nep-cna New Economics Papers
on China
Issue of 2009‒03‒28
eight papers chosen by
Zheng Fang
Ohio State University

  1. Economic Restructuring and Retirement in Urban China By John Giles
  2. Domestic Grain Market Reform In China: The Contribution of Economic Policy Research Funded by ACIAR Revisited By Mullen, John D.
  3. CHINA'S OFFICIAL RATES AND BOND YIELDS By Fan, Longzhen; Johansson, Anders C.
  5. IN THE SHADOW OF CHINA: TRADE AND GROWTH IN LAO PDR By Andersson, Magnus; Engvall, Anders; Kokko, Ari
  6. Impact of Financial Liberalisation on Stock Market Liquidity: Experience of China By Jess Lee; Alfred Wong
  7. An Empirical Evaluation of Poverty Mapping Methodology: Explicitly Spatial versus Implicitly Spatial Approach By Olivia, Susan; Gibson, John; Smith, Aaron; Rozelle, Scott; Deng, Xiangzheng
  8. How Large Will Be the Effect of China's Fiscal-Stimulus Package on Output and Employment? By Dong He; Zhiwei Zhang; Wenlang

  1. By: John Giles
    Abstract: This paper examines the effect of changes in immigrant eligibility for Supplemental Security Income in 1996 on the employment and retirement behaviors of foreign-born elderly persons. I find that denial of SSI was associated with a 5 percentage point (15 percent) increase in the employment of non-citizen elderly men and a 5.6 percentage point (11 percent) decrease in their retirement rate. The estimated effects were higher for recent arrivals, a group most likely to be affected by the policy change. Further, while recent arrivals were more likely to increase part-time work, the earlier arrivals responded to the policy by increasing full-time employment. I find no consistent evidence that denial of SSI affected the employment of elderly immigrant women, but some evidence that it raised their retirement rate, specifically among those who immigrated in recent years.
    Date: 2008–12
  2. By: Mullen, John D.
    Abstract: Mullen (2004,2005) conducted an impact assessment of two ACIAR funded economics research projects enquiring into domestic grain market reform in China. The benefit cost ratio to ACIAR was estimated to be in the range 5:1 to 33:1. The impact assessment was conducted when grain policy was viewed as being in a period of retrenchment rather than reform and hence the assessment was ex ante in nature. Since then the methodology for estimating nominal rates of assistance in China has been modified and the late 90s is now seen as a period when reform continued despite the professed policy stance. It seems opportune to revisit Mullen’s original impact assessment to assess the extent of welfare gains actually achieved.
    Keywords: impact assessment, China grain market reform, welfare analysis,
    Date: 2009
  3. By: Fan, Longzhen (School of Management, Fudan University); Johansson, Anders C. (China Economic Research Center)
    Abstract: Recent research shows that bond yields are influenced by monetary policy decisions. To learn how this works in an interest rate market that differs significantly from that of the U.S. and Europe, we model Chinese bond yields using the one-year deposit rate as a state variable. We also add the difference between the one-year interest rate and the one-year deposit rate as a factor. The model is developed in an affine framework and closed-form solutions are obtained. It is tested empirically and the results show that the new model characterizes the changing shape of the yield curve well. Incorporating the benchmark rate into the model thus helps us to match Chinese bond yields.
    Keywords: China; deposit rate; bond yields; jump process; affine model
    JEL: E43 E44 E52 E58
    Date: 2009–03–01
  4. By: Johansson, Anders C. (China Economic Research Center)
    Abstract: This study looks at the time-varying nature of systematic risk in the Greater China equity markets. The Shanghai and Shenzhen markets both have a low average systematic risk when measured against the world market. The short outbursts in systematic risk for these two markets seem to be directly related to policy shifts. The Hong Kong and Taiwan markets are more integrated with world markets and they show signs of large variations in systematic risk over time. Furthermore, conditional betas in the Shanghai and Shenzhen markets are stationary, while the Hong Kong and Taiwan betas are integrated of order one. In addition, long memory tests show that all four markets exhibit a long-run dependence in their conditional betas. While the two mainland China market betas are covariance stationary, the Hong Kong and Taiwan betas are not.
    Keywords: China; Taiwan; Hong Kong; time-varying beta; GARCH; unit roots; long memory
    JEL: C32 G12 G15
    Date: 2009–03–01
  5. By: Andersson, Magnus (European Institute of Japanese Studies); Engvall, Anders (Department of Economics); Kokko, Ari (China Economic Research Center)
    Abstract: The rapid integration of China into the global economy has profoundly altered external economic conditions for its neighbors and the wider developing world. This study explores the effects on Laos, a small developing country on the fringe of the Chinese market. The Lao case captures both global effects transmitted across the world market and a regional impact that may be limited to countries located close to China. Based on unique trade and household data-sets, the study identifies three main effects of China’s growth on the Lao economy: (i) an increased demand for exports of primary commodities to the Chinese market; (ii) increased inflows of Chinese manufactured goods competing with domestic Lao production; and (iii) border effects in northern Laos where low transaction costs have allowed even the poorest households to participate in exports to China. The first and second of these effects are expected to apply to most developing countries, whereas the third is unique to developing countries located close to the Chinese market. In the long run, it is possible that increasing wages and a gradual reduction of the Chinese surplus of unskilled labor will create new opportunities for labor intensive industry in other developing countries, but the short run strategies of many countries should probably focus on gradual upgrading of resource based industries.
    Keywords: Laos; exports; FDI; income distribution
    JEL: F14 F15 F20 O10
    Date: 2009–03–01
  6. By: Jess Lee (Research Department, Hong Kong Monetary Authority); Alfred Wong (Research Department, Hong Kong Monetary Authority)
    Abstract: This paper assesses the impact of the recent financial reforms in China. Following the country¡¯s accession to the World Trade Organization, financial liberalisation has picked up considerable momentum. Measures introduced encompass deregulation in the banking sector and refinements in various financial markets, as well as allowing more freedom for Chinese and foreign investors to participate and interact domestically and overseas. Compared to other studies on financial liberalisation, this study focuses on a relatively narrower aspect of financial reforms namely, the impact on stock market liquidity. Using a panel data set drawn from the Shanghai stock market, we find a positive and significant liquidity impact associated with the recent round of measures, which reflects not only an improvement in capital allocation efficiency in China¡¯s equity market but, from a financial stability point of view, also a reduction in its vulnerability. The finding also provides evidence on one of the important channels in which financial liberalisation can be transformed into economic growth over time.
    Keywords: Financial liberalisation, liquidity, dual-listed stocks, stock exchanges, fixed-effect panel regression
    JEL: G18 G32 F36 L22 C33
    Date: 2009–01
  7. By: Olivia, Susan; Gibson, John; Smith, Aaron; Rozelle, Scott; Deng, Xiangzheng
    Abstract: Poverty maps provide information on the spatial distribution of welfare and can predict poverty levels for small geographic units like counties and townships. Typically regression methods are used to estimate coefficients from the detailed information in household surveys, which are then applied to the more extensive coverage of a census. One problem with standard regression techniques is that they do not take into account the ‗spatial dependencies‘ that often exist in the data. Ignoring spatial autocorrelation in the regression providing the coefficient estimates could lead to misleading predictions of poverty, and estimates of standard errors. Household survey data usually lack exact measures of location so it is not possible to fully account for this spatial autocorrelation. In this paper, we use data from Shaanxi, China with exact measures of distance between each household to explicitly model this spatial autocorrelation. We also investigate which set of augmenting variables (i) census means or (ii) environmental variables mainly from satellite imagery have the most impact in soaking up unwanted spatial autocorrelation.
    Keywords: China, Poverty, Small Area Estimation, Survey Methods, Spatial Models,
    Date: 2009
  8. By: Dong He (Research Department, Hong Kong Monetary Authority); Zhiwei Zhang; Wenlang (Research Department, Hong Kong Monetary Authority)
    Abstract: This paper studies the effects of the fiscal-stimulus package in Mainland China on its output and employment. Using the input-output table as the analytical framework, we argue that the aggregate effect on output and employment of a given amount of fiscal spending depends on the distribution of such spending across different economic sectors. We estimate that the announced fiscal spending of RMB2 trillion yuan in 2009 could lead to a direct increase in output of RMB1.7 trillion yuan, implying a fiscal multiplier of around 0.84 in the short-run, and could potentially generate 18 million to 20 million new jobs in non-farming sectors. We further argue that the size of the fiscal multiplier also depends on the cyclical conditions of the economy and the policy environment, which we simulate using a dynamic structural model. Model results show that the fiscal multiplier in the medium run is around 1.1 as government fiscal spending leads to higher household consumption and corporate investment, which will take time to fully materialise.
    Keywords: Fiscal policy, Input-output table, Multiplier, Employment coefficient
    JEL: E2 H5
    Date: 2009–03

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