Abstract:Existing measurement methods of core inflation assume that price change of each goods and serves be expressed as the sum of core inflation and idiosyncratic relative price change. However, this assumption has no theoretical base and violates economic intuition. This article generalizes the classical new Keynesian model into a multi ector economy, proves new Keynesian Phillips curve in a multi ector economy, puts forward a formula decomposing sectoral price changes based on firms’ optimal decision. Based on this formula, this article puts forward an econometrics model of core inflation and its two tage estimation method, gives a simple calculation method of core inflation using steady tate weights, estimates core inflation in China. Effectivity test shows that, using two tage estimation method and method based on steady tate weights can get effective core inflation measurements.
Key Words:Core Inflation; New Keynesian Phillips Curve; Multisector Economy
JEL Classification:E31,E52

Abstract:This Paper analyzes the effect of external debt on the economic growth in theory and empirically. Based on the Cass oopmans amsey optimal growth model, theoretical model shows: for large country, the relationship between external debt and economic growth can be positive or negative monotonously or inverse “U” shape. For small country, there is only monotonous relationship. Empirical analysis verifies that for developed countries, external debt is good for economic growth when the external debt is at the low level; however, the effect will be opposite when the external debt reaches high level. And for developing countries, the relationship between external debt and economic growth is negative monotonously.
Key Words:External Debt; Economic Growth; Large Country
JEL Classification:E13，F34，O41

Abstract:Based on the dynamical uncertainty model, the paper analyzes how financial liberalization and deepening in one country can influence individual consumption, asset selection and welfare. Under economic environment of financial liberalization, the gap of financial development between two countries will cause less financial development country appear trade surplus, just because the individual in the country prefers to more precautionary savings. At same time, the country with developed financial market owns trade deficit. Besides, the difference in completeness of financial market also impacts the asset portfolio selection of individual, it prompts that the country with developed financial market takes long equity and short debt foreign asset portfolio strategy, the country with less financial development takes short equity and long debt strategy.
Key Words:Incomplete Financial Market; Structure of Foreign Asset; International Trade
JEL Classification:D52,F17,F34

Abstract:Since 1996, China has initiated a new rural financial system reform with introducing many kinds of new rural financial institutions (NRFIs) such as rural bank, (small) credit company and credit cooperative. The feature of the reform is that these institutions are mainly established by current commercial banks, only a few by private enterprises and individuals. Comparing their financing efficiency, we find that current commercial banks operate at higher monitoring costs in rural areas and cannot continue in the long run, and private enterprises in small credit companies will have to be much more efficient than their counterparts in rural banks due to full capital requirement, while credit cooperatives can achieve high efficiency by mutual monitoring. The logics of the reform lie in that under its implicit deposit guarantee, China’s government overestimates the risks of financial institutions operated by private enterprises, and chooses current commercial banks to dominate the establishment of NRFIs, which is supported by their consideration of the franchise values of new financial institutions. The future reform model should transform from the dominance of the state to that of rural enterprises and individuals.
Key Words:New Rural Financial Institutions; Monitoring Efficiency; Financing Conditions; Reform Logics
JEL Classification:G21, G28, Q14

Abstract:Present studies generally attribute increasing criminal rate in China to enlarging urban ural inequality and increasing rural rban migrant workers. Using a provincial panel data in China and instrument technologies, this paper, however, finds that there are no robust evidences supporting such points; secondly, we find strong evidences showing that the increasing criminal rate is mainly caused by increasing unemployment in urban labor market and the discrimination policies adopted by local urban governments, which substitutes the urban unemployment with migrants unemployment. Those jobless migrant workers are more vulnerable to crime than those jobless urban citizens for that the formers are not included in the social protection system specially provided for urban citizens.
Key Words:Urbanrural Inequality; Increasing Criminal Rate; Urban Unemployment Rate; Vulnerability of Unemployed Migrant Workers
JEL Classification:D60, E20, K31

Abstract:Residential segregation can be easily observed in Chinese cities. The informal housing sector (e.g. urban villages, temporary sheds on construction sites, basement rooms) provides living spaces for millions of rural migrant workers. This paper sets up a joint model for urban labor market and housing market, to examine the effects of migrantworker housing on economic growth. Housing provision is regarded as a combination of living space and living environment, with the latter affecting residents’ human capital accumulation. We find that the supply of lowquality migrant housing has a positive effect on reducing labor costs for lowskill jobs, but this effect diminishes when the city’s industrial structure upgrades. On the other side, upgrading the environment quality of migrant workers’ settlements has sustainable effect on economic growth, and the marginal benefit increases as the industrial structure improves. Meanwhile, such upgrading policy can reduce the social conflicts arising from social segregation, and thus may gain supports from urban residents.
Key Words:Rural Migrant Workers; Living Environment; Human Capital; Economic Growth; Policy Transition
JEL Classification:R23, R58

Abstract：The flattening trend of urban system at the prefecturallevel may be a manifestation of the extensive economic growth and excess capacity. This paper embedded the effect of housing price to diversified products geographical distribution into the KrugmanHelpman model, described the internal diffusion mechanism of rising urban housing price (especially large cities) on the location choice of differentiated products, using the prefecturallevels relevant data during 1998—2007 and by parameter estimation of empirical model, we find that the “nonblack hole” condition of urban systems flattening trend in the KrugmanHelpman model is established in China. This means that by controlling the level of abnormal price reversing the flattening trend of city system may have an important implication on adjusting the economic structure and growth pattern.
Key Words： “Nonblack Hole” Condition; Housing Price; Urban System
JEL Classification：R30，H30

Abstract：Removing energy subsidies is the basis of energy subsidies reform. In this paper, a twostep approach integrating indicator analysis and inputoutput table is proposed to study the problem. We first apply pricegap approach to estimate Chinas gas and electricity subsidies in 2007, then take Chinas income and area disparity, we divide urban and rural households into 10 income groups, and based on “energy budget” concepts, we design “impact index” and “affordability index”, with the help of inputoutput table, make a comprehensive study on how removing gas and electricity subsidies would affect households living from the perspective of direct and indirect aspects. Analytical results show that removing subsidies would have more serious impacts on low income households, especially rural poor households. Based on the study results, support policy that would limit the adverse impacts is proposed so as to develop and implement subsidies reform effectively in China.
Key Words： Gas and Electricity Subsidies; Households Living; Different Income Group; Inputoutput Model
JEL Classification：H21,H42

Abstract：Porter hypothesis considers that appropriate environmental regulation can stimulate the effect of “innovative compensation”, which can not only offset enterprises “compliance cost”, but also improve its productivity and competitiveness. Because of its own practical significance, such hypothesis attracts numbers of scholars interests in studying it. But there are few documents talking about the relationship between the intensity of environmental regulation and enterprises technological progress of production so far. Therefore, this paper constructs a mathematical model between the intensity of environmental regulation and enterprises technological progress of production, and conducts an empirical test on industrial sectors of Chinas 30 provinces between 1998—2007 based on panel data method, and the results show that：(1) in eastern and central regions, the initial weaker intensity of environmental regulation really weakens the rate of enterprises technological progress of production, however, with the increase of intensity of environmental regulation, the rate of enterprises technological progress of production gradually increases, which means a Utype relationship between the intensity of environmental regulation and enterprises technological progress of production；(2) in western regions, influenced by environmental regulation forms, the intensity of environmental regulation and enterprises technological progress of production hadnt formed a Utype relationship in statistical significance. Therefore, from a longterm point of view, the government should enact proper environmental regulation policy to make the enterprise not only promote the technological progress of pollution abatement, but also  the technological progress of production, thus to provide technical support for the realization of the “winwin” situation between environmental protection and economic growth.
Key Words： Intensity of Environmental Regulation；Technological Progress of Production；UType
JEL Classification：D24，Q43，Q55，Q58

Abstract：Based on the framework of Myers and Majluf (1984)s model, we build up a theoretical model focusing on how the controlling shareholder makes financing decisions for the companys project. The model shows that the decision of share issue is put forward to so long as the interests of the controlling shareholder increase, while the interests of the original minority shareholders are likely to be damaged. The external investors anticipate the diversion of the controlling shareholder and require a premium for their funds, which results in a kind of constraints on the company. The moral hazard type of financing constraints puts pressures on corporate cash holding decisions, and it is optimal for the controlling shareholder to hold more cash for the purpose of diversion. Consequently the companys cash flow sensitivity of cash would increase while the value of cash would decline. Using a sample of 2003—2009 companies listed in Chinese A stock market, we then test the model and find the higher divergence of the ultimate controlling shareholders control rights from cash
flow rights is associated with the higher cash flow sensitivity of cash but the lower value of cash, which confirms the prediction of the model.
Key Words： Controlling Shareholder; Moral Hazard; Corporate Cash Holdings
JEL Classification：G32, G34

Abstract：Innovation is the true source of economic growth. Industrial innovation consisting of the integration of the technological innovation, production innovation and market innovation is one of the basic determinants of state competitiveness. The paper not only builds an analysis framework including the variable of spillovers effect of the innovation, innovation input, innovation output, industrial effects etc, but also analyses the relationship between the innovation performance and the abovementioned variables for the listed firms in the Chinese small and mediumsized enterprises (SMEs) stock market in Shenzhen by investigating on their innovative activities during 2006—2008. The study shows that there is a significant positive correlation between the enterprise performance and innovation input, innovation output, and no significant or even a negative correlation between the enterprise performance and the innovation environment and industrial background such as government supports for innovation and opportunities of the strength, and a significantly negative correlation be discovered between the enterprise performance and the spillover effects; and also a negative correlation with the human capital investment, company age and Tobins Q.
Key Words： Innovation Performance; Innovation Spillovers Effect; Industrial Innovation; Listed Firms in Chinese SMEs Stock Market
JEL Classification：L320，O310