We argue that China's housing market volatility is driven by a unique institutional nexus of local government‘land financing’and novel central bank monetary policy tools,distinguishing it from Western precedents...We argue that China's housing market volatility is driven by a unique institutional nexus of local government‘land financing’and novel central bank monetary policy tools,distinguishing it from Western precedents.Addressing a critical research gap—the amplification role of bank credit creation—we develop a dynamic stochastic general equilibrium model that integrates local government land finance with the transmission of innovative monetary policy within a financial accelerator framework.Our model reveals a powerful feedback loop in which local government fiscal incentives and monetary policy shocks are mutually amplified through the banking system's credit creation process,generating self-reinforcing property price spirals.Crucially,our framework demonstrates the symmetry of this mechanism:a negative housing shock triggers the same accelerator in reverse,propagating a contraction in credit and M2 that poses systemic financial risk.Our study identifies and quantifies this institution-specific financial accelerator and,thus,offers a new framework for understanding the sources of systemic risk in the Chinese economy.展开更多
The purpose of this paper is to test the applicability of the ＂financial ac- celerator＂ mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment a...The purpose of this paper is to test the applicability of the ＂financial ac- celerator＂ mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the im- plications of the ＂financial accelerator＂. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and sub- samples.展开更多
China and other emerging market economies hoM large amounts of US dollar （USD）-denominated assets while their enterprises mainly raise funds from domestic banks. These economies＇currencies are under a constant pres...China and other emerging market economies hoM large amounts of US dollar （USD）-denominated assets while their enterprises mainly raise funds from domestic banks. These economies＇currencies are under a constant pressure to appreciate. The authors of this paper apply the model used in Bernanke et al. （1999） to small open economies in order to find out the optimal exchange rate regime for the emerging market economies. Findings indicate that a country＇s choice of exchange rate regime is directly associated with its percentage of USD-denominated assets and the strength of the financial accelerator effect. A managedfloating rate regime is more desirable than afreefloating regime because of its ability to better avoid liquidity traps given appreciation pressure. A managed floating rate regime also outperforms a fixed exchange rate regime because the former tends to cause less welfare loss. These factors make a managed floating rate regime the optimal choice for emerging market economies. Lastly, the authors propose policy steps and suggestions based specifically on China＇s current situation.展开更多
基金supported by the General Program of the National Natural Science Foundation of China(Project No.72173089).
文摘We argue that China's housing market volatility is driven by a unique institutional nexus of local government‘land financing’and novel central bank monetary policy tools,distinguishing it from Western precedents.Addressing a critical research gap—the amplification role of bank credit creation—we develop a dynamic stochastic general equilibrium model that integrates local government land finance with the transmission of innovative monetary policy within a financial accelerator framework.Our model reveals a powerful feedback loop in which local government fiscal incentives and monetary policy shocks are mutually amplified through the banking system's credit creation process,generating self-reinforcing property price spirals.Crucially,our framework demonstrates the symmetry of this mechanism:a negative housing shock triggers the same accelerator in reverse,propagating a contraction in credit and M2 that poses systemic financial risk.Our study identifies and quantifies this institution-specific financial accelerator and,thus,offers a new framework for understanding the sources of systemic risk in the Chinese economy.
文摘The purpose of this paper is to test the applicability of the ＂financial ac- celerator＂ mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the im- plications of the ＂financial accelerator＂. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and sub- samples.
文摘China and other emerging market economies hoM large amounts of US dollar （USD）-denominated assets while their enterprises mainly raise funds from domestic banks. These economies＇currencies are under a constant pressure to appreciate. The authors of this paper apply the model used in Bernanke et al. （1999） to small open economies in order to find out the optimal exchange rate regime for the emerging market economies. Findings indicate that a country＇s choice of exchange rate regime is directly associated with its percentage of USD-denominated assets and the strength of the financial accelerator effect. A managedfloating rate regime is more desirable than afreefloating regime because of its ability to better avoid liquidity traps given appreciation pressure. A managed floating rate regime also outperforms a fixed exchange rate regime because the former tends to cause less welfare loss. These factors make a managed floating rate regime the optimal choice for emerging market economies. Lastly, the authors propose policy steps and suggestions based specifically on China＇s current situation.
