Macroeconomic effects of China's Western Development Program: Analysis of co-movements among different regions based on the Bayesian dynamic latent factor model

doi:10.16511/j.cnki.qhdxxb.2019.25.002

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Abstract The influence of state-level and regional economic fluctuations on regional economic growth was analyzed using a Bayesian dynamic latent factor model based on the different economic development rates in different regions of China. This method decomposes the fluctuations of the macroeconomic aggregates in China into the state factor, the regional factors and the idiosyncratic errors specific to each aggregate variable. The dynamics of the macroeconomic variables were analyzed from 1980 to 2015 to show that the regional output and investment are mainly influenced by the state factor, while regional consumption is mainly influenced by the regional factor. Furthermore, the study finds that after implementation of China's Western Development Program, the state factor has more significant influence on the fluctuations of all the economic variables in the western region with the greatest influence on investment.

Keywords business cycles cross-regional economic co-movement Bayesian dynamic latent factor model

Issue Date: 19 November 2019

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	LIU Chun
	ZHANG Jian

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LIU Chun,ZHANG Jian. Macroeconomic effects of China's Western Development Program: Analysis of co-movements among different regions based on the Bayesian dynamic latent factor model[J]. Journal of Tsinghua University(Science and Technology), 2019, 59(11): 934-939.

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http://jst.tsinghuajournals.com/EN/10.16511/j.cnki.qhdxxb.2019.25.002 OR http://jst.tsinghuajournals.com/EN/Y2019/V59/I11/934

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