nep-cna New Economics Papers
on China
Issue of 2019‒09‒16
five papers chosen by
Zheng Fang
Ohio State University

  1. Towards an Institutional Interpretation of TFP Changes in China By Wu, Harry X.
  2. Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective By Kjetil Storesletten; Bo Zhao; Fabrizio Zilibotti
  3. Systemic Risk Clustering of China Internet Financial Based on t-SNE Machine Learning Algorithm By Mi Chuanmin; Xu Runjie; Lin Qingtong
  4. Evaluating international impacts of China-specific shocks in an input-output framework By Simola, Heli
  5. Parental Migration, Investment in Children, and Children's Non-cognitive Development: Evidence from Rural China By Jiang, Hanchen; Yang, Xi

  1. By: Wu, Harry X.
    Abstract: This research note reiterates the productivity theory in the Solow growth accounting framework to explore an institutional interpretation of changes in total factor productivity. In theory, total factor productivity or TFP growth is a costless gain in output, which captures the effect of positive externalities caused by spillovers of technological and organizational changes in a perfect market system. This provides a yardstick to gauge institutional effect on output in an imperfect market system if all inputs are properly measured. Using the Chinese case, I show that an integrated approach a la Jorgenson and Griliches (1967) that ensures a consistency between theory, methodology and measurement can facilitate empirical exercises even with data problems, and a so-constructed TFP index for China can satisfactorily reproduce China's post-reform productivity path with institutional interpretations.
    Keywords: Total factor productivity (TFP) growth, Factor reallocation effect on TFP growth, Institution, Economic reform
    JEL: C80 H70 O40 P30
    Date: 2019–08
  2. By: Kjetil Storesletten (Department of Economics, University of Oslo); Bo Zhao (National School of Development, Peking University); Fabrizio Zilibotti (Cowles Foundation, Yale University)
    Abstract: We document that the nature of business cycles evolves over the process of development and structural change. In countries with large declining agricultural sectors, aggregate employment is uncorrelated with GDP. During booms, employment in agriculture declines while labor productivity increases in agriculture more than in other sectors. We construct a unified theory of business cycles and structural change consistent with the stylized facts. The focal point of the theory is the simultaneous decline and modernization of agriculture. As capital accumulates, agriculture becomes increasingly capital intensive as modern agriculture crowds out traditional agriculture. Structural change accelerates in booms and slows down in recessions. We estimate the model and show that it accounts well for both the structural transformation and the business cycle fluctuations of China.
    Keywords: Agriculture, Business Cycle, Capital Accumulation, China, Employment, Lewis, Modernization, Structural Change
    JEL: E32 O11 O13 O14 O41 O47 O53
    Date: 2019–08
  3. By: Mi Chuanmin; Xu Runjie; Lin Qingtong
    Abstract: With the rapid development of Internet finance, a large number of studies have shown that Internet financial platforms have different financial systemic risk characteristics when they are subject to macroeconomic shocks or fragile internal crisis. From the perspective of regional development of Internet finance, this paper uses t-SNE machine learning algorithm to obtain data mining of China's Internet finance development index involving 31 provinces and 335 cities and regions. The conclusion of the peak and thick tail characteristics, then proposed three classification risks of Internet financial systemic risk, providing more regionally targeted recommendations for the systematic risk of Internet finance.
    Date: 2019–08
  4. By: Simola, Heli
    Abstract: The slowing in China’s massive economy has wide implications. China plays an essential role in international production chains, so disturbances can spill over to other economies in the global production network. We evaluate the international transmission and impact of various China-specific shocks with an input-output framework applied to the World Input-Output Database (WIOD). We consider shocks to Chinese final demand at the aggregate level, bilateral import tariffs between the US and China and sector-specific shocks to Chinese final demand and supply. Our results suggest that aggregate level shocks, as well as certain sector-specific shocks originating in China, may have large impacts elsewhere. Transmission of shocks through the global production network, however, is mitigated by the relatively low import-intensity of Chinese production.
    JEL: C67 F14 F43
    Date: 2019–09–06
  5. By: Jiang, Hanchen; Yang, Xi
    Abstract: Many children worldwide are left behind by parents who are migrating for work. While previous literature has studied the effect of parental migration on children's educational outcomes and cognitive achievements, this study focuses on how parental migration affects children's non-cognitive development. We use longitudinal data of children in rural China and adopt labor market conditions in destination provinces as instrumental variables for parental endogenous migration choice. We find that parental migration has a significant negative effect on children's non-cognitive development. Differentiating inter- and intra-provincial migrations suggests that the negative effect of parental migration is mainly driven by inter-provincial migrations. We test four different mechanisms of how parental migration affects child development including parental financial inputs, parental time inputs, household bargaining, and children's own time input. Our results provide insights into the relative importance of different mechanisms in determining the effect of parental migration on children's non-cognitive skill formation.
    Keywords: Left-behind Children,Parental Migration,Parental Input,Non-cognitive Development,China
    JEL: J12 J13 J24 J61 R23
    Date: 2019

This nep-cna issue is ©2019 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.