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China has been notable for both its rapidly growing foreign direct investment (FDI) and environmental pollution in recent decades. Using the exogenous shock of the 2008 financial crisis as a natural experiment, we construct instrumental variables for FDI by distinguishing between the decrease in FDI in coastal cities and non‐coastal cities. Based on panel data from Chinese prefecture‐level cities, we study the impact of FDI on air pollution in China. The results show that FDI has significantly worsened air quality in China and that the effect is more significant in big cities. FDI in China worsens air quality through increased pollution emissions and resource depletion.

In this paper, China’s core inflation is defined as any price changes that are caused by the money supply. This definition is especially relevant to examining monetary policy because the money supply is controllable by China’s central bank. This paper develops a New Keynesian DSGE model with a quantity-based monetary rule that fits real aggregated data from China to analyze core inflation’s key characteristics. Eight different approaches are used to estimate core inflation in China. By constructing VAR models of output growth, money supply growth and core inflation, we estimate the response of core inflation measures to the money supply shock. By matching the response to money supply shocks in both the model and the data, we compare the performance of different core inflation measures for monetary policy in China.

PurposeThis study aims to examine the effect of the Internet on irrigation system adoption. The authors implement the most extensive household survey of irrigation arrangements ever conducted in rural China and also exploit a public program to improve the quality of distance education in rural middle schools, which has led to plausibly exogenous variation in Internet access across rural districts.Design/methodology/approachThe authors present a conceptual framework highlighting the transmission mechanisms whereby Internet access may affect irrigation system selection and identify direct effects through agricultural production and an indirect effect through non-agricultural production. To examine the effect of the Internet on irrigation system adoption, we implement the most extensive household survey of irrigation arrangements ever conducted in rural China. We also exploit a public program to improve the quality of distance education in rural middle schools, which has led to plausibly exogenous variation in Internet access across rural districts.FindingsThe authors find evidence to suggest that Internet access can effectively reduce information frictions and searching costs in the non-agricultural labor market, thus increasing rural households' participation in non-farm work. To save more hours from agricultural production, rural households select more labor-saving irrigation systems.Originality/valueThis study’s findings have important implications for the ongoing policy debate over government investment in Internet infrastructure to improve agricultural development in rural and isolated areas.