Finance Seminar
Baxter B125
Mild Government Failure
Shang-Jin Wei,
N.T. Wang Professor of Chinese Business and Economy and Professor of Finance and Economics,
Graduate School of Business and School of International and Public Affairs,
Columbia University,
A relatively mild form of government failure - for example, bureaucrats can count but do not differentiate quality - can significantly affect the efficacy of industrial policy. We investigate this idea in the context of China's largest pro-innovation industrial policy using a structural model. We find that the return to the subsidy program is -19.7\% (but would be 7.8\% if the mild government failure can be removed). Furthermore, the welfare loss is exacerbated by patent trade.
For more information, please contact Sheryl Cobb by phone at 626-395-4220 or by email at [email protected].