Topics in Research on China’s Macro Economy
Hui He
07/11/2019-07/14/2019
Huazhong University of Science and Technology (HUST)
This short course is designed to bring you the frontier research on China’s macro economy since Song, Storesletten, and Zilibotti (2011 AER, SSZ hereafter). First, the stylized facts on China’s economy along four dimensions: growth, business cycles, inequality, and population aging are introduced. Second, we introduce two theoretical approach to understanding the growth and cycles in Chinese economy, namely the models in SSZ and Chang, Chen, Waggoner, and Zha (2015, NBER Macro Annual, CCWZ hereafter). Third, we will spend time to discuss the drivers behind the rapidly rising household saving rate. We then move to the study on China’s rising inequality and link it to the changing income shocks structure and deteriorating risk-sharing observed in the data. The rest of the course will focus on linking micro to macro by introducing heterogeneous agent model (HAM) and teach how to compute the HAM models. Finally, we will introduce the applications of using the HAM on China’s pension reforms and other macro issues.
Overview
Zhu, Xiaodong, 2012. “Understanding China’s Growth: Past, Present and Future,”
Journal of Economic Perspectives 26(4), pp. 103-124.
Storesletten, Kjetil, and Fabrizio Zilibotti, 2014. “China’s Great Convergence and Beyond,” Annual Review of Economics 6, pp 14.1-14.30.
Lecture 1 Stylized Facts of China’s Macro Economy
Zhu, Xiaodong, 2012. “Understanding China’s Growth: Past, Present and Future,”
Journal of Economic Perspectives 26(4), pp. 103-124.
Brandt, Loren and Xiaodong Zhu, 2010. “Accounting for China’s Growth,” Mimeo. Chang, Chun, Kaiji Chen, Daniel F. Waggoner, and Tao Zha, 2015. “Trends and Cycles in China’s Macroeconomy,” NBER Macroeconomics Annual, pp. 1-84.
Lecture 2 Understanding China’s Growth and Cycles: Theoretical Approach Song, Zheng, Kjetil Storesletten, and Fabrizio Zilibotti, 2011. “Growing Like China” American Review of Economics 101, pp 201-241.
Chang, Chun, Kaiji Chen, Daniel F. Waggoner, and Tao Zha, 2015. “Trends and Cycles in China’s Macroeconomy,” NBER Macroeconomics Annual, pp. 1-84.
Lecture 3 Understanding China’s High Saving Rate
Chamon, M. D., and E. Prasad, 2010. “Why are Saving Rates of Urban Households in China Rising?” American Economic Journal: Macroeconomics 2(1), pp. 93-130.
Curtis, C., S. Lagauer and N. Mark, 2015. “Demographic Patterns and Household Saving in China,” American Economic Journal: Macroeconomics 7(2), pp. 58-94.
Choukhmane, Taha, Nicolas Coeurdacier, and Keyu Jin, 2016. “The One-Child Policy and Household Savings,” Mimeo.
He, H., F. Huang, Z. Liu, and D. Zhu, 2018. “Breaking ‘Iron Rice Bowl’ and Precautionary Saving: Evidence from Chinese State-Owned Enterprises Reform,” Journal of Monetary Economics 94, pp. 94-113.
Lecture 4 Income and Consumption Inequality in China
Ding, Haiyan, and Hui He, 2018. “A Tale of Transition: An Empirical Analysis of Economic Inequality in Urban China, 1986-2009,” Review of Economic Dynamics 29, pp. 106-137.
Blundell, R., L. Pistaferri, and I. Preston， 2008. “Consumption Inequality and Partial
Insurance,” American Economic Review, 98(5), 1887--1921.
Attanasio, Orazio, and Luigi Pistaferri, 2016. “Consumption Inequality,” Journal of Economic Perspectives 30(2), pp. 3-28.
Piketty, Thomas, Li Yang, and Gabriel Zucman, 2017. “ Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015,” NBER Working Paper 23368.
Santaeulalia-Llopis, Raul, and Yu Zheng, 2016. “The Price of Growth: Consumption Insurance in China 1989-2009,” American Economic Journal: Macroeconomics, forthcoming.
Lecture 5 Introduction to Heterogeneous Agent Model (HAM)
Aiyagari, Sudharkar R., 1994, “Uninsured Risk and Aggregate Saving,” Quarterly Journal of Economics 109(3), pp. 659–84.
Imrohoroglu, A., S. Imrohoroglu, and D. Joines, 1995. “A Life-Cycle Analysis of Social Security,” Economic Theory 6, pp. 83-114.
Domeji, David, and Jonathan Heathcote, 2004, “On the Distributional Effects of Reducing Capital Taxes,” International Economic Review 45, pp. 523–54.
Heathcote, Jonathan, Kjetil Storesletten, and Giovanni Violante, 2009. “Quantitative Macroeconomics with Heterogeneous Households,” Annual Review of Economics 1, pp. 319–54.
Lecture 6 Applications of HAM on China’s Pension Reforms and Economic Transition
Song, Z., K. Storesletten, Y. Wang, and F. Zilibotti, 2015. “Sharing High Growth Across Generations: Pensions and Demographic Transition in China,” American Economic Journal: Macroeconomics 7(2), pp. 1-39.
He, Hui, Lei Ning, and Dongming Zhu, 2019. “The Impact of Rapid Aging and Pension Reform on Savings and the Labor Supply: The Case of China,” IMF Working Paper 19/61.
Ding, H., Z. Fu, and H. He, 2018. “Transition and Inequality,” manuscript
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