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Provincial business cycles and fiscal policy in China

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  • Fabrizio Carmignani
  • James S. Laurenceson

Abstract

This paper begins by documenting a significant challenge for macroeconomic policy-makers in China, namely a spatial dimension that sees considerable asynchronization in business cycle fluctuations across the country’s 31 provinces. This asynchronization points to potential benefits from provinces being able to exercise a degree of fiscal autonomy. The extent to which provinces have this autonomy in practice is then discussed. Finally, provincial fiscal policy is analyzed to assess whether it has had the effect of smoothing provincial business cycles. A key finding is that, if anything, provincial fiscal policy has amplified provincial business cycles, not smoothed them.
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  • Fabrizio Carmignani & James S. Laurenceson, 2013. "Provincial business cycles and fiscal policy in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(2), pages 323-340, April.
    • Handle: RePEc:bla:etrans:v:21:y:2013:i:2:p:323-340
    DOI: 10.1111/ecot.12010
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    Cited by:

    1. Jean-Louis Combes & Mary-Françoise Renard & Sampawende J.-A. Tapsoba, 2019. "Provincial public expenditure in China: a tale of pro-cyclicality," Economic Change and Restructuring, Springer, vol. 52(1), pages 19-41, February.
    2. Xiang Luo & Xinhai Lu & Zuo Zhang & Yue Pan, 2020. "Regional differences and rural public expenditure cyclicality: evidence from transitory and persistent shocks in China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(2), pages 281-318, October.
    3. Ntokozo Patrick Nzimande & Harold Ngalawa, 2017. "The endogeneity of business cycle synchronisation in SADC: A GMM approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1358914-135, January.
    4. Jean-Louis COMBES & Mary-Françoise RENARD & Sampawende Jules TAPSOBA, 2015. "Provincial Public Expenditure in China: A Tale of Profligacy," Working Papers 201524, CERDI.
    5. Gatfaoui, Jamel & Girardin, Eric, 2015. "Comovement of Chinese provincial business cycles," Economic Modelling, Elsevier, vol. 44(C), pages 294-306.
    6. Fabrizio Carmignani, 2013. "Does the Long Arm of US Macroeconomic Policy Reach South Asia?," South Asian Journal of Macroeconomics and Public Finance, , vol. 2(2), pages 145-168, December.
    7. Fabrizio Carmignani & James S. Laurenceson, 2013. "Provincial business cycles and fiscal policy in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(2), pages 323-340, April.

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