The housing boom and bust cycle has called attention to the volatility of housing prices and its impact on other markets. We challenge the conventional wisdom that housing prices are the present value of future rents and show that housing price uncertainty can affect household property investments, which in turn affect rent. Using data from Hong Kong and mainland China, we find a significant effect of housing price on rent and draw important implications for monetary and macro-prudential policies.
This paper provides evidence of heterogeneous human-capital externality using CHIP 2002, 2007, and 2013 data from urban China. After instrumenting city-level education using the number of relocated university departments across cities in the 1950s, one additional year of city-level education increases individual hourly wages by 22.0 percent, more than twice the OLS estimate. Human-capital externality is greater for all groups of urban residents in the instrumental variables estimation.
Chinese and Indian multinationals are continuously expanding their operations in Europe and the United States through cross-border acquisitions (CBAs), with the aim of tapping into international knowledge located in target firms and innovative hubs. Amendolagine, Giuliani, Martinelli, and Rabellotti have looked into impacts that CBAs have on...
This paper examines an important industrial policy in China in the 2000s that aims to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness.
Recent IMF research explores the effectiveness of credit in supporting the Chinese economy, and compares it with the effectiveness of fiscal stimulus. The study finds that credit contributed positively to output growth in China in the early 2000s, but the effect fell to almost zero post-2010. This suggests that, at present, credit cannot effectively support further growth of the Chinese economy. In contrast, the estimated fiscal multiplier is 1.4 post-2010, which is high in international and historic comparisons. Therefore, a targeted fiscal stimulus can cushion the adjustment of the Chinese economy to lower credit growth.