China Economic Quarterly International (CEQI)

 经济学（季刊）国际版

Volume 1, Number 1

March 2021

 

CONTENTS

The poverty of monetarism

Patrick Bolton

 

The heterogeneous growth effects of the business environment: Firm-level evidence for a global sample of cities

José-Daniel Reyes, Mark Roberts and Lixin Colin Xu

 

Winning at the starting line: The primary school premium and housing prices in Beijing

Xuan Han, Yan Shen and Bo Zhao

 

Credit constraint and firm’s export mode choice

Zhiyuan Li and Haichun Ye

 

Firm debt and labor share: The distribution effect of de-leverage

Feng Dong, Guangjun Shen and Yang Jiao

 

Political equality, coalition formation, and economic performance in autocracies

Yang Yao

 

Pride and prejudice: Different responses to migrant information among different identity groups

Ming Lu, Ziyang Yu and Qingyi Ji

 

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The poverty of monetarism

Patrick Bolton

https://www.sciencedirect.com/science/article/pii/S2666933120300034

Abstract: This paper provides a critical discussion of monetarism and the difficulties of understanding macroeconomic developments after the publication of Friedman and Schwartz’s classic 1965 article through a monetarist lens, especially for the period following the great financial crisis. This paper proposes three research directions for broadening the classical monetarist framework and provides new foundations for monetary economics.

 

The heterogeneous growth effects of the business environment: Firm-level evidence for a global sample of cities

José-Daniel Reyes | Mark Roberts | Lixin Colin Xu

https://www.sciencedirect.com/science/article/pii/S2666933120300010

Abstract: Using firm-level data covering 709 cities in 128 countries, we examine the role of a comprehensive list of business and institutional environment variables at the sub-national level in explaining firm employment and productivity growth. We find basic protection (with corruption as an element), access to finance and infrastructure, and the existence of a strong agglomeration environment to be critically important. By contrast, human capital and a list of refined business environment variables related to labor regulations, tax, and land access are unimportant. We also find that the effects of the business environment vary according to firm size, age, and the host country’s level of development.

 

Winning at the starting line: The primary school premium and housing prices in Beijing

March 2021

Xuan Han | Yan Shen | Bo Zhao

https://www.sciencedirect.com/science/article/pii/S2666933121000022

Abstract: Using housing transaction data from Beijing during 2013–16, this paper evaluates the education premium for good primary schools and its changes. We use the regression discontinuity method to estimate the average education premium and its variation year by year. We take advantage of differences in the right to school enrollment between homeowners and renters to determine the discontinuity boundaries. Furthermore, the difference-in-differences method is applied to investigate the changes in housing prices triggered by changes in the school attendance zones. We find that the average education premium for the top 59 high-quality primary schools in Beijing was about 11% and increased each year. During the sample period, the increase accumulated to more than 50%. The changes in the school attendance zones led to a significant 1.5%–3.5% rise in housing prices. This shows that it would be better to increase the supply of quality education rather than only guiding the demand for it to promote educational equity.

 

Credit constraint and firm’s export mode choice

Zhiyuan Li | Haichun Ye

https://www.sciencedirect.com/science/article/pii/S2666933121000034

Abstract: How do firms’ credit constraint affect their export mode choices between direct exporting and indirect exporting through intermediaries? This study explores this issue in a heterogeneous firm model where firms differ not only in productivity but also in credit levels. Our model predicts that more productive and financially less constrained firms tend to choose the more advanced export mode and that for the cutoff firms, there is an overall inverse relation between credit and productivity with diminishing marginal rate of substitution. These theoretical predictions are borne out in a large cross-country firm-level dataset over the period 2002–2012.

 

Firm debt and labor share: The distribution effect of de-leverage

Feng Dong | Guangjun Shen | Yang Jiao

https://www.sciencedirect.com/science/article/pii/S2666933121000046

Abstract: China is now facing the challenges of high leverage. Our study has examined the role of firms’ rising debt in explaining the decrease in labor share in recent years. We developed a model to show that firms may strategically use debt to increase their bargaining power, resulting in lower labor share. Empirical evidence shows the labor share is robustly negatively related to debt per worker, and the negative correlation varies across ownership, labor union and maturity of debt. The findings imply that the de-leveraging policy may help alleviate the worsening income inequality.

 

Political equality, coalition formation, and economic performance in autocracies

Yang Yao

https://www.sciencedirect.com/science/article/pii/S2666933120300022

Abstract: Autocracies have diverse records of economic growth. This paper provides a theory of endogenous coalition formation to explain economic performance in autocracy. The nature of the ruling coalition that the autocrat relies on to rule the society and extract rents affects the degree of inclusiveness of the autocracy's political and economic institutions that ultimately determines economic performance. A stable ruling coalition has to be invasion-proof --- i.e., being able to resist invasion from outside --- and coalition-proof --- i.e., being able to prevent split from inside. In a political environment where side payments are allowed to buy political support, a ruling coalition is coalition-proof if and only if it satisfies Condition E, i.e., every pair of its member groups holds similar levels of political power relative to the power of any third group (including the autocrat). When more pairs of groups satisfy Condition E in a society, the ultimate ruling coalition becomes more inclusive and societal output is increased.

 

Pride and prejudice: Different responses to migrant information among different identity groups

Ming Lu | Ziyang Yu | Qingyi Ji

https://www.sciencedirect.com/science/article/pii/S2666933121000010

Abstract: Previous studies have examined how information intervention affects intergroup prejudice and conflict. On that basis, this study introduced psychological adjustment cost into a behavioral model for identity and individual attitude change. The model predicts that changes in attitude are related to an individual’s initial identity, and the same information can either change or reinforce initial attitudes. Then, we used a survey to explore whether information about migration could change the attitudes of Shanghai residents toward interregional migrants to their city. We found that after reading neutrally described information about the benefits of internal migration, the attitudes of non-native interviewees toward immigrants became more positive while those of native Shanghai residents became more negative. We also found that young, well-educated people developed more positive attitudes about immigrants after reading the information.