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Some Caveats In Modelling Technical Progress And Investment: The Case Of China

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  • JESUS FELIPE

    (Central and West Asia Department, Asian Development Bank, Manila, Philippines)

  • JOHN McCOMBIE

    (Cambridge Centre for Economic and Public Policy, University of Cambridge, UK)

Abstract

Since the early 1990s, the number of studies using neoclassical models to understand the Chinese economy has mushroomed. In this paper, we review two examples of estimation of the rate of technical progress and one attempt at modelling investment. We identify their shortcomings and the problems with the alleged policy implications. We show that econometric estimation of neoclassical models may result in apparently sensible results for misinformed reasons. We conclude that modelling the Chinese economy requires a deeper understanding of its inner workings as a transition and as a developing economy.

Suggested Citation

  • JESUS FELIPE & JOHN McCOMBIE, 2011. "Some Caveats In Modelling Technical Progress And Investment: The Case Of China," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 305-324.
    • Handle: RePEc:wsi:jicepx:v:02:y:2011:i:02:n:s1793993311000324
    DOI: 10.1142/S1793993311000324
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    References listed on IDEAS

    as
    1. Epstein,Gerald A. & Gintis,Herbert M., 2011. "Macroeconomic Policy after the Conservative Era," Cambridge Books, Cambridge University Press, number 9780521148412, January.
    2. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2014. "As You Sow So Shall You Reap: From Capabilities to Opportunities," Oxford Development Studies, Taylor & Francis Journals, vol. 42(4), pages 488-515, December.
    3. Jesus Felipe & John McCombie, 2010. "Modeling Technological Progress and Investment in China: Some Caveats," Economics Working Paper Archive wp_643, Levy Economics Institute.
    4. Jesus Felipe & Utsav Kumar & Norio Usui & Arnelyn Abdon, 2013. "Why has China succeeded? And why it will continue to do so," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(4), pages 791-818.
    5. Zuliu F. Hu & Mohsin S. Khan, 1997. "Why Is China Growing So Fast?," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 103-131, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    China; identity; investment; neoclassical model; total factor productivity growth; E22; E62; C20; O23; P41;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • P41 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform

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