“Credit and Fiscal Multipliers in China”
Sophia Chen, Lev Ratnovski and Pi-Han Tsai
IMF Working Paper WP/17/273
Chen et al. estimate credit and fiscal multipliers in China. They use the tenure of the provincial party secretary, interacted with the type of stimulus used in other provinces, to obtain separate instruments for provincial credit and government expenditure. The results suggest that reducing credit growth in China is unlikely to disrupt output growth, whereas fiscal policy may be effective in supporting macroeconomic adjustment.
“Risks in China’s Financial System”
Zheng Michael Song and Wei Xiong
NBER Working Paper No. 24230
Since 2008 the Chinese debt-to-GDP ratio skyrockets. This fact, and the high leverage as well as the soaring housing prices, have caused wide concerns about the risks and instability of China’s financial system. Motivated by these concerns Song and Xiong reviewed several commonly perceived financial risks in their article and discuss the roots in China’s unique economic and financial system.
“Value-added exports and U.S. local labor markets: Does China really matter?”
Leilei Shen and Peri Silva
In: European Economic Review, Vol. 101, January 2018, Pages 479-504
In this paper, the main focus is the direct contribution of the Chinese economy to changes in U.S. labor market outcomes. Their strategy follows the insights provided by a model of international trade with G regions, where N of these regions represent commuting zones in the U.S. economy, and where firms in a particular sector and country are assumed to have access to the same technology displaying increasing returns to scale.
“Unified China and Divided Europe”
Chiu Yu Ko, Mark Koyama and Tuan-Hwee Sng
In: International Economic Review, January 2018, Vol. 59, No. 1, forthcoming
Throughout much of history,the most economically developed region of the world wasn’t Europe but China, which was typically a unified empire. This paper proposes a unified framework based on Eurasian geography to (a) help explain the different political equilibria in China and Europe, and (b) explore the economic consequences of political centralization and fragmentation.
“Post-disaster aid and development of the manufacturing sector: Lessons from a natural experiment in China”
Erwin Bult, Lih Xu and Xiaobo Zhang
In: European Economic Review, Vol. 101, January 2018, Pages 441-458
Bult et al. adopt a disaggregate approach to study the link between aid and Dutch Disease dynamics, using a natural experiment in China. Specifically, they examine whether post- disaster aid provided to a subsample of Chinese counties, devastated by an earthquake in 2008, affects the sectoral composition of local economies. Using different methods, they consistently find that counties receiving (more) aid —even “nearby counties” not directly damaged by the earthquake —tend to suffer from a contraction of the manufacturing sector.
“Population policies, demographic structural changes, and the Chinese household saving puzzle”
Suqin Ge, Dennis Tao Yang, Junsen Zhang
In: European Economic Review, Vol. 101, January 2018, Pages 181 – 209
Household saving rates have increased dramatically over the past two decades in China, in addition to the rise in average saving rate; the age-saving profile has also evolved into an unusual pattern. In this paper, Ge et al. propose and test a new hypothesis that demographic structural changes caused by a series of population control policies since the 1970s have contributed to changes in China’s household saving patterns. Therefor they develop a simple overlapping generation (OLG) model to illustrate the effects of population control policies and demographic structural changes on saving decisions of individuals at different life stages.
“Credit ratings of domestic and global agencies: What drives the differences in China and how are they priced?”
Xianfeng Jiang and Frank Packer
BIS Working Papers No. 648
In contrast to the the domestic rating agencies the top global agencies, headquartered outside of China, rate bonds, that are issued overseas by Chinese corporations, usually with much lower grades. In this paper, Jiang and Packer examine the risk assessments of Chinese (non-financial) companies published by the major Chinese rating agencies and the two largest global rating agencies. Further, they investigate the degree to which rating scales are comparable between domestic rating agencies, as well as between domestic and global rating agencies.
“The Rise and Fall of Local Elections in China: Theory and Empirical Evidence on the Autocrat’s Trade-Off”
Monica Martinez-Bravo, Gerard Padró I Miquel, Nancy Qian and Yang Yao
NBER Working Paper No. 24032
In the late 80’s and early 90’s China has introduced elections at the local level. The functions of these locally elected bodies are typically managerial or administrative, with little political consequence. Hence, existing theories that explain the presence of elections at the elite level do not provide a good framework for understanding the presence of local elections. Thus, the main goal of the paper by Martinez-Bravo et al. is to address this gap in the literature and provide a theory and empirical evidence on the conditions under which an autocratic regime would allow local elections.
“Assessing China’s Residential Real Estate Market”
Ding Ding, Xiaoyu Huang, Tao Jin and W. Raphael Lam
IMF Working Paper WP/17/248
In this paper Ding et al. use city-level real estate data to estimate the range of overvaluation of real estate markets across city-tiers in China. Further, they assesse the main risks of a real estate slowdown and its impact on economic growth and financial stability. They assume, if house prices rise further beyond “fundamental” levels and the bubble expands to smaller cities, it would increase the likelihood and costs of a sharp correction. That could weaken growth, undermine financial stability, reduce local government spending room, and spur capital outflows
“Financial Development, Financial Structure and Income Inequality in China”
Guanchu Li, Yuanyuan Liu, Chengsi Zhang
In: The World Economy, Vol. 40, No. 9, 1890-1917
The rapid growth that China has experienced throughout the past few decades was accompanied by a remarkable increase in income inequality. Li et al. investigate the linear and non-linear impacts of financial development and structure on income inequality, by using panel data for 23 Chinese provinces over the period from 1996 to 2012. Further they pay attention to the dual structure (rural and urban regions) of the Chinese economy.
“The Relationship between Political Tensions, Trade and Capital Flow in ASEAN Plus Three”
Thomas Gawarkiewicz and Yao Tang
In: The World Economy, Vol. 40, No. 9, 1958-1988
In this paper Gawarkiewicz and Tang aime to estimate the relationship between tensions, trade and capital flows in East and South-East Asia specifically. They identify three possible channels through which tensions can affect trade and/or capital flows: 1.) at the governmental level, 2.) at the firm level, and 3.) at the individual level due to consumer choices. Because a multitude of factors influence trade and capital flows, they estimate the determination of international trade and investment in a gravity model of trade augmented by political factors.
“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
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”
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”
In: European Economic Review, Vol. 98, September 2017, 169-188
Mau analyzes 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”
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.