Jian Yu, Xunpeng Shi and James Laurenceson
Consumption volatility is a key source of economic growth volatility; thus, it is an important factor in designing macroeconomic policy. The purpose of this paper is to…
Abstract
Purpose
Consumption volatility is a key source of economic growth volatility; thus, it is an important factor in designing macroeconomic policy. The purpose of this paper is to investigate the factors that determine household consumption volatility, using urban household survey (UHS) data over the period 2002–2009 in 18 provinces in China.
Design/methodology/approach
Both a traditional variance decomposition method and an advanced variance decomposition method are used.
Findings
The traditional variance decomposition method suggests that heterogeneity of consumption goods is the key to analyze consumption volatility in China. Consumption of transportation makes the highest aggregate contribution and per-unit volatility in consumption volatility, whereas consumption of food makes the second highest aggregate contribution and the lowest per-unit volatility. Further investigation with the advanced variance decomposition method, which allows the authors to capture intertemporal dynamics and cross-household differences simultaneously, finds that the main factor determining the consumption volatility in China is intertemporal dynamics, rather than cross-household differences.
Research limitations/implications
Future research could fruitfully explore four issues. First, consumption upgrading has increased the volatility of China’s household consumption. How much will this affect economic growth in China under its “new normal” conditions, and how should the Chinese government respond? Second, differences between UHS data and aggregate data in the calculations of consumption risk sharing need to be investigated. Third, it is important to investigate the channels through which the Chinese government can enhance its ability to spread consumption risks and thus reduce consumer consumption volatility. Finally, further study could extend the current 18 provinces to a nation-wide sample and update the data beyond 2009 to estimate the impact of the global financial crisis.
Practical implications
The results suggest that when policy makers design macroeconomic policies to smooth consumption volatility, they should consider heterogeneity in household consumption goods, regional disparity and intertemporal dynamics simultaneously. Well-managed volatility of Chinese household consumption can contribute to a stable economic growth in China and the world.
Social implications
Well-managed volatility of Chinese household consumption can contribute to a stable economic growth in China and the world.
Originality/value
This paper fills this gap by using China’s UHS data to assess consumption volatility from the perspectives of heterogeneity in household consumption goods, cross-household differences and intertemporal dynamics. We make three contributions to the literature. The first contribution of this paper consists of demonstrating the contributions of heterogeneity in household consumption goods to consumption volatility. The second contribution consists of using the advanced variance decomposition method proposed by Crucini and Telmer (2012). This decomposition methodology allows the authors to examine whether household consumption volatility is due to cross-household differences or intertemporal dynamics. The third contribution is that this paper takes Chinese residents’ consumption fluctuations as the starting point to analyze the impact of consumption fluctuations on the future trend of China’s economy.
Details
Keywords
Xunpeng Shi, James Laurenceson and Yuanling Liu
This paper aims to investigate the multifaced aspects and consequences of the EU Carbon Border Adjustment Mechanism (CBAM) from an Australia-China Relationship perspective.
Abstract
Purpose
This paper aims to investigate the multifaced aspects and consequences of the EU Carbon Border Adjustment Mechanism (CBAM) from an Australia-China Relationship perspective.
Design/methodology/approach
This paper leverages the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to examine both the internal and external factors that affect Australia and China in the context of the CBAM. In addition, we employ the PEST (Political, Economic, Social and Technological) framework to identify effective strategies for Australia-China cooperation following the implementation of the CBAM.
Findings
Our analysis reveals numerous mutual interests and opportunities for bilateral collaboration, despite challenges and threats, positioning the CBAM as a potentially significant catalyst for joint initiatives.
Practical implications
This paper proposes 10 potential areas for Australia and China cooperation from the political economic social and technological PEST dimensions.
Originality/value
This paper makes a pioneering attempt to explore potential strategies, both individually, and together, that Australia and China can adopt to manage the impact and consequence of CBAM.
Details
Keywords
Ding Chen, Navajyoti Samanta and James Hughes
Over the past two decades, China’s stock market has experienced rapid growth. This period has seen the transplantation of many “OECD principles of corporate governance” into the…
Abstract
Purpose
Over the past two decades, China’s stock market has experienced rapid growth. This period has seen the transplantation of many “OECD principles of corporate governance” into the Chinese corporate regulatory framework. These regulations are dominated by shareholder values. This paper aims to discover whether there is a causal relationship between the changes in China’s corporate governance and financial market growth.
Design/methodology/approach
This paper uses data from 1995-2014 to create a robust corporate index by looking at 52 variables and a financial index out of five financial market parameters. Subsequently, data are subject to a panel regression analysis, with the financial market index as the outcome variable, corporate governance index explanatory variable and a variety of economics, social and technological control variables.
Findings
This paper concludes that changes in corporate regulation have in fact had no statistically significant impact on China’s financial market growth, which must therefore be attributed to other factors.
Originality/value
The study is the first in the context of Chinese corporate governance impact studies to use Bayesian methodology to analyse a panel dataset. It uses OECD principles as the anchor to provide a clear picture of evolution of corporate governance for a 20-year period which is also longer than previous studies.
Details
Keywords
Fisayo Fagbemi and Richard Angelous Kotey
The paper assesses the role of natural resource rents in Nigeria's economy through the channel of institutional quality.
Abstract
Purpose
The paper assesses the role of natural resource rents in Nigeria's economy through the channel of institutional quality.
Design/methodology/approach
The analysis is done with the use of autoregressive-distributed lag (ARDL) bounds testing approach to cointegration, vector error correction model (VECM), Granger causality test and cointegrating regression over the period 1996–2019.
Findings
Findings support the notion that overreliance on natural resources could exacerbate the growing number of dysfunctional economic outcomes in the country. The study confirms that a mix of weak governance quality and natural resource rents could have a negligible effect on economic growth and possible retardation impact on the economy in the long run as well as in the short run. The evidence further reveals that there is unidirectional causality running from the interaction term to growth, suggesting that growth trajectory could be jointly determined by natural resource rents and the quality of institutions.
Originality/value
The divergent arguments associated with the mechanisms of resource curse in each of the resource-rich countries offer ample support for the contention that economic outcomes in resource-abundant states may not be a product of resource windfalls per se, but rather the quality of governance or ownership structure. Hence, the ultimate aim of the analysis is to further understanding on the link between resource rents and growth in Nigeria via governance channel.