Has China's Economy Become More Stable and Inertial?
Nonlinear Investigations Based on Structural Break and
Duration Dependent Regime Switching Models

Angang Hu

Jie Lu


Zhengyan Xiao

In this study we use both the structural break model and duration dependent transition model to study the characteristics of China's GDP growth from 1953 to 2009. The empirical results show that China's economic growth had become more stable since the economic reform in the end of the 1970s, and had transformed from a \low growth rate, high volatility" state to a "high growth rate, low volatility" state. In contrast to other transitional countries, China's structural break did not happen immediately, but rather it experienced a long transition period (1977-1992) which shows that China's economic development has a strong "growth inertia".

Key Words: Structural break; Duration dependent transition; Growth inertia.
JEL Classification Numbers: C11, E61, N15.