dependence rate, trade and positive reallocation induced by expected external risk. Accordingly, we must avoid the meaningless expense of actual payment caused by negative and positive labor reallocation in the course of trade structure revolution and upgrading.
Key Words:Trade; External Risk; Factor Reallocation; Government Expenditure
JEL Classification:F43, H11, J63 

     Exchange Rate System, Financial Accelerator and Economical Undulation

                       Yuan Shenguo^a, Chen Ping^b and Liu Lanfeng^a
                         (a:Guangdong University of Foreign Studies; b:Sun Yat-Sen University)

Abstract:This article establishes a small open economy model, one  goal is the inquires into the financial accelerator existence in China open economy; the other goal is the analysis of the difference of financial accelerator effect under different exchange rate system, which is in view of macroeconomic undulation characteristic in China during 1997—2008. Through using the Chinese data and the ML method to estimate DSGE model, the result shows the likelihood rate examination accepts the former to reject the latter. The simulation result demonstrates that the data of the model with financial accelerator is closer to the actual data characteristic, which has once more confirmed the open economy finance accelerator existence. Financial accelerator effect is stronger under fixed rate of exchange, which explained partly macroeconomic variable undulation difference under the different exchange rate system from 1997 to 2008 in China. The financial accelerator mainly disseminates and enlarges the influence of economy attacked by investment efficiency and the monetary policy, also amplifies the impact from the currency demand and the overseas, but the amplification to the preference and technology is not obvious.

Key Words:Open Economy; Exchange Rate System; Credit Friction; Financial Accelerator; Economical Undulation

JEL Classification:E10, E30, C30, C60

                                  The Impacts of Agglomeration on MNE’s Location Choice in China

                             Yu Pei and Sun Yongping
                              (University of Paris 1 Panthéon-Sorbonne; Hubei University of Economics)

Abstract:Based on the micro location theory of multinational firms (MNEs),and using the database of U.S. and European MNEs listing in “2007 Fortune 500”, this paper conducts Conditional Logit estimations to test empirically the main determinants of individual location choices conducted by 457 U.S. affiliates and 537