Center for Pacific Basin Studies

The Center for Pacific Basin Studies promotes cooperation among central banks in the Pacific Basin and provide insight into and analysis of economic policy issues affecting the region.

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Pacific Basin Notes

Occasional series of the FRBSF Economic Letter

Forecasting China’s Role in World Oil Demand

2017-24

Deepa D. Datta and Robert J. Vigfusson | August 21, 2017

Although China’s growth has slowed recently, the country’s demand for oil could be entering a period of faster growth that could result in substantially higher oil prices. Because Americans buy and sell oil and petroleum products in the global market, global demand prospects influence the profitability of U.S. oil producers and the costs paid by U.S. consumers. Analysis based on the global relationship between economic development and oil demand illustrates the prospects for Chinese oil demand growth and the resulting opportunities and challenges for U.S. producers and consumers.

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Working Papers

Interest-Rate Liberalization and Capital Misallocations

FRBSF Working Paper 2017-15

Liu • Wang • Xu | July 2017

We study the consequences of interest-rate liberalization in a two-sector general equilibrium model of China. The model captures a key feature of China's distorted financial system: state-owned enterprises (SOEs) have greater incentive to expand production and easier access to credit than private firms. In this second-best environment, liberalizing interest rate controls improves capital allocations within each sector, but exacerbates misallocations across sectors. Under calibrated parameters, interest-rate liberalization may reduce aggregate productivity and welfare, unless other policy reforms are also implemented to alleviate SOEs' distorted incentives or improve private firms' credit access.

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Conferences

2017 Asia Economic Policy Conference

November 16 - November 17, 2017
Center for Pacific Basin Studies, Federal Reserve Bank of San Francisco | San Francisco, California

Conference organizers invite research paper submissions by March 15 along the theme of “Monetary Policy Challenges in a Changing Global Environment.”

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