nep-cna New Economics Papers
on China
Issue of 2014‒09‒25
three papers chosen by
Zheng Fang
Ohio State University

  1. Asia's Little Divergence: State Capacity in China and Japan before 1850 By Sng, Tuan-Hwee; Moriguchi, Chiaki
  2. Does Local Governments' Budget Deficit Push Up Housing Prices in China? By Guiying Laura WU; Qu FENG; Pei LI
  3. Regional Economic Impact Analysis of High Speed Rail in China : Step by Step Guide By World Bank

  1. By: Sng, Tuan-Hwee; Moriguchi, Chiaki
    Abstract: This paper explores the role of state capacity in the comparative economic development of China and Japan. Before 1850, both nations were ruled by stable dictators who relied on bureaucrats to govern their domains. We hypothesize that agency problems increase with the geographical size of a domain. In a large domain, the ruler's inability to closely monitor bureaucrats creates opportunities for the bureaucrats to exploit taxpayers. To prevent overexploitation, the ruler has to keep taxes low and government small. Our dynamic model shows that while economic expansion improves the ruler's finances in a small domain, it could lead to lower tax revenues in a large domain as it exacerbates bureaucratic expropriation. To test these implications, we assemble comparable quantitative data from primary and secondary sources. We find that the state taxed less and provided fewer local public goods per capita in China than in Japan. Furthermore, while the Tokugawa shogunate's tax revenue grew in tandem with demographic trends, Qing China underwent fiscal contraction after 1750 despite demographic expansion. We conjecture that a greater state capacity might have prepared Japan better for the transition from stagnation to growth.
    Keywords: Comparative Institutional Analysis, Geography, Principal-Agent Problem, Institutions and Growth
    JEL: D73 N15 N40 O43 P52
    Date: 2014–08
  2. By: Guiying Laura WU (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological Univer- sity. Address: 14 Nanyang Drive, Singapore, 637332.); Qu FENG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological Univer- sity. Address: 14 Nanyang Drive, Singapore, 637332.); Pei LI (Institute of Real Estate Studies, National University of Singapore.)
    Abstract: Budget deficit has been a common fiscal pressure facing Chinese cities since the 1994 fiscal reform. Meanwhile, land lease sales have become a signi?cant o¤-budgetary revenue to local governments since 2003. This paper investigates whether ?nancing budget deficit is an important driving force of the recent soaring housing prices when local governments function as the monopoly supplier of urban land. A conceptual framework is developed to illustrate a transmission mechanism from budget deficit to housing prices. This leads to an empirical model consisting of two simultaneous structural equations for housing prices and land prices. Using data for the 35 major Chinese cities from 2003 to 2011, an empirical exercise shows although budget deficit has a positive effect on land prices, it is the factors from demand side, such as amenities, income and the user cost of housing capital, that have been pulling up the housing prices.
    Keywords: Housing Prices, Land Prices, Public Finance, Chinese Economy
    JEL: R21 R31 H27 G10
    Date: 2014–09
  3. By: World Bank
    Keywords: Banks and Banking Reform Macroeconomics and Economic Growth - Subnational Economic Development Social Protections and Labor - Labor Policies Economic Theory and Research Transport Economics Policy and Planning Finance and Financial Sector Development Transport
    Date: 2014–06

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