Channels of Interprovincial Consumption Risk Sharing in the Peopleâ€™s Republic of China
AbstractThis paper analyzes consumption risk sharing among provinces in the Peopleâ€™s Republic of China (PRC) during 1980â€“2007. The analysis finds that 9.4% of shocks to gross provincial product are smoothed by the interprovincial fiscal transfer system. This system also cushions a relatively large percentage of province-specific shocks in coastal areas. Using a variety of indicators, we explored nonfiscal channels of consumption risk sharing. We found that the migration of rural labor to urban areas and the remittance of migrant wages play an important role in promoting interprovincial consumption risk sharing in inland PRC provinces. In contrast, the extent of risk sharing through financial intermediation and capital markets is very limited. These factors have resulted in a low degree of risk sharing among provinces, especially during the last decade
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 23202.
Date of creation: Dec 2011
Date of revision:
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consumption risk sharing; the Peopleâ€™s Republic of China; fiscal transfer system; interprovincial;
Other versions of this item:
- Julan Du & Qing He & Oliver M. Rui, 2011. "Channels of Interprovincial Consumption Risk Sharing in the Peopleâ€™s Republic of China," Microeconomics Working Papers 23202, East Asian Bureau of Economic Research.
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-14 (All new papers)
- NEP-DEV-2012-03-14 (Development)
- NEP-TRA-2012-03-14 (Transition Economics)
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