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John Dodsworth and Dubravko Mihaljek

Contents
Preface
Acknowledgments
Glossary of Abbreviations
I	Introduction and Overview Longer-Term Trends Adjustment in the Mid-1990s Macroeconomic Policies Competitiveness Transition and Future Prospects
II	Growth, Structural Change, and Economic Integration Structural Transformation Economic Integration of Hong Kong and China Patterns of Growth Fluctuations in Aggregate Output
III	Adjustment in the Mid-1990s Why Adjustment Was Needed Consolidation in Asset Markets Adjustment in Product and Factor Markets Recovery External Sector and the Real Exchange Rate Conclusion
IV	Macroeconomic Policy Framework Fiscal Policy Linked Exchange Rate System Financial System and Regulatory Framework Factor Markets and Social Policies Trade and Competition Policies
V	Competitiveness in Services and Manufacturing Methodology Manufacturing Services Industries Profitability and Intersectoral Resource Allocation Differential Productivity Growth, Inflation, and the Real Exchange Rate Policy Implications
VI	Transition in 1997 Historical Context Hong Kong’s Constitutional Arrangements Institutions of Government Framework for Economic Policymaking
Appendices
I	Estimates Consumption Function Estimates Estimates of Export Supply and Import Demand Functions
II	Data Sources and Description Data Sources Description of the Data Estimates of Real Growth in Manufacturing
III	Joint Declaration and the Basic Law
References
Tables Section
II	Basic Indicators Business Cycles in Hong Kong Hong Kong: Interactions with Business Cycles in China and the United States
IV	Discrepancy Between Actual, Preliminary, and Projected Budgetary Outcomes Consolidated Government Account Medium-Range Fiscal Forecast Financial Indicators, Pre- And Post-Accounting Arrangements
V	Basic Indicators for Manufacturing Real Output and Deflators in Trade and Tourism Productivity and Unit Labor Costs in Trade and Tourism Real Output and Deflators in Transportation, Storage, and Communications Productivity and Unit Labor Costs in Transportation, Storage, and Communications Real Output and Deflators in Financing, Insurance, Real Estate, and Business Services Productivity and Unit Labor Costs in Financing, Insurance, Real Estate, and Business Services Community, Social, and Personal Services Gross Operating Surplus and Unit Labor Costs by Sector Output Prices by Sector Relative to Manufacturing Prices Wages by Sector Relative to Manufacturing Wages Performance of Tradable and Nontradable Industries
Appendices
	Estimates of Consumption Equations, 1969–94 Consumption Demand Elasticities, 1969–94
Figures Section
II	Output by Sector Employment by Sector Economic and Financial Integration Between Hong Kong and China Business Cycles Business Cycles in Hong Kong, China, and the United States
III	Stock Market Developments Property Market Developments Developments in GDP Trade Developments Labor Market Developments Price Developments
IV	Consolidated Accounts Budget and Actual Effects of Fiscal Policy Expenditure Developments Public Expenditure in Hong Kong and Selected Countries Exchange Rate Developments Financial Market Developments
Boxes Section
I	Institutional Arrangements for Hong Kong After 1997
II	Labor Supply in the Mid-1990s
III	Determinants of the Trade Balance
IV	Fiscal Impulse The Land Fund and Fiscal Reserves Cost of the Airport Core Program Evolution of the Hong Kong Monetary System Foreign Exchange Reserves Banking Crisis of the Early 1980s Summary of Banking Regulations Mandatory Provident Fund Scheme Proposal Government Measures for the Residential Property Market Regulation of the Telecommunications Industry
VI	Economic Background on the Establishment of Hong Kong Implementation of the Joint Declaration Selection of the Chief Executive of the Hong Kong Special Administrative Region Provisions on Monetary and Financial Autonomy of the Hong Kong Special Administrative Region

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