Government Infrastructural Investment and Household
Consumption in Chinese Provinces

Speaker: Professor Yang Yao
China Center for Economic Research (CCER),
National School of Development (NSD),
Peking University
Venue: Mochtar Riady Building, NUS Business School, Seminar Room BIZ 1 3-3
Date: 23 May 2011



Using Chinese provincial panel data for the period 1978-2006, this paper studies the relationship between government infrastructural investment and household consumption. In our baseline reduced-form regression, we find that a one percentage point increase of infrastructural investment in the government budget leads to a 0.31 percentage point reduction of the share of household consumption in GDP. This result
holds qualitatively in a variety of specifications and under different estimation methods. In contrast, private investment is not found to have any significant impact on the share of household consumption. Our structural estimations establish two channels for government investment’s negative effects, one by encouraging the development of the secondary sector that is more capital intensive than agriculture and services, and the other by increasing profits in the industrial sector.

Our Speaker

Yang  Yao

Professor, the China Center for Economic Research (CCER) and the National School of Development (NSD), Peking University.  He currently serves as the director of CCER and deputy dean of NSD in charge of academic affairs and the editor of the center’s house journal China Economic Quarterly. His research interests include economic transition and development in China. He has published widely in international and domestic journals as well as several sole authored and coauthored books on institutional economics and economic development in China including Ownership Transformation in China (co-author, World Bank, 2005), Globalisation and Economic Growth in China (co-editor, World Scientific, 2006), and CSR and Competitiveness in China (co-author, Foreign Languages Press, 2009). He is an associate editor of Agricultural Economics and serves in the editorial boards of several domestic and international journals. He is also a prolific writer for magazines and newspapers.

He was awarded the 2009 Sun Yefang Economics Award --- the highest economics award in China, the 2008 and 2010 Pu Shan Award in International Economics and the 2008 Zhang Peigang Award in Development Economics. He was awarded the title of Best Teacher by the Peking University Student Union in 2006 and was named a Young Leader by the Nanfang People Weekly in 2008.

Dr. Yao obtained his B.S. of geography in 1986 and M.S. of economics in 1989, both from Peking University, and his Ph.D. in development economics from the Department of Agricultural and Applied Economics, the University of Wisconsin-Madison in1996.

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