As part of the Brown Bag Lunch series, the International Economics Department at the Graduate Institute is pleased to invite you to a public talk given by Ye Zhang, Swiss Finance Institute. She will present her research titled Super Debt Cities: Local government finance, political connections and the geography of China's housing boom.

Abstract | During the global financial crisis, the Chinese government instructed the big four government-owned banks to expand lending. We show that cities with strong political connections benefited more from the lending boom, especially through the local government financing vehicles (LGFVs). By exploiting a granular land transaction-level dataset, we show the fundamental mechanism of local government finance: the monopoly power of land supply.  Specifically, LGFVs could purchase the land with cheaper price from the local governments and inflate collateral valuation from the local banks. As a result, this lending boom contributed significantly to the house-price boom across China since 2009.