Is income converging in China?
A flexible Fourier stationary test
Article first published online: 14 FEB 2013
© 2013 The Authors Economics of Transition © 2013 The European Bank for Reconstruction and Development
Economics of Transition
Volume 21, Issue 2, pages 341–356, April 2013
How to Cite
Su, C.-W. and Chang, H.-L. (2013), Is income converging in China?. Economics of Transition, 21: 341–356. doi: 10.1111/ecot.12012
- Issue published online: 15 MAR 2013
- Article first published online: 14 FEB 2013
- Manuscript Accepted: 21 NOV 2012
- Manuscript Received: 10 OCT 2011
- Flexible Fourier unit-root test;
- income convergence
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.