PhD defence of Heleen Mees on Tuesday 28 August 2012

On Tuesday 28 August 2012 Heleen Mees will defend her PhD thesis entitled 'Changing Fortunes How China's Boom Caused the Financial Crisis'. Supervisor is Professor Philip Hans Franses.

Time and location:

The PhD defence will take place in the Senate Hall of Erasmus University Rotterdam and will start at 10.00 hrs.

About the PhD thesis:

Since the financial crisis in 2008 and the ensuing economic recession that rocked the world economy, plenty of blame has been going around. The chairman of the U.S. Federal Reserve, Ben Bernanke, specifically singled out subprime mortgages and the Wall Street bankers that sold those mortgages. In bureaucratic jargon it is often dubbed a regulatory oversight failure. This study, however, shows that the Federal Reserve's loose monetary policy at the start of the new millennium triggered the U.S. refinancing boom in 2003 and 2004, spurring personal consumption expenditures through home equity extraction. The U.S. spending binge boosted economic growth and savings in China and oil-exporting nations. The build-up of savings in China, which are heavily skewed towards fixed income assets, depressed interest rates worldwide from 2004 on. The decline in long-term interest rates accounts for the U.S. housing boom. Despite popular belief, the proliferation of exotic mortgage products can hardly be faulted for the U.S. housing boom and eventual bust. There is no indication that China purposely flooded financial markets with money. Using a dataset that covers 5 decades (1960-2009), Mees shows that the main determinants of China's household savings rate are disposable income (measured by its reciprocal) and the old-age dependency rate. The income growth rate and young age dependency rate have a limited role.

There is no evidence that China's one-child policy or low interest rate (on deposito accounts) drives the household savings rate. Both the sex ratio and the interest rate prove not significant. Though China's (household) savings rate is high, it is not unique. Singapore and Malaysia have similar savings rates,and India's household savings rate was at 32% of disposable income in 2008 even 5%-point higher than China's household savings rate.

She based her research on statistics databases in the USA and China. In addition, she interviewed 300 people in Beijing to survey their views on money.

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About Heleen Mees:

Heleen Mees started working on her thesis in macro-economics at the Erasmus School of Economics in November 2009. Later, Mees accepted a teaching position at the University of Tilburg. After receiving her doctorate at Erasmus University in Rotterdam, Heleen Mees will assume the position of adjunct associate professor at New York University's Wagner Graduate School of Public Service. Mees writes monthly for Foreign Policy and has a weekly column in Het Financieele Dagblad. Mees is also the author of three books and has studied both economics and law.

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For more information about this ceremony, please contact Ronald de Groot, Communication Officer of the Erasmus School of Economics phone +31 10 408 1762 / 06 5364 1846, e-mail: rdegroot@remove-this.ese.eur.nl or Press Office, Erasmus University, Rotterdam: press@remove-this.eur.nl or +31 10 408 1216.