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China’s Fiscal Stimulus Package for the Current International Crisis: What does 1996–2006 Tell Us?

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  • Jonathan E. Leightner

    (Johns Hopkins – Nanjing University Center, Nanjing University, Nanjing 210093, China College of Business Administration, Augusta State University, Augusta, Georgia 30904, USA)

Abstract

This paper uses Bi-Directional Reiterative Truncated Projected Least Squares (BD-RTPLS) to estimate annual ∂GPP/∂G and %∂GPP/%∂G multipliers for China’s 31 provinces between 1996 and 2006 (GPP = Gross Provincial Product and G = government spending in the province). In order to account for the influence of omitted variables, BD-RTPLS produces a separate ∂GPP/∂G and %∂GPP/%∂G estimate for every observation in the data set. I find that ∂GPP/∂G and %∂GPP/%∂G were highest in 1996 while China was drastically cutting government spending to curb inflation, were lowest in 1997 during the Asian Financial Crisis, slowly rose between 1998 and 2004, and then declined some in 2005 and 2006 when the Chinese yuan was slowly appreciating.

Suggested Citation

  • Jonathan E. Leightner, 2010. "China’s Fiscal Stimulus Package for the Current International Crisis: What does 1996–2006 Tell Us?," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 5(1), pages 1-24, March.
    • Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:1-24
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0001-8
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    References listed on IDEAS

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    Cited by:

    1. Jonathan E. Leightner, 2013. "The Changing Effectiveness of Monetary Policy," Economies, MDPI, vol. 1(3), pages 1-16, November.

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    More about this item

    Keywords

    fiscal policy; China; crises; stimulus;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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