VAT rebates as trade policy: Evidence from China

Braakmann, Nils; Bo, Gao; Maioli, Sara

doi:10.1016/j.chieco.2020.101536

Cited by 14 publications

(10 citation statements)

References 62 publications

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“…Consequently, the adjustments from 2003 to 2007 were mainly reductions of the rates of VAT rebates for high energy-consuming and high polluting products (e.g., steel products, pesticide, chlorine and other chemical products), and resource-based products (e.g., rare earth metals, silicon and wooden products). As documented by Braakmann et al (2020), the adjustments during this period were indeed related to product characteristics, such as whether the product is resource-intensive, high-tech, pollutive and energy-consuming, but were unrelated to various measures of export shocks.…”

Section: Identificationmentioning

confidence: 76%

“…These objectives are clearly stated in the official circulars. As documented by Braakmann et al (2020), the adjustments during this period were indeed related to product characteristics, such as whether the product is resource-intensive, high-tech, pollutive and energy-consuming but were unrelated to various measures of export shocks.…”

Section: Introductionmentioning

confidence: 76%

“…As a result, higher VAT rebates increase exports. Chandra and Long (2013), Gourdon et al (2019) and Braakmann et al (2020) provide empirical evidence for this prediction with firm-level and product-level data. Departing from this literature, Gao et al (2020) study the employment and wage effects of VAT rebates and find that higher rebates increase firm employment.…”

Section: Introductionmentioning

confidence: 91%

“…The data on product-level rate of VAT rebates are collected in two steps as in Braakmann et al (2020). In the first step, the rates of VAT rebates of all products in September 2006 are collected from the website of Minister of Commerce.…”

Section: Product-level Rate Of Vat Rebatesmentioning

confidence: 99%

“…We further provide evidence of this explanation: firms' innovation activities, measured by R&D expenditure and sales of new products, are indeed significantly increased when rebates are higher. On the other hand, higher rebates promote firms to export more (e.g., Braakmann et al, 2020;Chandra & Long, 2013;and Gourdon et al, 2019). As widely acknowledged in the literature, this, as a result, may raise productivity through learning-by-exporting and increased competition in the international market.…”

Section: Introductionmentioning

confidence: 99%

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The impact of export VAT rebates on firm productivity: Evidence from China

Bao-qing

2021

World Economy

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This paper studies the impact of export VAT rebates on firm productivity with Chinese firm‐product‐level data. We find that higher VAT rebates significantly raise firm productivity. The results are robust to various estimations of firm productivity. Moreover, this paper finds that the impact of export VAT rebates on firm productivity is significantly different across firms and sectors. More specifically, our results suggest that the impact is mainly driven by firms with small export intensive margins and large export extensive margins, new exporters, financially constrained firms and low‐productivity firms. Furthermore, in high‐tech sectors, the impact is significantly large with a one percentage point increase of firm rate of VAT rebates nearly raising firm productivity by 6%.

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Section: Identificationmentioning

confidence: 76%

Section: Introductionmentioning

confidence: 76%

Section: Introductionmentioning

confidence: 91%

Section: Product-level Rate Of Vat Rebatesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The impact of export VAT rebates on firm productivity: Evidence from China

Bao-qing

2021

World Economy

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The employment and wage effects of export VAT rebates: evidence from China

Wang

2020

Rev World Econ

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This paper studies the employment and wage effects of VAT rebates to exporters with comprehensive firm-product-level data of China. It is found that the adjustments in VAT rebates significantly and positively affect firm’s employment but have no statistically significant effect on firm’s wage. Moreover, this paper finds that the employment effect of VAT rebates is heterogeneous across firms. In particular, low-productivity firms are more sensitive to the adjustments of VAT rebates than high-productivity firms, suggesting that an increase of VAT rebates may cause mis-reallocation of resources.

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