Do Interest Rates Play a Major Role in Monetary Policy Transmission in China?

Gunes Kamber, Madhusudan Mohanty, Aug 17, 2018

We explore the role of interest rates in monetary policy transmission in China in the context of its multiple instrument setting. In doing so, we construct a new series of monetary policy surprises using information from high frequency Chinese financial market data around major monetary policy announcements. We find that a contractionary monetary policy surprise increases interest rates and significantly reduces inflation and economic activity. Our findings provide further support to recent studies suggesting that monetary policy transmission in China has become increasingly similar to that in advanced economies.

The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms

Haichao Fan, Yu Liu, Nancy Qian, Jaya Wen, Aug 08, 2018

This investigation uses a balanced panel of large manufacturing firms to provide novel evidence on the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization increases cumulative VAT revenues and increases the effective average tax rate. Furthermore, the evidence suggests that the effects of computerization change over time: tax revenue gains are likely to be smaller in the long run. Meanwhile, firms reduce output and input, and increase productivity monotonically over time.

Does Good Luck Make People Overconfident? Evidence from a Natural Experiment in China

Huasheng Gao, Donghui Shi, Bin Zhao, Aug 01, 2018

We find that retail investors who win an allotment for an IPO subscription subsequently become more overconfident relative to retail investors who do not have an allotment. The former group subsequently trades more frequently and loses more money. Overall, our evidence indicates that the experience of good luck makes people more overconfident about their prospects.

Stabilizing China’s Housing Market

Richard Koss, Xinrui Shi, Jul 25, 2018

The sharp rise of house prices in China’s Tier-1 cities has fostered a great deal of commentary about the possibility of bubbles forming there. However, China’s unique housing market characteristics make it difficult to assess the macroeconomic severity of bursting bubbles, even if they exist. These characteristics include the setting of land supply and prices by the government, among many others. This paper looks at proposals to shore up the mortgage underwriting and legal infrastructure to help China withstand the impact of falling prices, should this occur.


Rising Intergenerational Income Persistence in China

Yi Fan, Junjian Yi, Junsen Zhang, Jul 04, 2018 

Trends and Cycles in China’s Macroeconomy

Chun Chang, Kaiji Chen, Daniel F. Waggoner, Tao Zha, Jun 27, 2018 

Carry Trade with Chinese Characteristics

Yi Huang, Ugo Panizza, Richard Portes, Jun 13, 2018 

Is the Wife A Risk Mitigator? Evidence from Family Firms in China

Yue Pan, Jinli Xiao, Vincent W. Yao, Jian Zhang, Jun 06, 2018 

How the Internet Changed Chinese Exports before Ali Baba Came

Ana M. Fernandes, Aaditya Mattoo, Huy Nguyen, Marc Schiffbauer, May 16, 2018