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Corporate Deleveraging and Macroeconomic Policies: Evidence from China

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  • Sun, Lixin

Abstract

In this paper, we estimate the dynamic equilibrium debt level for China’s non-financial corporates using an error correction model (ECM), and then analyse China’s corporate deleveraging and its consequence. Furthermore, we examine the effects of macroeconomic policies on China’s corporate deleveraging with a VAR model. The empirical results suggest that contractive monetary policy and fiscal policy rather than easy macroeconomic policies help reduce the non-financial corporate leverage in China.

Suggested Citation

  • Sun, Lixin, 2016. "Corporate Deleveraging and Macroeconomic Policies: Evidence from China," MPRA Paper 69140, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69140
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    More about this item

    Keywords

    Corporate Deleveraging; VAR/VEC Model; Dynamic Equilibrium Debt Level; Macroeconomic Policies; China’s Economy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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