The law of one price : evidence from the transitional economy of China

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

74 Citations (Scopus)

Abstract

This paper applies the recently developed econometric methods of panel unit root tests and nonlinear mean reversion to investigate price convergence in China--the largest transitional economy in the world. We find that prices did converge to the law of one price in China for an overwhelming majority of goods and services, based on a large panel data set. The finding sheds light on the extent of the market economy in China, and casts doubt on Young's proposition that the economic reform has led to the fragmentation of Chinese domestic markets.
Original languageEnglish
Pages (from-to)682-697
Number of pages16
JournalReview of Economics and Statistics
Volume88
Issue number4
DOIs
Publication statusPublished - 1 Nov 2006

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China
economy
Law
evidence
domestic market
economic reform
market economy
econometrics
fragmentation
Transitional economies
Law of one price
Economic reform
Fragmentation
Domestic market
Econometric methods
Panel data
Panel unit root tests
Market economy
Mean reversion
Extent of the market

Cite this

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abstract = "This paper applies the recently developed econometric methods of panel unit root tests and nonlinear mean reversion to investigate price convergence in China--the largest transitional economy in the world. We find that prices did converge to the law of one price in China for an overwhelming majority of goods and services, based on a large panel data set. The finding sheds light on the extent of the market economy in China, and casts doubt on Young's proposition that the economic reform has led to the fragmentation of Chinese domestic markets.",
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The law of one price : evidence from the transitional economy of China. / FAN, Chengze, Simon; WEI, Xiangdong.

In: Review of Economics and Statistics, Vol. 88, No. 4, 01.11.2006, p. 682-697.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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