Pub Date : 2025-11-25DOI: 10.1016/j.econmod.2025.107406
Christos Constantatos , Apostolos Ioannis Martis
We consider voluntary agreements (VAs) in which a firm agrees to an abatement level, expecting mild emissions tax rate in return. VAs are credible if the regulator offers a time-consistent menu relating emissions tax rates to abatement, and the firm chooses its abatement and tax rate from this menu. This VA type can be problematic when consumers are environmentally conscious. As consumers’ social responsibility (SR) increases, the regulator demands a lower tax rate independent of the firm’s abatement efforts: the regulator has little to offer regarding tax-rate reductions even at moderate SR levels. Credible VAs are typically considered superior to mandatory taxation; however, for sufficiently high SR levels, mandatory taxation is superior in terms of environmental protection and welfare.
{"title":"Environmentally conscious consumers and voluntary tax agreements: A case of dissonance","authors":"Christos Constantatos , Apostolos Ioannis Martis","doi":"10.1016/j.econmod.2025.107406","DOIUrl":"10.1016/j.econmod.2025.107406","url":null,"abstract":"<div><div>We consider voluntary agreements (VAs) in which a firm agrees to an abatement level, expecting mild emissions tax rate in return. VAs are <em>credible</em> if the regulator offers a <em>time-consistent</em> menu relating emissions tax rates to abatement, and the firm chooses its abatement and tax rate from this menu. This VA type can be problematic when consumers are environmentally conscious. As consumers’ social responsibility (SR) increases, the regulator demands a lower tax rate independent of the firm’s abatement efforts: the regulator has little to offer regarding tax-rate reductions even at moderate SR levels. Credible VAs are typically considered superior to mandatory taxation; however, for sufficiently high SR levels, mandatory taxation is superior in terms of environmental protection and welfare.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107406"},"PeriodicalIF":4.7,"publicationDate":"2025-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616205","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-22DOI: 10.1016/j.econmod.2025.107401
Xianbin Wang , Xitian Zheng , Dan Cao
Understanding how governments foster innovation remains a central issue in economic development. This paper investigates China's innovation-target-setting policy in prefecture-level cities' Five-Year Plans and its role in regional innovation. Using a difference-in-differences framework, we find robust evidence that target setting significantly increases invention patent applications. The effect operates mainly through higher fiscal expenditure on science and technology and greater public procurement of innovative products. The impact is particularly strong in cities facing greater economic growth target pressure, indicating that innovation and growth targets are complementary rather than conflicting. Further analysis shows that innovation targets improve patent quality, encourage collaborative research and development, and promote intercity knowledge spillovers. At the industry and firm levels, they stimulate innovation in leading and strategic emerging sectors and support the growth of gazelle, unicorn, and high-tech enterprises. Overall, institutionalized, target-driven policies can mobilize local governments to address market failures and advance innovation-led growth.
{"title":"Does innovation policy promote innovation? Evidence from innovation targets in China's five-year plans","authors":"Xianbin Wang , Xitian Zheng , Dan Cao","doi":"10.1016/j.econmod.2025.107401","DOIUrl":"10.1016/j.econmod.2025.107401","url":null,"abstract":"<div><div>Understanding how governments foster innovation remains a central issue in economic development. This paper investigates China's innovation-target-setting policy in prefecture-level cities' Five-Year Plans and its role in regional innovation. Using a difference-in-differences framework, we find robust evidence that target setting significantly increases invention patent applications. The effect operates mainly through higher fiscal expenditure on science and technology and greater public procurement of innovative products. The impact is particularly strong in cities facing greater economic growth target pressure, indicating that innovation and growth targets are complementary rather than conflicting. Further analysis shows that innovation targets improve patent quality, encourage collaborative research and development, and promote intercity knowledge spillovers. At the industry and firm levels, they stimulate innovation in leading and strategic emerging sectors and support the growth of gazelle, unicorn, and high-tech enterprises. Overall, institutionalized, target-driven policies can mobilize local governments to address market failures and advance innovation-led growth.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107401"},"PeriodicalIF":4.7,"publicationDate":"2025-11-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616204","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-22DOI: 10.1016/j.econmod.2025.107404
Yuhong Huang , Hui Cai
The impact of minimum wage policies on technological transformation remains inconclusive. Although the literature suggests that minimum wage adjustments affect corporate innovation, it lacks a focus on the recent rise of digital technological transformation. Using data from Chinese firms, we find that increasing minimum wages significantly hinder digitalization, particularly in regions with stricter enforcement, industries facing intense competition, and firms that are labor intensive, financially constrained, or whose employees possess weak bargaining power. We identify two plausible channels of impact, namely, the production-scale contraction effect and the risk-bearing capacity weakening effect. Furthermore, government incentives for digital adoption help mitigate the negative impact, and the effect of the minimum wage on digitalization is found to be nonlinear. This study highlights that in countries with underdeveloped labor market institutions, stronger labor protection may unintentionally obstruct enterprise upgrading. This suggests that minimum wage policies should balance labor protection with promoting technological progress.
{"title":"Minimum wage and enterprise digital transformation: Evidence from China","authors":"Yuhong Huang , Hui Cai","doi":"10.1016/j.econmod.2025.107404","DOIUrl":"10.1016/j.econmod.2025.107404","url":null,"abstract":"<div><div>The impact of minimum wage policies on technological transformation remains inconclusive. Although the literature suggests that minimum wage adjustments affect corporate innovation, it lacks a focus on the recent rise of digital technological transformation. Using data from Chinese firms, we find that increasing minimum wages significantly hinder digitalization, particularly in regions with stricter enforcement, industries facing intense competition, and firms that are labor intensive, financially constrained, or whose employees possess weak bargaining power. We identify two plausible channels of impact, namely, the production-scale contraction effect and the risk-bearing capacity weakening effect. Furthermore, government incentives for digital adoption help mitigate the negative impact, and the effect of the minimum wage on digitalization is found to be nonlinear. This study highlights that in countries with underdeveloped labor market institutions, stronger labor protection may unintentionally obstruct enterprise upgrading. This suggests that minimum wage policies should balance labor protection with promoting technological progress.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107404"},"PeriodicalIF":4.7,"publicationDate":"2025-11-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-21DOI: 10.1016/j.econmod.2025.107402
Jie Wang , Wanli Li
Using data from Chinese listed firms between 2007 and 2023, this study examines how state-owned capital participation affects the customer concentration of private firms. We find that state-owned capital participation helps reduce the customer concentration of private firms, which is more pronounced in lower-market-oriented regions and under higher economic policy uncertainty. Mechanism tests show that state-owned capital participation influences customer concentration by enhancing corporate reputation, strengthening financing capacity, increasing government procurement, and reducing information asymmetry. We also find that state-owned capital participation can strengthen market position, reduce operational risks, and enhance supply chain resilience for private firms. Overall, the study provides novel evidence on the determinants of customer concentration from an institutional perspective, highlighting the important role of ownership structure in shaping firms’ customer relationships.
{"title":"State-owned capital participation and customer concentration in private firms: Evidence from China","authors":"Jie Wang , Wanli Li","doi":"10.1016/j.econmod.2025.107402","DOIUrl":"10.1016/j.econmod.2025.107402","url":null,"abstract":"<div><div>Using data from Chinese listed firms between 2007 and 2023, this study examines how state-owned capital participation affects the customer concentration of private firms. We find that state-owned capital participation helps reduce the customer concentration of private firms, which is more pronounced in lower-market-oriented regions and under higher economic policy uncertainty. Mechanism tests show that state-owned capital participation influences customer concentration by enhancing corporate reputation, strengthening financing capacity, increasing government procurement, and reducing information asymmetry. We also find that state-owned capital participation can strengthen market position, reduce operational risks, and enhance supply chain resilience for private firms. Overall, the study provides novel evidence on the determinants of customer concentration from an institutional perspective, highlighting the important role of ownership structure in shaping firms’ customer relationships.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107402"},"PeriodicalIF":4.7,"publicationDate":"2025-11-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616228","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-20DOI: 10.1016/j.econmod.2025.107395
Andreas Zervas , Dimitrios Thomakos
We investigate how different types of government spending and total taxes affect the Greek economy, with a focus on the production side. We analyze their effects on various value-added sectors. Various government spending types impact production sectors differently; notably, government consumption spending has a more substantial effect on boosting the value added of the non-tradable sector. Our findings emphasize the way fiscal policy influences the economy from the production side. This aligns with recent theoretical studies suggesting that government spending significantly affects services. Additionally, we discovered a new insight: higher taxes severely decrease industrial production, increase inflation, with a larger multiplier effect than spending. These results offer crucial policy lessons; they help explain why adjustment programs resulted in significant output losses and highlight when consolidations may be successful.
{"title":"The fiscal policy blend and its impact on sectoral growth: The case of Greece","authors":"Andreas Zervas , Dimitrios Thomakos","doi":"10.1016/j.econmod.2025.107395","DOIUrl":"10.1016/j.econmod.2025.107395","url":null,"abstract":"<div><div>We investigate how different types of government spending and total taxes affect the Greek economy, with a focus on the production side. We analyze their effects on various value-added sectors. Various government spending types impact production sectors differently; notably, government consumption spending has a more substantial effect on boosting the value added of the non-tradable sector. Our findings emphasize the way fiscal policy influences the economy from the production side. This aligns with recent theoretical studies suggesting that government spending significantly affects services. Additionally, we discovered a new insight: higher taxes severely decrease industrial production, increase inflation, with a larger multiplier effect than spending. These results offer crucial policy lessons; they help explain why adjustment programs resulted in significant output losses and highlight when consolidations may be successful.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107395"},"PeriodicalIF":4.7,"publicationDate":"2025-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616197","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-20DOI: 10.1016/j.econmod.2025.107390
Aifan Ling , Xin You
Using China’s Targeted Poverty Alleviation (TPA) program as a quasi-natural experiment, we examine how corporate participation in TPA affects firm resilience during the COVID-19 pandemic. Theoretically, our corporate investment model shows that TPA’s implicit benefits can enhance abnormal returns during such a shock. Applying a difference-in-differences (DID) design to Chinese listed firms (2019-2024), we find TPA firms earn significantly higher abnormal returns during the pandemic (0.05% per week and 0.66% per month), and have an effect more pronounced during the COVID-19 period that later attenuated. Underlying mechanisms include improved information disclosure, greater resource access, reduced financial constraints, and enhanced management confidence. The benefits of TPA extend not only to a firm’s real operations, such as its profitability, efficiency, and supply chain stability, but also beyond the firm to positive socio-economic and environmental outcomes, which can build valuable social capital that enhances their resilience during a major external shock.
{"title":"The value of targeted poverty alleviation to stock performance during the COVID-19 period","authors":"Aifan Ling , Xin You","doi":"10.1016/j.econmod.2025.107390","DOIUrl":"10.1016/j.econmod.2025.107390","url":null,"abstract":"<div><div>Using China’s Targeted Poverty Alleviation (TPA) program as a quasi-natural experiment, we examine how corporate participation in TPA affects firm resilience during the COVID-19 pandemic. Theoretically, our corporate investment model shows that TPA’s implicit benefits can enhance abnormal returns during such a shock. Applying a difference-in-differences (DID) design to Chinese listed firms (2019-2024), we find TPA firms earn significantly higher abnormal returns during the pandemic (0.05% per week and 0.66% per month), and have an effect more pronounced during the COVID-19 period that later attenuated. Underlying mechanisms include improved information disclosure, greater resource access, reduced financial constraints, and enhanced management confidence. The benefits of TPA extend not only to a firm’s real operations, such as its profitability, efficiency, and supply chain stability, but also beyond the firm to positive socio-economic and environmental outcomes, which can build valuable social capital that enhances their resilience during a major external shock.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107390"},"PeriodicalIF":4.7,"publicationDate":"2025-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145571057","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper assesses the feasibility of monetary integration among BRICS economies, an issue that remains underexplored in the Optimum Currency Area (OCA) literature. Previous studies have typically relied on static indices or structural models that are not well-suited for forward-looking analysis. We develop a new OCA index using a Bayesian Seemingly Unrelated Regression (SUR) framework, which jointly estimates GDP growth and exchange rate volatility conditional on external macro-financial risks, including global uncertainty, oil prices, policy uncertainty, and sovereign risk. Using monthly data for the period 1998–2022, we analyse dynamics before and after the 2010 phase of institutional coordination. The results reveal persistent asymmetries in how BRICS economies respond to fundamentals and shocks, with India and China showing the greatest divergence. Elevated global uncertainty and financial risk are found to weaken macroeconomic alignment. The proposed index captures convergence patterns and facilitates scenario-based forecasting, offering a flexible framework for analysing monetary integration in both emerging and advanced economies.
{"title":"An optimum currency area index for BRICS: A Bayesian prediction model","authors":"Dimitrios Asteriou , Epameinondas Katsikas , Konstantinos Spanos","doi":"10.1016/j.econmod.2025.107396","DOIUrl":"10.1016/j.econmod.2025.107396","url":null,"abstract":"<div><div>This paper assesses the feasibility of monetary integration among BRICS economies, an issue that remains underexplored in the Optimum Currency Area (OCA) literature. Previous studies have typically relied on static indices or structural models that are not well-suited for forward-looking analysis. We develop a new OCA index using a Bayesian Seemingly Unrelated Regression (SUR) framework, which jointly estimates GDP growth and exchange rate volatility conditional on external macro-financial risks, including global uncertainty, oil prices, policy uncertainty, and sovereign risk. Using monthly data for the period 1998–2022, we analyse dynamics before and after the 2010 phase of institutional coordination. The results reveal persistent asymmetries in how BRICS economies respond to fundamentals and shocks, with India and China showing the greatest divergence. Elevated global uncertainty and financial risk are found to weaken macroeconomic alignment. The proposed index captures convergence patterns and facilitates scenario-based forecasting, offering a flexible framework for analysing monetary integration in both emerging and advanced economies.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107396"},"PeriodicalIF":4.7,"publicationDate":"2025-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-19DOI: 10.1016/j.econmod.2025.107399
Shuaizhang Feng, Jieyi Liu, Jingliang Lu
This study examines job age-friendliness in China's labor market, addressing the limited evidence on how job opportunities adapt to population aging. Using online job postings data from 2018 to 2023, we construct an Age-Friendliness Index (AFI) for occupations by applying natural language processing to measure textual similarity between occupation descriptions and age-friendly definitions. Our analysis reveals a declining trend in occupational age-friendliness, primarily driven by a shrinking share of age-friendly job vacancies. Furthermore, city-level age-friendliness is not correlated with demographic structure but is positively associated with a larger service sector share. These findings document the changing opportunities for older workers and underscore the urgency of promoting age-inclusive labor markets to sustain economic development in an aging society.
{"title":"The decline of age-friendly jobs in China: Evidence from online job vacancies","authors":"Shuaizhang Feng, Jieyi Liu, Jingliang Lu","doi":"10.1016/j.econmod.2025.107399","DOIUrl":"10.1016/j.econmod.2025.107399","url":null,"abstract":"<div><div>This study examines job age-friendliness in China's labor market, addressing the limited evidence on how job opportunities adapt to population aging. Using online job postings data from 2018 to 2023, we construct an Age-Friendliness Index (AFI) for occupations by applying natural language processing to measure textual similarity between occupation descriptions and age-friendly definitions. Our analysis reveals a declining trend in occupational age-friendliness, primarily driven by a shrinking share of age-friendly job vacancies. Furthermore, city-level age-friendliness is not correlated with demographic structure but is positively associated with a larger service sector share. These findings document the changing opportunities for older workers and underscore the urgency of promoting age-inclusive labor markets to sustain economic development in an aging society.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107399"},"PeriodicalIF":4.7,"publicationDate":"2025-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737064","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines how auction design can unintentionally facilitate bidder collusion in the land market. Departing from the dominant view that attributes low land concession revenues to corruption, we highlight how features of auction structure enable bidder-side collusion, suppressing sale prices. Using a dataset of land auctions from 15 Chinese cities (2006–2016), we find that two-stage (listing) auctions are significantly more susceptible to collusion than one-stage formats. Empirical evidence shows that sales concluding at the (secret) reserve price occur disproportionately in two-stage auctions, even after controlling for land and market characteristics. We argue that the transparency and sequencing of two-stage auctions, while designed to enhance fairness, inadvertently reduce monitoring costs and facilitate tacit bidder coordination. Our findings underscore the need to jointly consider auction format and reserve price policy in designing land sales to enhance market efficiency and mitigate collusion risks.
{"title":"Does auction design facilitate collusion?","authors":"Shao-Chieh Hsueh , Lingzi Liu , Shuoxun Zhang , Jingyi Zhao","doi":"10.1016/j.econmod.2025.107389","DOIUrl":"10.1016/j.econmod.2025.107389","url":null,"abstract":"<div><div>This paper examines how auction design can unintentionally facilitate bidder collusion in the land market. Departing from the dominant view that attributes low land concession revenues to corruption, we highlight how features of auction structure enable bidder-side collusion, suppressing sale prices. Using a dataset of land auctions from 15 Chinese cities (2006–2016), we find that two-stage (listing) auctions are significantly more susceptible to collusion than one-stage formats. Empirical evidence shows that sales concluding at the (secret) reserve price occur disproportionately in two-stage auctions, even after controlling for land and market characteristics. We argue that the transparency and sequencing of two-stage auctions, while designed to enhance fairness, inadvertently reduce monitoring costs and facilitate tacit bidder coordination. Our findings underscore the need to jointly consider auction format and reserve price policy in designing land sales to enhance market efficiency and mitigate collusion risks.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107389"},"PeriodicalIF":4.7,"publicationDate":"2025-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616229","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-19DOI: 10.1016/j.econmod.2025.107400
Ming Che , Zixiang Zhu , Yake Wen , Yujia Li
This paper examines the effects of international food price spikes caused by supply disruptions on China's economy. Existing literature recognizes food supply shocks as key drivers of global price volatility but offers limited insight into their impact on China's macroeconomy. Using a proxy Bayesian Vector Autoregression model with food supply shocks as an instrumental variable, we find that these shocks act as negative supply shocks, raising inflation, reducing output, and triggering monetary policy tightening in China. While the inflationary impact is consistent across economic states, the contractionary effect on economic activity is mainly concentrated in expansionary periods. Our results are robust across various model specifications, including larger structural VAR models. Time-varying analysis shows that inflationary effects have weakened over time, while output effects have strengthened. These findings enhance understanding of how global food supply shocks propagate to China and provide valuable guidance for policymakers managing economic disruptions post-2020.
{"title":"International food price swings and their consequences for the Chinese economy","authors":"Ming Che , Zixiang Zhu , Yake Wen , Yujia Li","doi":"10.1016/j.econmod.2025.107400","DOIUrl":"10.1016/j.econmod.2025.107400","url":null,"abstract":"<div><div>This paper examines the effects of international food price spikes caused by supply disruptions on China's economy. Existing literature recognizes food supply shocks as key drivers of global price volatility but offers limited insight into their impact on China's macroeconomy. Using a proxy Bayesian Vector Autoregression model with food supply shocks as an instrumental variable, we find that these shocks act as negative supply shocks, raising inflation, reducing output, and triggering monetary policy tightening in China. While the inflationary impact is consistent across economic states, the contractionary effect on economic activity is mainly concentrated in expansionary periods. Our results are robust across various model specifications, including larger structural VAR models. Time-varying analysis shows that inflationary effects have weakened over time, while output effects have strengthened. These findings enhance understanding of how global food supply shocks propagate to China and provide valuable guidance for policymakers managing economic disruptions post-2020.</div></div>","PeriodicalId":48419,"journal":{"name":"Economic Modelling","volume":"155 ","pages":"Article 107400"},"PeriodicalIF":4.7,"publicationDate":"2025-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145616198","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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