On February 6, Professor Yi Huang will give a talk on Public debt and private investment in China at 3:30 pm.
High levels of public debt are correlated with lower economic growth across countries, but questions remain about whether this relationship is causal. Using Chinese data, this column explores whether increasing public debt crowds out private investment. City-level investment ratios are found to be negatively correlated with local government debt for private manufacturing firms, but not for state-owned or foreign-owned manufacturers. This suggests that as well as the short-term benefits of fiscal stimulus, there might also be negative longer-term effects, such as the crowding out of more efficient firms.
Yi Huang's research interests lie at the intersection of international macroeconomics and finance. He is particularly interested in investigating the determinants of financial activity and economic development in the era of globalization.
The global financial crisis and the substantial trade and financial imbalances have attracted a great deal of attention from academics and policy makers. But few have studied the underlying dynamics. His research explains how firms’ financing decision and investment behavior drive financial markets and labor markets. Utilizing extensive firm-level micro datasets he has put together, and applying econometric tools, his research links firm dynamics with capital flows and current account movements.