Trends and cycles in China’s macroeconomy

That is the NBER paper by Chang, Chen, Waggoner, and Zha, pdf here.  Here is the abstract:

We make three contributions in this paper. First, we provide a core of macroeconomic time series usable for systematic research on China. Second, we document, through various empirical methods, the robust findings about striking patterns of trend and cycle. Third, we build a theoretical model that accounts for these facts. The model’s mechanism and assumptions are corroborated by institutional details, disaggregated data, and banking time series, all of which are distinctive of Chinese characteristics. The departure of our theoretical model from standard ones off ers a constructive framework for studying China’s macroeconomy.
Not a very illuminating abstract, but I thought this was an important piece.  There is now real and apparently reliable time series information for China!   And with the accompanying model, the authors find there is low consumption growth and overcapacity of heavy industry with rising debt risks, both problems stemming from the preferential credit access given to large Chinese firms.  That is hardly news, but it is nice to see it confirmed and measured, I call that Austro-Chinese business cycle theory
I’ll again be live-blogging the presentation and discussion once it is up and running, in the MR comments section to this post, feel free to add your own comments.


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