China's macroeconomic volatility — How important is the business cycle?

The existing literature that discusses China's macroeconomic volatility during the reform period does so with overwhelming reference to the business cycle. However, the business cycle is only a subset of macroeconomic volatility that occurs within a particular frequency band. In this paper we decompose various macroeconomic series by frequency and find that much volatility occurs at lower than business cycle frequencies. This suggests that it is necessary to look beyond the construct of the business cycle in order to understand the nature of China's macroeconomic volatility, and beyond the usual demand side explanations in the discussion of causes.