HenU/INFER Workshop on Applied Macroeconomics 5.5
Program
November 6th - Day 2
Parallel Session 4 A - Institutions
09:00 AM - 11:00 AM
Prof. Kenneth D. West
University of Wisconsin - Madison
Special Guest Star Chair
Globalization and the Rise of Populist Radical Right in Europe
Makram El-Shagi - Henan University
Steven J. Yamarik - California State University Long Beach
09:00 AM - 09:30 AM
Globalization and the Rise of Populist Radical Right in Europe
Makram El-Shagi (Henan University) / Steven J. Yamarik (California State University Long Beach)
This paper estimates the impact of globalization on the electoral outcomes of populist radical right (and lef) parties in Europe. We use import penetration, outbound foreign direct investment, immigration, and asylum seekers as globalization threats seen by voters. To control for endogeneity, we use the predicted values of the bilateral determinants of each globalization measure. We then estimate the effects of each indicator of globalization on the election results of populist radical right parties throughout Europe.
How Alliances Form and Conflict Ensues
Lu Dong - University of Nottingham
Lingbo Huang - Nanjing Audit University
Jaimie W. Lien - The Chinese University of Hong Kong
Jie Zheng - Tsinghua University
09:30 AM - 10:00 AM
How Alliances Form and Conflict Ensues
Lu Dong (University of Nottingham) / Lingbo Huang (Nanjing Audit University) /Jaimie W. Lien (The Chinese University of Hong Kong (CUHK)) / Jie Zheng (Tsinghua University)
In a social network in which friendly and rival bilateral links can be formed, how do alliances between decision-makers form, and what determines whether a conflict will arise? We study a network formation game between ex-ante symmetric players in the laboratory to examine the dynamics of alliance formation and conflict evolution. A peaceful equilibrium yields the greatest social welfare, while a successful bullying attack transfers the victimized player’s resources evenly to the attackers at a cost. Consistently with the theoretical model predictions, peaceful and bullying outcomes are prevalent among the randomly re-matched experimental groups, based on the cost of attack. We further examine the dynamics leading to the final network and find that groups tend to coordinate quickly on a first target for attack, while the first attacker entails a non-negligible risk of successful counter-attack by initiating the coordination. These findings provide insights for understanding social dynamics in group coordination.
Does Informality Hinder Financial Development Convergence?
Can Sever - IMF
Emekcan Yucel - Bogazici University
10:00 AM - 10:30 AM
Does Informality Hinder Financial Development Convergence?
Can Sever (IMF) / Emekcan Yucel (Bogazici University)
This paper sheds light on the role of informal economy in financial development convergence. The evidence shows that credit levels tend to converge across countries over time,
particularly when informality is lower. As the size of informal economy becomes larger, however, financial development convergence weakens, and eventually can turn out to be divergence. This finding suggests that policies that address informality can help countries with lower levels of financial development catch up with the countries with more developed financial systems. It also has implications for the evolution of cross-country income gaps, considering the role of financial development in economic performance. In the last part of the paper, we find evidence consistent with this. Result shows that higher informality is also associated with weaker income convergence across countries over time.
Innovation Beyond Jurisdiction Boundaries: Regional Integration and Spatial Reshaping of Innovation Patterns
Siyu Wang - Shanghai University of International Business and Economics
Peizhen Jin - East Normal University
10:30 AM - 11:00 AM
Innovation beyond jurisdiction boundaries: Regional integration and spatial reshaping of innovation patterns
Siyu Wang (Shanghai University of International Business and Economics) / Peizhen Jin (East Normal University)
Eliminating the jurisdictional boundary effect of the flow of innovative elements is the key to achieve coordinated regional development. This paper set a theoretical model of the influence of regional integration policies on the spatial agglomeration of innovations. We utilize the data mining methodology, and finally obtain the patent distribution and patent transfer data in 283 cities in China. The empirical results based on the Spatial Difference-in-Difference (SDID) model show that overall regional integration policies have improved Chinese cities. However, the changes in the urban innovation structure of different geographic locations and economic development levels show a spatial differentiation trend. The regional integration policy has significantly promoted the diffusion of innovation portrayed by the patent transfer network, so that the spatial density of innovation in urban agglomerations in developed areas presents a “ripple effect” that spreads from urban centers to border areas and tends to be balanced. However, the policy show less significance in inland or underdeveloped urban agglomerations. The above conclusions are still robust after changing the estimation method, replacing the core variables and dealing with the endogeneity of the story. In sum, the construction of transportation infrastructure, the agglomeration of high-tech industries, and the cultivation of human capital in urban border areas are important mechanisms for regional integration policies to drive the balanced pattern of innovation space. The formulation of regional integration policies under the premise of considering the heterogeneity of cities is conducive to the establishment of local government coordination and benefit-sharing mechanisms, and is essential for realizing a coordinated regional development strategy driven by high-quality innovation.
Parallel Session 4 B - Monetary Policy in China (II)
09:00 AM - 10:30 AM
Prof. Harald Uhlig
University of Chicago
Special Guest Star Chair
The Dynamic Effects of Macroeconomic Announcements on the Volatilities of Renminbi Onshore and Offshore Exchange Rates
Zhitao Lin - Jinan University
Tao Tang - Jinan University
09:00 AM - 09:30 AM
The dynamic effects of macroeconomic announcements on the volatilities of Renminbi onshore and offshore exchange rates
Zhitao Lin / Tao Tang (Jinan University)
We investigate the dynamic effects of Chinese and US macroeconomic announcements on the daily volatilities of Chinese RMB onshore (CNY) and offshore (CNH) exchange rates under the framework of a Markov switching VAR model with exogenous variables. We find the two-regime model is best fit for RMB volatilities and the estimated regime-switching date is around the exchange rate reform in August 2015. Empirical results show that both volatilities are affected by more kinds of Chinese and US announcements under the second regime. In the perspective of the average influence, we find a greater effect of US announcements in the CNY market; in contrast, Chinese announcements dominate in the CNH market from the perspective of average magnitude. The relative importance of US news weakening apparently in the second regime, leads to a growing role of Chinese news on RMB volatilities. Lastly, we show that the impact of positive local news is greater than that of negative news within China, whereas negative news released from the US are more associated with RMB volatilities.
Monetary Policy Surprises and Corporate Investment in China
Dong Lu - Renmin University of China
Huoqing Tang - Renmin University of China
Chengsi Zhang - Renmin University of China
09:30 AM - 10:00 AM
Monetary Policy Surprises and Corporate Investment in China
Dong Lu / Huoqing Tang / Chengsi Zhang (Renmin University of China)
This study provides firm-level evidence on the heterogeneous, dynamic effect of monetary policy shocks on corporate investment in China. We first identify exogenous monetary policy surprises using financial market data around policy announcement as external instruments. We then use rich firm-level data to examine the monetary policy transmission mechanisms. We find that unexpected monetary policy easing boosts firms' aggregate real investment in China, with peaks in the second and fourth years. This empirical pattern is generated by the heterogeneous dynamic responses of firms with size-dependent financial constraints: small-sized firms have quicker and larger responses than large-sized firms. However, these results are due mainly to the reaction of non-state-owned firms, not state-owned enterprises. We further find that sales revenue response could be the channel through which monetary policy shock transmits to firms' real investment, and a simple heterogeneous firm model can simultaneously explain these empirical findings.
The Role of SOE in the Transmission of Fiscal Policy Shocks in China
Makram El-Shagi - Henan University
Lin Zhang - Henan University
10:00 AM - 10:30 AM
The role of SOE in the transmission of fiscal policy shocks in China
Makram El-Shagi / Lin Zhang (Henan University)
In this paper, we demonstrate the importance of state-owned companies for the conduct of fiscal policy in China using both a structural VAR based on macroeconomic data and a panel model utilizing firm-level data. We show that state-owned companies respond fundamentally differently to fiscal policy shocks than non-SOEs. Our results strongly indicate that SOEs are not merely competitive with the private sector, but rather that their resources are leveraged as part of fiscal policy to support and stabilize the private economy.