How do Multinationals Impact China’s Technology? The Role of Quid Pro Quo Policy and Technology Spillovers
Multinationals play a crucial role in international knowledge diffusion. Using comprehensive patent data, we document: (1) multinational affiliates and their foreign parent firms comprise a significant portion of patents filed with China’s patent office; and (2) there are subsequent transfers and spillovers of these technologies to domestic firms. Guided by this evidence, we develop a model of multinational production featuring cross-country idea flows, transfers, and spillovers. Quantitatively, we find that without multinational production and knowledge spillovers, the idea stock owned by China would drop by 27%. Furthermore, due to the externalities of multinationals through technology transfers and spillovers, subsidizing multinationals will at most increase real income by 8% in China.
Xiao Ma, Yiran Zhan
Working Paper | No. 20240902 |
Keywords: multinational activities, technology transfers, knowledge spillovers
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Overnight Learning, Price Discovery, and Macroeconomic Announcements
We show fast price discovery at the market opening after macroeconomic announcements released overnight even when investors do not trade and learn from quotes while the stock market is closed. Leveraging a unique feature of unscheduled macroeconomic announcements arriving outside of regular trading hours of Chinese stock markets, our paper identifies the large impacts of learning from alternative sources other than prices on price discovery. We document that investors’ overnight learning from social media in the period between macro news arrival and market opening enhances the price discovery once market reopens for trades. Overnight learning among investors helps level the playing field across investors and mitigates reversals of overnight and intraday returns.
Haozhe Han, Grace Xing Hu, Calvin Dun Jia*
Working Paper | No. 20240904 |
Keywords: overnight learning, macroeconomic announcements, price informativeness, social media
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A High-Frequency Measure of Chinese Monetary Policy Shocks
We develop a daily measure of Chinese monetary policy shocks that incorporates both quantity and interest rate-based policy changes. Our shock measure serves as a sufficient statistic tailored to the Chinese market, addressing the common issue in emerging markets of lacking a key proxy for monetary policy stance due to multi-dimensional objectives and complex toolkits. We validate its effectiveness in capturing unexpected monetary policy changes in China. Shedding light on monetary policy transmission, our shock series reveals that Chinese monetary policy significantly affects the equity and credit risk of non-financial firms and shifts real macroeconomic variables.
Jianyao He, Dun Jia, Kai Li, Wenbin Wu*
Working Paper | No. 20240903 |
Keywords: monetary policy, inter-bank market, macroeconomic announcements, asset prices, China
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The Incident-Driven Green Products
We employ the ChatGPT model to identify green products in the US product markets. Approximately 3.7% of US product announcements from 2002 to 2022 qualify as green products. Using a stacked Difference-in-Differences approach, we find that firms involved in severe environmental incidents launch 40% more green products within two years following the incidents. These incident-driven green products are notably novel, supported by high-quality green patents, and result in substantial environmental improvements for both producers and consumers. In contrast, green products introduced without the impetus of environmental incidents do not demonstrate meaningful environmental gains and often raise concerns of greenwashing.
Yifei Zhang*
Working Paper | No. 20240901 |
Keywords: green products, environmental incidents, environmental performance, green patents, greenwashing, ChatGPT, machine learning
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Gold is a Hedging Asset
While industry investors commonly view gold as a hedging asset, academic studies often find the opposite. We show that gold is a prominent hedging asset via three different approaches: a state-space model, predictive regressions, and principal component analyses. We find that, ceteris paribus, gold prices increase with expected stock market return μₜ and expected dividend growth rate gₜ. In bad times, μₜ rises while gₜ declines. It thus may seem that gold prices fall in bad times and that gold prices insignificantly or even negatively predict stock returns. However, after addressing the omitted-variable-bias introduced by gₜ, we find that gold prices significantly and positively predict stock returns.
Aoxiang Yang*
Working Paper | No. 20240605 |
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The Asset Durability Premium
Durable capital is harder to finance not only due to its greater down payment, but also because of its larger
Dun Jia, Kai Li, Chi-Yang Tsou∗
Working Paper | No. 20240602 |
Keywords: durability; financial constraints; collateral, cross-section of stock returns
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Bargaining and Dynamic Competition
Industries with significant scale economies or learning-by-doing may come to be dominated by a single firm Econom
Shanglyu Deng, Dun Jia, Mario Leccese, Andrew Sweeting
Working Paper | No. 20240601 |
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Fare Structure and the Demand for Public Transit
We study fare structure design and public transit use Leveraging a fare rise in the Beijing Subway that replaced a flat rate with one that varies by distance, time, and offers quantity discounts, we find inelastic demand, inflexible travel schedules, and
Yizhen Gu, Qu Tang, Yacan Wang, Ben Zou*
Working Paper | No. 20240302 |
Keywords: public transit, demand for travel, price elasticity
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