Are Chinese individuals prone to money illusion?

Heleen Mees, Philip Hans Franses 20 November 2011

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China’s monetary policy and its inflation have got people talking – particularly about the effect on other countries (see for example the eBook edited by Evenett 2010). But what about its effect on China’s people? Are they fooled by money illusion?

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Topics:  Frontiers of economic research Monetary policy

Tags:  US, inflation, China, money illusion

Does openness generate growth? Reconciling the experiences of Mexico and China

Timothy Kehoe, Kim Ruhl 19 November 2011

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Does opening to international trade and foreign investment generate economic growth? A large empirical literature employs regressions with a country’s growth rate as the dependent variable and some measure of openness among the independent variables. Although some researchers find that growth is positively correlated with the share of trade in GDP, Rodríguez and Rodrik (2001) point out that the trade share is not a direct measure of policy. When the dependent variable is a measure of policy, the results are ambiguous and highly sensitive to the exact specification of the regression.

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Topics:  International finance International trade

Tags:  China, free trade, financial globalisation, openness, Mexico

The financial trilemma in China and a comparative analysis with India

Rajeswari Sengupta, Joshua Aizenman 15 November 2011

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Policymakers dealing with the Great Recession of 2008–09 are confronted with what we call the ‘financial trilemma’. This hypothesis, based on pioneering work by Mundell and Fleming in the 1960s, asserts that a country may not simultaneously target exchange-rate stability, conduct an independent monetary policy, and have full financial integration – it is a potent paradigm of open-economy macroeconomics (see Fleming 1962 and Mundell 1963).

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Topics:  Development International finance International trade

Tags:  China, India, emerging markets, exchange-rate policy, financial trilemma

China’s economic growth ‘miracle’ and its outlook by 2020

Yuhan Zhang 13 November 2011

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China’s economy has taken off since Deng Xiaoping’s economic reforms in 1978. Contrary to the conventional wisdom that China’s economic growth has been driven by exports, it is investment that actually contributes the most. China’s fixed capital formation and inventories jumped from 30% of GDP in 1980 to around 47.5% in 2010. Fixed capital formation, which corresponds to infrastructure such as factories, roads, and housing, had risen to the unprecedented high of 18.2 trillion renminbi at the end of 2010. And it is still rising.

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Topics:  Development

Tags:  growth, China

Should India join the sovereign-wealth-fund herd?

Kavaljit Singh 31 October 2011

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New Delhi will soon take a final call on the issue of setting up of a sovereign wealth fund. The idea of setting up an Indian sovereign wealth fund has been going around since 2007 when China established its major sovereign wealth fund, China Investment Corporation (CIC), with an initial capital fund of $200 billion. However, this time the proposal has received strong support from India’s corporate leaders who recently suggested the establishment of a state-owned sovereign wealth fund primarily to secure access to natural resources and pursue strategic investment opportunities overseas.

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Topics:  International finance International trade

Tags:  China, India, sovereign wealth funds

The rise of the renminbi as international currency: Historical precedents

Jeffrey Frankel 10 October 2011

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All of a sudden, the renminbi is being touted as the next big international currency. Just in the last year or two, the Chinese currency has begun to internationalise along a number of dimensions. A renminbi bond market has grown rapidly in Hong Kong, and one in renminbi bank deposits. Some of China’s international trade is now invoiced in the currency. Foreign central banks have been able to hold renminbi since August 2010, with Malaysia going first.

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Topics:  International finance

Tags:  reserve currency, China, renminbi, dollar

Will India overtake China in the next decade?

Ganeshan Wignaraja 29 September 2011

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There is renewed interest in the Asian giants in the wake of sluggish growth in advanced industrial economies. Over the past decades China and India have become super-exporters and surpassed all other developing countries (Winters and Yusuf 2007; Bardhan 2010). Some are predicting that India’s trade and growth performance will soon outpace China’s.

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Topics:  Development International trade

Tags:  China, India, emerging markets

Special economic zones: What have we learned?

Thomas Farole 28 September 2011

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It is more than 50 years since the establishment of the first modern special economic zones. But it is only relatively recently, particularly since the 1990s, that their popularity as a policy instrument has taken off. The International Labour Organization‘s database of special economic zones reported 176 zones in 47 countries in 1986; by 2006 this had risen to 3,500 zones in 130 countries (Boyenge 2007).

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Topics:  Development International trade

Tags:  China, developing countries, Special economic zones

Is the dragon learning to fly? An analysis of the Chinese patent explosion

Zhihong Yu , Markus Eberhardt, Christian Helmers 27 September 2011

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China’s economic success over the past three decades has been widely regarded as the result of its ability to produce manufactured goods at low cost, building on the availability of cheap labour and scale economies, while relying on existing (albeit in part advanced) technologies of production. China’s ability to upgrade its technology-base and its moving up the value-chain has been widely regarded as hampered by weak (intellectual) property rights enforcement (Zhao 2006).

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Topics:  International trade Productivity and Innovation

Tags:  China, patents, intellectual property rights

Legal origin: A Chinese perspective

Debin Ma 14 September 2011

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Recent scholarship stresses the key role of a nation’s 'legal origin' – eg common law versus civil law regimes – in accounting for growth performance, and current financial institutions (La Porta et al 1998). This work, however, has a big hole in it – non-Western legal traditions are nowhere mentioned. This is curious since Western intellectual giants such as Max Weber stressed the importance of such systems.

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Topics:  Development Economic history Frontiers of economic research Institutions and economics

Tags:  China, legal origin

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