Research Papers

Research Papers

The Long Shadow of a Fiscal Expansion

(2016)

Chong-En Bai, Chang-Tai Hsieh, Zheng (Michael) Song

In 2009 and 2010, China undertook a 4 trillion Yuan fiscal stimulus, roughly equivalent to 12 percent of annual GDP. The "fiscal" stimulus was largely financed by off-balance sheet companies (local financing vehicles) that borrowed and spent on behalf of local governments. The off-balance sheet...

The dynamic effect of rural-to-urban migration on inequality in source villages: System GMM estimates from rural China

(2016)

Wei Ha, Junjian Yi, Ye Yuan, Junsen Zhang

Using a newly constructed panel dataset that covers the 14-year period from 1997 to 2011 for more than 100 villages in China, this study analyzes the dynamic effect of rural-to-urban migration on inequality in source villages. Given that income inequality is time persisting, we use a system GMM...

Market structure, imperfect tariff pass-through, and household welfare in Urban China

(2016)

Jun Han, Runjuan Liu, Beyza Ural Marchand, Junsen Zhang

This paper investigates the tariff pass-through mechanism and the distributional effects of trade liberalization in urban China. We study how market structure, specifically the size of the private sector, affects tariff pass-through, and how this mechanism influenced the extent to which households...

Liquidity Regulation and Unintended Financial Transformation in China

(2016)

Kinda Cheryl Hachem, Zheng Michael Song

Many countries try to mitigate business cycle fluctuations by regulating the activities of their banks. We develop a theoretical framework to study the endogenous response of the banking sector and the implications for the aggregate economy. Under fairly mild conditions, we find that stricter liquidity...

Elite Recruitment and Political Stability: The Impact of the Abolition of China's Civil Service Exam

(2016)

Ying Bai, Ruixue Jia

This paper studies how the abolition of an elite recruitment system—China's civil exam system that lasted over 1,300 years—affects political stability. Employing a panel data set across 262 prefectures and exploring the variations in the quotas on the entry-level exam candidates, we find...

Does Trade Credit Boost Firm Performance?

(2016)

Dongya Li, Yi Lu, Travis Ng, Jun Yang

Some firms have achieved good performance in developing countries where the financial sector is far from established. One explanation in the literature is that these firms benefit from trade credit, a form of informal financing. Using a survey of firms in China conducted by the World Bank in early 2003,...

Chinese Saving Rates from 1953 to 2012: Trends, Compositions and Prospects

(2016)

Shaojie Zhou, Junsen Zhang

This study conducts a long-run analysis on the trends and components of Chinese saving rates from 1953 to 2012. We identify two structural changes in aggregate saving rates around 1978 and 2001, and examine them through a decomposition analysis of the income distribution and sector-specific saving...

A Study of Interest Rate Transmission Dynamics

(2016)

Jun Ma, Kang Shi, Honglin Wang, Lisheng Wang

We construct a Dynamic Stochastic General Equilibrium( DSGE) model to illustrate the transmission mechanism of the central bank policy rate in China based on Ma and Wang( 2014). Using a bank- centric financial system to characterize Chinese economy,our model qualitatively demonstrates and quantitatively...

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