Impact of Zombie Firms on China’s Aggregate TFP Dynamics
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| Title | Impact of Zombie Firms on China’s Aggregate TFP Dynamics
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| Author | Li Xuchao and Shen Guangjun |
| Organization | Zhejiang University；Central University of Finance and Economics |
| Email | henanlixuchao@163.com；hnshgj@126.com |
| Key Words | Zombie firms; TFP; Reallocation; Entry and Exit |
| Abstract | Characteristics of Zombie firms in China and their impact on aggregate TFP are studied in this paper. China has more zombie firms weighted by assets and liabilities in 2011-2013 than in 2008-2009, while almost the same zombie firms when evenly weighted. Most zombie firms are non-state-owned since 2005, and are distributed in over-capacity industries. Such zombie firms hinder China’s TFP growth. A 1% increase in zombie asset results in a 0.162% decrease in TFP growth rate. According to the dynamic OP TFP decomposition method proposed by Melitz & Polanec (2015), Zombie firms impose negative effect on technology progress and resource reallocation, while positive effect on firm entry and no significant effect on firm exit. |
| Serial Number | WP1187 |
| Time | 2017-05-02 |
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