Econometrics Seminar - Tao Zha (FED Atlanta, Emory University)

Title: Monetary Stimulus Amidst the Infrastructure Investment Spree: Evidence from China's Loan-Level Data (with Kaiji Chen, Haoyu Gao, Patrick C. Higgins, and Daniel F. Waggoner)

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.