nep-cna New Economics Papers
on China
Issue of 2017‒03‒05
six papers chosen by
Zheng Fang
Ohio State University

  1. The role of monetary and fiscal policies in promoting more and better jobs in China : issues, evidence and policy options By Cai, Fang.; Yang, Du.; Meiyan, Wang.
  2. The impact of China's WTO accession on internal migration By Giovanni Facchini; Maggie Y. Liu; Anna Maria Mayda; Minghai Zhou
  3. A Principal Component Approach to Measuring Investor Sentiment in Hong Kong By Chong, Terence Tai-Leung; Cao, Bingqing; Wong, Wing Keung
  4. The Drivers of Economic Growth in China and India: Globalization or Financial Development? By Shahbaz, Muhammad; Kandil, Magda; Kumar, Mantu; Nguyen, Duc Khuong
  5. Time series momentum and contrarian effects in the Chinese stock market By Huai-Long Shi; Wei-Xing Zhou
  6. China's Gradualistic Economic Approach and Financial Markets By Markus K. Brunnermeier; Michael Sockin; Wei Xiong

  1. By: Cai, Fang.; Yang, Du.; Meiyan, Wang.
    Abstract: This paper outlines the evolution of fiscal and monetary policies in China in conjunction with of labour market developments. It examines employment trends in China since the 1978 Economic Reforms – or “Reform and Opening Up” policies – along with the reorientation of macroeconomic policies in line with the transition from a planned to market economy. The authors argue that the increasing openness of China’s economy has resulted in a shift away from solely focusing on macroeconomic stability to supporting employment objectives as well.
    Keywords: promotion of employment, economic policy, monetary policy, macroeconomics, economic recession, trend, China
    Date: 2016
  2. By: Giovanni Facchini (University of Nottingham, CEPR, CES-Ifo, CReAM, GEP, and LdA); Maggie Y. Liu (Georgetown University); Anna Maria Mayda (Georgetown University, CEPR, IZA and LdA); Minghai Zhou (University of Nottingham, Ningbo China)
    Abstract: In this paper we focus on the changes in internal migration flows triggered by China’s 2001 entry into the World Trade Organization (WTO). We use a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We relate changes in internal migration rates to the reduction in trade policy uncertainty faced by Chinese exporters to the U.S., as measured by the normal-trade relations (NTR) gap (Handley and Limao 2013, Pierce and Schott 2015). We find that Chinese prefectures facing a larger decline in their average NTR-gap experience a greater increase in internal migration. Our results also show that the impact on skilled and unskilled internal migration rates is consistent with the average skill intensity of export industries of a prefecture.
    Keywords: Immigration Policy, Trade Policy, Political
    JEL: F22 J61
    Date: 2017–02–24
  3. By: Chong, Terence Tai-Leung; Cao, Bingqing; Wong, Wing Keung
    Abstract: In light of the increasing integration between China and Hong Kong, this paper develops a new market sentiment index for the Hong Kong stock market by including the CSI 300 index of the Chinese equity market. A threshold regression model using the sentiment index as a threshold variable is estimated to capture the state of the Hong Kong stock market.
    Keywords: Principal component analysis; Market sentiment; CSI 300; Threshold model
    JEL: C22 G17
    Date: 2017–02–26
  4. By: Shahbaz, Muhammad; Kandil, Magda; Kumar, Mantu; Nguyen, Duc Khuong
    Abstract: Using annual data from 1970-2013 for China and India, this study examines the impact of globalization and financial development on economic growth by endogenizing capital and inflation and drawing comparisons between the two fastest growing emerging market economies. In the long-run, co-integration test results indicate that financial development increases economic growth in China and India. The results also reveal that globalization accelerates economic growth in India but, surprisingly, impairs economic growth in China as it increases competition for exports. The results furthermore disclose that acceleration in capitalization and inflation, as a proxy for aggregate demand, are positively linked to economic growth in China and India. Causality test results indicate that both financial development and economic growth are interdependent. In contrast, causality runs from higher economic growth to increased globalization in India, while the results do not support long-term causality between globalization and economic growth in China.
    Keywords: Economic Growth, Globalization, Financial Development, China, India
    JEL: A1
    Date: 2017–02–02
  5. By: Huai-Long Shi (ECUST); Wei-Xing Zhou (ECUST)
    Abstract: This paper concentrates on the time series momentum or contrarian effects in the Chinese stock market. We evaluate the performance of the time series momentum strategy applied to major stock indices in mainland China and explore the relation between the performance of time series momentum strategies and some firm-specific characteristics. Our findings indicate that there is a time series momentum effect in the short run and a contrarian effect in the long run in the Chinese stock market. The performances of the time series momentum and contrarian strategies are highly dependent on the look-back and holding periods and firm-specific characteristics.
    Date: 2017–02
  6. By: Markus K. Brunnermeier; Michael Sockin; Wei Xiong
    Abstract: China’s gradualistic approach allowed the government to learn how the economy reacts to small policy changes, and to adjust its reforms before implementing them in full. With fully developed financial markets, however, private actors’ may front-run future policy changes making it impossible for the implement policies gradually. With financial markets the government faces a time-inconsistency problem. The government would like to commit to a gradualistic approach, but after it observes the economy’s quick reaction, it has no incentive to implement its policies in small steps.
    JEL: E5 G10
    Date: 2017–02

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