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...
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.
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.
Why do some states stay intact for centuries, while others fall relatively soon after they are founded?
Using subsidiary-level data of 3,863 Chinese nonfinancial firms from 2000 to 2019, we show that the multinationals have 5.3% higher capital expenditures than the domestic firms relative to the average. The multinational firms’ offshore investment increases with policy uncertainty about the domestic markets. Our analysis suggests that in the face of domestic uncertainty, multinational firms switch to...