Annual Conference

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Economic Transformation of Asia, Senior Fellows/Fellows

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May 2017

From Imitation to Innovation: Where Is all that Chinese R&D Going?

Kjetil STORESLETTEN, Zheng Michael SONG , Michael KONIG, Fabrizio ZILIBOTTI
We construct an endogenous growth model with random interactions where firms are subject to distortions. The productivity distribution evolves endogenously as firms seek to upgrade their technology over time either by innovating or by imitating other firms. We use the model to quantify the effects o...
Keywords: China, Imitation, innovation, Misallocation, productivity, R&D, subsidies, Taiwan, TFP Growth, Traveling Wave
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Annual Conference

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Economic Transformation of Asia

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May 2017

Rationed Fertility: Theory and Evidence

Rufei GUO, Junjian YI, Junsen ZHANG
We analyze the effect of exogenous changes in fertility on child quality both at and off the unrestricted optimal fertility level in a general model with rationed fertility. Besides the price and substitution effects analyzed in the literature, we show that a desired fertility change, representing a...
Keywords: Rationed Fertility, quantity-quality trade-off, intrahousehold resource allocation
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2017

Reserve Requirements and Optimal Chinese Stabilization Policy

Mark M. SPIEGEL, Zheng LIU, Chun CHANG, Jingyi ZHANG
China’s central bank frequently adjusts reserve requirements for macroeconomic stabilization. We evaluate the effectiveness of such policy in a two-sector DSGE model. A heavy-industry sector—proxied as state-owned enterprises (SOEs)—is financed through government-guaranteed bank loans subject ...
Keywords: Reserve requirementsChinese monetary policyOff-balance sheet loansFinancial acceleratorReallocation
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2017

Subnational Debt of China: The Politics-Finance Nexus

Ru HONG, Haoyu GAO, Dragon Yongjun TANG
Using unique proprietary loan-level data, we provide the first comprehensive study on China’s local government debt, which was off-balance sheet. Policy and commercial banks, both of which are state owned, are the main financiers of local governments. We find that notwithstanding their prevalent n...
Keywords: Local Government Debt, China, China Development Bank, Policy Loans, Political Promotion
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2017

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

Zhiguo HE, Zhuo CHEN, Chun LIU
The upsurge of shadow banking is typically driven by rising financing demand from certain real sectors. In China, the 4 trillion yuan stimulus package in 2009 was behind the rapid growth of shadow banking after 2012, expediting the development of Chinese corporate bond markets in the poststimulus pe...
Keywords: Local Government Financing Vehicles, Municipal Corporate Bonds, Shadow Banking in China
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