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Author Aziz, Jahangir
Title Real and Financial Sector Linkages in China and India
Imprint Washington : International Monetary Fund, 2008
©2008
book jacket
Descript 1 online resource (38 pages)
text txt rdacontent
computer c rdamedia
online resource cr rdacarrier
Series IMF Working Papers
IMF Working Papers
Note Intro -- Contents -- I. Introduction -- II. China and India's Recent Growth Experience -- III. China and India's Economy as a Neoclassical Growth Model -- IV. Calibrating the Growth Model -- V. Semulating the Solow Growth Model -- VI. Investment Wedge -- VII. Interpreting Investment Wedges as Financial Frictions -- A. China's Nonperforming Loans -- B. Borrowing Constraints and Bank Reform in China -- C. Self-Insurance Against Administrative Controls -- D. Financial Sector Reforms in India -- VIII. Conclusions -- References -- Figures -- 1. China and India: GDP Growth Rate -- 2. Changes in GDP Components: 1990-2005 -- 3. China: Growth Accounting -- 4. China and India: Labor Productivity -- 5. India: Growth Accounting -- 6. China: Simulation with Efficiency Wedge -- 7. China Simulation with Efficiency and Government Wedges -- 8. India: Simulation with Efficiency and Government Wedges -- 9. China: Derived Investment Wedge -- 10. India: Derived Investment Wedge -- 11. China: Simulation with Efficiency, Government and Investment Wedges -- 12. India: Simulation with Efficiency, Government and Investment Wedges -- 13. China: Derived Cumulative Capital Wedge -- 14. China: Average Effective Tax Rate -- 15. China: Domestic Savings by Sectors -- 16. China: Short-Term Bank Loan -- 17. China: Simulation with Borrowing Constraint -- 18. Effective Gross Capital Income Tax Rate -- 19. India: CRR and SLR -- 20. India: Domestic Savings -- 21. India: Simulation with SLR -- 22. India: Simulation with SLR and CRR -- 23. India: Simulating Policy Change -- 24. China: Simulating Policy Change -- Table -- 1. China: Official Estimate of NPLs Created at End-2004
In the spirit of what is known as business cycle accounting, this paper finds that the investment wedge-the gap between household's rate of intertemporal substitution and the marginal product of capital-is large and quantitatively significant in explaining China's and India's growth. Specific financial sector policies are shown to map well the size and changes in the investment wedge. In the case of China, nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending, have implied large transfers from households to firms that have kept capital cost low and encouraged investment. In the case of India, post-1992 financial sector reforms, particularly the reduction in the funds preempted by the government from the banking system, has played an important role in reducing the cost of capital. Simulations show that for rebalancing growth in China and sustaining high investment rate in India, further financial sector reforms could turn out to be key
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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2020. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries
Link Print version: Aziz, Jahangir Real and Financial Sector Linkages in China and India Washington : International Monetary Fund,c2008 9781451869569
Subject Economic development -- China -- Econometric models.;Economic development -- India -- Econometric models.;Finance -- China -- Econometric models.;Finance -- India -- Econometric models
Electronic books
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