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China's regional convergence in panels with multiple structural breaks

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  • Takashi Matsuki
  • Ryoichi Usami

Abstract

This study investigates the existence of regional convergence of per capita outputs in China from 1952 to 2004, particularly focusing on considering the presence of multiple structural breaks in the provincial-level panel data. First, the panel-based unit root test that allows for the occurrence of multiple breaks at various break dates across provinces is developed; this test is based on the p-value combination approach suggested by Fisher (1932). Next, the test is applied to China's provincial real per capita outputs to examine the regional convergence in China. To obtain the p-values of unit root tests for each province, which are combined to construct the panel unit root test, this study assumes three Data Generating Processes (DGPs): a driftless random walk process, an Autoregressive Moving Average (ARMA) process and an Autoregression (AR) process with cross-sectionally dependent errors in Monte Carlo simulation. The results obtained from this study reveal that the convergence of the provincial per capita outputs exists in each of the three geographically classified regions-the Eastern, Central and Western regions-of China.

Suggested Citation

  • Takashi Matsuki & Ryoichi Usami, 2009. "China's regional convergence in panels with multiple structural breaks," Applied Economics, Taylor & Francis Journals, vol. 43(7), pages 873-890.
    • Handle: RePEc:taf:applec:v:43:y:2009:i:7:p:873-890
    DOI: 10.1080/00036840802600012
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    References listed on IDEAS

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    1. Hashem Pesaran, M., 2007. "A pair-wise approach to testing for output and growth convergence," Journal of Econometrics, Elsevier, vol. 138(1), pages 312-355, May.
    2. Jeremy Berkowitz & Lutz Kilian, 2000. "Recent developments in bootstrapping time series," Econometric Reviews, Taylor & Francis Journals, vol. 19(1), pages 1-48.
    3. Banerjee, Anindya & Carrion-i-Silvestre, Josep Lluís, 2006. "Cointegration in panel data with breaks and cross-section dependence," Working Paper Series 591, European Central Bank.
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    Cited by:

    1. Johan Lyhagen & Johanna Rickne, 2014. "Income inequality between Chinese regions: newfound harmony or continued discord?," Empirical Economics, Springer, vol. 47(1), pages 93-110, August.
    2. Matsuki, Takashi & Sugimoto, Kimiko, 2013. "Stationarity of Asian real exchange rates: An empirical application of multiple testing to nonstationary panels with a structural break," Economic Modelling, Elsevier, vol. 34(C), pages 52-58.
    3. Guangdong Li & Chuanglin Fang, 2018. "Spatial Econometric Analysis of Urban and County-level Economic Growth Convergence in China," International Regional Science Review, , vol. 41(4), pages 410-447, July.
    4. Nicholas Apergis & Sayantan Ghosh Dastidar & Ghulam Mustafa, 2021. "Fracking and Asset Prices: The Role of Health Indicators for House Prices Across Oklahoma’s Counties," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(2), pages 583-602, April.
    5. Matsuki, Takashi, 2019. "Per capita output convergence across Asian countries: Evidence from covariate unit root test with an endogenous structural break," Economic Modelling, Elsevier, vol. 82(C), pages 99-118.
    6. Matsuki, Takashi & Usami, Ryoichi, 2008. "Long-run growth patterns within Asian NIEs: Empirical analysis based on the panel unit root test, allowing the heterogeneity of time trend and endogenous multiple structural breaks," MPRA Paper 11541, University Library of Munich, Germany.
    7. Deeptha Wijerathna & Jayatilleke S. Bandara & Christine Smith & Athula Naranpanawa, 2014. "Regional disparities in Sri Lanka: an empirical analysis," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(2), pages 77-102, December.

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