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Stabilizing China’s Housing Market
Richard Koss, Xinrui Shi, Jul 25, 2018The 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.
Leverage-Induced Fire Sales and Stock Market Crashes
Jiangze Bian, Zhiguo He, Kelly Shue, Hao Zhou, Dec 03, 2018The authors find that margin investors heavily sell their holdings when their account-level leverage edges toward the maximum leverage limits. Stocks that are disproportionately held by accounts close to leverage limits experience high selling pressure and abnormal price declines that subsequently reverse over the next 40 trading days. Unregulated shadow-financed margin accounts contributed more to the market crash even though these shadow accounts had higher leverage limits and held a smaller fraction of market assets.
The Effect of Computer-Assisted Learning on Students’ Long-Term Development
Nicola Bianchi, Yi Lu, Hong Song, Feb 17, 2021We examine the effect of computer-assisted learning on students’ long-term development. We explore the implementation of the largest ed-tech intervention in the world to date, which connected China’s best teachers to more than 100 million rural students through satellite internet. Exposure to the program improved students’ academic achievement, labor performance, and computer usage for at least ten years after program implementation. These findings indicate...
The Two-Pillar Policy for the RMB from December 2015 to May 2017
Urban J. Jermann, Bin Wei, Vivian Yue, Aug 16, 2017We document that since December 2015 the People’s Bank of China (PBC) has followed a “two-pillar” exchange rate policy that aims to achieve both stability and flexibility. Based on a no-arbitrage model and options price data we estimate the credibility of the policy as well as its impact on the RMB/USD exchange rate. The model was able to correctly forecast the end of the two-pillar policy in May 2017.
The Impact of the China Tire Safeguard
Sunghoon Chung, Joonhyung Lee, Oct 23, 2019This column evaluates the impact of the China tire safeguard on the US tire industry. Contrary to claims made by the US government, we find that total employment and average wages in the tire industry were unaffected by the safeguard. This result is not surprising as we find that Chinese tires have been completely diverted to other exporting countries due to the strong presence of multinational corporations in the world tire market. On the other hand, US domestic tire prices increased by up to 10% during the safeguard period...
