Is income converging in China? |
| |
Authors: | Chi‐Wei Su Hsu‐Ling Chang |
| |
Institution: | 1. Department of Finance, Ocean University of China, , China;2. Department of Accounting and Information, Ling Tung University, , Taiwan |
| |
Abstract: | This study adopts a flexible Fourier unit‐root test proposed by Enders and Lee (2012) to revisit the tendency towards convergence in real per capita income among provinces after economic reform in China. When a data‐generating process is non‐linear, a Fourier series not only allows for the possibility of an unknown number of structural breaks with unknown forms but also allows for the use of a low‐frequency component to capture multiple changes. Contrary to what the linear statistics suggest, our results from a flexible unit‐root test indicate that China's eastern and western regions are converging to their own specific steady states. |
| |
Keywords: | Flexible Fourier unit‐root test breaks income convergence |
|
|