www.unive.it/persone/billio

Roberto Casarin (Contact Author)

University Ca' Foscari of Venice - Department of Economics ( email )

San Giobbe 873/b
Venice, 30121
Italy
+39 030.298.91.49 (Phone)
+39 030.298.88.37 (Fax)

HOME PAGE: http://sites.google.com/view/robertocasarin

Eric Girardin

University Aix-Marseille 2 - GREQAM ( email )

Centre de la Vieille Charité
Marseille, 13 002
France

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