China Center for Economic Research

About: China Center for Economic Research is a based out in . It is known for research contribution in the topics: China & Emerging markets. The organization has 157 authors who have published 371 publications receiving 11294 citations.

New Structural Economics: A Framework for Rethinking Development

Abstract: As strategies for achieving sustainable growth in developing countries are re-examined in light of the financial crisis, it is critical to take into account structural change and its corollary, industrial upgrading. Economic literature has devoted a great deal of attention to the analysis of technological innovation, but not enough to these equally important issues. The new structural economics outlined in this paper suggests a framework to complement previous approaches in the search for sustainable growth strategies. It takes the following into consideration: First, an economy's structure of factor endowments evolves from one stage of development to another. Therefore, the optimal industrial structure of a given economy will be different at different stages of development. Each industrial structure requires corresponding infrastructure (both"hard"and"soft") to facilitate its operations and transactions. Second, each stage of economic development is a point along the continuum from a low-income agrarian economy to a high-income industrialized economy, not a dichotomy of two economic development stages ("poor"versus"rich"or"developing"versus"industrialized"). Industrial upgrading and infrastructure improvement targets in developing countries should not necessarily draw from those that exist in high-income countries. Third, at each given stage of development, the market is the basic mechanism for effective resource allocation. However, economic development as a dynamic process requires industrial upgrading and corresponding improvements in"hard"and"soft"infrastructure at each stage. Such upgrading entails large externalities to firms'transaction costs and returns to capital investment. Thus, in addition to an effective market mechanism, the government should play an active role in facilitating industrial upgrading and infrastructure improvements.

Realized GARCH: a joint model for returns and realized measures of volatility

Abstract: SUMMARY We introduce a new framework, Realized GARCH, for the joint modeling of returns and realized measures of volatility. A key feature is a measurement equation that relates the realized measure to the conditional variance of returns. The measurement equation facilitates a simple modeling of the dependence between returns and future volatility. Realized GARCH models with a linear or log-linear specification have many attractive features. They are parsimonious, simple to estimate, and imply an ARMA structure for the conditional variance and the realized measure. An empirical application with Dow Jones Industrial Average stocks and an exchange traded index fund shows that a simple Realized GARCH structure leads to substantial improvements in the empirical fit over standard GARCH models that only use daily returns. Copyright © 2011 John Wiley & Sons, Ltd.

Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China

Abstract: This paper examines why credit constraints for domestic and exporting firms arise in a setting where banks do not observe firms' productivities. To maintain incentive compatibility, banks lend below the amount that firms need for optimal production. The longer time needed for export shipments induces a tighter credit constraint on exporters than on purely domestic firms. In our application to Chinese firms, we find that the credit constraint is more stringent as a firm's export share grows, as the time to ship for exports is lengthened, and as there is greater dispersion of firms' productivities, reflecting more incomplete information.

Processing Trade, Tarff Reductions, and Firm Productivity: Evidence from Chinese Firms

Abstract: This paper explores how reductions in tariffs on imported inputs and final goods affect the productivity of large Chinese trading firms, with the special tariff treatment that processing fi rms receive on imported inputs. Firm-level input and output tarffs are constructed. Both types of tariff reductions have positive impacts on productivity that are weaker as firms ’share of processing imports grows. The impact of input tariff reductions on productivity improvement, overall, is weaker than that of output tari¤ reductions, although the opposite is true for non- processing firms only. Both tariff reductions are found to contribute at least 14.5% to economy-wide productivity growth.