Corporate Deleveraging and Macroeconomic Policies: Evidence from China

Sun, Lixin (2016): Corporate Deleveraging and Macroeconomic Policies: Evidence from China.

Abstract

In this paper, we estimate the dynamic equilibrium debt level for China’s non-financial corporates using an error correction model (ECM), and then analyse China’s corporate deleveraging and its consequence. Furthermore, we examine the effects of macroeconomic policies on China’s corporate deleveraging with a VAR model. The empirical results suggest that contractive monetary policy and fiscal policy rather than easy macroeconomic policies help reduce the non-financial corporate leverage in China.

• Item Type: MPRA Paper
• Language: English
• Keywords: Corporate Deleveraging; VAR/VEC Model; Dynamic Equilibrium Debt Level; Macroeconomic Policies; China’s Economy
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy

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