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Tax Policy and Lumpy Investment Behavior: Evidence from China’s VAT Reform

Zhao Chen, Xian Jiang, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Yi Xu, Apr 01, 2020

To stimulate investment and promote production efficiency, the Chinese government has undertaken a series of value-added tax (VAT) reforms. One of those reforms, in 2009, reduced not only the purchasing price of equipment, but also investment frictions, i.e., the price gap imposed by the pre-reform VAT system between new and used equipment. We find that this reform increased equipment investment by 36%...

Going Green in China: Firms’ Responses to Stricter Environmental Regulations

Haichao Fan, Joshua Graff Zivin, Zonglai Kou, Xueyue Liu, Huanhuan Wang, Apr 29, 2020

Evidence from China shows that firms respond to stricter enforcement of the emission reduction target by reducing their pollution. This effect is stronger for firms in industries with higher pollution intensity. Stricter environmental regulations also lead to sharp declines in firms’ profits, capital, and labor. A sequence of tests of the underlying mechanisms reveals...

Human Mobility Restrictions and the Spread of the Novel Coronavirus (2019-nCoV) in China

Hanming Fang, Long Wang, Yang Yang, Jun 03, 2020

We provide a rigorous examination of the causal impact of human mobility restrictions, particularly the lockdown of the city of Wuhan on January 23, 2020, on the containment and delay of the spread of the Novel Coronavirus (2019-nCoV) in China. We employ various difference-in-differences strategies to disentangle the lockdown effect on human mobility reductions from other confounding effects, including a panic effect, a virus deterrence effect, and a Spring Festival effect. We find that the lockdown of Wuhan significantly reduced the within-city movements and cross-city migration with Wuhan, and the enhanced social distancing policies in the 63 Chinese cities outside Hubei province have been effective in containing the spread of the novel coronavirus. We also estimate that, had the government not enacted the historic lockdown of the city of Wuhan, the COVID-19 cases in China would be 64.81% higher in the 347 Chinese cities outside Hubei province, and 52.64% higher in the 16 non-Wuhan cities inside Hubei.

VoxChina Covid-19 Forum (First Edition): Public Health and Public Policy

VoxChina, Apr 11, 2020

Covid-19 poses unprecedented challenges to the global health and global economy. We are pleased to initiate a series of Covid-19 Public Health and Public Policy Virtual Forums to discuss the impact and policy responses to Covid-19.