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on China |
| By: | Dotsey, Michael (Federal Reserve Bank of Philadelphia); Li, Wenli (Federal Reserve Bank of Philadelphia); Yang, Fang (Louisiana State University) |
| Abstract: | We examine the role of demographics and changing industrial policies in ac- counting for the rapid rise in household savings and in per capita output growth in China since the mid-1970s. The demographic changes come from reductions in the fertility rate and increases in the life expectancy, while the industrial policies take many forms. These policies cause important structural changes; first benefiting private labor-intensive firms by incentivizing them to increase their share of employment, and later on benefiting capital-intensive firms resulting in an increasing share of capital devoted to heavy industries. We conduct our analysis in a general equilibrium economy that also features endogenous human capital investment. We calibrate the model to match key economic variables of the Chinese economy and show that demographic changes and industrial policies both contributed to in- creases in savings and output growth but with differing intensities and at different horizons. We further demonstrate the importance of endogenous human capital investment in accounting for the economic growth in China. |
| Keywords: | Aging; Credit policy; Household saving; Output growth; China |
| JEL: | E21 J11 J13 L52 |
| Date: | 2019–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:19-21&r=all |
| By: | Zhang, Xin (Beijing Normal University); Chen, Xi (Yale University); Zhang, Xiaobo (Peking University) |
| Abstract: | This paper studies the impact of six main air pollutants on three key dimensions of subjective well-being (SWB) – life satisfaction, hedonic happiness and mental health. We match a nationally representative survey in China with local air quality and rich weather conditions according to the exact date and county of each interview. By making use of variations in exposures to air pollution across similar respondents living in the same county, we find that PM2.5 reduces hedonic happiness and increases the rate of depressive symptoms, but does not affect life satisfaction. Our results show that the benefits of reducing air pollution would be higher if the hidden costs of air pollution on SWB in China are taken into account. |
| Keywords: | life satisfaction, hedonic happiness, depressive symptoms, air pollution, China |
| JEL: | I31 Q51 Q53 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12313&r=all |
| By: | Kimberly Singer Babiarz (Stanford University); Paul Ma (University of Minnesota); Grant Miller (Stanford University; NBER; Center for Global Development); Shige Song (City University of New York) |
| Abstract: | Most of China’s fertility decline predates the famous One Child Policy—and instead occurred under its predecessor, the Later, Longer, Fewer (LLF) policy. Studying LLF’s contribution to fertility and sex selection behavior, we find that it i) reduced China’s total fertility rate by 0.9 births per woman (explaining 28% of China’s modern fertility decline), ii) doubled the use of male-biased fertility stopping rules, and iii) promoted postnatal neglect (implying 210,000 previously unrecognized missing girls). Considering Chinese population policy to be extreme in global experience, our paper demonstrates the limits of population policy—and its potential human costs. |
| Keywords: | fertility, sex selection, family planning |
| JEL: | J13 J16 |
| Date: | 2019–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:505&r=all |
| By: | Funke, Michael; Tsang, Andrew |
| Abstract: | The recent upgrade of the People’s Bank of China’s monetary policy framework establishes a corridor system of interest rates. As the revamped policy arrangement now features a multiple-instrument mix of liquidity tools and pricing signals, we employ a dynamic factor modelling approach to derive an indicator of China’s monetary policy stance. The approach is based on the notion that comovements in several monetary policy instruments have a common element that can be captured by a single underlying, unobserved component. To clarify and interpret the derived index, we employ a baseline DSGE model that can be solved analytically and allows tracing of the expansionary and contractionary on-and-off phases of Chinese monetary policy. |
| JEL: | C54 E52 E58 E61 E32 |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2019_008&r=all |
| By: | Cong, Lin William (University of Chicago - Booth School of Business); Lee, Charles M. C. (Stanford University - Graduate School of Business); Qu, Yuanyu (University of International Business and Economics (UIBE) - School of Banking and Finance); Shen, Tao (Tsinghua University) |
| Abstract: | This study reports on the current state-of-affairs in the funding of entrepreneurship and innovations in China and provides a broad survey of academic findings on the subject. We discuss the implications of these findings for public policies governing the Chinese financial system. In particular, we conclude that regulations governing the initial public offering (IPO) process in China are antiquated and in dire need of reform. We also identify and discuss promising areas for future research. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3733&r=all |
| By: | Deschenes, Olivier (University of California, Santa Barbara); Wang, Huixia (Hunan University); Wang, Si (Hunan University); Zhang, Peng (Hong Kong Polytechnic University) |
| Abstract: | We provide the first study estimating the causal effect of air pollution on body weight. Using the China Health and Nutrition Survey, which provides detailed longitudinal health and socioeconomic information for 13,226 adult individuals over 1989-2011, we find significant positive effects of air pollution, instrumented by thermal inversions, on body mass index (BMI). Specifically, a 1 μg/m3 (1.59%) increase in average PM2.5 concentrations in the past 12 months increases BMI by 0.31%, and further increases the overweight and obesity rates by 0.89 and 0.19 percentage points, respectively. Our paper identifies a new cause of obesity, and sheds new light on the morbidity cost of air pollution. |
| Keywords: | air pollution, obesity, weight gain, China |
| JEL: | I12 I15 Q53 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12296&r=all |
| By: | Bennani, Hamza |
| Abstract: | This paper tests whether the People's Bank of China's communication affects expectations of market participants and matters as a monetary policy instrument. For that purpose, we first rely on a computational linguistic tool to measure the tone of PBC speeches and second, we use a high frequency methodology to estimate the effect of tone on stock prices. Our results show that positive changes of the tone affect positively stock prices in the Shanghai and the Shenzhen stocks markets. Additional extensions show that PBC communication does not have a persistent e ect on stock prices and that the tone of PBC communication still has a positive and significant impact on stock prices even when controlling for all the monetary policy instruments implemented by the central bank. Hence, our findings show that PBC communication matters as a monetary policy instrument to shape market expectations and to move asset prices. |
| JEL: | E52 E58 |
| Date: | 2019–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2019_009&r=all |
| By: | Xing, Chunbing (Beijing Normal University); Sun, Yan (Beijing Normal University) |
| Abstract: | We study how the migration decision of young women in rural China is shaped by the return arrangement and opportunities of college education. Women outnumbered men in young rural-urban migrants in the early 2000s, but the surplus of young women has recently disappeared. We propose that the temporary nature of migration and an earlier return time relative to men are the major reasons that women migrate at a younger age. When higher education expansion increased women's chance of permanent migration, women stayed in school longer. Empirical evidence is consistent with this hypothesis. Marriage motives and demand factors are also considered. |
| Keywords: | migration, gender, education expansion, marriage |
| JEL: | J12 J16 O15 R23 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12311&r=all |
| By: | Giuntella, Osea (University of Pittsburgh); Wang, Tianyi (University of Pittsburgh) |
| Abstract: | A handful of studies have investigated the effects of robots on workers in advanced economies. According to a recent report from the World Bank (2016), 1.8 billion jobs in developing countries are susceptible to automation. Given the inability of labor markets to adjust to rapid changes, there is a growing concern that the effect of automation and robotization in emerging economies may increase inequality and social unrest. Yet, we still know very little about the impact of robots in developing countries. In this paper we analyze the effects of exposure to industrial robots in the Chinese labor market. Using aggregate data from Chinese prefectural cities (2000-2016) and individual longitudinal data from China, we find a large negative impact of robot exposure on employment and wages of Chinese workers. Effects are concentrated in the state-owned sector and are larger among low-skilled, male, and prime-age and older workers. Furthermore, we find evidence that exposure to robots affected internal mobility and increased the number of labor-related strikes and protests. |
| Keywords: | emerging economies, labor markets, robots |
| JEL: | J23 J24 O33 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12281&r=all |
| By: | Cai, Ning; Feng, Jinlu; Liu, Yong; Ru, Hong; Yang, Endong |
| Abstract: | By merging transaction-level trade data from China Customs and loan data from the China Development Bank (CDB), we analyze the effects of government credit on trade activities. We find that CDB credit mainly flows to SOEs in strategic industries at the top of the supply chain. These up-stream loans lead to the lower price and higher amount of export goods of private firms in down-stream industries, which leads to decreases in employment and performance of the US firms in the same industry. In contrast, the US firms in downstream industries use cheaper intermediate goods imported from China and perform better subsequently. |
| JEL: | E51 F30 G21 G28 |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2019_007&r=all |
| By: | Jermann, Urban J. (University of Pennsylvania); Wei, Bin (Federal Reserve Bank of Atlanta); Yue, Vivian Z. (Emory University) |
| Abstract: | We document stylized facts about China's recent exchange rate policy for its currency, the renminbi (RMB). Our empirical findings suggest that a "two-pillar policy" is in place, aiming to balance RMB index stability and exchange rate flexibility. We then develop a tractable no-arbitrage model of the RMB under the two-pillar policy. Using derivatives data on the RMB and the U.S. dollar index, we estimate the model to assess financial markets' views about the fundamental exchange rate and sustainability of the policy. Our model is able to predict the modification of the two-pillar policy in May 2017, when a discretion-based "countercyclical factor" was introduced for the first time. We also examine the model's ability to forecast RMB movements. |
| Keywords: | exchange rate policy; two-pillar policy; managed float; Chinese currency; renminbi; RMB; central parity; RMB index |
| JEL: | F31 G12 G13 G15 |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2019-08&r=all |