Advanced Search
MyIDEAS: Login

Increased Exposure of China to Asymmetric External Shocks: Is Fiscal Federalism an Efficient Answer?

Contents:

Author Info

  • Jean-François BRUN

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Jean-Louis COMBES

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Pascale COMBES MOTEL

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Mary-Françoise RENARD

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

Abstract

The aim of this paper is to examine whether there is a co-insurance mechanism against provincial aggregate income fluctuations between the Chinese provinces. Our theoretical argument relies on the existence of an efficient allocation of risk between the Chinese provinces. According to this analysis, an institutional arrangement between the provinces allows the perfect smoothing of provincial private consumption. In this case, changes in provincial private consumption depend rather on changes in aggregate Chinese income than on asymmetric changes in provincial income. We test this hypothesis on the 1989-2000 period for 30 Chinese provinces using the GMM estimator. Econometric evidence highlights the weakness of co-insurance mechanisms between the Chinese provinces. First, we reject the hypothesis of perfect insurance. Second, there does not seem to exist a significant, though imperfect, insurance mechanism. Indeed, the provinces’ private consumption reactions are the same either after a shock affecting all the provinces or after an asymmetric shock.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://publi.cerdi.org/ed/2002/2002.17.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CERDI in its series Working Papers with number 200217.

as in new window
Length: 18
Date of creation: 2002
Date of revision:
Handle: RePEc:cdi:wpaper:182

Contact details of provider:
Postal: 65 Bd. F. Mitterrand, 63000 Clermont-Ferrand
Phone: (33-4) 73 17 74 00
Fax: (33-4) 73 17 74 28
Web page: http://cerdi.org/
More information through EDIRC

Related research

Keywords: China.; Fiscal Federalism; Regional Economics Risk Coping; Co-insurance;

Other versions of this item:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Mary-Françoise Renard, 2004. "La montée en puissance de la Chine dans le commerce mondial : une réussite spectaculaire pour une économie fragile," Revue d'Économie Financière, Programme National Persée, vol. 77(4), pages 43-61.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:182. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.