Monetary Stimulus Amidst the Infrastructure Investment Spree: Evidence from China&Apos;S Loan-Level Data

81 Pages Posted: 31 Aug 2020 Last revised: 18 Nov 2021

See all articles by Kaiji Chen

Kaiji Chen

Emory University - Department of Economics; Federal Reserve Bank of Atlanta

Haoyu Gao

Renmin University of China

Patrick C. Higgins

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Daniel F. Waggoner

Federal Reserve Bank of Atlanta

Tao A. Zha

Federal Reserve Bank of Atlanta; Emory University

Multiple version iconThere are 2 versions of this paper

Date Written: August 2020

Abstract

We study the impacts of the 2009 monetary stimulus and its interaction with infrastructure spending on credit allocation. We develop a two-stage estimation approach and apply it to China's loan-level data that covers all sectors in the economy. We find that except for the manufacturing sector, monetary stimulus itself did not favor SOEs over non-SOEs in credit access. Infrastructure investment driven by non-monetary factors, however, enhanced the monetary transmission to bank credit allocated to LGFVs in infrastructure and at the same time weakened the impacts of monetary stimulus on bank credit to non-SOEs in sectors other than infrastructure.

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Suggested Citation

Chen, Kaiji and Gao, Haoyu and Higgins, Patrick C. and Waggoner, Daniel F. and Zha, Tao A., Monetary Stimulus Amidst the Infrastructure Investment Spree: Evidence from China&Apos;S Loan-Level Data (August 2020). NBER Working Paper No. w27763, Available at SSRN: https://ssrn.com/abstract=3683647 or http://dx.doi.org/10.2139/ssrn.3683647

Kaiji Chen (Contact Author)

Emory University - Department of Economics ( email )

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Haoyu Gao

Renmin University of China ( email )

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Patrick C. Higgins

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

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Daniel F. Waggoner

Federal Reserve Bank of Atlanta ( email )

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Tao A. Zha

Federal Reserve Bank of Atlanta ( email )

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404-521-8956 (Fax)

Emory University ( email )

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