Corporate Deleveraging and Macroeconomic Policies: Evidence from China

Lixin Sun

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Corporate Deleveraging; VAR/VEC Model; Dynamic Equilibrium Debt Level; Macroeconomic Policies; China’s Economy (search for similar items in EconPapers)
JEL-codes: E32 E62 E63 (search for similar items in EconPapers)
Date: 2016-01-28
New Economics Papers: this item is included in nep-cna, nep-mac and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69140

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