The role of SOEs in the transmission of fiscal policy shocks in China

Makram El-Shagi and Lin Zhang ()
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Lin Zhang: Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan

No 2022/2, CFDS Discussion Paper Series from Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China

Abstract: In this paper, we demonstrate the importance of state-owned enterprises (SOEs) for the conduct of fiscal policy in China using both a structural VAR based on macroeconomic data and a panel model utilizing firm-level data. We show that SOEs respond fundamentally differently to fiscal policy shocks than non-SOEs. Our results strongly indicate that SOEs are not merely competition to non-SOEs but rather that their resources are leveraged as part of fiscal policy to support and stabilize the private economy.

Keywords: China; fiscal policy; SOE (search for similar items in EconPapers)
JEL-codes: E62 H32 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-cna
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Persistent link: https://EconPapers.repec.org/RePEc:fds:dpaper:202202

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