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The Impact of Intranational Trade Barriers on Exports: Evidence from a Nationwide VAT Rebate Reform in China

Jie Bai, Jiahua Liu, Feb 19, 2020

It is well known that various forms of non-tariff trade barriers exist within a country. Empirically, it is difficult to measure these barriers as they can take many forms. We take advantage of a nationwide VAT rebate policy reform in China as a natural experiment to identify the existence of these intranational barriers due to local protectionism and study the impact...

Peer Effects, Political Competition, and Ecological Efficiency

Xudong Chen, Bihong Huang, Yantuan Yu, Jul 29, 2020

This study examines the impacts of political competition on eco-efficiency. We first develop a theoretical model in which local government officials compete against each other to maximize their own political score. We find that after an initial stage of decline, eco-efficiency eventually increases once environmental performance becomes a meaningful component of local government officials’ annual assessment. These theoretical predictions are corroborated...

Does Spatial Misallocation in China’s Housing and Land Markets Drive Up Housing Prices?

Yongheng Deng, Yang Tang, Ping Wang, Jing Wu, Mar 23, 2022

We documented pervasive spatial misallocations in the housing and land markets in China. We find larger cities with more competitive land markets and strict land supply restrictions have fewer subsidies in housing sales, and consequently a higher housing price compared to its frictionless benchmark. Removing frictions brings welfare gain because more individuals live in larger cities.

What You Import Matters for Productivity Growth: Experience from Chinese Manufacturing Firms

Jiawei Mo, Larry D. Qiu, Hongsong Zhang, Xiaoyu Dong, Dec 22, 2021

We find that capital import has a substantially larger productivity effect than intermediates import, by generating significant long-term productivity gains through R&D-capital synergy, R&D-inducing, and direct dynamic productivity effects. Our findings highlight the importance of tariff structure in tariff liberalization: the change in tariff structure explains 18% of the productivity gains following China’s WTO accession.

Trade Policy Uncertainty and Firm Innovation

Qing Liu, Hong Ma, May 12, 2021

This study proposes a novel channel through which trade liberalization may induce innovation through the reduction of trade policy uncertainties (TPU) in destination markets. To verify this link, we utilize the significant reduction of TPU engendered by China's accession to the World Trade Organization (WTO) in 2001 as a quasi-natural experiment. We find that reduction in TPU significantly encourages firms' patent applications and that firms' innovation responses to TPU reduction vary by productivity, ownership, exporting status, and the irreversibility of investment.