The Trend Cycle Decomposition Of Real GDP In China

Since the found of new China, the economy has been in the interchange between theprosperity and recession, from state of ups and downs to that of fluctuating in thepeak. However, as for each area and each province, autonomous region or municipality,there is little literature to research the economic fluctuation systematically. As a result, thispaper summarizes the development process of the theory of economic cycle, as well as theliterature of the models referred to the decomposition of the economic cycle. This paperhas modeled and estimated the real GDP series and analyzes the characteristics of theeconomic cycle, by use of the unobserved components model by Clark, the structured timeseries model by Harvey and HP filter. The biggest contribution of this paper is the trendcycle decomposition of each area, province, autonomous region or municipality throughUC model, getting the characteristics of the trend and the cycle, explaining the economicphenomena of the prominent characteristics. For example, how the influential events orthe polices made effect on the economy of each area, and how the development strategiesof each province such as the fixed assets investment influenced the economy of itseconomy. And at last, comparisons were made among the trend of cycle of differentprovinces.The meaning of the conclusion of this paper lies in the comparison of the cyclesamong different areas or provinces or automous cities and so on, especially, we can usethe model to forecast the real GDP of the next years.