Population Aging, Credit Market Frictions, and Chinese Economic Growth
Abstract: We build a uniﬁed framework to quantitatively examine population aging and credit market frictions in contributing to Chinese economic growth between 1977 and 2014. We ﬁnd that demographic changes together with endogenous human capital accumulation account for a large part of the rise in per capita output growth, especially after 2007, as well as some of the rise in savings. Credit pol-icy changes initially alleviate the capital misallocation between private and public ﬁrms and lead to signiﬁcant increases in both savings and output growth. Later, they distort capital allocation. While contributing to further increase in savings, the distortion slows down economic growth. Among factors that we consider, increased life expectancy and ﬁnancial development in the form of reduced inter-mediation cost are the most important in driving the dynamics of savings and growth.
File(s): File format is text/html https://philadelphiafed.org/-/media/research-and-data/publications/working-papers/2019/wp19-55.pdf
Provider: Federal Reserve Bank of Philadelphia
Part of Series: Working Papers
Publication Date: 2019-12-20