Optimising Production: Industrial Policies in Networks Ernest Liu, Mar 13, 2019 Many developing countries adopt industrial policies favoring upstream sectors. Liu (2018) shows these policies might enhance aggregate production efficiency. When sectors form a production network, market imperfections generate distortions that compound through input demand linkages, accumulating into upstream sectors and creating an incentive for well-meaning governments to subsidize these sectors. The study proposes the measure “distortion centrality,” which is a sufficient statistic that can guide policy interventions in arbitrary networks. Distortion centrality predicts sectors that were promoted in South Korea in the 1970s and modern-day China, suggesting that these policies might have generated positive aggregate effects.
In the Shadows of the Government: Relationship-building during Political Turnovers Hanming Fang, Zhe Li, Nianhang Xu, Hongjun Yan, Mar 06, 2019 We document that firms use two instruments to build relationships with local government officials in China: “perk spending” and personnel changes. Following a turnover in the positions of Party Secretary or Mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their perk spending...
Gender-Targeted Job Ads: Patterns, Impacts, and Mechanisms Peter Kuhn, Kailing Shen, Feb 27, 2019 Gender-targeted job ads are common in many emerging economies. Using data from jobboards—which differ substantially in terms of culture, size, and user groups targeted—our empirical evidence suggests that policies that target workers’ application decisions may be at least as important as policies that target employers’ screening decisions, if not more.
Misallocation of Managerial Talent in China’s Housing Boom Yu Shi, Feb 20, 2019 The housing boom in China has raised great concerns about capital and credit misallocation. Recent research by IMF Economist Yu Shi finds that China’s imperfect financial market and regulations in the land market have also led to a misallocation of managerial talent, dampening productivity and growth in the non-real estate sectors. Productive managers in other sectors moved to the real estate sector...
The Mandarin Model of Growth Wei Xiong, Feb 13, 2019 The Mandarin model is defined by two key features of the Chinese economy. First, the government takes a central role in driving the economy through its active investment in infrastructure. Second, the agency problems between the central and local governments can lead to a rich set of phenomena in the Chinese economy—not only rapid economic growth propelled by the tournament among local governors, but also short-termist behaviors of local governors that directly affect China’s economic and financial stability.