Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/62909 
Year of Publication: 
2007
Series/Report no.: 
Working Paper No. 584
Publisher: 
Queen Mary University of London, Department of Economics, London
Abstract: 
This study attempts to measure the inefficiency associated with aggregate investment in a transitional economy. The inefficiency is decomposed into allocative and production inefficiency based on standard production theory. Allocative inefficiency is measured by disequilibrium investment demand. Institutional factors are then taken into consideration as possible explanatory variables of the disequilibrium. The resulting model is applied to Chinese provincial panel data. The main findings are: Chinese investment demand is strongly receptive to expansionary fiscal policies and inter-provincial network effects; and although there are signs of increasing allocative efficiency, the tendency of over-investment remains, even with improvements in production efficiency.
Subjects: 
Over-investment, Efficiency, Disequilibrium, Soft-budget constraint
JEL: 
E22
E62
H74
P3
C23
Document Type: 
Working Paper

Files in This Item:
File
Size
390.37 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.