Total factor productivity and state ownership: Evidence from China's 2008 stimulus package

We examine the impact of China's economic stimulus plan in 2008 on the total factor productivity (TFP) of China's listed firms. We hypothesize that firms operating in regions characterized by greater resource misallocation would experience a more pronounced decline in TFP following the imp...

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Bibliographic Details
Published inThe Manchester school Vol. 92; no. 3; pp. 246 - 280
Main Authors Han, Shi‐zhuan, Duan, Taotao, Gao, Han, Zhou, Tianhang, Li, Jie
Format Journal Article
LanguageEnglish
Published Manchester Blackwell Publishing Ltd 01.06.2024
Subjects
Companies
DID
economic stimulus package
Ownership
Productivity
Provinces
SOEs
Stimulus
total factor productivity
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Summary:We examine the impact of China's economic stimulus plan in 2008 on the total factor productivity (TFP) of China's listed firms. We hypothesize that firms operating in regions characterized by greater resource misallocation would experience a more pronounced decline in TFP following the implementation of the stimulus plan. To gauge the extent of resource misallocation, we employ the proportion of state‐owned enterprises (SOEs) as a measure. Our findings reveal a substantial decrease in TFP for firms located in provinces with higher SOE shares compared to those in provinces with lower SOE shares, amounting to approximately 9.2%. These results highlight the unintended policy consequence of the stimulus plan for firm‐level productivity in China.
Bibliography:We thank the participants of the Third Camphor Regional Economics Conference at Nanjing University, the Workshop on Monetary Policy and the Great Recession in East China Jiaotong University, and the 22nd Camphor Economics Conference of Zhejiang Jiaxing College for their valuable comments. The authors contribute to this paper equally and all should be regarded first author.
ISSN:1463-6786
1467-9957
DOI:10.1111/manc.12466