The Impact of China's Fiscal and Monetary Policy Responses to the Great Recession: An Analysis of Firm-Level Chinese Data

Jason Taylor (), Wenjun Xue () and Hakan Yilmazkuday
Additional contact information
Jason Taylor: Department of Economics, Central Michigan University
Wenjun Xue: Department of Economics and Finance, Shanghai University

No 2002, Working Papers from Florida International University, Department of Economics

Abstract: This paper investigates the effects of Chinese financial and fiscal policies designed to counter the worldwide Great Recession of 2008. We examine how policies designed to increase bank credit and health (i.e., asset liquidity, capital adequacy ratio, profitability, and bad loan ratio) influenced firm-level output, employment and investment. We also explore the impact of China's expansionary fiscal policy with regard to these firm-level variables. We find that the policy effects varied based on firm-level characteristics such as size, liability ratio, profitability, ownership and the industry in which the firm operates. With respect to the dynamic effects, our results suggest that Chinese financial and fiscal policies were generally effective in the short run, but their positive impacts ceased within two years.

Keywords: Banking System; 2008 Economic Stimulus Plan; The Great Recession; Chinese Recovery; Panel VAR Model; Firm-Level Investigation (search for similar items in EconPapers)
JEL-codes: E32 E62 G21 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2020-02
New Economics Papers: this item is included in nep-cna, nep-mac and nep-tra
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Citations: View citations in EconPapers (6)

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Journal Article: The impact of China’s fiscal and monetary policy responses to the great recession: An analysis of firm-level Chinese data (2020)
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