Fiscal subsidy policy on home appliances: its effects on domestic consumption and exports in China
Ting Ji, Ningyuan Jia, Faqin Lin and Hang Wu
This paper evaluates the effects of the Home Appliances Going to the Countryside (HAGC) policy, a fiscal subsidy program implemented in China to boost private consumption of home appliances in rural areas from 2007 to 2012. Using the policy as a natural experiment and employing the difference-in-difference estimator, we find that the policy did not increase domestic sales of relevant goods as expected; instead, it actually reduced domestic sales and significantly promoted exports. These surprising results are robust across regressions of alternative datasets, more controls, and different regions. We further provide detailed information of undisclosed audit data for a county in Zhejiang province to shed light on the underlying mechanism of such unexpected results, suggesting loopholes in the HAGC and changes in export tax rebate rates. ? 2019 Institute of World Economics and Politics, Chinese Academy of Social Sciences
1 July 2019
China and World Economy 27(4) , pp.53-73, 2019
https://onlinelibrary.wiley.com/doi/10.1111/cwe.12286
This Journal article is published under the centre's Trade programme.