Provincial business cycles and fiscal policy in China

Carmignani, Fabrizio and Laurenceson, James S. (2013) Provincial business cycles and fiscal policy in China. Economics of Transition, 21 2: 323-340. doi:10.1111/ecot.12010

Author Carmignani, Fabrizio
Laurenceson, James S.
Title Provincial business cycles and fiscal policy in China
Journal name Economics of Transition   Check publisher's open access policy
ISSN 0967-0750
Publication date 2013-04
Sub-type Article (original research)
DOI 10.1111/ecot.12010
Open Access Status
Volume 21
Issue 2
Start page 323
End page 340
Total pages 18
Place of publication United Kingdom
Publisher Wiley-Blackwell Publishing
Collection year 2014
Language eng
Formatted abstract
We characterize the cyclical properties of fiscal policy in China along two related dimensions. First, we estimate the sign and size of the fiscal policy multiplier. Second, we assess whether fiscal policy is conducted pro- or counter-cyclically. To account for the challenges posed by China's vast geography, we use data at the provincial level. We find that (i) fiscal policy generally has ‘Keynesian’ effects, and (ii) fiscal policy is mostly conducted pro-cyclically. This means that fiscal policy is more an element of destabilization than a tool for stabilization.
Keyword Business cycle
Fiscal policy
Regional growth
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes The authors thank Michael Reddell, Kam Ki Tang, an anonymous referee, and participants at the Reserve Bank of Australia/Australian National University research workshop, China and East Asia in the Global Economy, Sydney, December 13–14, 2010, for comments received on an earlier version of this article.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
School of Economics Publications
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