Publications
State-owned Enterprises and Entrusted Lending: Economic Growth and Business cycles in China Economic Inquiry
Re-examining the international spillovers: an Asian perspective (with Georgios Magkonis and Simon Rudkin) International Review of Economics and Finance
Optimal central banking policies: Envisioning the post-digital yuan economy with loan prime rate-setting (with King Yoong Limand Chunping Liu) Emerging Markets Review
Informal economy and Central bank digital currency (with Eun Young Oh) Economic Inquiry
Wiley Research Headline September/2022 -- Topical Evidence Article
Mitigating economic volatility: When building efficient financial markets should supersede conventional economic policy (with M. Emranul Haque and Paul Middleditch) Journal of Government and Economics
Recession and Recovery from the Pandemic (with Lester Hunt and Anqi Zhang) Research in Globalization
Optimal fiscal management in an economy with resource revenue-financed government-linked companies (with King Yoong Lim) International Journal of Finance and Economics
Book Chapters
Working Papers
Uncertainty Shocks in An Intangible Economy
abstract: This paper studies uncertainty shocks in the context of an intangible economy. I build a two-sector dynamic stochastic general equilibrium (DSGE) model to understand a shift in investment composition and its implications for the transmission of uncertainty shocks. The model is motivated by the role of intangible capital as a cushion, mitigating the adverse effects of uncertainty on investment, as suggested by firm-level data. The quantitative analysis suggests that heightened uncertainty directs resources toward the intangible sector, making the economy more intangible-intensive. The rising importance of intangibles not only expands the size of the economy but also diminishes aggregate volatility in the uncertainty-driven business cycle.
On the Macroeconomic Effects of Shadow Banking Development (With Georgios Magkonis and Eun Young Oh)
abstract: We build and estimate a dynamic stochastic general equilibrium model with risky innovation and shadow credits to study the macroeconomic implications of shadow banking (SB), particularly on productivity. Our analysis is motivated by negative relationships between SB development and innovation outcome or total factor productivity (TFP) growth. In our model, information asymmetry associated with technology utilization leads to an agency problem in which shadow intermediation reduces banks’ incentives to screen project quality. An SB boom crowd-out traditional financial services, decreases innovation quality and technology efficiency, and thereby reduces TFP. In the light of model mechanisms, we analyse cross-country differences and deliver important implications of SB. SB development mainly driven by financial factors (e.g., the US case) leads to significant loss on TFP while that relatively prompted by real-sided factors (e.g., China and the EA cases), could be less harmful.
International Transmission of Uncertainty Shocks in Emerging Economies (with Georgios Magkonis and Tapas Mishra)
abstract: Uncertainty shocks have natural spatial spillover attributes. This paper investigates the international transmission of economic uncertainty, focusing on emerging market economies (EMEs). Based on a monthly panel VAR model, we find that domestic uncertainty in EMEs causes stagflation effects that propagate to other EMEs through international trade linkages, leading to recession and net capital outflows. A two-country DSGE model is developed to further explore these dynamics, highlighting the significant role of trade integration in amplifying the spillover effects. We also examine the impact of capital account liberalization, finding that inflow liberalization can mitigate the adverse effects of uncertainty shocks in the medium to long term. This study contributes to the literature by focusing on uncertainty shocks originating from EMEs and their international implications, providing insights into the macroeconomic consequences of trade integration and financial liberalization.
The Dynamics of Monetary Policy Regimes in China Under Global Uncertainty: A Time-Varying Approach (with Georgios Magkonis, and Eun Young Oh)
abstract: This study examines the evolution of China’s monetary policy regimes and its economy in response to global uncertainty, using a time-varying parameter vector autoregression model with stochastic volatility. Analyzing a monthly dataset with a novel measure of monetary policies from 2002 to 2020, we contribute to understanding the impact of global uncertainty shocks amidst policy and structural changes in China. Our findings reveal reduced reactivity and sensitivity of the economy and monetary policy to uncertainty in the 2010s, indicating the Chinese economy’s increased resilience under the new normal policy regime. Negative monetary policy relationships with the overshooting of output or inflation are found, with a stronger association observed in the context of inflation overshooting. This highlights China’s attention to forward-looking inflation in policy adjustments.
Work in Progress
Corporate Tax Policies and Intangible Investment (with Lin Lang)