Export tax rebates and resource misallocation: Evidence from a large developing country
利用2004年中国出口退税政策大调整，比较受退税影响企业与不受影响企业的生产和定价决策，发现退税降低会减少受惠企业产出并降低整体资源配置效率。
Abstract The export tax rebate policy is one of the most frequently used policy instruments by Chinese policy‐makers. This paper provides a vital analysis of its allocation effects. We use customs transactions, tax administration and firm‐level data to measure the effect of variation in export tax rebates, taking advantage of the large policy change in 2004. A difference‐in‐difference approach allows us to compare the production and pricing decisions of eligible versus non‐eligible firms and the distributional implications. We tie these distributional results to a structural model akin to Hsieh and Klenow (2009) where incomplete tax rebates act as a tax on revenue of export sales. A reduction in tax rebates shifts production away from rebate‐eligible firms and decreases allocative efficiency. Our takeaway is that by adjusting its value‐added tax policy as a part of broader policy objectives, China introduces an allocative efficiency dimension that must be taken into consideration.