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The Chinese Government plans to create a world-class city cluster in the Guangdong-Hong Kong-Macau Greater Bay Area (GBA). The GBA is a very attractive destination for both national and international businesses to profit in trading and investment activities. To realize the anticipated profit potential, existence of purchasing power parity (PPP) is a necessary condition for a favorable prospect of closer economic cooperation and integration in the GBA city cluster. Research study that investigates the PPP relationships among the GBA cities is scarce. To fill this research gap, our study aims to examine validity of the PPP and the extent of goods market integration in the GBA. Since the functional form of the cointegrating relationship may not be exact or linear, we adopt the rank tests for analysis without prior knowledge and specification of the functional form. We also address the rank problems that occur in multivariate rank tests. Results of the rank tests confirm validity of the PPP relationships among the GBA cities with some empirical evidence of nonlinearity that clear the doubt concerning the potential barriers to goods market integration in the GBA. There are policy implications for the local and central authorities in justifying further integrated development programs. [ABSTRACT FROM AUTHOR]

This paper investigates one of the key factors of sustainable development in the tourism sector: productive efficiency. A firm is technically inefficient when it can produce a higher output level with existing input quantities. Technical inefficiency can be reduced by stimulating the incentive of workers and employing suitable managers. On the other hand, scale inefficiency occurs when an enterprise is not producing in the constant returns to scale region. Such inefficiency can be lessened by reallocating resources to achieve an optimal production scale. Most previous empirical studies of efficiency analysis are based on the assumption of convex production sets. This paper points out that when this assumption does not hold, policies on resources allocation would be misled. To remedy this deficiency, this paper adopts a newly developed empirical frontier to model nonconvexity in the production set. It is found that, in the tourism sector, travel agents and hotels are technically efficient and scale inefficient. Consequently, a policy which leads to the merging of small firms to improve the efficiency of the market will best suit the sustainable development of the tourism sector. Our results are very different from those derived from the existing production frontiers in Data Envelopment Analysis. [ABSTRACT FROM AUTHOR]

This article adopts a time-varying parameter model to investigate whether the economic downturn has affected convergence of the consumer price index. The dynamic patterns of the intranational purchasing-power parity coefficients in mainland China before and after the financial tsunami are found to differ, indicating that the convergence has indeed been adversely affected by the downturn. [ABSTRACT FROM AUTHOR]