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The Neoclassical Growth of China

Author

Listed:
  • Jesús Fernández-Villaverde
  • Lee E. Ohanian
  • Wen Yao

Abstract

This paper studies China's four-fold increase in per capita GDP relative to the U.S. between 1995 and 2019. First, we argue that China's growth pattern is very similar to that of several other East Asia economies that initially grew very quickly. Second, we show that a minimalist Ramsey-Cass-Koopmans model with a parsimonious TFP catch-up process can account for China's growth path and the growth paths of other East Asia economies at a similar stage of development. The growth paths of other East Asia economies and the model predictions suggest that China's growth will substantially slow, so much so that we find the U.S. growth rate will likely be higher than China's by 2043. We also find that China's income per capita will level off at roughly 44% of the U.S. level around 2100.

Suggested Citation

  • Jesús Fernández-Villaverde & Lee E. Ohanian & Wen Yao, 2023. "The Neoclassical Growth of China," NBER Working Papers 31351, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31351
    Note: EFG
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    More about this item

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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