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The validity of purchasing power parity (PPP) between two economies implies goods markets of the two are well integrated. This is a pre-condition for further economic convergence. This study examines validity of the PPP between China and European countries. Since the functional form of the cointegrating relationship may not be exact or linear, we adopt the nonparametric rank tests for analysis, without prior specification of the functional form. We also address the rank problems that occur in multivariate rank tests. The results indicate strong support for nonlinear PPP relationships between China and European countries, especially during the second subsample period. This indicates China's rising economic power, particularly in the most recent decade. Although there have been disputes between China and Europe, these results suggest favorable prospects for closer economic cooperation between the two sides and the need for formulation of common policies to pursue an integrated market in the future. [ABSTRACT FROM AUTHOR]

This article examines the measures taken by the Chinese government in the real estate sector from 2005 to the first quarter of 2009 in order to get a better understanding of related policy developments. A multivariate regression analysis was performed to determine the effect of such measures, especially credit control, on growing real estate development investments after the financial tsunami. The results indicate that adjusting the money supply in order to influence interest rates could be more effective than long-term measures such as land supply or administrative policies. Importantly, the study concludes that interest rates are market measures that allow the economy to adjust more freely without building up bubbles again, as opposed to mandatory and interventionist government policies. [ABSTRACT FROM AUTHOR]