The law of one price : evidence from the transitional economy of China
Document Type
Journal article
Source Publication
Review of Economics & Statistics
Publication Date
11-1-2006
Volume
88
Issue
4
First Page
682
Last Page
697
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.
DOI
10.1162/rest.88.4.682
Print ISSN
00346535
E-ISSN
15309142
Publisher Statement
Copyright © 2006 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Fan, C. S., & Wei, X. (2006). The law of one price: Evidence from the transitional economy of China. Review of Economics & Statistics, 88(4), 682-697. doi: 10.1162/rest.88.4.682