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on China |
| By: | Curran , Declan; Funke, Michael (Hamburg University, Germany) |
| Abstract: | We present a new composite leading indicator of economic activity in mainland China, es-timated using a dynamic factor model. Our leading indicator is constructed from three se-ries: exports, a real estate climate index, and the Shanghai Stock Exchange index. These series are found to share a common, unobservable element from which our indicator can be identified. This indicator is then incorporated into out-of-sample one-step-ahead forecasts of Chinese GDP growth. Recursive out-of-sample accuracy tests indicate that the small-scale factor model approach leads to a successful representation of the sample data and provides an appropriate tool for forecasting Chinese business conditions. |
| Keywords: | forecasting; China; leading indicator; factor model; growth cycles |
| JEL: | C32 C52 E32 E37 |
| Date: | 2006–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2006_006&r=cna |
| By: | Funke, Michael (Hamburg University) |
| Abstract: | The New Keynesian Phillips curve (NKPC) posits the dynamics of inflation as forward looking and related to marginal costs. In this paper we examine the empirical relevance of the NKPC for mainland China. The empirical results indicate that an augmented (hybrid) NKPC gives results that are consistent with the data generating process. It is in this respect that the NKPC provides useful insights into the nature of inflation dynamics in mainland China as well as useful insights for the conduct of monetary policy. |
| Keywords: | China; inflation; New Keynesian Phillips curve |
| JEL: | C22 E31 |
| Date: | 2005–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2005_006&r=cna |
| By: | Wang, Jiao (London South Bank University, now at Access Economics (Australia)); Mayes, David (Bank of Finland); Wan, Guanghua (UNU-WIDER) |
| Abstract: | Using a CGE model (PRCGEM) updated to 2002, the paper explores how WTO membership could affect earnings in 40 industries across 31 regions (and 8 regional blocks) of China during the period 2002–2007. Taking into account labour movement between regions within China, the direct contribution of WTO membership to overall economic growth and development is predicted to be small, with a rise in real GDP of only 6.48% short term and 5.6% long term. However, structural economic change and the WTO shock should increase regional output, especially in the established coastal economies. Regional labour movement is found to increase 69.2% at the completion of economic structural reforms. A slight decrease in the Gini coefficient for income inequality is also anticipated. |
| Keywords: | applied CGE modelling; China; WTO; labour movement; inequality |
| JEL: | C68 O18 R12 R23 |
| Date: | 2005–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2005_018&r=cna |
| By: | Mehrotra, Aaron (BOFIT) |
| Abstract: | We examine the role of the exchange and interest rate channels during recent deflation episodes in Japan, Hong Kong and China. We estimate open-economy structural vector autoregressive (SVAR) models for the three economies with different monetary regimes and varying degrees of openness. In both Japan and Hong Kong, shocks to the nominal effective exchange rate have a statistically significant impact on prices, with a notably stronger effect in Hong Kong. Our results provide evidence about the role of external influences in the deflation episodes of these economies, and could also be seen to weakly support suggestions to depreciate the currency in order to escape from a liquidity trap. The importance of the interest rate channel is also found to be high in Japan and Hong Kong. In China, where interest rates have not been an important monetary policy tool, neither exchange nor interest rate shocks significantly influence price developments. |
| Keywords: | deflation; zero lower bound; SVAR |
| JEL: | E31 F41 |
| Date: | 2005–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2005_017&r=cna |
| By: | Alan de Brauw (International Food Policy Research Institute); John Giles (Michigan State University and IZA Bonn) |
| Abstract: | In this paper, we investigate how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which made it easier for rural migrants to register as temporary residents in urban destinations. We show that timing of ID card distribution is unrelated to local rainfall shocks affecting demand for migration, and not related to proxies reflecting time-varying changes in village policy or administrative capacity. We find a robust negative relationship between migrant opportunity and high school enrollment. The mechanisms behind the negative relationship are suggested by observed increases in subsequent local and migrant non-agricultural employment of high school age young adults as the size of the current village migrant network increases. |
| Keywords: | migration, educational attainment, rural China |
| JEL: | O12 O15 J22 J24 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2326&r=cna |
| By: | Mehrotra , Aaron (BOFIT) |
| Abstract: | We examine money demand in the Chinese economy during a period characterized by significant disinflation and outright deflation, coupled with strong output growth. Our study establishes a stable money demand system for broad money M2. Inflation affects the adjustment of the system towards equilibrium, and shocks to broad money are found to lead to higher inflation in the context of an impulse response analysis. No evidence of non-linearity in money demand is found for the disinflationary period. The results provide support for the PBoC’s policy of specifying intermediate targets for money growth. Importantly, our results suggest that movements in the nominal effective exchange rate should be taken into account in a successful implementation of such a policy. |
| Keywords: | money demand; disinflation; deflation; China |
| JEL: | E31 E41 |
| Date: | 2006–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2006_010&r=cna |
| By: | Ji, Gang (BOFIT) |
| Abstract: | This study investigates the economic consequences of cross-listing on the Chinese stock market. We argue that by adopting a higher disclosure standard through cross- listing firms voluntarily commit themselves to reducing information asymmetry. As a result, cross-listed firms are able to benefit from growth opportunities with less appropriated cash flow and lower cost of capital. The empirical evidence shows that cross-listed firms indeed command higher valuations than their non-cross-listed counterparts, after controlling for certain firm-specific attributes. This lends support to the corporate governance hypothesis of cross-listing on the Chinese stock market. The study also argues that an overall upgrad-ing of accounting standards cannot substitute for the cross-listing mechanism. |
| Keywords: | corporate governance; listing; China |
| Date: | 2005–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2005_014&r=cna |
| By: | Zhu, Pingfang (Research Institute of Econometrics and School of Economics, Shanghai University of Finance and Economics.); Li, Lei (Research Institute of Econometrics and School of Economics, Shanghai University of Finance and Economics.); Lundin, Nannan (Örebro University and Trade Union Institute for Economic Research (FIEF)) |
| Abstract: | This paper examines the impact of R&D expenditure and technology import on the level and the growth of productivity, as well as on the general economic performance in manufacturing firms with various ownership structures in Shanghai, China. The empirical analyses are based on the firm-level information of a sample of manufacturing firms for the period 1998–2003. We find clear-cut evidence indicating that firms with foreign participation have a productivity advantage over their domestic counterparts. The expenditures on technology import not only have a direct and positive effect on productivity, but also indirectly enhance the absorptive capacity of firms to facilitate in-house R&D activities. This is particularly true for firms with foreign participation, or for firms in sectors with relatively high technical standards. Furthermore, R&D expenditure and technology import may also have positive effects on profitability and export performance, depending on the ownership structure of the firm and the technical standard in the sector. |
| Keywords: | Science and Technology policy; Science and Technology investment; R&D |
| JEL: | L52 O32 O38 |
| Date: | 2005–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2005_005&r=cna |