Quantitative Easing, Wealth Effect and Export
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| Title | Quantitative Easing, Wealth Effect and Export
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| Author | Zhang Jingjia,Sun Puyang and Liu Lanbiao |
| Organization | NanKai University |
| Email | vanillajiajia@163.com；puyangsun@nankai.edu.cn；liulanbiao@vip.sina.com |
| Key Words | quantitative easing, cross-border wealth effect, export, enterprise ownership |
| Abstract | We developed the Keynesian model of closed economy for quantitative easing policy, and reveal the cross-border wealth effect on export from quantitative easing through an open macro-economy perspective for the first time. Based on theoretical analysis, we initiate a theoretical model and hypothesis on exporters' heterogeneity in developing countries under the political shock of quantitative easing in developed countries. Meanwhile, we use the detailed firm-product data from Chinese customs and apply difference in difference method to test the behavior of exporters in China under the background of Japanese quantitative easing during 2001-2006. Our results show that, in line with the findings from our theoretical model, quantitative easing in developed countries stimulates the export volume of Chinese firms, especially for foreign invested ones. However, quantitative easing knocks down the export ratio of Chinese foreign invested firms to the developed countries with such policy, which indicates the shock from exchange rate appreciation is larger than the shock of increasing international capital flow. By using PSM to establish the test group and control group, we effectively test the heterogeneity of exporting behavior responds among different types of ownership under the shock of quantitative easing, and derive results in accordance with our theoretical analysis. It's better for our government to be alert about the fluctuation of export volume brought by the implementation and tapering of quantitative easing policies in developed countries, and smooth the negative effect from the aspects of exchange rate and international capital flow. |
| Serial Number | WP812 |
| Time | 2015-02-03 |
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