The decomposition of disturbances to national output of China - the evidence of sectoral and regional shocks

Koyin Chang, Dennis P. Wilson, Yung Hsiang Ying, Yoonbai Kim

Research output: Contribution to journalArticlepeer-review


The Chinese government has established policies to promote its industrial sectors and to develop coastal provinces since the late 1978. To investigate the extent and reason the output growth in China has been influenced by these policies, an error-component model is employed to decompose the importance of sectoral and regional shocks to variations in national output. The results show that both sectoral specific shocks common across regions and regional specific shocks common across sectors are important in explaining the disturbance of national output in China. Specifically, sectoral specific shocks consistently explain relatively more disturbance of Chinese output than regional specific shocks do. Our empirical results are somewhat different from Stockman (1988) and Costello (1993), since they show almost equal explanatory power of sectoral and national shocks in accounting for national outputs in OECD countries.

Original languageEnglish
Pages (from-to)747-757
Number of pages11
JournalApplied Economics
Issue number6
StatePublished - Mar 2010

Bibliographical note

Funding Information:
We appreciate an anonymous referee and David Cornberg for their valued suggestions and comments on the revision of this article. The usual disclaimer applies. We also wish to thank the National Science Council (NSC) of Taiwan and National Policy Research Center NSYSU for providing funding for this research. Finally, we like to thank the funding from the National Science Council of Taiwan under the funding number NSC 91-2415-H-130-002-, and the funding from the Center for Humanities and Social Sciences, and the funding from National Policy Research Center of National Sun Yat-sen University. We also thank Dr. David Cornberg for his comments and suggestions to this paper.

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'The decomposition of disturbances to national output of China - the evidence of sectoral and regional shocks'. Together they form a unique fingerprint.

Cite this