nep-cna New Economics Papers
on China
Issue of 2014‒11‒22
five papers chosen by
Zheng Fang
Ohio State University

  1. Venture Capital Networks and Investment Performance in China By Zhiyang Liu; Zhiqi Chen
  2. What Drives Housing Dynamics in China? A Sign Restrictions VAR Approach By Bian, Timothy Yang; Gete, Pedro
  3. Are the Children of Uneducated Farmers Doubly Doomed? Farm, Nonfarm and Intergenerational Educational Mobility in Rural China By Emran, M. Shahe; Sun, Yan
  4. Highway toll and air pollution: evidence from Chinese cities By Fu, Shihe; Gu, Yizhen
  5. Is urban food demand in the Philippines different from China? By Tomoki Fujii

  1. By: Zhiyang Liu (Shanghai University of Finance and Economics); Zhiqi Chen (Department of Economics, Carleton University)
    Abstract: We investigate the relationship between venture capital (VC) networks and investment performance in China. Distinct features of China’s VC networks are captured in our econometric model through the inclusion of an index of network stability and a dummy variable that indicates a VC firm’s connections with the Chinese state. Our econometric analysis shows that a VC firm’s position in its network, its network stability and close connections with the state all contribute to its investment performance. Comparison with the findings in Hochberg et al. (2007) indicates that networks are more important for investment performance in China than in the US. Moreover, our analysis suggests that familiarity with local culture and customs and understanding of the idiosyncrasies of China’s markets and institutions are important for the success of a VC firm in China.
    Keywords: Venture capital; Networks; Investment performance; China
  2. By: Bian, Timothy Yang (University of International Business and Economics); Gete, Pedro (Georgetown University and IE Business School)
    Abstract: We study housing dynamics in China using vector autoregressions identified with theoryconsistent sign restrictions. We study five potential drivers: 1) Population increases; 2) a relaxation of credit standards, for example, due to the shadow banking system; 3) increasing preferences towards housing, for example, due to a housing bubble or housing being a status asset to be competitive in the marriage market; 4) an increase in the savings rate; and 5) expected productivity progress. Our results show that fundamental shocks (population, credit and productivity) play a major role in the dynamics of house prices and residential investment before 2009. Preference shocks seem especially relevant in the last several years, and when the estimation uses price indices not coming from China’s National Bureau of Statistics.
    JEL: E3 F44 R21 R31
    Date: 2014–09–01
  3. By: Emran, M. Shahe; Sun, Yan
    Abstract: This paper relaxes the single factor model of intergenerational educational mobility standard in the literature, and develops a research design to study the effects of parents' education and occupation on children's schooling. We use survey data from rural China that cover three generations and are not subject to coresidency bias. The evidence from recently developed matching and propensity score weighted estimators shows that the mean effects of parents education from the standard model miss substantial heterogeneity. Within the low education subsample, a son (girl) attains about 0.80 (0.60) years of additional schooling when born into a non-farm household compared to a farm household, and among the farming households, a child gains a one year of schooling when at least one parent has more than primary schooling. Having nonfarm parents, however, does not confer any advantages over the farmer parents if the farmers are relatively more educated, even though nonfarm households have significantly higher income. This suggests that income plays a secondary role to parental education. Estimates of cross-partial effects without imposing functional form show little evidence of complementarity between parental education and non-farm occupation. The role of family background remains stable across generations for girls, but for boys, family background has become more important after the market reform.
    Keywords: Educational Mobility, Inequality, Rural China, Nonfarm, Education and Occupation, Family Background, Heterogeneity, Complementarity, Market Reform, Gender Gap
    JEL: I24 I32 O1
    Date: 2014–10–01
  4. By: Fu, Shihe; Gu, Yizhen
    Abstract: Most highways in urban China are tolled to finance their construction. During the eight-day National Day holiday in 2012, highway tolls are waived nationwide for passenger vehicles. We use this to test highway tolls’ effect on air pollution. Using daily pollution and weather data for 98 Chinese cities in 2011 and 2012 and employing both a regression discontinuity design and differences-in-differences method with 2011 National Day holiday as a control, we find that eliminating tolls increases pollution by 20% and decreases visibility by one kilometer. We also estimate that the toll elasticity of air pollution is 0.16. These findings complement the scant literature on the environmental impact of road pricing.
    Keywords: highway toll; air pollution; visibility; regression discontinuity design; differences-in-differences
    JEL: H23 Q53 R41 R48
    Date: 2014–10–30
  5. By: Tomoki Fujii (School of Economics, Singapore Management University, Singapore, 178903)
    Abstract: It is essential to understand the consumption pattern of food and how it changes over time to formulate sound economic policies as well as marketing and pricing strategies. In this study, we estimate the Quadratic Almost Ideal Demand System with six rounds of the Family Income Expenditure Survey exploiting the conditional linearity of the demand system. We find that the Filipino diet has become westernized and that the changes in urban food demand elsticities are qualitatively similar to those in urban China, especially for meat, fruits, and vegetables. We also offer some policy and business implications.
    Keywords: demand system; elasticity; generalized least-squares; iterated linear least-squares
    Date: 2014–10

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