| ID | 170085 |
| Title Proper | Pushing on a string |
| Other Title Information | State-owned enterprises and monetary policy transmission in China |
| Language | ENG |
| Author | Chen, Hongyi |
| Summary / Abstract (Note) | This paper studies whether monetary transmission in China is asymmetric. While researchers have found an asymmetric transmission in the US and other economies, China offers a specific rationale for asymmetries: the presence of state-owned enterprises (SOEs) with preferential access to financing. To study the consequences of SOEs for monetary policy transmission, we differentiate between expansionary and restrictive policy shocks and argue that SOEs generally suffer less from a policy tightening and benefit more from a policy easing. Based on sector-specific macroeconomic time series and a large firm-level data set, we provide evidence of a systematic and sizeable asymmetry in the transmission of monetary policy shocks in China. The nature of the asymmetry is consistent with the notion of explicit or implicit government guarantees of SOEs and has consequences for the adjustment of aggregate variables. In contrast to other central banks, the People's Bank of China seems able to “push on a string”. |
| `In' analytical Note | China Economic Review , No.54; Apr 2019: p.26-40 |
| Journal Source | China Economic Review 2019-04 |
| Key Words | Financial System ; State-Owned Enterprises ; VAR ; Monetary Transmission ; Firm-Level Data ; State-Dependent ; Local Projections |