Brown Bag seminar in Economics | Yijia Chen
Welcome to the Brown Bag Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Yijia Chen, SSE who will present "Interest Rate Distortion and Welfare Dynamics: A Case Study of China"
Abstract
In this study I explore the welfare implications of a hypothetical financial reform that reduces the interest rate distortion between China's public and private sectors. A two-sector heterogeneous-agent model is developed to capture two sources of interest rate distortion: financial friction and implicit government guarantee. The numerical result suggests that, while the elimination of either financial friction or the implicit government guarantee enhances allocative efficiency, the resulting welfare impacts differ significantly. Specifically, removing financial friction raises both output and consumption, whereas eliminating the implicit government guarantee reduces them. This divergence is primarily attributed to the varying responses in aggregate capital.
Yijia Chen is a Ph.D. student at SSE, in the Department of Economics.
This seminar takes place at Stockholm School of Economics, Sveavägen 65, in room A750.
Please contact kathrine.abelson@hhs.se if you have any questions.
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