Abstract:The adjustment of industrial structure is currently a key issue in China, however, the effects of industrial structure on economic growth is not consistent in the literatures. In this paper, we develop a new measurement of industrial structure from the rationalization and optimization of industrial structure and specify a fixed effect model to explore the relationship between industrial structure and economic growth.Futhermore,we consider the mechanism of the rationalization and optimization of industrial structure on economic fluctuations. The results showed that the rationalization of industrial structure and economic growth has a steady relationship and the optimization of industrial structure and economic growth has an uncertain relationship, but their impact mechanisms on economic growth are the same. The optimization of industrial structure is an important source of economic fluctuations, but the rationalization of industrial structure can avoid this fluctuation. Overall, the contribution of the rationalization of industrial structure to economic development is much greater than the optimization of industrial structure. In the policy making process, the government should give more consideration to the rationalization of industrial structure rather to the optimization of industrial structure.
Key Words:Rationalization of Industrial Structure; Optimization of Industrial Structure; Economic Growth; Economic Fluctuations

Abstract:In this paper, China’s inflation rate, cyclical fluctuations, and nonlinear dynamics are analyzed based on the MRSTAR model. The authors investigate the partition of inflation rate, asymmetric and nonlinear characteristics of its dynamics, and transition path and intrinsic mechanism of different regimes. The empirical results show that China’s inflation rate can be divided into four regimes: deflation, deflation recovery, moderate inflation, and hyper inflation. The partition criteria not only depend on the inflation level but depend on its magnitude as well. Within a fluctuation cycle, the typical transition path of different regimes is laid out as follows: deflation→moderate inflation→hyper inflation→moderate inflation→deflation. The deflation and moderate inflation phases have high persistence, whereas the hyper inflation phase has low persistence. The impulse responses to shocks are transient, and there appears to be asymmetry between the impulse responses to positive and negative shocks.
Key Words:Inflation Rate; Cyclical Fluctuation; MRSTAR Model; Nonlinear Impulse Response

Abstract:This paper applies MetafrontierMalmquistLuenberger productivity index to measure the total factor productivity growth and its components in a sample of 27 commercial banks in China under the constraint of nonperforming loans over the period 2004 to 2009, and empirically examines macroeconomic factors of productivity changes. The major conclusions are as follows: in the technology gap ratio indicating the technology deviating from metafrontier, the tendency of stateowned commercial banks shows V shape, while the jointstock commercial banks go steady and the City commercial banks escalate. TFP of China banking industry operates well. The PTC is the major source of promoting the TFP. The PTEC and the SEC don’t go well. The TPSC shows that China banking industry trends to the frontier of CRS. The jointstock commercial bank is the best in the PTCU, but worst in the PTRC. The share of foreign banks and the investment in fixed assets push forward the TFP of banks.
Key Words:Nonperforming Loans; Total Factor Productivity; Metafrontier; MalmquistLuenberger Productivity Index；Directional Distance Function

Abstract:The question how the compensation and debt interact to the firm value, though studied in the theoretical literature, has not been empirically studied. Based on the data of Chinese listed firms from 2002 to 2008, the paper shows that there is a substitute relationship between manager incentive and debt, in which the compensation is measured by monetary salary and by perks. Further, we find this relationship differs under different nature of the firm and different level of marketization. Our study not only enriches the theory of capital structure and agency, but also inspires the firm decision.
Key Words:Manager Incentive; Debt; Firm Value; Substitute

Abstract:In this paper we exploit the innovation of financial instrument (short\|term bond) to the variation of financial constrains of the listed companies and empirically test the effect of financial constraints on operating performance. We handle the endogeneity problem in empirical test from two aspects. First, we use the natural experiment to identify the causality of financial constraints on operating performance. Second, we further show the economic mechanisms, that is the channel of allocating financial resources. We provide the evidences suggesting financial development contribute to efficiently allocating financial resources, less financial constrains, and performance improvement. We find that after short\|term bond become a potential financial instrument of firm, the firm experience an increase in debt capacity and investment capacity, thus a huge improvement in performance. Our evidences suggest that financial development has a great impact on corporate value.
Key Words:Short\|term Bond;Financial Innovation;Financial Constrain;Financial Development;Economic Growth

Abstract:This paper investigates the role of venture capital backing in the IPO underpricing of Chinese firms on different stock markets. We find that the IPOs of VC-backed firms are more underpriced than those of other firms listed on the small and medium enterprises board of Shenzhen Stock Exchange and the main board of Hong Kong Stock Exchange. However, no significant difference is found among VC-backed firms in the US markets. We also find that companies backed by younger VC firms are younger at their IPO than those backed by older VC firms and that investment period is positively associated with IPO underpricing, supporting the Grandstanding hypothesis that VC firms utilize IPO underpricing to establish a reputation in capital market.
Key Words:Venture Capital; IPO Underpricing; Grandstanding Hypothesis

Abstract:Factor markets’ distortion could induce individual household’s misallocation of capital and labor and lowers the aggregate TFP in agriculture. Based on the household’s data from rural fixed point survey in 2003-07, we analyze the extent of factors’ misallocation in east, middle, west and northeast district of China and its relationship with aggregate TFP. The results show great difference in different area. In the view of level and diffusion, the extent of resource misallocation is relatively high in the east and west of China, and low in the middle and northeast. If distortions in capital and labor could be effectively removed without consideration of technology, the total TFP could increase by more than 20%, among which the east and west district could increase by 30%. The extent of misallocation can be attributed to the nonfarm opportunities, financial market performance and the lands’ scale. Promoting social transformation is the main way to improve agriculture outputs.
Key Words:TFP; Resource Misallocation; Market Distortion

Abstract:This paper develops an extended lowendtohighenddistributed Hotelling Model to explore the constraints, timing and determinants under which Chinese lowend downstream firms engage in international vertical merger. We show that international vertical merger generates the dual effects of market share expansion and product position improvement. The overseas market demand plays a key role in the lowend downstream firms’ optimal choice over market expansion strategies. As compared to exports or first merging domestic upstream firms then exports, international vertical merger is not an optimal choice under normal market demand conditions. However, when there comes a negative demand shock, a substantially large increase in the production cost of the overseas upstream firms, together with a decline in the brand value of the foreign downstream rival firms， brings about a chance for international vertical merger, and it is optimal for the domestic lowend downstream firms to merge with the overseas highend upstream firm then. Moreover, if the international vertical merger can sufficiently improve the brand value of the merged entity, the social welfare of the host country where the merger target belongs to will also be improved.
Key Words:International Vertical Merger; Technology Intensity; Negative Demand Shock

Abstract:We construct a third market model to analyze the impact of trade liberalization on the environmental policies and social welfare. In the setting, there are two verticalrelated manufacturers (upstream firm and downstream firm) in each country. The upstream firm produces intermediate input to supply downstream firm in both countries. All the final products produced by downstream firm are exported to a third market. Environmental tax is levied on the polluting intermediate input in order to keep environmental issue under control. Our results show that（1）the rentshift effect from strategic environmental policy for intermediate goods is obvious, but it is ambiguous for final goods under the verticalrelated market. (2) The trade liberalization of these intermediate input between two countries will bring down the environmental tax which will cause countries’ environmental standard racing to the bottom. While the environmental pollution effect is senior, the free trade will force to increase the environmental tax in each country. (3)The effect of trade liberalization on social welfare is ambiguous, when social welfare function is a concave function of bilateral tariff. Moreover we also investigate the implications of the reasonable environmental tax to settle the international trade disputes and achieve sustainable development in China.
Key Words:Vertical Related Markets; Trade Liberalization; Strategic Environmental Policy

Abstract:Utilizing the implementation of New Rural Cooperative Medical System (NRCMS) in 2003, this paper analyzes the relationship of future uncertainty and household nutrient structure. By comparing household enrolled in NRCMS with non participant household current energy intake, this paper shows that NRCMS increases household per capita calorie intake significantly, and the effects on households in different income groups are not the same, while low-income families response much more than middle-income or high income families. NRCMS also has significant effects on the family′s other nutrition intakes and families participated in NRCMS will significantly increase their protein and fat intake. These conclusions are very helpful for policy maker to deepen Chinese rural resident nutrient structure and to alleviate the unbalance of nutrient intake between household in different income groups.
Key Words:New Rural Cooperative Medical System; Nutrient Structure; Uncertainty; Maximum Likelihood Estimation

Abstract:This paper estimates the impact of institutions on economic performance in China. We use the enrollment in Christian missionary lower primary schools in China in 1919 as the instrument for current institutions. Employing the two-stage least squares method, we find that the impact of institutions on Chinese economic growth is positive and statistically significant. The result survives from various robustness checks with addition of geographic and policy related variables.
Key Words:Institution; Geographic Factors; Economic Policy