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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, 2020To 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%...
GDP Management to Meet or Beat Growth Targets
Changjiang Lyu, Kemin Wang, Frank Zhang, Xin Zhang, Oct 24, 2018We apply the discontinuity methodology from the accounting literature to a political economy setting of GDP reporting and examine whether Chinese local governments manage regional GDP numbers. We find strong evidence of discontinuities around zero in the distribution of actual minus target GDP growth rates. The frequencies of just meeting or beating GDP growth targets are about five (four) times the frequencies of just missing targets at the prefecture (province) level. The results are stronger for governors with longer tenures and those without political connections to higher-level officials as well as for local governments with more resources under their control.
Mapping U.S.-China Technology Decoupling, Innovation, and Firm Performance
Pengfei Han, Wei Jiang, Danqing Mei, Dec 01, 2021We develop measures for technology decoupling and dependence between the U.S. and China based on combined patent data. The first two decades of the century witnessed a steady increase in technology integration (or less decoupling), but China’s dependence on the U.S. increased (decreased) during the first (second) decade. Decoupling in a technology field predicts China’s growing dependence on U.S. technology, which, in turn, predicts less decoupling further down the road...
China’s Rebalancing and Gender Inequality
Mariya Brussevich, Era Dabla-Norris, Bin Grace Li, Jun 23, 2021This study documents women’s declining relative wages and labor force participation in China over the last two decades, in contrast with the predictions of the structural transformation literature, suggesting that rising service sector share is associated with narrowing gender gaps. We show that women’s labor supply elasticity to spouse’s wages increased dramatically between 1995 and 2013, which is consistent with a U-shaped relationship between economic development and women’s...
Misallocation of Managerial Talent in China’s Housing Boom
Yu Shi, Feb 20, 2019The housing boom in China has raised great concerns about capital and credit misallocation. Recent research by IMF Economist Yu Shi finds that China’s imperfect financial market and regulations in the land market have also led to a misallocation of managerial talent, dampening productivity and growth in the non-real estate sectors. Productive managers in other sectors moved to the real estate sector...
