Using China’s county-level panel data of 2007-2016, this paper verifies theexistence of agglomeration shadows from an infrastructure development perspective. Withhigh-speed railway (HSR) launch as a quasi-natural experiment, we find that the launch ofHSR lines was followed by a decrease in GDP per capita of counties along the route by 2.6percentage points. This conclusion remains valid after a series of robustness tests and thetreatment of potential endogeneity problem. Mechanism analysis suggests that such effectis the most significant for counties within a distance of 97 to 195 km to the nearest centralcity, which is a manifestation of the “agglomeration shadows.” We also uncover that HSRwould spur economic growth for counties with favorable endowments. However, HSR alsohas a significant negative impact on permanent population in counties. When change inpermanent population is taken into account, HSR’s negative impact on the countywideeconomy becomes smaller. Shrinking permanent population in counties after HSR launchis a manifestation of such agglomeration shadows. HSR has facilitated the free flow ofpopulation. These findings point to the possibility that HSR may have induced regionaleconomic equilibrium amid agglomeration.
As two main tools of macroeconomic policies, coordination and conflictbetween fiscal and monetary policies have been paid considerable attention by researchers.Under a structural vector autoregressive model that incorporates fiscal and monetarypolicies, this paper analyzes the monetary policy response to fiscal shocks. Our study findsthat during the occurrence of a fiscal shock, the growth rate of broad money supply M2substantially increased, indicating the adoption of an expansionary monetary policy by themonetary authority to fiscal policy expansion. Based on this empirical finding, this paperimproves the dynamic stochastic general equilibrium model to investigate the fiscal policyeffects under China’s monetary policy coordination. Our analysis shows that monetarypolicy coordination will significantly boost the economic stimulus effect of fiscal policy,generating a fiscal crowding-in effect. From the perspective of China’s institutional strength,this conclusion offers a theoretical explanation on the empirical fact of the fiscal crowdingineffect uncovered in the research literature, and offers a policy reference for makingthe proactive fiscal policy more efficient and effective. This paper suggests that China’spolicymakers give full play to the country’s institutional strength by coordinating fiscal andmonetary policies for high-quality economic development.
To promote the reconstruction and optimization of the global value chains(GVCs), it is essential to tackle the prominent contradictions and problems includinginequality of opportunity and status in the evolution of the GVC division of labor. The Beltand Road Initiative (BRI) promoted by China has obtained remarkable achievements in thisregard; however, there lacks sound theoretical and empirical evidence as to whether the BRIhas driven the GVCs to develop towards a more equitable direction. This paper employs thedifference-in-differences model to empirically analyze the GVC optimization effect of theBRI. In addition, on the basis of the so-called “five-pronged approach” index, the paperuses the mediating effect model to test the mechanism of influence. The empirical resultssuggest that the BRI has helped participating countries along the routes to increase theirposition in GVC division of labor significantly through the mediating mechanism of four outof the “ five-pronged approach”, namely policy coordination, road connectivity, unimpededtrade, and currency convertibility. The strengthening of and closer people-to-people tieshas not yet appeared to be an effective mediator, and a possible explanation may be that itsinfluence is indirect and lagging.
Cash flow statements suggest that China’s rising labor remuneration has had amajor impact on its national savings rate since 2008. Accordingly, this paper proposes laborremuneration hypotheses to explain the evolving trend of China’s national savings rate. Wehypothesize that: (1) The certainty and predictability of household labor remuneration haveled to excess sensitivity to consumption, with a corresponding decrease in the householdsavings rate; (2) rising household labor remuneration means a greater share of laborremuneration is paid by firms, resulting in a smaller corporate savings rate; (3) the increasein the payment of labor remuneration by firms as a share of national disposable income hasresulted in the government spending more on social welfare and public services resulting inthe government having a declining share of disposable income, less propensity to save, anda falling government savings rate. Using China’s provincial panel data of 2008-2016, weperformed an empirical test with the minimum wage standard as the instrumental variableto verify the above hypothesis. To cope with economic growth pressures, China needs to shiftfrom an investment-driven to a consumption-driven growth model and prioritize investmentefficiency over quantity.
Based on the endogenous technology progress framework for late-movinglarge countries, this paper simulates the effects of market size on technology progress pathand technology catch-up, and finds that under the strategy of combining innovation withimitation, the increase of market size will restrain the convergence of economies towardstechnology frontier and deepen their reliance on imitation. Under the strategy of replacingimitation with innovation, there is a non-uniform U-shaped threshold effect for marketsize to influence technology progress path and catch-up, and the threshold for the shift oftechnology progress path lags behind that for technology catch-up. Hence, we should followtechnology catch-up as the benchmark and timely adjust our innovation strategy to unleashthe advantages of economies of scale for innovation. The innovation-driven developmentstrategy is a choice compatible with China’s changing market size. However, since Chinaremains in a transition from a super-large economy to a super-strong one, the contributionof innovation will decrease at first before increasing afterwards.
Distinct from the existing literature conforming to the Porter hypothesis whichemphasizes the technological innovation mechanism, this paper examines the mechanismof technological transformation through which environmental technical standards influencethe manufacturing industry in reducing emissions and improving efficiency (i.e. greentransition). Furthermore, drawing upon enterprise samples from the databases of ChineseIndustrial Enterprises and Chinese Industrial Pollution Sources from Major MonitoredEnterprises, it empirically validates the results of the theoretical analysis. Overall, ourresearch reveals that environmental technical standards can propel manufacturingenterprises to reduce pollution and increase productivity by following an incrementalpath of technological transformation, thereby achieving a green transition. Moreover,environmental technical standards indirectly promote green technology innovation in theupstream equipment manufacturing enterprises. Heterogeneity analysis further showsthat environmental technical standards have a stronger effect of green transition on thosecompanies with higher pollution emission intensity, lower productivity, slower capitalrenewal and stronger financing capacity prior to implementing the environmental policies.
Based on the global asset portfolio model, this paper created a panel thresholdmodel using EPFR fund data to empirically test the non-linear spillover effects of USeconomic policy uncertainties on cross-border capital flow for emerging economies. Ourstudy led to the following findings: (1) When the level of global investor risk tolerance ishigh, rising US EPU will induce a capital inflow into emerging economies, as manifestedin the “portfolio rebalancing effect.” When the level of global investor risk tolerance isbelow a critical threshold, this gives rise to risk aversion and emerging economies willexperience net capital outflow, i.e. the “flight to quality effect”. (2) Equity fund investorshave a lower risk tolerance threshold than bond fund investors. (3) According to ourheterogeneity analysis, more attention should be paid to monitoring capital flow throughactively managed funds, ETF funds, and retail investor funds. The economy should increasefinancial efficiency and economic resiliency to mitigate capital outflow pressures from theexternal environment.