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China’s Fiscal Stimulus Package for the
Current International Crisis: What does 1996–2006 Tell Us? |
Jonathan E. Leightner, |
Johns Hopkins –
Nanjing University Center, Nanjing University, Nanjing 210093, China
College of Business Administration, Augusta State University, Augusta,
Georgia 30904, USA ; |
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Abstract This paper uses Bi-Directional Reiterative Truncated Projected Least Squares (BD-RTPLS) to estimate annual ∂GPP/∂G and %∂GPP/%∂G multipliers for China’s 31 provinces between 1996 and 2006 (GPP = Gross Provincial Product and G = government spending in the province). In order to account for the influence of omitted variables, BD-RTPLS produces a separate ∂GPP/∂G and %∂GPP/%∂G estimate for every observation in the data set. I find that ∂GPP/∂G and %∂GPP/%∂G were highest in 1996 while China was drastically cutting government spending to curb inflation, were lowest in 1997 during the Asian Financial Crisis, slowly rose between 1998 and 2004, and then declined some in 2005 and 2006 when the Chinese yuan was slowly appreciating.
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Keywords
fiscal policy
China
crises
stimulus
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Issue Date: 05 March 2010
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