Tests of goods market integration between China and European countries

A nonlinear nonparametric approach

Bibliographic Data

ID12917828
AuthorsShu-Kam Lee (Hong Kong Shue Yan University), Lubanski Lam (Hong Kong Shue Yan University), Kai-Yin Woo (0000-0003-1168-3313, Hong Kong Shue Yan University, corresponding author)
Year2023
Volume17
Issue2
Pages285-299
Publication date2023-11-13
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueChina Economic Journal (JOURNAL)
Journal identifiersISSN: 1753-8963 • E-ISSN: 1753-8971
PublisherRoutledge (PUBLISHER • GB)
DOI10.1080/17538963.2023.2277976
OpenAlexW4388625707
LanguageEN
References cited34

The validity of purchasing power parity (PPP) between two economies implies goods markets of the two are well integrated. This is a pre-condition for further economic convergence. This study examines validity of the PPP between China and European countries. Since the functional form of the cointegrating relationship may not be exact or linear, we adopt the nonparametric rank tests for analysis, without prior specification of the functional form. We also address the rank problems that occur in multivariate rank tests. The results indicate strong support for nonlinear PPP relationships between China and European countries, especially during the second subsample period. This indicates China’s rising economic power, particularly in the most recent decade. Although there have been disputes between China and Europe, these results suggest favorable prospects for closer economic cooperation between the two sides and the need for formulation of common policies to pursue an integrated market in the future

Business · China · Econometrics · Economic integration · Economics · Geography · Industrial organization · International economics · International trade · Market integration · Microeconomics · Nonlinear system · Nonparametric statistics · Global Trade and Competitiveness · Global trade and economics · Monetary Policy and Economic Impact

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