|
on Transition Economics |
|
Issue of 2014‒05‒09
fifty-two papers chosen by J. David Brown IZA (Institute for the Study of Labor) |
| By: | Yu Ren; Cong Xiong; Yufei Yuan |
| Abstract: | In this paper, we apply the theory of rational expectation bubbles proposed by Blanchard and Watson (1983) to the Chinese housing market. The theory implies that negative returns on house prices are less likely to occur if the bubbles exist. Based on data from 35 cities in China, we nd no evidence to support the existence of such bubbles in the Chinese housing market. |
| Keywords: | China house price; Rational expectation bubble; Hazard rate. |
| JEL: | R31 E31 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002167&r=tra |
| By: | Qing He; Haiqiang Chen |
| Abstract: | The volatility of Chinese GDP growth has been markedly lower since the mid-1990s. We utilize frequency domain and vector autoregression (VAR) methods to investigate the origin of the observed volatility reduction in the Chinese economy. Our estimation indicates that lower volatility of random shocks to the economy, or the good luck hypothesis, accounts for most of the decline in macroeconomic volatility. Although good policy and better business practices are also contributing factors, they play a marginal role in dampening China’s economic fluctuations. |
| Keywords: | Great Moderation; Output Volatility; China. |
| JEL: | C33 E31 E32 J00 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002199&r=tra |
| By: | Ying Fang; Yang Zhao |
| Abstract: | This paper estimates the effect of institutions on economic performance using cross-city data from China. We argue that China’s ongoing reforms are part of a long and circuitous historical transition from antiquity to modernity, which started about 150 years ago. Learning from Western countries has been a central aspect of this historical process. The West had a large influence on the early stage of this transition, which has persisted to current reforms. This study uses the enrollment in Christian missionary lower primary schools in China in 1919 as an instrument for present institutions. Employing a two-stage least squares method, we find that the effect of institutions on economic performance in China is positive and significant. The results are robust according to various tests including additional controls, such as geographic factors and government policy-related variables. |
| Keywords: | Institutions, Christian, Geography, Policy!#O11, O53, P16, P51 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002010&r=tra |
| By: | Bing Xu (Universidad Carlos III); Adrian van Rixtel (Bank for international settlements); Michiel van Leuvensteijn (All pensions group) |
| Abstract: | Since the 1980s, important and progressive reforms have profoundly reshaped the structure of the Chinese banking system. Many empirical studies suggest that financial reform promoted bank competition in most mature and emerging economies. However, some earlier studies that adopted conventional approaches to measure competition concluded that bank competition in China declined during the past decade, despite these reforms. In this paper, we show both empirically and theoretically that this apparent contradiction is the result of flawed measurement. Conventional indicators such as the Lerner index and Panzar- Rosse H-statistic fail to measure competition in Chinese loan markets properly due to the system of interest rate regulation. By contrast, the relatively new Profit Elasticity (PE) approach that was introduced in Boone (2008) as Relative Profit Differences (RPD) does not evidence these shortcomings. Using balance sheet information for a large sample of banks operating in China during 1996-2008, we show that competition actually increased in the past decade when the PE indicator is used. We provide additional empirical evidence that supports our results. We find that these, firstly, are in line with the process of financial reform, as measured by several indices, and secondly are robust for a large number of alternative specifications and estimation methods. All in all, our analysis suggests that bank lending markets in China have been more competitive than previously assumed. |
| Keywords: | competition, banking industry, China, lending markets, marginal costs, regulation, deregulation |
| JEL: | D4 G21 L1 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1404&r=tra |
| By: | Lei Meng |
| Abstract: | In this paper I examine if China's grain subsidy program keeps farmers from engaging in migratory work using self-collected panel rural household survey data from Zhijiang, Hubei province. Making use of Zhijiang's unique geographical features, I construct a treatment and a control group and use a difference-in-differences methodology to identify the subsidy effect on migration. My results suggest that the grain subsidy policy does keep farmers at the rural origin. |
| Keywords: | Migration, Agricultural subsidy, Rural China |
| JEL: | J61 R23 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002171&r=tra |
| By: | Puman Ouyang; Shihe Fu |
| Abstract: | In many countries inward foreign direct investment (FDI) typically concentrates in a few regions. However, there is little empirical evidence on whether spatially concentrated FDI boosts economic growth in other regions within the same country. We use a dataset that covers 96% of Chinese cities from 1996–2004 and find that “inter-regional spillovers†from FDI concentrated in China’s coastal cities have a positive and significant effect on the growth of inland cities. In addition, an inland city’s industrial development affects its absorptive capacity to gain such interregional spillovers from coastal FDI. |
| Keywords: | D124Foreign direct investment, Regional inequality, Inter-regional spillovers, Absorptive capacity, Growth |
| JEL: | F21 R12 O40 O14 O18 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002154&r=tra |
| By: | Cruz, Prince Christian (Asian Development Bank Institute); Gao, Yuning (Asian Development Bank Institute); Song, Lei Lei (Asian Development Bank Institute) |
| Abstract: | Domestic financial market development is a key determinant of a currency’s international status, and financial depth and market liquidity are two essential attributes for an international currency. This paper discusses the status of the People’s Republic of China’s (PRC) financial markets and their depth and liquidity conditions. The paper also compares the PRC’s financial markets with those in developed and emerging economies, contemporaneously and historically. The paper finds that the PRC’s financial markets are not as deep and liquid as those in developed economies, and are much less so than those with international currencies. To support the internationalization of the renminbi, the PRC needs to remove several major obstacles to deepen its financial markets and improve their liquidity conditions. |
| Keywords: | RMB internationalization; financial depth; bond markets; stock market; money markets |
| JEL: | E40 E50 |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0477&r=tra |
| By: | XiaoBo Zhang; Ravi KANBUR |
| Abstract: | While increasing income inequality in China has been commented on and studied extensively, relatively little analysis is available on inequality in other dimensions of human development. Using data from different sources, this paper presents some basic facts on the evolution of spatial inequalities in education and healthcare in China over the long run. In the era of economic reforms, as the foundations of education and healthcare provision have changed, so has the distribution of illiteracy and infant mortality. Across provinces and within provinces, between rural and urban areas and within rural and urban areas, social inequalities have increased substantially since the reforms began. D 2005 Elsevier Inc. All rights reserved. JEL classification: D63; O15; O18 |
| Keywords: | Illiteracy; Infant mortality rate; Spatial inequality in China; Polarization |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002079&r=tra |
| By: | Luo, Xubei; Zhu, Nong |
| Abstract: | The enterprise reforms of the 1990s profoundly changed the structure of the economy in China. With the deepening of market economy, the share of the state-owned and collective enterprises declined. Expansion and contraction, as well as establishment and closure, of firms became a common phenomenon. The level and volatility of firm productivity have become increasingly important aspects of the micro performance of the economy. This paper uses a firm-level data set collected annually by the National Bureau of Statistics of China in 1998-2007 to examine the role of different firm characteristics in productivity volatility. The paper measures productivity volatility at the firm level as the standard deviation of the annual growth rate of productivity. The main objectives are twofold: first, it examines the variation of productivity volatility across firms of different characteristics and their evolution over time; second, it investigates the sources of productivity volatility at the firm level in China. The results suggest that in general, productivity volatility at the firm level has declined over time in China. Among firms with different characteristics, large firms, old firms, foreign firms, and firms located in the coastal provinces are less volatile. Firm size and location are the two major factors that drive changes in productivity volatility, one in a positive way and one in a negative way. Although the gaps of volatility between smaller firms and larger firms declined, the gaps between firms located in the coastal provinces and inland provinces increased. |
| Keywords: | Emerging Markets,Economic Conditions and Volatility,Economic Theory&Research,Microfinance,Labor Policies |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6846&r=tra |
| By: | Piyush Chandra; Cheryl Long |
| Abstract: | A destination-based VAT system without a complete export tax rebate is detrimental to a country's exports, while an increase in the VAT rebate rate helps reduce the negative effects. In this paper, we study the role of VAT rebates in affecting Chinese exports using firm-level panel data for 2000–2006. To address potential endogeneity, we rely on a quasi-natural policy experiment in 2004, when the fiscal conditions of local governments became important in determining the actual VAT rebate rates for exports. The empirical findings demonstrate significant and large effects of VAT rebates on export volume. On average, for each percentage point increase in the VAT rebate rate, the amount of exports increased by 13%, which translates into an additional $4.70 of exports for each $1 of export tax rebates paid. |
| Keywords: | VAT rebate, Export growth, Trade policy, China |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002196&r=tra |
| By: | Kent Wang; Li Miao; Jiawei Li |
| Abstract: | We analyzed the correlation between mainland China and Hong Kong stock markets based on cash flow (CF) news and discount rate (DR) news instead of considering market return as a whole. We decomposed stock return into CF news and DR news following Campbell and Vuolteenaho. Then, the VARBEKK-GARCH method was used to investigate the time-varying correlations of CF news and DR news in the two markets.We ensured robustness by using the structural break test from Bai and Perron to estimate the structural break points during the sample period. The results show that CF news and DR news in the mainland China market is more volatile than in the Hong Kong market, and DR news correlation is usually negative when the mainland China market is undergoing some reform. The estimated structural break points were matched to important events in the mainland China market and the two markets become increasingly correlated. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002183&r=tra |
| By: | Hau Chyi; Shangyi Mao |
| Abstract: | ‘‘Three generations under one roof’’ is an old Chinese saying used to describe a desired living arrangement. The traditional concept of happiness for a Chinese elderly person is being able to ‘‘play with grandchildren with candy in mouth, enjoy life with no cares.’’ In a fast-changing economy like, how does society, especially the elderly themselves, view these traditional values? Using the 2005 Chinese General Social Survey, we study the determinants of happiness of the Chinese elderly. We are particularly interested in whether living with their child and whether living with their grandchild affect the happiness of the elderly. An important empirical concern is that unobserved permanent income may affect both the living arrangements of the elderly and their level of happiness. We include property ownership variables as proxies and also adopt an instrument variable approach to identify the causal relationship between the elderly’s happiness and their living arrangements. We find that, conditional on living with a grandchild, living with one’s child has a negative effect on the elderly’s happiness. Furthermore, elderly Chinese who live with grandchildren are associated with a much higher degree of happiness than their counterparts. |
| Keywords: | Happiness; Chinese Elderly; Living Arrangement |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002134&r=tra |
| By: | Yoshino, Naoyuki (Asian Development Bank Institute); Kaji, Sahoko (Asian Development Bank Institute); Tamon, Asonuma (Asian Development Bank Institute) |
| Abstract: | This paper analyzes the optimal transition of the exchange rate regime in the People’s Republic of China (PRC). How the PRC can successfully reach the desired regime—whether a basket peg or floating regime—from the current dollar-peg regime remains a major question. To answer it, we develop a dynamic small open-economy general equilibrium model. We construct four transition policies toward the basket-peg or floating regime and compare the welfare gains of these policies to those of maintaining the dollar-peg regime. Quantitative analysis using PRC data from Q1 1999 to Q4 2010 leads to two conclusions. First, a gradual adjustment toward a basket-peg regime seems the most appropriate option for the PRC, and would minimize the welfare losses associated with a shift in the exchange rate regime. Second, a sudden shift to a basket peg is the second-best solution. This is preferable to a sudden shift to a floating regime, since it would enable the authorities to implement optimal weights efficiently in order to achieve policy goals once a decision has been made to adopt a basket-peg regime. |
| Keywords: | exchange rate regime; exchange rate adjustment; Chinese exchange rate regime; dynamic adjustment; transition path |
| JEL: | E42 F33 F41 F42 |
| Date: | 2014–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0476&r=tra |
| By: | Ying Fang; Li Qi; Zhongjian Lin |
| Abstract: | We measure the correlations between two cities’ real GDP growth rates (a measure of business cycle correlations) to capture the degree of segmentation across China’s provincial and regional borders. This type of segmentation can be caused by local protectionism as well as other economic and geographic factors that affect business cycle correlations between two cities. After controlling these other factors, we are able to pin down the border effect that is due to local protectionism: administrative border effect. We find that the inter-provincial administrative border effect first rose and then gradually declined in the period between 1991 and 2007. Further, its increase coincided with the introduction of the Tax Sharing System reform, which started in 1994. This administrative border effect declined steadily in recent years as the tax reform was fully instituted. Our analysis shows that China’s reform path (under market-preserving federalism) did not create a persistent provincial “administrative border effect†that debilitated market forces. |
| Keywords: | Border effect, Market integration, Business cycle correlation |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002016&r=tra |
| By: | Haomiao Zuo; Sung Y. Park |
| Abstract: | Many studies analyze the money demand using a (fixed coefficient) cointegrating regression model, which may not be appropriate to deal with the money demand of a transition economy like China. This paper investigates this issue using a time-varying cointegration approach based on the quarterly data from 1996 to 2009. We find some interesting results: (i) the estimates of the income elasticities are between 0.60 and 0.75, which are comparable with the previous studies; (ii) the estimated interest rate elasticity supports the argument that the overall effect of the interest rate on the money holding is weak although there are some mild evidences that it has been strengthened in recent years; (iii) the substitution effect of equity asset dominates the wealth effect, especially, during the bullish market period. Our result is robust to the alternative choices of the scale or opportunity cost variables and shows that omission of the stock prices in the money demand function would possibly yield a misspecification problem. |
| Keywords: | Money demand; Time-varying coefficient ; Cointegration; Canonical cointegration regression; Chinese economy |
| JEL: | E41 C51 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002133&r=tra |
| By: | Haiqiang Chen; Qian Han; Yingxing Li; Kai Wu |
| Abstract: | This paper investigates the effect of introducing index futures trading on the spot price volatility in the Chinese stock market. We employ a recently developed panel data policy evaluation approach (Hsiao et al. 2011) to construct counterfactuals of the spot market volatility, based mainly on cross-sectional correlations between the Chinese and international stock markets. This new method does not need to specify a particular regression or a time series model for the volatility process around the introduction date of index futures trading, and thus avoids the potential omitted variable bias caused by uncontrolled market factors in the existing literature. Our results provide empirical evidence that the introduction of index futures trading significantly reduces the volatility of the Chinese stock market, which is robust to different model selection criteria and various prediction approaches. |
| Keywords: | Index futures; Spot market volatility; Panel data; Chinese stock market. |
| JEL: | G14 G1 G15 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002169&r=tra |
| By: | Zhu, Yanyuan; Feng, Xiao |
| Abstract: | We build China's national production function based on national accounting data since 1997, when China primarily transformed from the Planned economy to Market. By proxying and measuring stocks of human capital(HC), physical capital and the efficiency units, as well as government expenditure reflecting total factor productivity(TFP), we analyze CES production functions' explanation effects by numerical simulation, and then according to the findings, choose Cobb-Douglas form for further research. Our results include, first, Cobb-Douglas production function in the form of capital coefficients - capital relative density, appropriately reflects Chinaâs recent input-output relationship. Second, taking factor-augmenting technical progress into consideration, the proxy settings for two capitals are empirically plausible for future research on Chinaâs endogenous growth model. Third, expansionary government expenditure negatively affects Chinaâs TFP and output. -- |
| Keywords: | national production function,factor-augmenting technical progress,physical capital efficiency units |
| JEL: | C52 E01 O47 O53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ubwwpe:20142&r=tra |
| By: | Xin Meng; Kailing Shen; Sen Xue |
| Abstract: | In the past 20 or so years the average real earnings of Chinese urban male workers have increased by 350%. Accompanying this unprecedented growth is a considerable increase in earnings inequality. Between 1988 and 2009 the variance of log earnings increased from 0.28 to 0.54, a 94% increase. Using a unique set of repeated cross-sectional data this paper examines the causes of this increase in earnings inequality. We find that the major changes occurred in the 1990s when the labor market moved from a centrally-planned system to a market-oriented system. The decomposition exercise conducted in the paper identifies the factor that drives the significant increase in the earnings variance in the 1990s to be an increase in the within-education–experience cell residual variances. Such an increase may be explained mainly by the increase in the price of unobserved skills. When an economy shifts from an administratively determined wage system to a market-oriented one, rewards to both observed and unobserved skills increase. The turn of the century saw a slowing down of the reward to both the observed and unobserved skills, due, to some extent, to the college expansion program that occurred at the end of the 1990s. |
| Keywords: | Earnings inequality, China |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002165&r=tra |
| By: | Chen, Shuai; Chen, Xiaoguang; Xu, Jintao (Resources for the Future) |
| Abstract: | We estimate the link between corn and soybean yields and weather in China, while controlling for other variables that could affect crop yields, such as socioeconomic and climate adaptation variables. We find that: (i) there are nonlinear and asymmetric relationships between corn and soybean yields and weather variables; (ii) expansion of corn and soybean production to land types not previously used for these two crops had detrimental effects on average yields for both crops; (iii) climate change led to a net economic loss of about $200 million to China’s corn and soybean sectors in the past decade; (iv) corn and soybean yields are projected to decline by 4-14% and 8-21% by 2100. |
| Keywords: | climate, China, corn, soybean, yields, land |
| JEL: | Q54 Q10 |
| Date: | 2014–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-14-07-efd&r=tra |
| By: | Rui Fan; Ying Fang; Sung Y. Park |
| Abstract: | This paper revisits the resource curse phenomenon in China and differs from the previous studies in four respects: (i)City-level data isused; (ii)A spatial variable I sconstructed to estimate the diffusion effect of natural resources among cities in the same province; (iii)The impact of resource abundance on economic development is investigated not only at the city level but also at the prefectural level in China; (iv) We use a functional coefficient regression model to deal with city-specific heterogeneity and, at the same time, analyze the transmission mechanism of the resource curse phenomenon.Our empirical results show that there is no signifficant evidence to support the existence of a resource curse phenomenon inChina.On the other hand, we find that the degree of natural resource abundance in a city has a positive diffusion effect on the economic growth of neighboring cities within the same province at the city level, but not at prefectural levels. We attribute this to the urban bias policy. |
| Keywords: | Resource curse; Diusion effects; Transmission channels; Functional coefficient model. |
| JEL: | O13 O18 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002163&r=tra |
| By: | Gregory C. Chow; Changjiang Liu; Linlin Niu |
| Abstract: | We use time-varying regression to model the relationship between returns in the Shanghai and New York stock markets, with possible inclusion of lagged returns. The parameters of the regressions reveal that the effect of current stock return of New York on Shanghai steadily increases after the 1997 Asian financial crisis and turns significantly and persistently positive after 2002 when China entered WTO. The effect of current return of Shanghai on New York also becomes significantly positive and increasing after 2002. The upward trend has been interrupted �during the recent global financial crisis, but reaches the level of about 0.4-0.5 in 2010 for both �markets. Our results show that China’s stock market has become more and more integrated to the �world market in the past twenty years with interruptions occurring during the recent global �economic downturn. |
| Keywords: | China; Globalization; Rate of Return; Stock Markets; Time-varying parameter regression. |
| JEL: | C29 C58 G14 P43 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002146&r=tra |
| By: | Tingguo Zheng; Huiming Guo |
| Abstract: | Considering that monetary policy instability may cause indeterminacy of the macroeconomic equilibrium, this paper derives the boundary condition between determinacy and indeterminacy in a small open economy DSGE model, and then uses this model to investigate China's monetary policy and macroeconomic fluctuations under indeterminacy during the period from 1992 to 2011. The empirical results show that the nominal interest rate reacts not only to inflation and output gap, but also to the changes in RMB exchange rate. Moreover, the indeterminacy in the macro-dynamics indicates the instability in China's monetary policy, and it stems from two sources, the sunspot shock and the indeterminate propagation of fundamental shocks. In addition, we find that the monetary policy shock affects macroeconomic dynamics significantly in the short run, while in the long run, it only influences nominal variables, such as the inflation and the exchange rate, but not the real output. |
| Keywords: | Small open economy, DSGE model, Indeterminacy, Monetary policy |
| JEL: | C5 E4 E5 F4 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002201&r=tra |
| By: | Biao Guo; Qian Han; Maonan Liu; Doojin Ryu |
| Abstract: | This is the first study to examine the intraday price discovery and volatility transmission processes between the Singapore Exchange and the China Financial Futures Exchange. Using one- and five-minute high-frequency data from May to November 2011, we find that China’s CSI 300 index futures dominate Singapore’s A50 index futures in both intraday price discovery and intraday volatility transmission processes. However, A50 futures contracts also make a substantial contribution (26%-37%) in the price discovery process. These results have important implications for both traders and policymakers. |
| Keywords: | Price Discovery, Volatility Transmission, Futures Market, CSI 300, A50, Information Share. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002180&r=tra |
| By: | Tingguo Zheng; Yujuan Teng; Tao Song |
| Abstract: | Friedman’s plucking model of business fluctuations suggests that output cannot exceed an upper limit, or ceiling level, but it is occasionally plucked downward, with depth and steepness, due to recessions. This paper investigates China’s business fluctuations using the quarterly real GDP data over the period 1978-2009. Our results provide some support for the plucking model. We find that there exists the ceiling effect of real output, and the negative asymmetric� shocks affect the transitory component significantly, which therefore captures the plucking downward behavior during the recession from the idea of Friedman. In addition, it is also suggested by the results that the basic asymmetric UC model is not appropriate for�directly modeling China’s real output since the business cycle is inaccurately measured, but it works quite well when considering a structural break at 1992:Q2. |
| Keywords: | �business cycle; plucking model; asymmetry; regime switching; structural break |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002127&r=tra |
| By: | Ye, Xinyue; Yue, Wenze |
| Abstract: | This paper aims to make contributions to comparative analysis of regional economic dynamics in China and the US from the methodological perspective. More specifically, some recent advances in exploratory space-time data analysis (ESTDA) will be suggested and implemented to conduct this task in an open source environment. China and the US have been the subject of much discussion about the patterns and trends of regional development, because of their importance in the world economic system. Despite the rich and growing empirical literature on numerous case studies at both national and sub-national scales, comparative space time analysis between and within these two economic systems has just begun to catch attentions. Additionally, ESTDA and its open source implementation can facilitate comparative studies of regional development. -- |
| Keywords: | ETSDA,regional development,comparative analysis,open source,China,USA |
| JEL: | C21 C88 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201420&r=tra |
| By: | Shihe Fu; Liwei Shan |
| Abstract: | Existing studies in finance have documented the comovement of stock returns of companies headquartered in the same location. The interpretation is that local investors have a “local bias†due to an information advantage on local companies. This paper argues that localized agglomeration economies affect the fundamentals of local companies, resulting in the local comovement of stock returns. Using the data for China A-share listed companies from 1997-2007, we confirm the local comovement of stock returns of companies headquartered in the same city; moreover, the stock returns of a company headquartered in a city with stronger agglomeration economies are also correlated more highly with stock returns of other companies headquartered in the same city. The local comovement of earnings among companies headquartered in the same city is also found, and the local comovement of stock returns is correlated with the local comovement of earnings. We conclude that correlated local fundamentals due to localized agglomeration economies can explain the local comovement of stock returns. |
| Keywords: | Stock returns; Local bias; Agglomeration economies |
| JEL: | G1 R1 R3 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002041&r=tra |
| By: | Biao Guo; Qian Han; Maonan Liu; Doojin Ryu |
| Abstract: | This is the first study to examine the intraday price discovery process between the Singapore Exchange and the China Financial Futures Exchange. Using one- and five-minute high-frequency data from May to November 2011, we found that China’s CSI 300 index futures dominated Singapore’s A50 index futures in terms of the price discovery process. However, A50 futures contracts also made a substantial contribution (26%-37%) to the price discovery process. A further division of the sample period into two sub-periods found that A50 futures dominated the price discovery process from May to August 2011 and that CSI 300 futures dominated the process from August to November 2011. These results have important implications for both traders and policymakers. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002049&r=tra |
| By: | Zhong, Ma |
| Abstract: | Compare with the rate of development of human society , human biological evolution and behavioral pattern change very slowly ,thus human has to use “raw” cognitive pattern which cause bias to process modern information. To study the problem of Corporate Over-investment based on Heuristic Theory , this paper based on the behavior perspective. Based on Richandson (2006) model , using 2001 to 2012 data of China listed companies , we find that : when company shows consistency of high financial performance ( 1 ) due to the Self-attribution Bias, the level of confidence will increase, then exacerbate over-investment ; ( 2 ) due to Representative Bias and Conservatism Bias, causing the decision-making process related to information processing bias, over-investment will be intensified ; ( 3 ) based on the use of executive compensation and corporate risk levels to measure overconfidence , overconfidence will aggravate this distortion . |
| Keywords: | consistency of financial performance information, cognitive bias, Heuristic, overconfidence, managers confidence, inefficient investment, overinvestment |
| JEL: | C31 G3 |
| Date: | 2014–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55476&r=tra |
| By: | Aleksandra Kolasa (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland); Barbara Liberda (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | This paper studies the drivers of total private and household savings in Poland and compares them to those in developed countries. To this end, the two types of saving regressions are estimated: one based on an annual panel of OECD countries and the other using Polish quarterly time series. Compared to an “average” OECD country, the Polish private and household saving rates are more affected by the process of financial deepening. Moreover, they are also more sensitive to changes in government and corporate savings. |
| Keywords: | private savings, household savings, Poland, panel study, saving determinants |
| JEL: | E21 O16 O57 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2014-13&r=tra |
| By: | Tang, Liwei; Hu, Zongyi; Zhang, Yongjun |
| Abstract: | Combining the characteristics of BM direction distance function, non- radial DEA model and Luenberger productivity indicators, we develop a non-radial BML-DEA model to measure Environmental Performance. And by using the panel data of 30 provinces from 1997 to 2011 in China, we measure and analysis the regional industrial eco-efficiency. The results show that the overall growth of industrial Environmental Performance of the region comes mainly from technological progress rather than efficiency improvements, the highest average annual growth rate of areas are Beijing, Shanghai, Jiangsu and Guangdong. The effect from three pollutants on industrial Environmental Performance by descending is SO2, CO2 and Smoker, and the contribution of the three pollutants deal more balanced. There are significant differences among industrial Environmental Performance and its decomposition ingredients in different regions. The growth rate of industrial Environmental Performance in east is significantly higher than other regions, but the growth rate of efficiency is not superior to the center and west, and even slightly lower than the center. Therefore, regions need to enhance the efficiency in using the resources. |
| Keywords: | Environmental Performance; infeasible solution; slacks; non- radial BML-DEA model |
| JEL: | C61 O44 Q01 Q5 |
| Date: | 2014–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55380&r=tra |
| By: | Haiqiang Chen; Terence Tai Leung Chong; Yingni She |
| Abstract: | This paper develops a new investor sentiment index for the Chinese stock market. The index is constructed via the principal component approach (PCA), taking six important economic and market factors into consideration. The sentiment index serves as a threshold variable in a threshold autoregressive model to identify the stock market regimes. Our findings show that the Chinese stock market can be divided into three regimes: namely, a high-return volatile regime, a low-return stable regime and a neutral regime. The sentiment index is shown to have good out-of-sample predictability. |
| Keywords: | Principal Component Analysis; Market Sentiment; Market Turnover; Threshold Model. |
| JEL: | C43 G14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002214&r=tra |
| By: | Yongmiao Hong; Hai Lin; Shouyang Wang |
| Abstract: | Using the daily data of Chinese 7-day repo rates from January 1, 1997 to December 31, 2008, this paper tests a variety of popular spot rate models, including single-factor diffusion, GARCH, Markov regime-switching and jump-diffusion models. We document that Chinese spot rates are subject to both market forces and administrative forces. GARCH, regime-switching and jump-diffusion models capture some important features of the dynamics of Chinese spot rates, but all models under study are overwhelmingly rejected. We further explore possible sources of model misspecification using diagnostic tests. |
| Keywords: | Spot rate models; Term structure of interest rates; Market segmentation; Nonparametric specification tests |
| JEL: | E4 C5 G1 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002118&r=tra |
| By: | Ying Fang; Li Qi; Yang Zhao |
| Abstract: | Whether natural resources boost or deter economic development remains an open question in the literature. Papyrakis and Gerlagh (2007) found a significant negative association between economic growth and resource abundance at a U.S.-state level. They demonstrated that resource abundance crowds out human capital accumulation and R&D investment. This paper performs an empirical analysis on data from 95 cities in China from 1997 to 2005 and finds no obvious evidence of a significant relationship between natural resources and economic development at the city level. By controlling province dummy variables, however, it becomes clear that resource abundance in one city imposes a significant positive “spill-over†effect on the other cities within the same province. Moreover, an analysis on transmission channels of such spill-over effects reveals that resource abundance boosts the manufacturing industry in the other cities, which is consistent with the “big push†theory. |
| Keywords: | Curse of resources; Spill-over effects; Big push |
| JEL: | O13 O18 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002007&r=tra |
| By: | Yanan He; Jing Zhao |
| Abstract: | This paper uses copula approach to investigate the extreme dependence between crude oil and stock sectors in China. Empirical results show that oil-stock linkages have been changed by the occurrence of the recent financial crisis. Before the financial crisis, only two stock sectors have weakly negative tail dependence, while in the post-crisis period much more sectors become positively dependent with oil at extreme levels. Meanwhile, heterogeneity of sector dependence with crude oil is identified. The sector of Basic materials has the largest tail dependence (94.5%) with crude oil prices, which is followed by Financials and Construction & Materials. Asymmetric tail dependence is found in the Basic materials-crude oil pair, indicating that two returns exhibit greater correlation during market crashing than booming. Empirical findings in this paper have potentially important implications for financial market participants and policy makers. |
| Keywords: | Stock sector; Crude oil; Tail dependence; Copula |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002210&r=tra |
| By: | Ying Fang; Shicheng Huang; Linlin Niu |
| Abstract: | We employ a Bayesian method to estimate a�time-varying coefficient version of the de facto currency basket model of�Frankel and Wei (2007) for the RMB of China, using daily data from February�2005 to July 2011. We estimate jointly the implicit time-varying weights of�all 11 currencies in the reference basket announced by the Chinese�government. We find the dollar weight has been reduced and is sometimes�significantly smaller than one, but there is no evidence of systematic�operation of a currency basket with a�discernible�pattern of significant�weights on other currencies. During specific periods, the reduced dollar weight has not been switched to other major international currencies, but�instead to some East Asian currencies, which is hard to explain by trade�importance to or trade competition with China. We examine currency baskets�of these East Asian Economies, which include major international currencies�and the RMB in their baskets. We find an evident tendency of Malaysia and�Singapore to increase the weights of RMB in their own currency baskets, and�a continuously significant positive weight of RMB in the basket of Thailand.�These findings suggest that the occasionally positive weights of some East�Asian currencies in RMB currency basket reflects the positive RMB weights in�these East Asian currency baskets, as these East Asian economies have been�systematically placing greater weights on RMB under the new regime of RMB�exchange rate. |
| Keywords: | RMB currency basket, time-varying regressions, East Asia,�China, US |
| JEL: | F31 F41 C11 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002045&r=tra |
| By: | Rui Fan; Ying Fang; Sung Y. Park |
| Abstract: | This paper studies the resource curse phenomenon in China. The “resource curse†is an important claim that the resource-abundant economies grow at a slower pace than the resource-scarce economies do. There are many recent studies that analyze the resource curse phenomenon theoretically and empirically. However, few papers analyze which socio-economic variables determine the resource curse. This paper is di erent from the previous studies in three aspects: (i) The city-level data is used; (ii) Using the functional coecient regression model we can take care of city-specific heterogeneity and, at the same time, analyze the transmission mechanism of the curse of recourses; (iii)We construct a variable to estimate the e ect of the di usion processes of the natural resources among cities in the same province. Our empirical results show that there is no evidence to support the statement of resource curse in China. On the other hand, the level of natural resources in a city imposes a significant positive di usion e ect on the economic growth of neighbor city within the same province. |
| Keywords: | Resource curse; Di usion e ects; Transmission channels; Functional coecient Model; |
| JEL: | O13 O18 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002026&r=tra |
| By: | Yongmiao Hong; Hai Lin; Shouyang Wang |
| Abstract: | Understanding the dynamics of spot interest rates is important for derivatives pricing, risk management, interest rate liberalization, and macroeconomic control. Based on a daily data of Chinese 7-day repo rates from July 22, 1996 to August 26, 2004, we estimate and test a variety of popular spot rate models, including single factor diffusion, GARCH, Markov regime switching and jump diffusion models, to examine how well they can capture the dynamics of the Chinese spot rates and whether the dynamics of the Chinese spot rates has similar features to that of the U.S. spot rates. A robust M-estimation method and a robust Hellinger metric-based specification test are used to alleviate the impact of frequent extreme observations in the Chinese interest rate data, which are mainly due to IPO. We document that GARCH, regime switching and jump diffusion models can capture some important features of the dynamics of the Chinese spot rates, but all models under study are overwhelmingly rejected. We further explore possible sources of�model misspecification using some diagnostic tests. This provides useful information for future improvement on modeling the dynamics of the Chinese spot rates. |
| Keywords: | Generalized residuals, Robust specification tests, Robust M-estimation, Spot rate |
| JEL: | E4 C5 G1 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:001998&r=tra |
| By: | Chuanglian Chen; Guojin Chen; Shujie Yao |
| Abstract: | A decline in the relative price of imported goods compared to that of domestically produced goods, e.g., caused by domestic currency appreciation, may have different effects on domestic consumption. Such effects may not be accurately detected and measured in a classical permanent-income model without considering consumption habit formation as pointed out by Nishiyama (2005). To resolve this problem, this paper employs an extended permanent-income model which encompasses consumption habit formation. Both cointegration analysis and GMM are used to estimate the (modified) intertemporal elasticities of substitution (IES) between imports and domestic consumption and the parameters of habit formation as well as the (modified) intratemporal elasticities of substitution (AES). We find that import and domestic consumptions are complements in China, but substitutes in Japan and Korea. Different per capita incomes and consumer behaviors between China and the other two countries are two possible reasons for different relationships between import and domestic consumptions. |
| Keywords: | Habit formation; Imports and domestic consumption; China, Japan and Korea |
| JEL: | D01 D11 D91 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002188&r=tra |
| By: | Mariya Hake (Oesterreichische National Bank); Fernando López-Vicente (Banco de España); Luis Molina (Banco de España) |
| Abstract: | In this paper we compare the determinants of loan dollarisation in two emerging market regions, namely Central, Eastern and Southeastern Europe (CESEE) and Latin America, by means of a meta-analysis of 32 studies that provide around 1,200 estimated coefficients for six drivers of foreign currency lending. One common pattern we identify is that macroeconomic instability (as expressed by inflation volatility) and banks’ funding in foreign currency play a significant role in explaining loan dollarisation in both regions. By contrast, the interest rate differential appears to be a key determinant only in Latin America, while the positive impact of exchange rate volatility on dollarisation implies a more prominent role for supply factors in the CESEE region. While the robustness of the results has been verified, our meta-analysis shows that estimates reported in the literature tend to be influenced by study characteristics such as the methodology applied and the data used. |
| Keywords: | foreign currency loans, CESEE, Latin America, meta-regression, random effects maximum likelihood |
| JEL: | C5 E52 F31 O57 P20 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1406&r=tra |
| By: | Kang, Lili; Peng, Fei |
| Abstract: | More aggressive acquiring firms paid higher executive compensation than non or less aggressive acquiring firms. This paper applies the generalized propensity score (GPS) methodology to estimate the relationship between a firm’s acquisition and its executive compensation. Allowing for continuous treatment, that is, different levels of the firms’ acquisition activities, we apply the GPS method on a panel data set of Chinese Public Listed Companies (PLCs) and find that there is a causal effect of firms’ acquisition activities on executive compensation. However, there is a divergent interests between the board directors and executive managers which may bring serious agency problem in the acquisition decision. The self-selection effect plays a dominant role in the acquisition premiums of top 3 board directors, while the learning-by-acquiring effect on compensation is more prominent for executive managers than board directors. As the executive managers as a whole, can benefit more executive management positions as well as higher growth of executive compensation from aggressive acquisition than board directors and top 3 executive managers. |
| Keywords: | Acquisition Decision; Executive Compensation; Generalized Propensity Score; Agency problem |
| JEL: | C14 G34 J33 M12 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55766&r=tra |
| By: | Marc K Chan (Economics Discipline Group, University of Technology, Sydney) |
| Abstract: | This paper analyzes the effects of a pilot program that enables cross-market investment between Hong Kong and Shanghai's stock exchanges. Among the companies that are concurrently listed in both markets, the announcement of the program causes the price disparity between shares in both markets to reduce by an average of 16.6 percent within the same day of announcement. The price convergence is directly proportional to the magnitude of preexisting price disparity. Despite the large institutional differences between both markets, the prices converge symmetrically via initial share price increases in the market that traded the stock at a relative discount. The results suggest that capital control plays an important role in explaining the disparity of equity prices between markets. |
| Keywords: | Capital account liberalization; Chinese reform; law of one price; dual-listed shares; natural experiment |
| JEL: | O16 F32 |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:22&r=tra |
| By: | Gao-Feng Gu (ECUST); Xiong Xiong (TJU); Yong-Jie Zhang (TJU); Wei Chen (SZSE); Wei Zhang (TJU); Wei-Xing Zhou (ECUST) |
| Abstract: | Price gap, defined as the logarithmic price difference between the first two occupied price levels on the same side of a limit order book (LOB), is a key determinant of market depth, which is one of the dimensions of liquidity. However, the properties of price gaps have not been thoroughly studied due to the less availability of ultrahigh frequency data. In the paper, we rebuild the LOB dynamics based on the order flow data of 26 A-share stocks traded on the Shenzhen Stock Exchange in 2003. Three key empirical statistical properties of price gaps are investigated. We find that the distribution of price gaps has a power-law tail for all stocks with an average tail exponent close to 3.2. Applying modern statistical methods, we confirm that the gap time series are long-range correlated and possess multifractal nature. These three features vary from stock to stock and are not universal. Furthermore, we also unveil buy-sell asymmetry phenomena in the properties of price gaps on the buy and sell sides of the LOBs for individual stocks. These findings deepen our understanding of the dynamics of liquidity of common stocks and can be used to calibrate agent-based computational financial models. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1405.1247&r=tra |
| By: | Ling Peng; Yongmiao Hong |
| Abstract: | This paper estimates the impact of inter-sectoral linkages on productivity at the sectoral level. An exhaustive Chinese panel data set for capital, infrastructure and a sectoral agglomeration index is linked with an economic distance matrix derived from inter-sectoral transactions. The latter matrix can replace the conventional geographic distance matrix from spatial econometrics. The impact through spillovers is mixed—the direct impact passing to related sectors and back to the initial sector itself, and the indirect impact arising from changes in all sectors. The results suggest that (1) economic growth in a sector is driven by spillovers among sectors that are linked through flows of goods and services; economic distance plays a more important role in stimulating productivity spillover than spatial distance; a shorter economic distance transmits a larger productivity spillover between sectors; (2) infrastructure spillover improves labor productivity in linked sectors; (3) agglomeration diseconomies can be partially reduced by infrastructure investment. |
| Keywords: | Inter-sectoral linkages, Economic distance, Spatial econometrics, Spillover, indirect impact |
| JEL: | C33 O41 H41 D62 L69 P59 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002193&r=tra |
| By: | Cheng Hsiao; H. Steve Ching; Shui Ki Wan |
| Abstract: | We propose a simple to implement panel data method to evaluate the impacts of social policy. The basic idea is to exploit the dependence among cross-sectional units to construct the counterfactuals. The cross-sectional correlations are attributed to the presence of some (unobserved) common factors. However, instead of trying to estimate the unobserved factors, we propose to use observed data. We use a panel of 24 countries to evaluate the impact of political and economic integration of Hong Kong (HK) with Mainland China. We find that the political integration hardly had any impact on the growth of the Hong Kong economy. However, the economic integration has raised HK’s annual real GDP by about 4%. |
| Keywords: | panel data, factor model, cross-sectional dependence, program evaluation, ARMA models. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002139&r=tra |
| By: | Gregory C Chow; Shicheng Huang; Linlin Niu |
| Abstract: | This paper studies the economic integration of East Asian economies among one another and with the US using co-movement of stock market prices. Both time-varying correlations and regressions are employed. We have traced the increased integration from 1980 to 2011 among the NIEs of Korea, Hong Kong, Taiwan and Singapore, the increase in integration of China since the Shanghai stock market opened in 1990 and the effect of the recent great economic recession of the US on its economic influence on the East Asian economies. |
| Keywords: | economic integration, time-varying regressions, East Asia, China, US, Japan, stock prices. |
| JEL: | C22 G12 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002042&r=tra |
| By: | Xiaofang Dong; Shihe Fu; Yufei Yuan |
| Abstract: | Local governments often charge developers impact fees to finance local public goods. This has been practiced in the Chinese cities for more than two decades; however, no empirical studies have tested the effect of impact fees on real estate prices. Using a panel data set for 35 large and medium cities from 1998 to 2008, we find that impact fees lead to a significant increase in real estate prices. For a given city, an increase of impact fee by one yuan leads to an increase of about 5 yuan in the price of newly-built housing; a 1% increase in impact fee leads to an increase of 5 percentage points in the housing price index and 7 percentage points in the land price index. |
| Keywords: | Impact fee; Real estate price; Local public finance |
| JEL: | H71 R30 R31 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002181&r=tra |
| By: | Peter Kuhn; Kailing Shen |
| Abstract: | We study explicit gender discrimination in a population of ads on a Chinese internet job board. Gender-targeted job ads are commonplace, favor women as often as men, and are much less common in jobs requiring higher levels of skill. Employers’ relative preferences for female versus male workers, on the other hand, are more strongly related to the preferred age, height and beauty of the worker than to job skill levels. Almost two thirds of the variation in advertised gender preferences occurs within firms, and one third occurs within firm*occupation cells. Overall, these patterns are not well explained by a firm-level animus model, by a glass-ceiling model, nor by models in which broad occupational categories are consistently gendered across firms. Instead, the patterns suggest a model in which firms have idiosyncratic preferences for particular job-gender matches, which are overridden in skilled positions by factors such as thinner labor markets or a greater incentive to search broadly for the most qualified candidate. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002164&r=tra |
| By: | Zhihong Chen; Shihe Fu; Dayong Zhang |
| Abstract: | Based on the parallel growth implications of the four urban growth theories (endogenous growth theory, random growth theory, hybrid growth theory, and locational fundamentals theory), this paper uses the Chinese city size data from 1984-2006 and time series econometric techniques to test for parallel growth. The results from various types of stationarity tests show that city growth is generally random. Conditioning on growth trend and structural change, certain groups of cities with common location-specific characteristics, such as similar natural resource endowment or policy regime, grow parallel in the long run, suggesting that locational fundamentals may have persistent impact on city growth. |
| Keywords: | Urban growth; Parallel growth; Zipf's law; Locational fundamentals; Structural change |
| JEL: | C22 R11 R12 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002175&r=tra |
| By: | He, Haoran; Chen, Yefeng; Last Name, First Name |
| Abstract: | One method to reduce greenhouse gas emissions is to subsidize emissions-reducing activities. The question is how to allocate such subsidies. Allocation through auctions is an emerging mechanism. In a controlled experimental market setting, we compare the effects of a variety of auction mechanisms for allocating subsidies for carbon emissions reduction in China. Besides the conventional auction mechanisms, we place particular focus on testing the actual performance of the auction mechanism proposed by Erik Maskin (2011). We find that, while the Maskin auction mechanism spends the most from a fixed subsidy budget and leads to the largest emissions reduction, its per-unit emissions reduction cost is higher than that of discriminatory and uniform-price auction mechanisms. Both the Maskin and uniform-price auctions outperform discriminatory auctions in price discovery. Furthermore, from the government’s perspective, the Maskin auctions exhibit the strongest improvement tendency with repeated auctions. |
| Keywords: | auctions, subsidy allocation, carbon dioxide, greenhouse gases, emissions reduction |
| JEL: | C91 C93 D64 |
| Date: | 2014–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-14-06-efd&r=tra |
| By: | Ludovit Odor (Council for Budget Responsibility); Judita Jurasekova Kucserova (National Bank of Slovakia, Research Department) |
| Abstract: | Estimates of potential output and the output gap are essential elements in the toolkit of policy makers. Latest changes in the European fiscal framework have strengthened significantly the role of structural budget balances, which rest on output gap calculations. With the adoption of the Fiscal Compact new procedures are entering into force. Independent fiscal institutions are going to play an important role in triggering correction mechanisms. In our view, the new framework will be credible only if meaningful estimates of output gaps and structural budget balances are available in real time. This is a huge problem especially for small countries with short history and many structural breaks, where the estimation of output gap is more an art than a science. Very volatile estimates of output gap with weak information content can quickly undermine the credibility of independent fiscal institutions. In this working paper we critically review the current estimation techniques in Slovakia and propose a new framework to calculate more robust output gap figures. In a companion paper we deal with possible improvements in the estimation of structural budget balances. |
| Keywords: | output gap, real-time evaluation, fiscal policy, principal component analysis, multivariate Kalman filter |
| JEL: | E23 C22 C32 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:svk:wpaper:1027&r=tra |
| By: | Kailing Shen; Peter Kuhn |
| Abstract: | Can having more education than a job requires reduce one’s chances of being offered the job?� We study this question in a sample of applications to jobs that are posted on an urban Chinese website.� We find that being overqualified in this way does not reduce the success rates of university-educated jobseekers applying to college-level jobs, but that it does hurt college-educated workers’ chances when applying to jobs requiring technical school, which involves three fewer years of education than college. Our results highlight a difficult situation faced by the recent large cohort of college-educated Chinese workers:� They seem to fare poorly in the competition for jobs, both when pitted against more-educated university graduates, and when pitted against less-educated technical school graduates. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002178&r=tra |
| By: | V. Brian Viard; Shihe Fu |
| Abstract: | We evaluate the environmental and economic effects of Beijing’s driving restrictions. Based on daily data from multiple monitoring stations, air pollution falls 19% during every-other-day and 8% during one-day-per-week restrictions. Based on hourly viewership data, the number of television viewers during the restrictions increases 1.7 to 2.3% for workers with discretionary work time but is unaffected for workers without, consistent with the restrictions’ higher per-day commute costs reducing daily labor. Causal effects are identified from both time-series and spatial variation in air quality and intra-day variation in viewership. We provide possible reasons for the policy’s success, including evidence of high compliance based on parking garage entrance records. Our results contrast with previous findings of no pollution reductions from driving restrictions and provide new evidence on commute costs and labor supply |
| Keywords: | Driving restrictions; externalities; environmental economics; pollution |
| JEL: | H23 D62 L51 J22 R41 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002039&r=tra |