Capital in the twenty-first century in China: Do Piketty's Laws work in the Chinese case?
Zhiming Long and
Rémy Herrera
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Abstract:
We propose a method of constructing a general capital stock à la Piketty for China from 1952 to 2015 (Part 1). The elasticities of income with respect to this capital are econometrically estimed through equations which also integrate human capital and R&D. The tests are performed within frameworks of modern neoclassical macrodynamic models. On this basis, we calculate an implicit rate of return of capital to test the validity of what Piketty states as a "fundamental inequality", comparing rate of return on capital and income growth rate in the long run. This inequality is verified, but appears to be tendentiously challenged over the last decade. Then, Piketty's "second law", arguing that the coefficient of capital tends to be equal to the ratio between savings rate and income growth rate, is examined. This "second law" is to be viewed as a process of asymptotic convergence in the long term (Part 2). These results are compared with new estimates for the post-1978 sub-period of "capitalism with Chinese characteristics", but the fundamental inequality is no longer verified, and it is not reasonable to affirm the validity of the "second law" (Part 3). Finally, we address the issue of the inequalities in China.
Keywords: Capital; Rate of return; Growth; Economic law; Econometrics; China (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:
Published in China Economic Review, 2018, 50 (3), pp.153-174. ⟨10.1016/j.chieco.2018.03.002⟩
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Related works:
Working Paper: Capital in the twenty-first century in China: Do Piketty's Laws work in the Chinese case? (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-03233277
DOI: 10.1016/j.chieco.2018.03.002
Access Statistics for this paper
More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().