Research

Publications 



Working Papers


Carbon emissions from the perspective of regional competition: Evidence from China’s low-carbon city policy with Meng-Ting Chen  and Shiyan Zhang (Under Review, PDF)

Global warming poses a prominent challenge to every country. China, being one of the largest developing countries, has undergone a rapid economic transformation in its endeavor to achieve sustainable development. This paper delves into a quasi-natural environmental experiment conducted in China, specifically focusing on the low-carbon city program initiated between 2010 and 2011. Our study uncovers the phenomenon of regional competition among Chinese local governments concerning carbon emissions, which in turn generates spillover effects stemming from the policy. To identify the effects of the low-carbon city policy on both economic and environmental development, we employ the spatial difference-in-differences (SDID) approach. Our analysis suggests that reductions in carbon emissions in the pilot cities will decrease carbon emissions and economic performance in the surrounding areas. Finally, by exploring firm-level data, we find that the policy significantly impacts large private firms operating in non-secondary industries. 


Does Elite Capture Matter? Local Political Elites and the Targeted Poverty Alleviation Strategy in China with Jie Tang and Xia Li (Under Review, PDF) Presentations (including scheduled): 98th WEAI  Annual Conference 2023.

China has implemented a nationwide poverty alleviation campaign, called the targeted poverty alleviation (TPA) strategy, to achieve the national goal of completely eradicating poverty by the end of 2020. However, the capture of political elites is considered an obstacle to achieving this goal. This paper investigates whether political elite capture exists in TPA based on the specific targeting strategy using the “Thousand-Person Hundred-Village” survey dataset in 2017. Overall, TPA is not subject to political elite capture in practice and deliberately excludes political elite households from the strategy. Here, we present three main findings. First, the probability of political elite households registering in the national poverty database (jiandanglika) under TPA is approximately 12.5% lower than that of non-elite households. Second, we found that the lower registration probability of political elite households was mainly reflected in households with committee members in the village. Third, political elite connections increase the likelihood of political elite households receiving general government transfers, suggesting that political elite capture still exists in other public welfare programs.


Economic Growth, Fiscal Inequality and Fiscal Decentralization (under review, PDF) 

Presentations (including scheduled): 76th IIPF Virtual Conference 2020 and Dissertation Seminar 2021 at Graduate Center, CUNY

This paper investigates the impact of fiscal inequality on regional economic growth under two different fiscal systems in China by adopting the event-study method. The "event" is the tax-sharing reform, switching from the "Fiscal Responsibility System" (FRS, 1987-1993), to the "Tax Sharing System" (TSS, 1994-present). I present three primary findings: First, there are different impacts of overall fiscal inequality on economic growth pre- and post-1994. Second, fiscal decentralization in the expenditure side could improve regional growth in China.  Finally, the use of extra-budgetary funds could reduce the economic growth gap between rich and poor provinces.


Local Fiscal Competition and Deficits in China with Timothy J. Goodspeed (under review, PDF)

Presentations (including scheduled): 57th MVEA Virtual Conference 2020, 96th WEAI Annual Conference 2021, 77th Annual Congress of the IIPF 2021, Dissertation Seminar 2021 at Graduate Center, CUNY, 91th SEA Annual Conference 2021, and 79th Annual Congress of the IIPF 2023.

This paper adds to the literature by examining fiscal competition and deficit financing by local governments in a developing country, China.   We examine a unique revenue source in China, land-use premiums (a type of property tax), in a panel dataset consolidated at the prefectural level from 2006 to 2016. Our results indicate that fiscal competition in land-use premiums exists and is stronger among wealthier than poorer local governments, a result that supports the view of Cai and Treisman (2005) that competition among asymmetrically endowed regions can lead to less discipline.  Moreover, we find higher local deficits are associated with lower land-use premiums, a result that suggests that the local government does not fill any fiscal gap with own revenues. 


VAT Distortion and Corporate Tax Avoidance with Renjie Zhao and Binbin Tian (Draft available upon request)

Presentations (including scheduled): 58th MVEA Virtual Conference 2021 and 97th WEAI Annual Conference 2022


Excess input VATs cannot be refunded in China, which causes a heavy financial burden for firms. Using the China National Tax Survey Database (NTSD), this paper explores the relation between input VAT credit carryovers and corporate income tax avoidance behavior. We find that the ratio of input VAT credit carryovers (IVCCs) scaled to cash inflow is negatively associated with effective corporate income tax rates (ETRs). In addition, we find that the tax avoidance activities of firms can be carried out by increasing their costs deducted before tax to underreport their profits. Finally, to explore the causal effect of input VAT credit carryovers on corporate income tax avoidance, we investigated the impact of a recent VAT reform that allowed VAT refunds for excess input VAT credits in 18 industries in 2018 using the China Stock Market & Accounting Research Database (CSMAR). The results indicate that refunding excess input VAT credits could improve corporate tax compliance.


How Does Land Use Policy Affect Local Labor Market and Housing Market? with Meng-Ting Chen  (PDF)

Presentations (including scheduled):  IEAS Research Workshop (Academia Sinica, Taiwan) 2022, Soochow University Seminar (Taiwan) 2022, 98th WEAI  Annual Conference 2023, Soochow University Seminar (Suzhou) 2023, Hehai University Seminar 2023, University of New Mexico Seminar 2023, and National Sun Yat-sen University Seminar (Taiwan).


This paper examines the impact of land use policy on the local labor market and housing market in China. There are two primary land use purposes: residential land and commercial land. We found that the more commercial land that the Chinese local government grants, the lower the regional unemployment rates, the higher the regional wages, and the higher the housing prices. We then built a model to investigate the mechanism behind the aforementioned empirical facts. Higher commercial land use attracts more firms and creates more jobs but reduces the land available for building houses. The combination of rising housing demand and reducing housing supply brings up the housing prices in high commercial land use areas.


Selected Work in Progress

Juridical Independence and ESG Disclosures with Jiayin Li and Keyi Zhao


Fiscal Decentralization and Local Economic Growth


Household Consumption and the Targeted Poverty Alleviation Strategy with Xia Li