Optimal capital account liberalization in China

• 成果类型: Article
• 署名作者: Liu, Zheng; Spiegel, Mark M.; Zhang, Jingyi
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - San Francisco; Shanghai University of Finance & Economics
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2020.08.003
• 发表日期: 2021
• 关键词: Capital controls; Financial repression; CHINA; Sequencing of reforms; Misallocations; welfare

摘要

China maintains tight controls over its capital account. Its current policy regime also features financial repression, under which banks are required to extend funds to state-owned enterprises (SOEs) at favorable terms, despite their lower average productivity than private firms. We incorporate these features into a general equilibrium model. Our model illustrates a tradeoff between aggregate productivity and inter-temporal allocative efficiency from capital account liberalization under financial repression. As a result, along a transition path with a declining SOE share, welfare-maximizing policy calls for rapid removal of financial repression, but gradual liberalization of the capital account. (C) 2020 Elsevier B.V. All rights reserved.