Do permanent shocks explain income levels? a common cycle-common trend analysis of regional income levels for China

Narayan, Paresh Kumar and Narayan, Seema 2008, Do permanent shocks explain income levels? a common cycle-common trend analysis of regional income levels for China, Pacific economic review, vol. 13, no. 5, pp. 656-662.

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Title Do permanent shocks explain income levels? a common cycle-common trend analysis of regional income levels for China
Author(s) Narayan, Paresh Kumar
Narayan, Seema
Journal name Pacific economic review
Volume number 13
Issue number 5
Start page 656
End page 662
Publisher Wiley-Blackwell Publishing Asia
Place of publication Richmond, Vic.
Publication date 2008-12
ISSN 1361-374X
1468-0106
Summary In this paper, we analyse per capita income levels of China's three main regions: the western region, the eastern region and the central region using common cycle and common trend tests. Our main contribution is that we impose the common cycle and common trend restrictions in decomposing shocks into permanent and transitory components. We find that: (i) there is evidence for two cointegrating relationships and one common cycle; and (ii) the variance decomposition analysis of shocks provides evidence that over short horizons, permanent shocks play a large role in explaining variations in regional per capita incomes.
Language eng
Field of Research 140299 Applied Economics not elsewhere classified
140218 Urban and Regional Economics
140211 Labour Economics
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2008
Copyright notice ©2008, Blackwell Publishing Asia Pty Ltd
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017871

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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