Policy Effect Evaluation, Factor Resource Mismatch And Total Factor Productivity

The theroies and practice of industry policy in China is the important component of China economy development theory and New growth theory.And there has been much controversy about the policy effect and evaluation standards in academia and policy practice over the years.Based on classic literature and theroies,this article apply efficiency as the main indicater to evaluate the effect of industry policy.Specifically create the therotical framework of policy effect evaluation with firm-level total factor productivity and distortion of resource allocation which has been widely used as efficiency and growth standard.Thereafter evaluate the effect of policy of excess capacity reduction in 2016.The policy of excess capacity reduction is a very Chinese-style industy policy,which has been conducted by Chinese government from 1990 s to nowadays,involving multiple industries and using various policy measures.The most recently one is the action of excess capacity reduction in 2016 with 200 billion financial subsidies.Based on the therotical model and data,this article proposes the following four assumptions: the first one is capacity reduction policy in 2016 increased firm-level total factor productivity.Secondly,the effect of capacity reduction in 2016 is mainly reflected in the improvement of capacity utilization rate,and will not increase the purified total factor productivity.Thirdly,"capacity reduction" policy will increase the distortion of factor resource allocation.The last is this policy is diffuse and conductive.The main contents are as follows: First,according to the policy formulation and implementation time,this article selects the data of listed companies in the steel,coal,cement,glass,and electrolytic aluminum industries from 2008 to 2018 as the basis for policy evaluation,and processes the data according to common methods.After that,comparing four kinds of firm-level TFP calculation methods,and then selecting ACF method included control variables as the main analysis method.And calculating purified total factor productivity.Subsequently,using the Differences-in-Differences method based on the theory of quasi-natural experiments,the policy effects in 2016 were analyzed,and firm-level total factor productivity before and after purification was compared.Finally,this paper analyzes the distortion of resource allocation using two methods,and makes a comparison before and after policy implementation.The main theoretical conclusions of this article include the following four aspects.First,total factor productivity measurement method needs to be selected based on theoretical assumptions and data,and there is no universally applicable theory because of industry heterogeneity and so on.Second,capacity utilization has a greater impact on total factor productivity,which could be negative severely overcapcity industries.The third is that although the administrative policy mechanism can play a role,but it will lead to a decline in actual production efficiency and deepen the distortion of resource allocation;while the market mechanism can still play a role in industries with severe overcapacity.Market-oriented policy mechanism strongly promotes the recovery and rise of actual production efficiency,and alleviates the distortion of factor resources.The innovation of this article focuses on the following four aspects.The first is to evaluate effects of policies from the perspective of “shock”.Based on the theory of total factor productivity calculation,resource allocation distortion and Differences-in-Differences method,a general evaluation framework for policy effects is constructed.The second is to use the financial data of listed companies to build an firm-level production function accounting index system,and compare the mainstream total factor productivity measurement method,and make trade-offs based on theoretical assumptions and test results.The third is to effectively separate the impact of ‘capacity utilization rate' on the total factor productivity by purified total factor productivity,and realize the measurement of the enterprise's ‘real'production efficiency.The fourth is to extend the evaluation of policy effects to resource allocation,using the index of resource misallocation to measure the impact of policy shocks.