A Bridge on Economic Issues between China and the World
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China’s War on Pollution: A Review of Evidence from the First Five Years
Michael Greenstone, Guojun He, Shanjun Li, Eric Zou, Jun 30, 2021The decade from 2010 to 2019 marked a significant turning point in China’s approach to environmental regulation and pollution. This review article examines recent trends in air and water quality, with a focus on the five years following the Chinese government’s announcement of its “war on pollution” in 2014. It also summarizes the emerging literature that has taken advantage of recent improvements in data availability and accuracy to understand the social, economic, and health impacts of environmental pollution in China.
Household Finance in China
Russell Cooper, Guozhong Zhu, Sep 20, 2017We study household financial choices in China and compare them with those in the US. We estimate a structural model where the two countries differ in terms of preferences and institutional arrangements. In the structural estimation, we take into account the effects of important structural changes in the Chinese economy between 1990-2000.
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 Chinese Saving Rate: Long-Term Care Risks, Family Insurance, and Demographics
Ayşe İmrohoroğlu, Kai Zhao, Sep 13, 2017In this paper, we show that a general equilibrium model that properly captures the risks in old age, the role of family insurance, changes in demographics, and the productivity growth rate is capable of generating changes in the national saving rate in China that mimic the data well. Our findings suggest that the combination of the risks faced by the elderly and the deterioration of family insurance due to the one-child policy may account for approximately half of the increase in the saving rate between 1980 and 2010. We also show that changes in total factor productivity growth account for the fluctuations in the saving rate during this period.
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.
