This paper studies the impact of the COVID-19 epidemic on economic and health outcomes in China from January 20 to September 28, 2020. We first document China’s containment policies and present empirical evidence on the role of the online economy. We then use a SIR-macro model to study the macroeconomic and health outcomes of the epidemic. The model can generate infection and death dynamics broadly consistent with the data and the U-shaped recovery of the Chinese economy at the weekly frequency. The analysis reveals that, in addition to the containment policies, the development of the online economy (both online consumption and remote work) plays a critical role in fighting an epidemic.

We augment an overlapping generations endogenous credit cycle model with environmental externalities and two regulatory authorities to study how fiscal and financial environmental regulation together shape environmental quality, macroeconomic stability, and income distribution. Environmental quality depends on pollution from the brown sector, regulated either through environmental haircuts on collateral or via tax-financed abatement and environmental improvements. We find that haircuts and taxes affect emissions, income distribution, and system stability in distinct ways, with interaction effects that create trade-offs between environmental outcomes and macroeconomic stability. Compared to scenarios with only financial regulation, introducing an environmental tax maintains similar environmental quality but achieves higher aggregate income and capital per worker. However, we uncover intergenerational trade-offs as environmental regulation improves environmental quality and raises incomes for younger agents and investors but lowers and destabilizes the returns of older generations reliant on capital income.

This study analyses the dynamics of the global rare earth element market, with a focus on China’s dominant role as the primary supplier, which is crucial for the energy transition and digitalization. Using a game-theoretic approach, the research examines a potential duopoly market structure that may emerge over time, as well as potential shifts in supply from China to other countries in this scenario. It considers China’s low marginal costs and factors such as resource extraction and discoveries. Additionally, the study examines the strategic market interactions, the role of technological advancements, and policy support in shaping market outcomes. The methodology assumes that agents have limited foresight and use a learned value function to strategically assess outcomes based on their own and others’ actions, while accounting for environmental constraints.

We investigate the impact of the academic environment on directed technical change and economic growth. We develop a heterogeneous Schumpeterian growth model in which innovation is categorized into radical and incremental types. A supportive environment for academic exploration enhances scientists’ autonomy utility in basic research, thereby motivating basic research and reducing the R&D difficulty of radical innovations through knowledge spillovers. We identify two major effects of the academic environment on economic growth: a positive directed technical change effect fostering growth through radical innovation, and a negative applied research crowding-out effect. Numerical analysis based on Chinese data reveals a negative autonomy utility (−0.37), indicating insufficient autonomy in basic research exploration. Promoting economic growth necessitates institutional reforms. The optimal autonomy utility for maximizing growth is 0.80. Welfare analysis further shows that the optimal autonomy utility is 0.87 for basic research labor and 0.75 for non-basic research labor.

The pandemic crisis introduced an unprecedented supply-side shock that was global in scope. Despite historically high levels of prior sovereign debt and low bond yields, macroeconomic policy responses included monetised fiscal expansions of extraordinary magnitude. Conventional theory suggests that the combination of supply contractions with such expansions is inflationary, yet central bank discourse during the pandemic expressed little concern about inflation. Our theoretical analysis suggests the presence of strong inflation forces at the time, likely offset by continuing pessimism shocks, consumption constraints and expectations management. In prominent advanced countries over more than a century, monetised fiscal expansions are shown to have preceded inflation surges, most strongly following signature episodes like WWII.

This paper introduces an overlapping generations model to explore the interplay between economic growth, the environment, and endogenous technology adoption. Considering an economy with physical capital and publicly funded human capital, the analytical framework extends Prieur and Bréchet (2013, Macroeconomic Dynamics 17, 1135–1157) by incorporating the endogenous technology choice mechanism from Umezuki and Yokoo (2019, Journal of Economic Dynamics & Control 100, 164–175). The analysis focuses on how the choice of capital-intensive technologies impacts environmental dynamics. The model reveals complex equilibrium dynamics, driven by a core trade-off between individuals’ resource allocation on consumption versus environmental protection and firms’ technology decisions.

This study utilizes a Bayesian Dynamic Stochastic General Equilibrium model, calibrated with Chinese data, to assess the impact of public investments, which account for about 16.2% of China’s GDP. Despite an expected public capital stock of 256% of GDP, based on a 4.6% depreciation rate and a 0.73 efficiency rate of public investment (emerging-economy estimate), the actual figure stands at 152%. This significant discrepancy underscores the inefficiencies in public investments, with 43% of public investment expenditures enhancing the capital stock. The output elasticity (productivity) of public capital is estimated at just 3%, substantially lower than the previously estimated 8% for emerging economies, and has declined to 2% in the post-2008 period. Simulations based on these efficiency and productivity metrics reveal that the output multiplier of public investment is 0.7. China’s public investments reduce TFP, crowd out private investment, and raise the public debt-to-GDP ratio in the medium term.