China Macroeconomic Stability : New Evidence from Unknown Smooth Breaks

We utilize the new stationarity test based on the standard KPSS procedure which uses a single frequency Fourier function approximating unknown smooth breaks developed by Becker et al. (2006) for studying Chinese economic reform. In contrast to other literatures on unit-root and structural change tests, we are not about to seek for structural changes exactly, but focus on the starionarity test after approximating breaks appropriately. The empirical results show that most variables including real GDP, real GDP per capita, bank credit and wage are stationary. Nevertheless China's macroeconomic is stable. The reform is successful and should be promoted