We study a prominent energy regulation affecting large Chinese manufacturers that are part of broader conglomerates. Using detailed firm-level data and difference-in-differences research designs, we show that regulated firms cut output and shifted some production to unregulated firms within their conglomerate instead of improving their energy efficiency. To account for conglomerate and market spillovers, we interpret these results through the lens of an industry equilibrium model featuring conglomerate production. The policy raises welfare if the per ton benefits of carbon reduction exceed $161. Alternative policies that exploit public information on business networks can increase aggregate energy savings by 10 percent.

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther, the SOE is more likely to be decentralized, and this distance-decentralization link is more pronounced with higher communication costs and greater firm-performance heterogeneity. However, when the Chinese central government oversees SOEs in strategic industries, the distance-decentralization link is muted. We also consider alternative agency-cost-based explanations, and do not find much support.

Using detailed data on company visits by Chinese mutual funds, we provide direct evidence of mutual fund information acquisition activities and the consequent informational advantages mutual funds establish in local firms. Mutual funds are more likely to visit local and nearby firms both in and outside of their portfolios, but the ease of travel between fund and firm locations can substantially alleviate geographic distance constraints. Company visits by mutual funds are strongly associated with both fund trading activities and fund trading performance. Our results show that geographic constraints and costly information acquisition amplify information asymmetry in financial markets.

Urban forests are ubiquitous, yet their impacts and values remain largely unknown. We study a massive urban afforestation policy in Beijing that planted 1/3 of a million acres of greenery in less than a decade. We conduct a remote-sensing audit of the program, finding that it contributes to a substantial greening up of the city. This causes significant downwind air quality improvement, reducing average PM2.5 concentration at city population hubs by 4.2%. Rapid vegetation growth unexpectedly led to a 7.4% increase in pollen exposure. Analysis of medical claims data shows that increased aeroallergens triggered emergency room visits, mirroring pollution effects though much less severe. Monetized net health benefits of the program amount to 1.5% of the city’s GDP. Urban forests are only partially capitalized in housing values, with buyers mainly appreciating proximity to green spaces but not the air quality improvements they bring.

This study examines the effects of trade liberalization on municipal financing costs. Using the granting of permanent normal trade relations (PNTR) to China as an exogenous shock, we find that U.S. counties that are more exposed to trade liberalization issue bonds with significantly higher tax-adjusted yield spreads. Moreover, these counties pay higher gross spreads and are less likely to issue bonds after PNTR. We also show that secondary market yield spreads increase significantly in response to the U.S. granting of PNTR to China. In addition, we provide evidence that a reduction in debt serving capacity serves as a channel underlying the trade shock effects. Our findings highlight the costs of trade liberalization for public finance.

We provide for the first time the emerging market variance risk premium (EMVRP) from 2006 to 2023, based on nine emerging stock and option markets—Brazil, China, India, South Korea, Mexico, Poland, Russia, South Africa, and Taiwan. The EMVRP significantly predicts international stock returns and currency appreciation rates, especially for horizons longer than six months. This is in sharp contrast with the predictive pattern of the developed market variance risk premium (DMVRP), which is more important over horizons shorter than six months. These findings are consistent with an illustrative model incorporating partial market integration and heterogeneous economic uncertainty.

We adapt the design of four experimental studies on retirement decision-making and conduct replications with a larger online sample from the broader population. We replicate most of the main effects of the original studies. In particular, we confirm that consumption decisions are less efficient when subjects need to borrow from the future than when they need to save from the present. When subjects collect retirement benefits as lump sum instead of annuities, they choose to retire later, as suggested by the original study. We also confirm that savings are higher when they are incentivized with matching contributions than when incentivized with tax rebates. However, when faced with varying survival risks, subjects in our replication make only partial adjustments to spending paths when ambiguity is reduced. We also propose a further experimental research agenda in related topics and discuss practical issues on subject recruitment, attrition, and redesign of complex tasks.

This study examines whether corporate relationship spending through business entertainment expenses (BEEs) affects future stock price crash risk. Stakeholder theory suggests that expenditure on relationship building with external stakeholders enhances trust, firm reputation, and transparency, potentially lowering future crash risk. However, agency theory suggests that excessive relationship spending is associated with greater information opacity and managerial opportunism, contributing to greater future crash risk. Our results are more aligned with the agency perspective, showing that BEEs relate positively to future crash risk. China's 2012 anti-corruption campaign significantly moderated the effect of BEEs on stock price crash risk, particularly for firms having weak political connections, weak information transparency, and weak external monitoring mechanisms. The positive BEE-crash relation persists after the anti-corruption campaign for high financial risk firms.

This paper shows that politicians’ pressure to climb the career ladder increases bank risk exposure in their region. Chinese local politicians are set growth targets in their region that are relative to each other. Growth is stimulated by debt-financed programs which are mainly financed via bank loans. The stronger the performance pressure the riskier the respective local bank exposure becomes. This effect holds for local banks which are under some control of local politicians, it has increased with the release of stimulus packages requiring local co-financing and it is stronger if politicians hold chairmen positions in bank boards.

We collect worker month-level panel data from two companies in Beijing for a two-year period before and after the opening of a nearby subway station, which significantly improved public transportation commutes for some workers. We find a significant difference-in-differences increase (12.6% of the standard deviation) in bonus pay, which is strongly correlated to worker-level performance measures, for affected workers relative to unaffected coworkers. We find no evidence that the improved performance is a result of affected workers spending extra time at the workplace. We find suggestive evidence for a relative decline in turnover, consistent with a gain in utility for affected workers.