Abstract: Exploring the business cycle characteristics from regional perspective has important implications for better understanding the regional and national economic performances, and further enhancing the effectiveness while of macro-control policy. This paper uses a Markov-switching model with a structural break to investigate China’s regional business cycle phases and their relation to the national business cycle, with the economic data covering the period of 1978-2009. The results show that the regional cycles have an early-1990s structural break as well as the national cycle, and the regional cycles are significantly different while their synergy to the national cycle is strong. We also find that during the post-break period the synergy of the central and western regions is relatively strong, while the concordances of the eastern regions is quite different.
Keywords: Regional Business Cycles, National Business Cycle, Structural Break, Macroeconomic Policy
source:Finance & Trade Economics ,No3,2014