Interest Rate Liberalization and Capital Misallocations

• 成果类型: Article
• 署名作者: Liu, Zheng; Wang, Pengfei; Xu, Zhiwei
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - San Francisco; Hong Kong University of Science & Technology; Peking University Shenzhen Graduate School (PKU Shenzhen); Peking University; Shanghai Jiao Tong University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20180045
• 发表日期: 2021
• 页码: 373-419
• 关键词: policy burdens; PRODUCTIVITY; CHINA; allocation; constraints; distortions; frictions; finance; GROWTH

摘要

We study the consequences of interest rate liberalization in a two-sector general equilibrium model of China. The model captures a key feature of China's distorted financial system: state-owned enterprises (SOEs) have greater incentive to expand production and easier access to credit than private firms. In this second-best environment, interest rate liberalization can improve capital allocations within each sector but can also exacerbate misallocations across sectors. Under calibrated parameters, the liberalization policy can reduce aggregate productivity and welfare unless other policy reforms are also implemented to alleviate SOEs' distorted incentives or improve private firms' credit access.