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Author/Editor:
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Aziz, Jahangir
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Publication Date:
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December 01, 2006
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Electronic Access:
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Free Full text
(PDF file size is 878KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly distorted in the 1990s and 2000s. The distortion could have been caused by nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending. If China is to rebalance growth towards relying more on consumption and less on exports and investment, banking sector reforms and financial market development could, therefore, turn out to be key.
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Order a print copy
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Series:
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Working Paper No. 06/291
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Subject(s):
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Economic growth | China | Economic policy | Bank reforms | Financial sector | Capital markets | Capital | Consumption | Investment | Exports | Economic models | China, People's Republic of
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Author's Keyword(s):
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Business cycle accounting | rebalancing growth | financial distortions |
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English
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Publication Date:
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December 01, 2006
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ISBN/ISSN:
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1934-7073
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Format:
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Paper
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Stock No:
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WPIEA2006291
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Pages:
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34
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Price:
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US$18.00 )
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Please address any questions about this title to
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