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Local Government Implicit Debt and the Pricing of LGFV Bonds
Laura Xiaolei Liu, Yuanzhen Lyu, Fan Yu, Jun 22, 2022To examine the implicit guarantee provided by Chinese local governments to local government financing vehicles (LGFV), we create a proxy for local governments’ implicit debt ratio and find it correlated with the credit spread of LGFV bonds.
A Tale of Tier 3 Cities
Kenneth Rogoff, Yuanchen Yang, Mar 29, 2023This paper provides new estimates of the housing stock, construction rates, and price developments by city tier in China.
Can Credit Still Prop Up the Chinese Economy?
Sophia Chen, Lev Ratnovski, Feb 28, 2018Recent IMF research explores the effectiveness of credit in supporting the Chinese economy, and compares it with the effectiveness of fiscal stimulus. The study finds that credit contributed positively to output growth in China in the early 2000s, but the effect fell to almost zero post-2010. This suggests that, at present, credit cannot effectively support further growth of the Chinese economy. In contrast, the estimated fiscal multiplier is 1.4 post-2010, which is high in international and historic comparisons. Therefore, a targeted fiscal stimulus can cushion the adjustment of the Chinese economy to lower credit growth.
Bilateral Trade and Shocks in Political Relations: Evidence from China
Yingxin Du, Jiandong Ju, Carlos D. Ramirez, Xi Yao, Mar 14, 2018To what extent do political relations between countries affect their economic exchange? Using evidence of China’s relations with other major powers during the period of 1990 to 2013, Yingxin Du, Jiandong Ju, Carlos D. Ramirez, and Xi Yao point out the time-aggregation bias in the existing empirical research and provide insights on the relationship between political shocks and trade.
Impacts of Housing Policy: China’s Experiment
Kaiji Chen, Qing Wang, Tong Xu, Tao Zha, Jan 13, 2021China’s unprecedented and unexpected loosening of loan-to-value ratio (LTV) policy during 2014Q4–2016Q3 provides an ideal case to study the role of housing policy in housing booms and busts and its impacts on consumption and debt burdens among households. Evidence from three unique micro datasets shows that such a policy change disproportionately increased the share of mortgages to middle-aged and high-income homeowners in the total amount of newly issued mortgages and at the same time reduced their consumption growth...
