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Monetary Stimulus Amidst the Infrastructure Investment Spree: Evidence from China's Loan-Level Data

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Listed:
  • Kaiji Chen
  • Haoyu Gao
  • Patrick C. Higgins
  • Daniel F. Waggoner
  • Tao Zha

Abstract

We study the impacts of the 2009 monetary stimulus and its interaction with infrastructure spending on credit allocation. We develop a two-stage estimation approach and apply it to China's loan-level data that covers all sectors in the economy. We find that except for the manufacturing sector, monetary stimulus itself did not favor SOEs over non-SOEs in credit access. Infrastructure investment driven by non-monetary factors, however, enhanced the monetary transmission to bank credit allocated to LGFVs in infrastructure and at the same time weakened the impacts of monetary stimulus on bank credit to non-SOEs in sectors other than infrastructure.

Suggested Citation

  • Kaiji Chen & Haoyu Gao & Patrick C. Higgins & Daniel F. Waggoner & Tao Zha, 2020. "Monetary Stimulus Amidst the Infrastructure Investment Spree: Evidence from China's Loan-Level Data," NBER Working Papers 27763, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27763
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    More about this item

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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