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

Author

Listed:
  • Makram El-Shagi

    (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)

  • Lin Zhang

    (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)

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.

Suggested Citation

  • Makram El-Shagi & Lin Zhang, 2022. "The role of SOEs in the transmission of fiscal policy shocks in China," CFDS Discussion Paper Series 2022/2, Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China.
    • Handle: RePEc:fds:dpaper:202202
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    File URL: http://cfds.henuecon.education/images/dpaper/WP_2_2022_fiscal_China.pdf
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    More about this item

    Keywords

    China; fiscal policy; SOE;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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