| Economic Research Journal (Monthly) Vol.45 No.10 October, 2010 |
| • The Rural-urban Income Disparity and Its Effects to Economic Growth in the Case of China |
| The purpose of this paper is to study the stage effects of regional rural2urban income disparity to economic growth in the case of China. T o do that , we measure the Tale index and speci fy a panel cointegration model with respect to the Chinese situation of rural2urban income disparity and economic growth. The estimated results of the panel cointegration model indicate that there is the panel cointegartion relationship with di fferent structure depending on the level of the rural2urban income disparity and the economic stage. Such panel cointegration implies that the effect of rural2urban income disparity to economic growth is positive at the beginning of Chinese reform , however , the effect is negative at present . Estimated PVECMindicates that the long - run effects of the disparity depress the economic growth and stimulate the disparity in short run. Therefore , to implementing the view of scienti fic development , we should focus on increasing farmer’ s income s o as to reduce rural2urban income disparity in short run and promoting investment to farmer’ s human capital s o as to change long - run effects of the disparity to the economic growth. |
| …………………………Wang Shaoping and Ouyang Zhigang（44） |
| • Labor Adjustment Cost, Liquidity Constraints and Chinas Economic Fluctuations |
| Stylized facts in China1 s aggregate fluctuations show two characteristic departures from those observed in developed countries: 1 Changes in the number of China1 s work force appears uncor related with its output; 2 Chi na1 s aggregate consumpti on fluctuates more than its output. Strongly procyclical labor input and smooth consump tion over an agent1 s lifetime resulted from standard RBC models are a mismatch of those stylized facts. However when we introduce labor adjustment cost model1 and liquidi ty constraints into a standard RBC model model2 with indivisable labor, second moments from our calibrated models fi t the data quite satisfactorily. The relati ve standard deviations of capi tal, investment and employment with respect to outpu t resulted from model 1 are 0 35, 3 2 and 0 19 respecti vely, very close to 0 37, 3 and 0 19 as observed in practice. When liquidi ty constraint is introduced into the model, relative standard deviation of consump tion with respect to output is also greatly improved from 0 33 of model 1 to 1 13 of model 2 compared with 1 18 in practice. |
| …………………………Hu Yonggang and Liu Fang（32） |
| • Business Cycle Synchronization and Regional Financial Cooperation in East Asia |
| The aim of this paper is to investigate business cycle synchronization among East Asia countries regions . It has an important implication in terms of evaluating the costs and benefits of macroeconomic coordination. Indeed, using both a cointegration and a common cycles theory in a VAR p framework, a set of countries regions is said to have common and synchronous business cycle if the short run and long run dynamics is perfectly correlated. Using seasonally adjusted real GDP per capita for period 1994Q1 to 2005Q3, we show that East Asia countries regions have common and synchronous business cycles and qualify well as a candidate to establish financial cooperation in the future. |
| …………………………Yu Xulan82 |
| • On Monetary Policy Game and Exchange Rate Stability Under Asymmetric IS Shocks |
| This paper divides the countries in the current international monetary system CIMS into three blocs , that is , the core ,the floating periphery and the pegged periphery , and constructs a s o2called Tri2Country Core2Periphery Game Model . In virtue of this framework , this paper studies the equilibriumof the monetary policy game among the three blocs under the asymmetric shocks of total demand , and the conditions and timings a country gives up the fixed exchange rate regime. The main conclusion shows that : whether exchange rate or exchange rate regime is stable or not rests less with the degree of ex ogenous shocks , and more with the asymmetry of the impact . When the core takes a cooperative attitude with the floating periphery , the Nash equilibrium and the stability of the CIMS are more likely to be realized. The key to implement the peg system lies on the g overnment’ s capacity and con fidence. These conclusions are beneficial for China to grasp the correct monetary and exchange rate policy orientation in weakening the asymmetric IS shocks and promoting the exchange rate coordination in East Asia. |
| …………………………Ran Shengxin and Wang Pinling68 |
| • The Share Law of "Comparative Benefit" :Study on the Determination Mechanism of Economic Competitiveness |
| The essence of economic competitiveness of an agent is how much it can share from the“Comparative Benefit” , which represents the net added gain resulted from the division and trade between it and its partners according to their comparative advantage , in economic activities. S o , competitiveness includes two kinds of capacities : one is the cooperative competitiveness between the agent and its partners namely , economic coopetitiveness , the other is the non2cooperative competitiveness between the player and its craftmen namely , economic dispetitiveness . With no consideration of the existence of craft competitors , the competitiveness of the agent related to its partner i . e. coopetitiveness here is constantly 1 :1 according to their gross level , and just determined by the productivities of itsel f and its partner in terms of their average level shared by per unit of factor inputs. I f the player and its partner all have craft competitors , the competitiveness of any of them is mainly related to the cooperation degree of all the craft competitors in the industry , and , certainly , the productivities of all players. But , as for the dispetitiveness of it with its craft brothers , the productivities of them are still the most important determinants |
| …………………………Hou Jingchuan,Qian Wenrong and Huang Zuhui138 |
| • Financial Development and Economic Growth with Financial Controlling Policies |
| Using panel data from 1978 ! 2002 and applying recent GMM techniques developed for dynamic panels, this paper investigates the relationship between the financial intermediation development and economic growth based on samples of di fferent financial controlled areas and di fferent periods. Our econometric resul ts show that financial intermediation development negatively influences economic growth in strong financial controlled area. While in weak financial controlled area, there is no any significant role of financial in termediation development on economic growth. These results mean that loosing financial con trolling policies can improve resource allocation efficacy of financial intermediation. |
| …………………………Wang Jinbin95 |
| • A Contribution to the Empirics of the Effectiveness of Foreign Aid |
| Bequest motive has direct effects on represen tative consumer ‘s consumption and saving decisions. In this paper, the author uses an overlapping generations model with bequests to investigate the effectiveness of foreign aid. I find that, under certain circumstances, the impact of foreign aid on recipien t countrys capi talaccumulation is non linear, exhibiting the typical kind of threshold effects. This theoretical finding is consis ten t with viewpoin ts such as convergence clubs and threshold externali ties in recent cross country growth literature, and is helpful to explain the severe controversies in the empirical li terature about theeffectiveness of foreign aid. The resul ts of threshold regression analyses using cross country longitudinal data are consistent with the main conclusions of the theoretical model. |
| …………………………Yang Dongsheng105 |
| • Ownership Structure and Corporate Performance: Measures and Endogeneity |
| In this paper , we analyzed the di fferences between two methods of ownership structure — — —direct ownership structure and ultimate ownership structure , compared the di fferent characteristics of the ownership structure and the di fferent types and levels of ultimate owners , and tested the endogenous of ownership structure by using the data of 3217 listed companies in 2004 to 2006. The studies have suggested that , no matter adopting the direct ownership or the ultimate ownership , the relationship between ownership concentration and corporate per formance is reflected as a left2low2and2right2high U curve ; province and local g overnment ownership has obvious negative effects on corporate per formance ; the conclusions of our analysis have con firmed the endogenity hypothesis of the ownership structure. |
| …………………………Cao Tingqiu, Yang Xiuli and Sun Yuguang126 |
| • Validity of the Comparative Advantage Theory: An Empirical Test from Chinese Historical Data |
| To test the validity of neoclassical trade theory is always an important research field in international economics,but since researchers have trouble in getting data about autarky prices,direct test of the theory of comparative advantage is very difficult.The experience of Chinese economy separating from outside world before Opium war and trading freely with western countries after Opium war should be looked as a natural experiment.This article uses the data about prices and trade volumes in this period to test the theory of comparative advantage,the results verify the theory sufficiently. |
| …………………………Guan Hanhui151 |
| • On the Mechanism of Auctioning the SOE in China with the Constraint of Accommodating Employees |
| The transfer of SOE s proper ty ri ght involves benefi ts readjustment of i ts stakeholders; therefore the design of the trading mechanism is not only to sell the SOE with a high price but also to realize other non !price objectives such as rearrangement of original employees, fur ther development of the enterprise etc. This paper constructs a bidding mechanism with the constraint of accommodating employees to analyze the tradeoff between maximizi ng SOE auction revenue and minimizing induced unemploymen t. By adding that the winner is req uired to settle down a cer tai n quantity of former SOE employees in the new enterprise, this mechanism brings on the competition among prospective investors in both the price and the quanti ty of employment, which can help the government to balance the different objectives more efficiently. However , the constraint will only work under the conditi on that the government has stressed sufficiently on the employees rear rangement and set the bes t constrai nt threshold. Moreover, the government should set an explicit compensation s tandard for the induced lay !offs to eliminate the investors accommodating cost disper sion and introduce more s trategic investors with considerable heterogeneity to participate in the biddi ng . |
| …………………………Wang Hai and Zhang Weidong115 |
| • The Features of Chinas Sustained High Growth and the Decline of Regional Economic Disparity |
| This paper examines 11 developing economies after WWI I and presents two promi nent features of China+ s growth: one is the high growth ratewith low fluctuations, manifesting the, high but stable+ growth pattern; the other is that China as a developing country with largest populati on and vast terri tory, is just experiencing the narrowing gap of regional growth rate during the sustained high growth period. This paper addresses the two features and extends the second one to the analysi s on the decline of regional provincial disparity of GDP per capita. We use the Variation Coefficient, Gini Coefficient and Coefficient to measure the overall disparity of GDP per capita from 1952 ! 2006, and find that they all show the inver ted U curve with initial widening and the subsequent nar rowing trend. The third inverted U curve in par ticular, according to the Variation Coefficient and Gi ni Coefficien t,reveals that the regional dispari ty of GDP per capita presents some increase in 1990s and the new trend of decline from 2000.While according to Coefficient, the decline trend will occur from 2005. We also conduct the econometric analysis on the above three inver ted U curves and then conclude that the decline of overall regional disparity of GDP per capi ta has just started and how to consolidate and develop such trend has a long way to go. |
| …………………………Liu Shucheng and Zhang Xiaojing（17） |
| • The Effects of Labor Supply and Economic Growth Path Transition |
| The transition process of labor supply effect is described in a dual economy model subject to population increasing and human capi tal inves tmen t conditions. Based on some empirical evidence from the labor market in Chi na we find the ver tical effect emerges while the horizontal effect is decreasing. The development of China could not depend on demorgraphic dividends in the long run due to the decreasing horizontal effect. It ? s indi spensable to enhance human capital by knowledge and skill accumulation to sustain endorgenous economic growth. |
| …………………………Research Group（4） |
| • Study on the Correlation between RMB Nominal Exchange Rate and Nominal Interest Rate |
| With Chinese financial opening and RMB internationalization carrying on , the study on the correlation between RMB exchange rate and interest rate is more important . This paper gives a framework which shows that 1 managed floating exchange rate regime is g ood for realizing internal and external equilibrium , 2 capital account liberalization is needed , and that 3foreign exchange interventions for maintaining exchange rate make economy g o wide of equilibrium. With the help of theoretical and empirical methodology analysis , the paper finds that there is some alternate recurrent linkage between RMB nominal exchange rate and interest rate. Both of them have“adjustment 2increase2 adjustment 2decrease2 adjustment”responses and when one is increase or decrease , the other is in adjustment . The paper points out that we should respect the spontaneous action of marketforces when the macro2 economy does some adjustments to come to its internal and external equilibrium. And we should harmonize the RMB exchange rate policy and interest rate policy. |
| …………………………Wang Aijian and Lin Nan（56） |
| • “Wave Phenomena” and Formation of Excess Capacity |
Abstract:In this paper we analyze the formation of excess capacity, showing that excess capacity can be led by decentralized investment decisions under incomplete information rather than fluctuations in aggregate demand. Following Lin (2007), we illustrate that because of the advantages of backwardness, firms in a developing country are prone to share a consensus about the next promising industry, resulting in a wave phenomenon in the firms’ investments and thus excess capacity in the new industry. Focusing on information imperfection during capacity investments, especially “uncertainty about firm-number”, we establish a two-stage model to study the micro mechanism of wave phenomena-the seemingly unreasonable result is rather based on individual rational decision under incomplete information about aggregate investment and other firms’ behavior. Furthermore, this paper discusses the influences on endogenous variables from changes in realized firm number, the industry’s potentials, capacity establishment cost, etc. Finally, besides getting a better understanding of “wave phenomena”, we discuss the implications of our results for better industrial andmacroeconomic policies.
Key Words:Wave Phenomena; Excess Capacity; Uncertain Number of Firms; Investment Behavior
JEL Classification:D43, D82, L13, L16 |
| …………………………Lin Justin Yifu, Wu Ho-Mou and Xing Yiqing ( 4 ) |
| • Urbanization Path and City Scale in China: An Economic Analysis |
Abstract:This paper first examines lessons from past experiences of China’s urbanization. The author argues that megacities in China are still not enough. Further development of megacities leading by market forces favors economic efficiency and optimal allocation of resources. However, the author suggests that cities and towns at different scales may have symbiotic and complementary relationships, and small cities and towns that geographically near large cities enjoy better environment for further development. The paper proves that, via econometric analysis, development of megacities in different countries is subject to a number of levels of factors, including economic development, urbanization, population density, transport facilities, and geographic location of the country. Based on the trends of changes of these factors, the author predicts that the proportion of the Chinese population living in megacities may reach 30% by 2020 and 39% by 2030. This will requires 100 or 150 more megacities in China. The author also raises opinions on what roles can government plays in urbanization.
Key Words:Urbanization； City Scale； Agglomeration Effect
JEL Classification:R12, R15, O18, O53 |
| …………………………Wang Xiaolu ( 20 ) |
| • An Empirical Study of Wealth Distribution of Urban and Rural Households in China |
Abstract:This paper makes a thorough empirical study, from three aspects, on the wealth distribution of urban and rural households in China based on data from Aordo Center. We first depict the holistic statistical features of wealth distribution; and then do an analysis of structural decomposition of wealth distribution, based on the makeup of wealth; at last we explore the possible causes of wealth distribution and inequality with two methods: dividing sample according to individual characteristics and estimating the wealth function. We observe a serious wealth inequality, and the Gini coefficient of rural households is already larger than that of urban, specifically. The inequality of financial assets and housing is the main source of net wealth inequality. Occupation, education and Party member status all have significant influences on households’ wealth accumulation.
Key Words:Wealth Distribution； Inequality； Gini Index； Wealth Function
JEL Classification:D31, D63 |
| …………………………Liang Yunwen, Huo Zhen and Liu Kai ( 33 ) |
| • The Role of Consumer Knowledge on Medical Care Demand in China's Health Care Reform |
Abstract:Using data from CHNS 2000—2006, the paper examines (1) how consumer knowledge about health insurance impacts the demand for medical care, and (2) the macro and micro factors determining consumer health insurance knowledge. It is found that people lacking health insurance knowledge are significant less likely to use medical care, which subsequently weakens the effectiveness of public health insurance policies in China. Consumer health insurance information is not only related to individual characteristics, but also depends more on the public policies in health care reform.
Key Words:Health Insurance; Information; Knowledge; Demand for Medical Care
JEL Classification:I11, I12, I18, D12
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| …………………………Liu Hong, Wang Jun and Fang Hai ( 48 ) |
| • Saving and Growth Effects of the One-Child Policy:Theory and China's Empirical Study |
Abstract:This paper investigates the saving and growth effects of China’s sharp demographic transition originated from the one-child policy. Using a three period overlapping generation model with demographic change under fertility constraint, we discuss the impacts of the birth rate, population growth rate and age composition on China’s saving rate and economic growth rate. Our theory model predicts that lower birth and population rate will increase aggregate saving rate and growth rate of per capita GDP, and the population aging has an ambiguous effect on aggregate saving rate. Based on theory model, we conduct an empirical study by drawing on panel data from China’s 29 provinces for the period 1989—2007. The findings support our theory predictions. Our results are robust to different definitions of demographic variables and alternative estimation methods. We conclude that China’s one-child policy is indeed saving and growth enhancing.
Key Words:One-child Policy; Demographic Transition; Savings; Economic Growth
JEL Classification:D91, J11, E21, O11 |
| …………………………Wang Wei ( 63 ) |
| • A Study on the Relationship between Household Wants, Vulnerability and Income-Consumption |
Abstract:Households’ saving or consumption behaviors are dominated by their wants on commodity consumption and wealth accumulation. Households’ own vulnerability, structure and lifecycle as well as the external environment influence households’ wants. Households’ consumption is rigid. The saving-consumption decision can only be made after rigid consumption demand is met. After a detailed theoretical and empirical analysis using household consumption function formatted by rigid-demand theory, this paper finds an explanation for the long lasting low consumption rate in China lies in the reducing rigid consumption demand and the household vulnerability.
Key Words:Household Wants; Vulnerability; Rigid Demand; Consumption Function
JEL Classification:D11，D12，D13 |
| …………………………He Ping, Gao Jie and Zhang Rui ( 78 ) |
| • Smoking, Drinking, and Earnings in China |
Abstract: Based on China Health and Nutrition Survey data, using the ratio of smokers and drinkers in the household excluding the observation itself, the paper investigates the effects of smoking and drinking on earnings in urban China. We find that smoking has no effects on earnings, but drinking has significant positive effects on earnings. We also find that drinking can affect earnings in nonpublic sector and in non-office jobs. Drinking has significant positive effects on wages, but has no effects on nonwage income. Drinking has larger effects on woman’s earnings than that of men’s. In addition, we find that the channel of drinking affecting earnings is not by changing health status, or labor supply, but by social function. Our results show that there is no economic return of smoking, but return to drinking is positive significantly.
Key Words: Smoking; Drinking; Earnings; Weak IV
JEL Classification:J28，J31，I12 |
| …………………………Yin Zhichao and Gan Li ( 90 ) |
| • The Political Economy of China's Tax Rebate PolicyWang |
Abstract: This text explores the decision-making mechanism and forming factors of China’s tax rebate policy, based on the framework of political economy of trade policy. We firstly construct theoretical framework of National Interest Model, Interest Group Model, and Combined Model. Then we regress tax rebate rate on a series of variables reflecting products’ and industries’ political and economic characters with product-level data. Empirical results show that China’s tax rebate policy is the equilibrium of interaction between government and interest groups. The significance of specific groups’ interest and national interest offset each other during the process of policy making.
Key Words:Tax Rebate; Political Economy; National Interest; Interest Groups
JEL Classification:F13, B41, D72 |
| …………………………Xiaosong and Xie Shenxiang (101 ) |
| • Nominal and Real Returns on China's Foreign Exchange Reserves |
Abstract: We construct three different measures of the returns on China’s foreign exchange reserves. In the sample period, we find that returns on China’s foreign exchange reserves in term of a basket of currencies or of goods and services are much lower and more volatile than that in term of the US dollar. In addition, movements of real returns on China’s foreign reserves do not show a close relation with that of dollar-denominated returns, suggesting that targeting the maximum returns on foreign reserves in terms of dollar may not be appropriate for achieving China’s policy object of maintaining and increasing the value of its reserve holdings.
Key Words: Foreign Exchange Reserve； Purchasing Power； US Dollar
JEL Classification:F21,F33,G11 |
| …………………………Zhang Bin, Wang Xun and Hua Xiuping (115 ) |
| • Real Time Estimates of Chinese Output Gap and Reliability Analysis |
Abstract: Based on the collection of real time data, this paper adopts six commonly used detrending methods to estimate China's quarterly output gap during the period 1992 to 2010 in various forms, decompose revisions of output gap estimates, and further analyze the reliability of real time output gap estimates. Our results show that output gap estimates have significant diversity across different methods, besides, the revision of output gap plays an important role in real time estimate and the data revision effect exists significantly. But more importantly, we find that in these six detrending methods, the Clark's (1987) unobserved components model is most reliable for real time estimate, and it can well describe China's business cycle and macroeconomic position, whereas the reliability of other methods is worse, especially for the HP filter.
Key Words: Output Gap; Real Time Estimate; Final Estimate; Data Revision; Reliability
JEL Classification：C32, E32 |
| …………………………Zheng Tingguo and Wang Xia (129 ) |
| • Agency Costs and Corporate Voluntary Disclosure |
Abstract: Voluntary disclosure of firm operating activities can reduce information asymmetry and agency problem between shareholders and managers. Managers, however, have power over when and which information to disclose. This paper examines the relation between agency costs and corporate voluntary disclosure. Due to low litigation risks in China, when agency costs are high, managers are more likely to misuserm resources for their own benefits, and thus they are less likely to voluntarily disclose information on operating activities. By examining footnote disclosure of “other cash payment related to operating activities”, we find that the higher the agency cost between shareholders and managers, the lower the probability that managers voluntarily disclose information on specific operating cash payments, and the less the degree of voluntary disclosure.
Key Words：Agency Costs；Voluntary Disclosure；Other Cash Payment Related to Operating Activities
JEL Classification：G140, H320 |
| …………………………Luo Wei and Zhu Chunyan (143 ) |
|