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Demographic Transition, Industrial Policies, and Chinese Economic Growth

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  • Michael Dotsey
  • Wenli Li
  • Fang Yang

Abstract

We build a unified framework to quantitatively examine the demographic transition and industrial policies in contributing to China’s economic growth between 1976 and 2015. We find that the demographic transition and industrial policy changes by themselves account for a large fraction of the rise in household and corporate savings relative to total output and the rise in the country’s per capita output growth. Importantly, their interactions also lead to a sizable fraction of the increases in savings since the late 1980s and reduce growth after 2010. A novel and important factor that drives these dynamics is endogenous human capital accumulation, which depresses household savings between 1985 and 2010 but leads to substantial gains in per capita output growth after 2005.

Suggested Citation

  • Michael Dotsey & Wenli Li & Fang Yang, 2022. "Demographic Transition, Industrial Policies, and Chinese Economic Growth," Working Papers 22-17, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:94396
    DOI: 10.21799/frbp.wp.2022.17
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    More about this item

    Keywords

    Aging; Credit policy; Household saving; Output growth; China;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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