“Roads, Railroads, and Decentralization of Chinese Cities”

“Roads, Railroads, and Decentralization of Chinese Cities”

Nathaniel Baum-Snow, Loren Brandt, Vernon Henderson, Matthew Turner

In: Review of Economics and Statistics Volume 99 | Issue 3 | July 2017 p.435-448

Baum-Snow et al. investigate the effects of the recently constructed Chines national highway system on local economic outcomes. They focus on the different consequences for regional primates and hinterland prefectures and offer, based on their results, policy implications.

“Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the United States”

“Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the United States”

Kyle Handley and Nuno Limão

In: American Economic Review, Vol. 107, No. 9, 2731–2783

One of the most important economic developments of the last 20 years is China’s integration into the global trading system. The world’s share of imports from China between 1990 and 2010 rose from 2 to 11 percent. Handley and Limão argue that China’s WTO accession significantly contributed to its export boom to the United States through a reduction in US trade policy uncertainty. To verify that argument they build a model that allows them to interpret, gauge and quantify the effects of trade policy uncertainty.

“US policy spillover(?) –China’s accession to the WTO and rising exports to the EU”

“US policy spillover(?) –China’s accession to the WTO and rising exports to the EU”

Karsten Mau

In: European Economic Review, Vol. 98, September 2017, 169-188

Mau analyzes in his paper the transmission of bilateral trade policies on multilateral exports, due to existence of a global component in fixed export entry costs. Therefore he provides formal intuition for a spillover from bilateral US tariffs policies to China’s multilateral export performance. With this analysis he shed some light on the understanding of the consequences of international trade policies.

“Does the Stock Market Boost Firm Innovation? Evidence from Chinese Firms”

“Does the Stock Market Boost Firm Innovation? Evidence from Chinese Firms”

Hui He, Hanya Li and Jinfan Zhang

IMF Working Paper 17/147

He et al. deal with the question whether the stock market affects a firm’s innovation activity or not. To do so they examine the innovation activities of Chinese firms by make use of the unique characteristics of the Chinese patent system. In their paper they are running an ordinary least squares regression as well as a difference-in-differences approach to mitigate the endogeneity concerns that come along with the OLS analysis.

“Trading with China: Productivity Gains, Job Losses”

“Trading with China: Productivity Gains, Job Losses”

JaeBin Ahn, Romain Duval

IMF Working Paper No. 17/122

In this paper Ahn and Duval discuss the benefits and costs of rising trade between China and advanced economies. They criticize the shift in the economic focus, away from the benefits toward the costs of a globalized world. Therefore the authors analyze the impact of productivity in advanced economies of fast-growing trade with China between the mid-1990s and late-2000s.

“WTO Accession and Performance of Chinese Manufacturing Firms”

“WTO Accession and Performance of Chinese Manufacturing Firms”

Loren Brandt, Johannes van Biesebroeck, Luhang Wang and Yifan Zhang

In: American Economic Review 2017, Vol. 107, No. 9, 2784-2820

Brandt et al. examine the effects that the trade liberalization in China during the last decades had on the evolution of markups and productivity of Chinese manufacturing firms. Therefore they use firm-level data that covers most of the manufacturing sector in China to investigate the role of domestic trade liberalization over a period that takes China’s WTO-entry 2001 into account.

Linda Glawe attended the 6th Lindau Meeting on Economic Science

Linda Glawe, researcher at the Department of Macroeconomics and at the Center for East Asia Macroeconomic Studies (CEAMeS) participated in the 6th Lindau Meeting on Economic Science in Lindau from the 22nd to 26th August 2017. She is one of the 350 young economists from 66 countries that have successfully undergone a multi-stage, international selection process and qualified for the meeting. Central topics of the Lindau Meeting included social inequality, new conditions for monetary and fiscal policy as well as contract and organisational theory. Besides the lectures of the 17 Nobel laureates, the program also included several panel discussions and seminars which offered the opportunity for inspiring and interesting discussions with the laureates. For Linda Glawe, it was an especially great pleasure to talk to Professor Christopher Pissarides about her current research.

6th Lindau Meeting on Economic Sciences 23.08.2017 – 26.08.2017, Lindau, Germany, Picture/Credit: Julia Nimke/Lindau Nobel Laureate Meetings

Linda Glawe and Professor Christopher Pissarides

“Downside Risk in the Chinese Stock Market – Has it Fundamentally Changed?”

“Downside Risk in the Chinese Stock Market – Has it Fundamentally Changed?”

Eric Ghysels, Hanwei Liu

CEPR Discussion Paper 12180

The purpose of the paper by Ghysels and Liu is to characterize fundamental changes in the downside risk of the Chinese stock market and discern what the causes of these changes are. Furthermore, they provide a synopsis of several key events that took place during the sample period (June 1995 – December 2016) and present an overview of the structure of the two stock exchanges in mainland China, namely the Shanghai and Shenzhen stock exchange.

[CEAMeS DP09] – “The Changing Patterns of Investment in the PRC Economy”

CEAMeS Discussion Paper No. 9 | 2017

Carsten Holz

The investment-intensive growth model of the People’s Republic of China (PRC) is often viewed as state-driven and ultimately unsustainable. But largely unnoticed, a shift has taken place. This paper examines the changes in investment patterns since 2003 and the potential impact of industrial policies on these patterns. The point of view is macroeconomic, based on economy-wide data with various breakdown. Significant shifts in investment patterns across sectors and ownership forms have occurred over time, supporting a new growth model with a reduced role of the state, and these shifts appear driven more by market factors than by government policies.

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„Government Efficiency and Exports in China“

Antonia Reinecke & Hans-Jörg Schmerer

Forthcoming in: Journal of Chinese Economic and Business Studies 15 (2017)


This paper investigates the role of local governments’ efficiency on exports in China. We argue that firms located in provinces characterized by high governmental efficiency export more due to a positive productivity effect that lowers transaction costs. The analysis builds on NBS firm-level data that covers a representative sample of Chinese establishments. We find a positive correlation between provincial governments efficiency and Chinese firm’s exports. Moreover, we are able to show that the positive link between firm size and exports is magnified by governmental efficiency. Larger firms export more and this relationship is much stronger in provinces with more efficient provincial governments.

“The People’s Republic of China in the middle-income trap?”

Linda Glawe & Helmut Wagner

ADBI Working Paper No. 749, 2017


Over the last decade, a growing body of literature dealing with the phenomenon of the “middle-income trap” (MIT) has emerged. The term MIT usually refers to countries that have experienced rapid growth and thus reached the status of a middle-income country in a very short period, but have not been able to further catch up with the group of high-income economies. In particular, since the beginning of the growth slowdown of the economy of the People’s Republic of China (PRC) in 2011, there has been rising concern that the PRC is, or will also be, confronted with such a trap. We analyze the PRC’s MIT situation, considering both the (absolute and relative) empirical MIT definitions and MIT triggering factors identified in the literature. We survey the recent literature, make our own MIT forecasts, and analyze under which conditions the PRC could be caught in an MIT.


“How severe will the growth slowdown in China caused by the structural change be? An evaluation based on the experiences from Japan and South Korea”

Michael Murach & Helmut Wagner

in: Journal of Chinese Economic and Business Studies, Vol. 15 (3), July 2017, pp. 269-287


China’s economy has been growing at a high rate for the past three decades. However, the current process of rebalancing from an investment- and manufacturing-led growth model toward a consumption- and service-led model is associated with decreasing growth rates. We show that China’s current state of structural change in terms of sectoral employment share is similar to the historical developments in Japan and South Korea. We derive plausible scenarios for future growth rates in China and (by isolating the allocation effect, i.e. the pure effect of structural change) look at the effects of tertiarization on economic growth in China for the period 2014−2030 by applying a simple simulation study.

“The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes”

“The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes”

Zhuo Chen, Zhiguo He, Chun Liu

NBER Working Paper No. 23598

This paper links China’s recent fast-growing shadow banking activities to the four trillion stimulus package in 2009. Chen et al. zoom in on the composition shift of the liability side of China’s local governments, and show that the rollover pressure of bank loans that were taken on by local government finance vehicles in 2009 pushed them toward non-bank debt financing after 2012.

“Sterilized Intervention and Optimal Chinese Monetary Policy”

“Sterilized Inteervention and Optimal Chinese Monetary Policy”

Wukuang Cun and Jie Li

USC-INET Research Paper No. 16-29R

In this paper Cun and Ji examine the extent to which monetary sterilization can neutralize the effects of currency intervention in China. In addition, they study the optimal choice of monetary policy instruments and the optimal policy rules given China’s current external policy regimes.