A Bridge on Economic Issues between China and the World
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Accounting for Urban China’s Rising Income Inequality: The Roles of the Labor Market, Human Capital, and Marriage Market Factors
Shuaizhang Feng, Gaojie Tang, Mar 27, 2019China has witnessed persistent increases in economic inequality since the early 1990s when the urban labor market began its transformation — from centrally-controlled to market-driven. Using the Urban Household Survey data, this paper (Feng and Tang, 2018) documents the trends...
Physician-Induced Demand: Evidence from China’s Drug Price Zero-Markup Policy
Hanming Fang, Xiaoyan Lei, Julie Shi, Xuejie Yi, Aug 11, 2021We exploit the staggered rollout of China’s drug price zero-markup policy (ZMP) to study physician-induced demand in healthcare. Our results show that the drug expenses in the treatment hospitals dropped by 63 log points (47 percent) compared with those of the control group; however, the expenses for non-drug services were 28 log points (32 percent) higher in the treatment group than in the control group. Our results provide robust evidence for physician-induced demand.
In Rural China, Gift-Giving Is an Increasingly Costly Competition
Erwin Bulte, Ruixin Wang, Xiaobo Zhang, May 01, 2019Gift expenditures grow swiftly in rural China and may adversely affect people's welfare. While gift-giving helps to maintain social status and connections, gift competition may create a predicament: people must spend more and more to "keep up with the Joneses." As a result, the escalating gift expenses crowd out spending on other important consumption and become increasingly burdensome to people in rural areas, particularly to the poor.
Corporate Innovation and IPO Interventions
Lin William Cong, Sabrina T. Howell, May 20, 2020The Chinese government has occasionally suspended IPOs, exogenously creating uncertainty about access to public markets for firms already approved to list. We show that suspension-induced delay reduces corporate innovation activity both during the delay and for years after listing.
Can Credit Still Prop Up the Chinese Economy?
Sophia Chen, Lev Ratnovski, Feb 28, 2018Recent 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.
