Sectoral cointegration, structural break and agriculture's role in the Chinese economy in 1952-92: a VAR approach

Abstract

A VAR model is constructed to study the sectoral cointegration relationship in China. As a primary sector of the economy, agriculture is found to be a growth engine throughout the data period 1952-92 although its contribution to GDP declined steadily over time. This evidence is consistently found in both the long-run and the short-run models of a VAR. In contrast, the growth of non-agricultural sectors had little effect on agriculture in 1952-77. However, a structural break is found under the economic reforms (1977-92) when industry and other non-agricultural sectors started to cause agriculture to grow.