Simulating the impact of foreign capital in an open-economy macroeconomic model of China

Tsang, Shu-ki; Ma, Yue

doi:10.1016/s0264-9993(97)01042-0

Cited by 12 publications

(6 citation statements)

References 16 publications

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“…Like the open macroeconometric model of China developed by Tsang & Ma (1997), we have employed here the error-correction mechanism (ECM) (see Banerjee et al., 1993;Davidson et al, 1978;Engle & Granger, 1987;Hendry, 1995) in specifying the behavioural equations. This modelling technique ensures that short-run dynamic specifications are consistent with long-mn equilibria and avoid ad hoc regressions that do not have long-run equilibrium relationships.…”

Section: Estimation Of the Hong Kong Modelmentioning

confidence: 99%

“…In the Chinese model (Tsang & Ma, 1997) we have not been able to use the ECM in many equations. The key reason is that major aspects of the Chinese economy are not showing error-correcting characteristics, as the reform process itself implies trial and error, and hence instability and uncertainty about the long-run equilibria.…”

Section: Estimation Of the Hong Kong Modelmentioning

confidence: 99%

“…In the estimation process, we have also experimented with a two-stage specification (Engle & Granger, 1987), as in Tsang & Ma (1997). To implement this approach, we first estimate the long-run equilibrium equation for the dependent variable, with all the variables level.…”

Section: Estimation Of the Hong Kong Modelmentioning

confidence: 99%

“…Given additional funding from Hong Kong and the UK, we have succeeded in constructing an open-economy econometric model of China (Tsang & Ma, 1997). In summer 1996, the Research Grants Council of Hong Kong kindly provided a grant to enable the continuation of the project under the direct responsibility of Tsang Shu-ki and Tang Shu-hung for three more years.…”

Section: Acknowledgementsmentioning

confidence: 99%

“…Tsang & Ma, 1997) that Hong Kong.plays a crucial role in channelling Chinese exportslimports tolfrom the international markets. Hong Kong also provides the major source of foreign direct investment to China.…”

Section: Introductionmentioning

confidence: 99%

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The Impact of the China Factor on the pre-1997 Hong Kong Economy: a macroeconometric analysis

Tsang

Tang

1998

International Review of Applied Economics

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After the reunification of Hong Kong and China in 1997, Hong Kong is assured of a high degree of autonomy by the Basic Law. However, there remains some worry about the territory's economic viability and financial stability. Whether Chinese policies and China's remarkable growth momentum could continue to boost Hong Kong's prosperity has become an issue of concern. As the Chinese economic reform proceeds, the 'China factor' has been generating an increasing influence on the performance of the Hong Kong economy. Unfortunately, there have been very few rigorous quantitative analyses of this rapidly evolving development. To fill the gap, we have constructed a macroeconometric model of Hong Kong which takes into detailed account the linkages of the two economies including trade and capital flows. Estimation of the model incorporates error correction techniques to establish short-run dynamics and long-run equilibria. Our findings have identified crucial channels through which the 'China factor' has exerted impact on the Hong Kong economy. It is shown that the factor was not overwhelming up to the recent past, in terms of its stabilizing effects in the financial market and its stimulation on growth, although its influence may rise in the post-1997 era.

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Section: Estimation Of the Hong Kong Modelmentioning

confidence: 99%

Section: Estimation Of the Hong Kong Modelmentioning

confidence: 99%