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Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China
Hanming Fang, Ming Li, Zenan Wu, Feb 22, 2023Inter-jurisdictional competition in a regionally decentralized authoritarian regime distorts local politicians’ incentives in resource allocation among firms from their own city and a competing city.
Do Interest Rates Play a Major Role in Monetary Policy Transmission in China?
Gunes Kamber, Madhusudan Mohanty, Aug 17, 2018We explore the role of interest rates in monetary policy transmission in China in the context of its multiple instrument setting. In doing so, we construct a new series of monetary policy surprises using information from high frequency Chinese financial market data around major monetary policy announcements. We find that a contractionary monetary policy surprise increases interest rates and significantly reduces inflation and economic activity. Our findings provide further support to recent studies suggesting that monetary policy transmission in China has become increasingly similar to that in advanced economies.
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%...
A Summary of Retail Investors and Momentum
Jun Du, Dashan Huang, Jane Yu Liu, Yushui Shi, Avanidhar Subrahmanyam, Huacheng Zhang, Oct 26, 2022We explore the link between momentum and retail investing via an identification strategy in China, where retail investors dominate. We propose that due to a round lot restriction, small retail investors are less likely to hold and trade stocks with high nominal prices, and find supporting evidence.
The Long-Run Trend of Residential Investment in China
Ding Ding, Weicheng Lian, Oct 09, 2019Residential investment has been a key growth engine for China in the last two decades. Total housing investment grew from about 4 percent of GDP in 1997 to a peak of 15 percent of GDP in 2014, with residential investment accounting for more than two-thirds of it. Our analysis indicates that structural changes in the Chinese economy that led to rebalancing toward consumption...
