THESIS
2017
ix, 48 pages : illustrations ; 30 cm
Abstract
In this paper, I investigate the effect of government policies that reduce the credit constraint
and entry barrier for firms in the Chinese economy quantitatively. To build a framework
which is suitable for quantitative analysis, I incorporate feature of Chinese economy into a standard
RBC model. These features include the difference in productivity and asymmetric access
to financial markets between state owned enterprises (SOE) and private enterprises (PE) and
vertical production structure discussed in Li, Liu, and Wang [30]. In particular, I introduce
endogenous firm dynamics in both the upstream and downstream sector. Quantitative analysis
show that this model can explain specific patters of Chinese business cycles, especially the relative
volatility of investment, reasonably...[
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In this paper, I investigate the effect of government policies that reduce the credit constraint
and entry barrier for firms in the Chinese economy quantitatively. To build a framework
which is suitable for quantitative analysis, I incorporate feature of Chinese economy into a standard
RBC model. These features include the difference in productivity and asymmetric access
to financial markets between state owned enterprises (SOE) and private enterprises (PE) and
vertical production structure discussed in Li, Liu, and Wang [30]. In particular, I introduce
endogenous firm dynamics in both the upstream and downstream sector. Quantitative analysis
show that this model can explain specific patters of Chinese business cycles, especially the relative
volatility of investment, reasonably well and thus can be used as a benchmark model for
policy analysis. From the policy experiments, I find the output will increase the most once the
entry barrier for private firms in the upstream sector are reduced. The credit policy experiment
shows loose credit restriction will lead to higher output but a shift of investment from upstream
to downstream. These results indicate upstream private firms are the most constrained.
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