Credit Market Imperfection and Sectoral Asymmetry of Chinese Business Cycle
AbstractThis paper analyzes the role of credit market imperfection and sectoral asymmetry as a means through which shocks to the real economy are propagated and amplified. Drawing on firm-level data to calibrate the model, our simulations capture two key stylized facts of the Chinese economy: that credit constraints are more binding in nontradable sectors than in tradable industries and that output volatility is much greater in China than in industrial economies. We find that the driving force behind our simulation results is strongly related to the non-uniform nature of credit market imperfections in China and their implications for resource allocation and the way in which the economy reacts to shocks. Correctly capturing these macro-financial interactions are essential to understand the dynamic behavior of the Chinese economy.
Download InfoIf 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.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/118.
Date of creation: 01 May 2011
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-02 (All new papers)
- NEP-CMP-2011-07-02 (Computational Economics)
- NEP-CNA-2011-07-02 (China)
- NEP-DGE-2011-07-02 (Dynamic General Equilibrium)
- NEP-MAC-2011-07-02 (Macroeconomics)
- NEP-TRA-2011-07-02 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Calomiris, Charles W & Hubbard, R Glenn, 1990.
"Firm Heterogeneity, Internal Finance, and 'Credit Rationing.',"
Royal Economic Society, vol. 100(399), pages 90-104, March.
- Charles W. Calomiris & R. Glenn Hubbard, 1990. "Firm Heterogeneity, Internal Finance, and `Credit Rationing'," NBER Working Papers 2497, National Bureau of Economic Research, Inc.
- Kiyotaki, Nobuhiro & Moore, John, 1997.
Journal of Political Economy,
University of Chicago Press, vol. 105(2), pages 211-48, April.
- John Moore & Nobuhiro Kiyotaki, . "Credit Cycles," Discussion Papers 1995-5, Edinburgh School of Economics, University of Edinburgh.
- Ryo Kato, 2003. "Matlab code for Kiyotaki-Moore credit cycles," QM&RBC Codes 113, Quantitative Macroeconomics & Real Business Cycles.
- Nobuhiro Kiyotaki & John Moore, 1995. "Credit Cycles," NBER Working Papers 5083, National Bureau of Economic Research, Inc.
- Héricourt, Jérôme & Poncet, Sandra, 2009.
"FDI and credit constraints: Firm-level evidence from China,"
Elsevier, vol. 33(1), pages 1-21, March.
- Sandra Poncet & Jérôme Héricourt, 2009. "FDI and credit constraints: firm level evidence from China," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) hal-00633901, HAL.
- Gertler, Mark, 1992.
"Financial Capacity and Output Fluctuations in an Economy with Multi-period Financial Relationships,"
Review of Economic Studies,
Wiley Blackwell, vol. 59(3), pages 455-72, July.
- Gertler, Mark, 1990. "Financial Capacity And Output Fluctuations In An Economy With Multiperiod Financial Relationships," Working Papers 90-44, C.V. Starr Center for Applied Economics, New York University.
- Gong, Gang & Lin, Justin Yifu, 2008.
"Deflationary expansion: An overshooting perspective to the recent business cycle in China,"
China Economic Review,
Elsevier, vol. 19(1), pages 1-17, March.
- Gang Gong & Justin Yifu Lin, 2005. "Deflationary Expansion : an Overshooting Perspective to the Recent Business Cycle in China," Macroeconomics Working Papers 21959, East Asian Bureau of Economic Research.
- Arellano, Manuel & Bond, Stephen, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 277-97, April.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- repec:cep:stitep:285 is not listed on IDEAS
- Aaron Tornell & Frank Westermann, 2003.
"Credit Market Imperfections in Middle Income Countries,"
CESifo Working Paper Series
960, CESifo Group Munich.
- Aaron Tornell & Frank Westermann, 2003. "Credit Market Imperfections in Middle Income Countries," NBER Working Papers 9737, National Bureau of Economic Research, Inc.
- Gertler, M.L. & Hubbard, R.G., 1988.
"Financial Factors In Business Fluctuations,"
fb-_88-37, Columbia - Graduate School of Business.
- Mark Gertler & R. Glenn Hubbard, 1988. "Financial factors in business fluctuations," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 33-78.
- Loren Brandt & Xiaodong Zhu, 2000. "Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 422-451, April.
- Jahangir Aziz, 2008. "Real and Financial Sector Linkages in China and India," IMF Working Papers 08/95, International Monetary Fund.
- Ben Bernanke & Mark Gertler & Simon Gilchrist, 1998.
"The Financial Accelerator in a Quantitative Business Cycle Framework,"
NBER Working Papers
6455, National Bureau of Economic Research, Inc.
- Bernanke, Ben S. & Gertler, Mark & Gilchrist, Simon, 1999. "The financial accelerator in a quantitative business cycle framework," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 21, pages 1341-1393 Elsevier.
- Bernanke, B. & Gertler, M. & Gilchrist, S., 1998. "The Financial Accelerator in a Quantitative Business Cycle Framework," Working Papers 98-03, C.V. Starr Center for Applied Economics, New York University.
- Steven M. Fazzari & R. Glenn Hubbard & BRUCE C. PETERSEN, 1988.
"Financing Constraints and Corporate Investment,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
- Gao, Xu, 2007. "Business Cycle Accounting for the Chinese Economy," MPRA Paper 7050, University Library of Munich, Germany, revised Dec 2007.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.