ABSTRACT
This empirical study investigates, unlike previous studies, the presence of a liquidity trap using firm-level data. The study focuses on the case of China. A panel threshold model is employed. The empirical estimation reveals that the interest elasticity of money demand declines as the interest rate falls, a finding indicating that China has not been in a liquidity trap.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 For detailed interpretation of the threshold model, readers can refer to Hansen (Citation1999).