Contact: Department of Trade Economics Business School Renmin University of China Beijing, China
Working Papers
Identifying Treatment Effects on Productivity: Theory with An Application to Firms' Production Digitalization , with Moyu Liao and Karl Schurter.
We study the identification and estimation of treatment effects on the productivity
of firms. Our approach embeds standard methods of production function estimation into a dynamic potential outcome framework. This new framework clarifies the
necessary assumptions and potential pitfalls when quantifying causal effects on productivity. Our methods can be applied under weaker assumptions than those have
been previously employed in the literature and do not require a solution to the firm’s
dynamic optimization problem. We apply our method to study the effect of production digitalization on productivity growth. Our results robustly show that the average treatment effect of production digitalization is not significant in a window of five
years after production digitalization. However, we find substantial heterogeneity in
the impact of production digitalization on productivity across time and industries.
Importantly, firms with lower productivity before production digitalization tend to
receive less productivity gains as time evolves.
How Heterogeneous are Productivity Gains from Exporting? A Semi-Structural Approach, with Moyu Liao and Hao Sun, submitted
On the Identification and Estimation of Multiproduct Firms' Production Functions, with Moyu Liao and Jie Zhang, submitted
Financing Innovation with Innovation: A Quantitative Analysis of Patent Collateral in China, with Minjie Deng and Min Fang, submitted
Trade Policy Uncertainty and Market Diversification by Risk-Averse Firms, with T. Zhu, Z.H. Wang and K.J. Gu, submitted
The Impact of Digitalization on Productivity: Evidence from Chinese Manufacturing Firms, with H.X. Chen, J.T. Yi and X.L. Liu, submitted
TPA and Innovation, with W.L. He and Y.Q. Tang, R&R at JOM.
2024 AOM best paper award
Bank Competition, Defaulting Risks and Innovation, with Mengbo Zhang, Aomeng Zhang, Fan Li and Xinyang Li, R&R at Canadian Journal of Economics
中国专利质量测算策略与变化特征, 经济研究, R&R
创新链与产业链融合下的产业政策, 经济研究, R&R
Publications
Made and Created in China: The Role of Processing Trade , with Aksel Erbahar and Yuan Zi, conditionally accepted at Scandinavian Journal of Economics
Detecting Learning from Importing: The Effect of Importing Behavior on R&D Expenditures of Chinese Firms, with J.T. Yi and J.C. Huang, accepted at The World Economy
We study the impact of anticorruption efforts on firm performance, exploiting an unanticipated corruption crackdown in China’s Heilongjiang province in 2004. We compare firms in the affected regions with those in other inland regions before and after the crackdown. Our main finding is an overall negative impact of the
crackdown on firm productivity and entry rates. Furthermore, these negative impacts are mainly experienced by private and foreign firms, while state-owned firms are mostly unaffected. We present evidence concerning two potential explanations for our findings. First, the corruption crackdown may have limited bribery opportunities that helped private firms operate. Second, the corruption
crackdown may have interfered with personal connections between private firms and government officials to a greater extent than institutional connections between state-owned firms and the government. Overall, our findings suggest that corruption crackdowns may not restore efficiency in the economy, but instead
lead to worse economic outcomes, at least in the short run.
We extend the empirical framework by Peters et al. (2017) to include both R&D and patents in the productivity evolution. We provide a decomposition of the benefits of R&D into the patent and non-patent components, and a novel measure of the patent value conditioning on the firm's R&D investment. Using a sample of Chinese high-tech manufacturing firms, we find that (1) 47.8% to 67% of the benefits of R&D investment comes from non-patent R&D activities; (2) On average an invention (a utility model) patent causes around 0.76 (0.66) percent increase in the firm value; (3) The start-up costs of R&D are around ten times as large as the maintenance R&D costs. The counterfactual analysis shows that the lump-sum subsidy is more effective than the proportional subsidy in increasing the expected firm value and innovation probability. R&D continuers respond more actively than the R&D starters to the R&D subsidy.
As a developing economy, China's unprecedented patenting surge is puzzling. We study China's patent surge and its driving forces using a novel and comprehensive merged dataset on patent applications filed by Chinese firms. We find that R&D investment, FDI, and patent subsidy have different effects on different types of patents. First, R&D investment has a positive and significant impact on patenting activities for all types of patents under different model specifications. Second, the stimulating effect of foreign direct investment on patent applications is only robust for utility model patents and design patents. Third, the patent subsidy only has a positive impact on design patents. The results imply that FDI and patent subsidy may disproportionately spur low-quality patents.
This paper investigates the relationship between imports and innovation by importing
firms. We first construct a theoretical model in which imports stimulate innovation
through cost-reducing knowledge spillovers. We then employ a combined micro dataset
of Chinese manufacturing firms to estimate the effects of imported intermediates on the
firm’s R&D investment. The dataset allows us to construct firm-year level instruments for
importing and exporting that are uncorrelated with the innovation decision of the firm.
Our estimations find that: (1) importing intermediates tends to increase importing firms’
R&D intensity; and that (2) exporting also increases importing firms’ R&D intensity. Examining
the channels through which importing affects innovation, we find that importing
from high-income sources has a greater impact on innovation. High-tech firms tend to
experience greater increases in innovation intensity, as do private firms. Our results are
supported by a series of robustness checks.
This paper asks whether banks help or grab the enterprise in the real economy. Using the firm-
level data on Chinese enterprises during 2001–2007, we find that interest payment of private
enterprises is negatively related to the return on sales (ROS) and asset growth, which implies a
detrimental effect of bank loans on private firms' performance. But this linkage is significantly
positive for state-owned enterprises. Focusing on private enterprises, the grabbing impact from
banks is strongest for firms without government subsidies, with low production values, with
small size, or with low capital intensity. Our results are robust to alternative estimation
approach and variable specifications. To conclude, the bank-centered financial system in China
has assisted in the development of state-owned enterprises, while the development of private
enterprises has been impeded by Chinese banks.