Business Cycle Effects of Credit and Technology Shocks in a DSGE Model with Firm Defaults

This paper proposes a theoretical framework to analyze the impacts of credit and technology shocks on business cycle dynamics, where firms rely on banks and households for capital financing. Firms are identical ex ante but differ ex post due to different realizations of firm specific technology shocks, possible leading to default by some firms. The paper advances a new modelling approach for the analysis of financial intermediation and firm defaults that takes account of the financial implications of such defaults for both households and banks. Results from a calibrated version of the model highlight the role of financial institutions in the transmission of credit and technology shocks to the real economy. A positive credit shock, defined as a rise in the loan to deposit ratio, increases output, consumption, hours and productivity, and reduces the spread between loan and deposit rates. The effects of the credit shock tend to be highly persistent even without price rigidities and habit persistence in consumption behaviour.bank credit, financial intermediation, firm heterogeneity and defaults, interest rate spread, real financial linkages

Exploring Employment Intentions of College Students in Small and Medium-sized Cities against the Backdrop of High-Quality Economic Development: Taking Huai’an City as an Example

Against the backdrop of high-quality development of the national economy, the development of each city is also facing transformation and upgrading. Cities need high-quality development, and high-quality talents are the key. The problem of attracting high-quality talents in domestic small and medium-sized cities in high-quality development needs to be solved urgently. This paper takes Huai’an, a third-tier city in China, as an example, to understand the intentions and confusions of college students when they seek employment. The qualitative approach of semi-structured interviews is employed. The study finds that in small and medium-sized cities, factors hindering college students from staying in local cities for employment include that the intensity of the government in publicizing high-quality development has not reached to most college students, the guide courses in colleges and universities meet difficulties in the process of delivery, and college students' own career planning are not guided well. In response to the above problems, this paper puts forward suggestions such as strengthening the positive interaction between schools and college students, enhancing the publicity of high-quality urban development among college students, and closely integrating college students’ career guidance courses with local development. Quality development attracts more high-quality talents

China's Emergence in the World Economy and Business Cycles in Latin America

The international business cycle is very important for Latin America’s economic performance as the recent global crisis vividly illustrated. This paper investigates how changes in trade linkages between China, Latin America, and the rest of the world have altered the transmission mechanism of international business cycles to Latin America. Evidence based on a Global Vector Autoregressive (GVAR) model for 5 large Latin American economies and all major advanced and emerging economies of the world shows that the long-term impact of a China GDP shock on the typical Latin American economy has increased by three times since mid-1990s. At the same time, the long-term impact of a US GDP shock has halved, while the transmission of shocks to Latin America and the rest of emerging Asia (excluding China and India) GDP has not undergone any significant change. Contrary to common wisdom, we find that these changes owe more to the changed impact of China on Latin America’s traditional and largest trading partners than to increased direct bilateral trade linkages boosted by the decade long commodity price boom. These findings help to explain why Latin America did so well during the global crisis, but point to the risks associated with a deceleration in China’s economic growth in the future for both Latin America and the rest of the world economy. The evidence reported also suggests that the emergence of China as an important source of world growth might be the driver of the so called “decoupling” of emerging markets business cycle from that of advanced economies reported in the existing literature.international business cycle, emerging markets, Great Recession, GVAR, China, Latin America, trade linkages

‘New Engineering Education’ in Chinese Higher Education: Prospects and challenges

Since becoming a formal signatory of the Washington Accord in 2016, China has outlined an initiative ‘New Engineering Education’ (NEE) to reform its engineering education at university level. This paper elaborates upon the NEE initiative by presenting analysis of its domestic and international context, the goals of the initiative, how the initiative draws upon international standards, major actions under the initiative, and the challenges remaining for NEE to achieve its goals. The paper argues that China views international practices and standards of engineering education in developed nations as highlands to imitate and surpass, and the NEE goals embody an ambitious systematic rather than partial reform of the sector. China has pushed forward the NEE reform with measures such as formulating National Standards for dozens of categories of engineering programs, commissioning 600+ research projects on NEE development, establishing new engineering programs and interdisciplinary courses, strengthening university-partnership, updating accreditation for engineering programs, and improving both external and internal quality assurance mechanism. The sector, however, still faces challenges in achieving systematic quality upgrade due to hindering factors like enlarged uneven resource allocation, downplayed teaching activities and the difficulties in reforming the curricula system. Expected changes are also discussed.Received: 06 March 2018Accepted: 07 November 2018Published online: 29 November 2018</p