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VAT rebates as trade policy: Evidence from China

journal contribution
posted on 07.08.2020, 12:32 by Nils Braakmann, Bo GaoBo Gao, Sara Maioli
Value-added tax (VAT) rebates are a commonly used export-promoting policy. This paper exploits China’s frequent adjustments of VAT rebates and large-scale data on export transactions to estimate the effects of VAT rebates on exports. Our differencein-differences estimations show that the negative adjustments of VAT rebates in our sample period significantly reduce export value and quantity by 15.30% and 19.75%, respectively. This shows that the trade policy of VAT rebates is very effective. We also find that the effect of VAT rebates on exports operating through extensive margins is larger than the effect through intensive margins. Moreover, we find that the passthrough of VAT rebates to importers is around 47%.

Funding

Economic and Social Research Council

History

School

  • Business and Economics

Department

  • Economics

Published in

China Economic Review

Volume

63

Publisher

Elsevier

Version

AM (Accepted Manuscript)

Rights holder

© Elsevier

Publisher statement

This paper was accepted for publication in the journal China Economic Review and the definitive published version is available at https://doi.org/10.1016/j.chieco.2020.101536

Acceptance date

05/08/2020

Publication date

2020-08-13

Copyright date

2020

ISSN

1043-951X

Language

en

Depositor

Dr Bo Gao . Deposit date: 5 August 2020

Article number

101536