Research
Publication
Import and Innovation: Evidence from Chinese Firms, with Zhang & Chen, 2017, European Economic Review
(Publish version: http://www.sciencedirect.com/science/article/pii/S0014292117300338 )
This paper investigates the impact of import on innovation intensity. We first build up a simple model where import can stimulate innovation through knowledge spill-overs which reduce firms' cost of innovation. We then use a combined rm-level dataset of Chinese manufacturing firms to empirically investigate the causal relationship between import and innovation. We study both the impact of importing of intermediate inputs and capital goods in a multiple treatment causal study framework. Our study finds that both the importing of intermediate inputs and capital goods enhance firms' innovation intensity; capital goods import entry has a larger positive impact on innovation than intermediate import entry both in the short and long run; importing from high-income countries increases firms' innovation intensity greater than importing from low-income sources. Our empirical findings coincide with our theoretical models predictions, and are robust to different matching estimators and various matching techniques.
Does high external debt predict lower economic growth? Role of sovereign spreads and institutional quality, with Wang & Xue, 2021, Economic Modelling
There has been a lengthy debate regarding the relationship between external borrowing and macroeconomic fragility. This paper investigates the predictive power of external debt as an indicator for economic growth to examine the argument that there is a dynamic relationship between external debt and growth. We conduct a panel regression using data from low- and middle-income countries (LMCs) between 1970 and 2018. The results indicate that an increase in total, long-term, or external public debt consistently predicts slowdowns in short- and medium-run growth. Limited evidence on non-linear external debt-growth relationship highlights the fact that external borrowing, especially by the public sector, significantly contributes to macroeconomic fragility. Proxy vector autoregressive (PVAR) estimation also confirms the dynamic causal effect of external sovereign debt expansion on economic slowdowns. Further evidence suggests that even the countries have high borrowing costs, better institutional quality can help mitigate the negative impact of external borrowing on growth.
Does designed financial regulation policy work efficiently in pollution control? Evidence from manufacturing sector in China, with Zhang & Tong, 2021, accepted by Journal of Cleaner Production
Green production and pollution control matter a great deal for resource conservation and sustainable growth. Today, Chinese firms are facing the challenge of upgrading the modes of production of industries with high energy consumption and high pollution to align with green initiatives. Financial systems can be designed to intervene in modes of production to control firms’ pollution emissions, but the degree of impact and design mechanism are not clearly understood up to now. Thus, evaluating the policy impact of such transactions related to firm production is indeed an important contribution to existing knowledge about these topics. Using novel firm-level data with pollution and financial variables, we exploit the causal effect of bank loans on firms’ abatement performance by using a natural experimental of a green loan policy shock in China. The results show that green loan policy has the positive effect of pollution abatement by state-owned and private-owned firms. This paper also investigates how green loan policy may promote green production through strengthening financial constraint and decreasing fixed and intangible investments. Furthermore, we find that political ties transfer financial burdens from firms with strong political ties to firms with weak political ties. In closing, we articulate the implications of our study of a green financing system for sustainable growth and cleaner production.
Does tax reduction spur innovation? Firm-level evidence from China, with Zhang, 2020, accepted by Finance Research Letters
The role of taxation in firms’ innovation is far from a clear answer. We estimate the effect of tax reduction on firms’ innovation. By using a novel matched dataset with rich information on innovative activities and taxation reduction, we find the significant promotion effect of tax reduction In addition, by taking heterogeneity into account, we find the promotion effect is larger in service industry than manufacturing sector. Furthermore, we employ alternative innovation indicators and estimation models to take robust checks. The policy implication is that more tax reduction policies should be introduced to small and medium- size firms.
Does financial constraint impede the innovative investment? Micro evidence from China, With Zhang, 2020, Emerging Markets Finance and Trade, 56:7, 1423-1446.
This study is among one of relatively few to test for financial constraints on corporate intangible investment behavior. We provide new evidence on the influence that financing constraints have on innovation investment using data of Chinese industrial firms during 1998–2006. By employing the system Generalized Method of Moments to overcome the endogeneity problem of large dynamic panel data, we find that non-state and foreign-owned firms exhibit positive and statistically significant sensitivity of innovation investment to cash flow, while state-owned enterprises (SOEs) do not. In addition, among firms with these characteristics, short-term banking finance and smoothing function of net working capital play significantly positive roles in financing innovation investment not only for SOEs but also for non-state and foreign firms. Our results are robust to a battery of sensitivity checks.
Less financial constraints, more clean production? New evidence from China, with Zhang,2019, Economics Letters.
This paper explores the effects of financial constraints on pollution abatement at firm level in China. By using a novel matched data contains rich financing information and air pollution protection variables, we find financial constraints hinder air pollution abatement significantly, whereas state-owned factor can alleviate financial constraints through external financial resources and better support pollution expense than privately and foreign owned firms.
Does innovation facilitate firm survival? Evidence from Chinese high-tech firms, with Zhang & Ning, 2018, 11(75), Economic Modelling.
The impact of innovation mechanisms on firm survival remains inconclusive in the existing literature, especially when we consider the case of a rapidly growing emerging economy. Using a unique firm-level dataset of 14,065 Chinese high-tech start-ups from 2007 to 2013, we employ a discrete time hazard model to study the impact of differences in internal and external innovation mechanisms, specifically, innovation efficiency and spillover effect derived from trade, on the likelihood of firms' survival as these factors are currently less understood. Bigger and older technology-intensive firms tend to have lower probalility of exit. Our results suggest that innovation as measured by patents, innovation efficiency and firms' import and export activities can increase the survival rate of Chinese high-tech firms. This implies that policy makers should focus on promoting both internal and external innovation mechanisms to improve the survival of indigenous high-tech firms.
Does Credit Market Impede Innovation? Based on the Banking Structure Analysis, with Zhang & Xin, 2017, Review of International Economics and Finance
This paper asks whether the credit market impede the innovation. Using the province- and industry-level input and output of innovation dataset combined with regional loan structure in Chinese credit market during 1999-2007, we identify two measures to proxy Chinese banking structure, the long-term vs. short-term bank loans and the Big-Four vs. non-Big-Four banks, which affect technological innovation. We show that industries that are more dependent on external finance exhibit a disproportionally higher innovation level in provinces with a larger share of the long-term bank loan market. However, the larger share of the short-term bank loan market appears to discourage innovation in industries with more dependence on external finance. Moreover, the positive effect of the long-term bank loans on innovation is strengthened in provinces with a higher level of market share of the non-Big-Four banks, whereas the negative effect of the short-term bank loans on innovation is mitigated in those provinces. Our study provides evidence on the positive effect of the credit market on innovation.
Foreign Direct Investment and Pollution Havens Hypothesis: Firm-Level Panel Data Evidence from China, Globalization and the Environment of China. pp.73-96. (with Maoliang Bu & Shuwen Zhai & Jie Zhang)
(previous named Is Foreign Direct Investment Sensitive to the Environmental Regulation: Firm-Level Evidence from China )
The central debate on pollution havens concerns whether the level of environmental regulation in developing countries influences foreign investment location decisions. Most empirical studies are based on aggregate data, while micro-level evidence is relatively lacking in the literature. To fill this research gap, this paper tests for the existence of intracountry pollution havens in China by estimating the determinants of foreign investment flows based on a large firm-level panel dataset. Evidence from this study supports the existence of pollution havens within China in certain industries. However, the sensitivity of foreign investment to environmental regulation varies significantly across industries with different pollution characteristics. Furthermore, when the impact of government subsidies on foreign investment is accounted for, the results show that subsidies can compensate for pollution treatment costs in provinces with stricter environmental regulation.
Working Paper
The nexus between internet and productivity, 2020
Uncertainty Shocks and Structural Investment Response, in revision
Big Names, Big Gains? Evidence From China, 2015 July
Information asymmetry among firms is a key obstacle in international trade. in traditional Chinese culture, name is a key factor for a firm's success, so the owner would carefully choose a specific name for the firm. While the regulation laws in now china also make firms' name under strict regulation. in this paper, we investigate whether firm's name act as an efficient tool to reduce the risk of uncertainty in international trade. We divide firms into two categories, big-names and non-big-names, and then investigate the gains premium from specific firms' name. From the perspectives of intensive margins and extensive margins, we specify the real effect of big-names by controlling firm-level characteristics, and characteristics of export destinations. Finally, we observe that big-names significantly promote firms' export.
Processing Trade and Enterprise Productivity In China (under review)
Recent literature found that the productivity of export enterprises is lower than the non-export enterprises in China, which challenges the recently developed new new trade theory. By using the unique combined data of Chinese industrial enterprises and customs enterprises, we found that the productivity of foreign-funded processing trade enterprises was significantly lower than non-export enterprises. Our evidence shows that processing trade can be the key factor in understanding the “mystery” of Chinese export enterprises productivity. Moreover, it was found that the low productivity of foreign-funded enterprises of processing trade was related to the “error” of “measuring productivity”, which was derived from the low nominal value of the enterprise value added to the price level, while the low nominal value of the enterprise value added was closely related to its low level of taxes and employee wages. Therefore, the low productivity of foreign-funded enterprises of processing trade may not reflect the actual low productivity, while it could be generated from the tax benefit policy towards foreign-funded enterprises and their possible price transferring behaviors.
Work in Progress
Who response to policy inincentive? Behavioral record evidence, 2022
Mixed policy and Innovation: A novel evidence, 2022
Manufacturing shock and rural development, 2021
Cutural shock and the modernlization of villages, 2021
Taxation benefit and production transition, 2021
Environmental regulation and Growth, 2017, with Bu
Trade Policy and Export Performance, 2017, with Wei
We contribute to the studies on the consequence of heterogeneous trade policy on export growth with firm-level evidence and unique firm-level specific policy assistance.
Stained NIPs: Evidence from China, 2016, with Zhou
We investigate the debate of the efficiency of trade policy caused the attraction by numerous economists.
Trade and Pollution, in revision
we contribute to the literature on the environmental effect of international trade, by providing direct micro evidence from China.
Does culture cause innovation? in revision
Different kinds of firms may have various strategies in innovation. In this paper, we investigate the role of culture in firms' behavior of innovation.
Journal Articles in Chinese
(2018) 创新追赶战略抑制了中国专利质量么?经济研究,2018年第5期
(2017) 全球价值链下中国本土企业的创新效应,经济研究，2017年第3期
(2016) 油价不确定性与企业投资，金融研究，2016年第12期
(2016) 全国文明城市与企业绩效——基于倾向性匹配倍差法的微观证据，产业经济研究，2016年第5期
(2016) Financial constraints and capital-labor ratio: an evidence from China, China Economic Quarterly （融资约束影响企业资本劳动比吗?——中国的经验证据，经济学季刊，第3卷）
(2016) 员工培训与企业生产率:来自中国的经验证据，学习与探索，第2期
(2015) 政府补贴如何影响中国企业出口的二元边际，世界经济第6期
(2015)Import and Productivity: Evidence from China, China Economic Quarterly （进口与企业生产率——中国的经验证据，经济学季刊，第3卷）
(2014) How Does Competition Affect Innovation: Evidence from China, accepted by China Industrial Economics (with Jie Zhang & Fuxin Zhai) （竞争如何影响创新：中国情景的新检验，中国 工业经济，2014年第11期）
(2014) Has the Quality of China’s Export Products been promoted? Economic Research Journal（中国出口产品质量得到提升了么？经济研究, 2014年第10期）
(2014) Does Import Induce Export? A Micro Interpretation of China's Export Miracle, World Economy （进口是否引致了出口：中国出口奇迹的微观解读, 世界经济, 2014年第6期）
(2013) Can the Reform of “County Directly Administrated by Province” Promote Economic Growth? Empirical Evidences from Enterprises in Henan Province, Contemporary Finance & Economics (“省直管县”能否促进经济增长?——来自河南省企业层面的经验证据, 当代财经, 2013年第8期)
(2013) How does financial constraint affect exporters' extensive and intensive margins? World Economic Papers ( 融资约束如何影响中国企业出口的二元边际？世界经济文汇, 2013年第4期)
(2013) Why does Export Inhibit Chinese Enterprises' Value-added Ratio? An Investigation Based on Government's Behavior, Management World (为什么出口会抑制中国企业增加值率?——基于政府行为的考察, 管理世界, 2013年第6期)
(2012) Financial constraint, financial channels and firms' R&D investment, World Economy, World Economy ( 融资约束、融资渠道与企业R&D投入,世界经济, 2012年第10期）
(2011) Does the factor market distortion boost the export of Chinese firms? World Economy (要素市场扭曲是否激发了中国企业出口,世界经济, 2011年第8期)
Conferences
"Is Foreign Direct Investment Sensitive to the Environmental Regulation: Firm Level Evidence from China", International Conference on Industrial Upgrading and Sustainable Economic Growth in China, Guangzhou, China, December, 2013.
"Import and Innovation: Firm-level Evidence from China", 2013 Fudan Doctor Academic Forum, Shanghai, December, 2013.
"Financial Repression，credit constraints, and export quality", Conference on the Development and Transformation of International Trade in New Stage of China's Reform and Opening, Shanghai, September, 2014.