Abstract:Entrepreneurs borrow from households via financial intermediaries to finance innovations. With entrepreneur’s effort unobservable to others, they sign credit contracts to share the monopolistic profit on innovations. The existence of two representative agents (an entrepreneur and a household) permits a study of income inequality between agents in new growth models. We find the following. First, an increase in entrepreneur’s share raises economic growth initially, but beyond a point, it will decrease growth, while such an increase always increases the income gap between entrepreneurs and workers. Second, an increase in the tax on the income of entrepreneurs from innovation would reduce their effort and thereby decrease the growth rate, while it would help to reduce income inequality. In contrast, an increase in the tax on the interest earnings decreases the growth rate, although it does not affect entrepreneur’s effort; such an increase, however, would not help to reduce income inequality. A tax on labor income (the wage) would increase income inequality, leaving the balanced growth rate unchanged.
Key Words:Credit Market Imperfection; Equity Contract; Taxation; Income Inequality; Balanced Growth

Abstract:Economic growth and inequality increasing are two stylized facts in rural China during economic transition, which play opposite roles in poverty reduction. Based on household surveys conducted by CHIPs in 1988, 1995, 2002, and 2007, this paper discusses the economic growth effect and inequality effect in poverty reduction, estimates the elasticity of economic growth and inequality to poverty reduction. Additionally, by applying Shapley decomposition, the paper also discusses the effects of various income components in poverty reduction determination and the elasticity of inequality to poverty reduction by income components.
Key Words:Economic Growth; Inequality; Poverty

Abstract:This paper proposes a property transformation perspective to study the mechanisms of wealth accumulation and wealth disparity creation during China’s post socialist transformation. It examines how housing privatization, marketization have translated a greater wealth inequality between cadres and private entrepreneur households, between state sectors and private sectors. In the 1980s, cadres and those working in the public sectors were more likely to be assigned a bigger and better house for almost free, whereas those in the private sectors had to rely on a self\|built or inherited house, or even buy a house from the market. The housing policies since the 1980s have essentially encouraged working units to privatize their houses by selling them to existing residents. Data analyses of the Chinese Household Income Project 1988,1995 and 2002 show that with the large scale housing privatization since the mid\|1990s, cadres and those working in the state sectors are more likely to obtain a private house from their working units at a discounted price than those in the private sectors.With the recent boom of housing market in China, housing inequality prior to and during the housing privatization has been translated greater disparity in housing value and household wealth between those working in the state sectors and those in the private sectors. In addition, their advantages of housing value and total wealth seem accelerating with the rapid development of housing market and privatization.
Key Words:Property Transformation； Housing Marketization and Privatization; Wealth Inequality

Abstract:We exploit a quasi\|natural experiment arising from the introduction of a health insurance program in rural China, to examine how the insurance coverage affects household consumption. The results show that on average, the insurance coverage increases non\|healthcare consumption by more than 5 percent. This insurance effect exists even for households with medical spending. In addition, the insurance effect is stronger for poorer households and households with worse self\|reported health status. It also gets stronger when the insurance for households’ expenditure at the county\|level hospitals gets more generous. These results are consistent with the precautionary savings argument. We also find that the insurance effect varies by household experience with the program. Particularly, the effect is significant only in villages where some households in the village have actually obtained reimbursement from the insurance program. Within these villages, the program stimulates less consumption among the new participants than among households that have participated in the program for more than one year.
Key Words:Precautionary Savings; Health Insurance; New Cooperative Medical Scheme; Chinese Household Consumption and Savings

Abstract:Using panel data of the China Health and Nutrition Surveys(CHNS),this paper analyzes the determinants of transitions to non-farm self-employment. The paper distinguishes the existence of different initial status (unemployment or paid employment) and final status (own-account self-employed or employers with employees), furthermore, transitions within self-employment was present. The main conclusion is that intergenerational transfers of human capital play a key role in transitions into self-employment regardless of starting status. Age and gender has a significant effect on the probability of transition for unemployed people to self-employment. The probability of transition for unemployed people is much higher than the ones for paid-employed. When the final states (i.e. employers and own-account workers) are also taken into account,  the probability of transition for unemployed people to employer is much smaller than the ones for paid-employed, while the probability of transition for unemployed people to own-account self-employment is much higher than the ones for paid-employed. Higher education contributes with the job generation process.
Key Words:Non-farm Self-employment; Occupational Choice; Informal Sector; Intergenerational Transfers of Human Capital

Abstract：Using Chinese provincial panel data from 1985 to 2009, this paper employs panel unit root tests, panel co-integration method and VECM to analyze the lead-lag relationship between housing investment and economic growth in China. Empirical results show that there is a stable uni-directional Granger-causality between housing investment and GDP in China, and the direction of Granger causality runs from GDP to housing investment, no matter whether it is at the national level or at the sub-regional level, no matter whether it is before or after the 1998 mass housing reform. These findings imply that “The Housing-led Growth Hypothesis” does not stand in China, and the policies formulated and enforced by the government to promote housing investment as a tool of economic development since the mid-1990s should be re-evaluated.
Key Words：Housing Investment; Economic Growth; Lead-lag Relationship; Granger Causality

Abstract:This paper loose the hypothesis of “rational agent”, expresses the culture with cognitive bias of self control in the frame of behavioral hyperbolic discounting model, and explains the mechanism of insufficient consumption(in Europe and America) and excessive consumption(in East Asia). We regress between culture and consumption with a panel data covering 48 countries over year 1978 to 2007. The results show that traditional explanatory variables such as precautionary saving are less powerful than the unobservable country individual effects in explaining consumption rate difference, and Confucianism dummy variable and sex indices which proxy culture can explain 28% and 58% of those unobservable country individual effects. This indicates that culture which unchangeable over time is stronger than traditional variables in explaining consumption rate difference across countries. In practice, consumption commitment technology originated from the hyperbolic discounting model, can effectively correct consumption bias due to the cognitive bias induced by consumption culture, hence can make the intervention policy more effectively which is aimed at increasing internal demand in China.
Key Words:Consumption Culture; Self-Control; Hyperbolic Discounting; Increasing Internal Demand

Abstract：Based on the balance sheet of government, this paper suggest that the governments assets are the basic guarantees for ensuring the repayment of the governments debts, so if a governments assets are less than its liabilities, the government debt risk may occur. A simplified “liquidity assets” balance sheet of government is constructed firstly based on Chinese reality, and then by using of the balance sheet, the Chinese government directed debt risk between the years of 1998 to 2008 is analyzed while the risk between 2009—2010 is also forecasted as well. It shows that the risk between the years of 2003 to 2006 was relatively stable and not so high in general, but the risk in the years before or after such period was in a much higher level under the influence of the each financial crisis broke out around the world. It can be seen that the impact of financial crisis to government debt risk is significant. At the same time, this result also shows that the positive fiscal policy could availably reduce government debt risk in short-term, and the effect is similar of the 1997 Asian financial crisis and the 2007 U.S. sub-prime mortgage crisis on Chinese government debt risks, to other words government debt risk will have a trend of “big-small-big” owing to the positive fiscal policy within a few years after the outbreak of the financial crisis. Finally, by introducing the government contingent liabilities, the research provides that the Chinese fiscal wont be safe unless the government contingent liabilities is no more than 24 trillion RMB by detecting the fiscal default risk under the government contingent liabilities.
Key Words：Government Debt Risk；Government Liquidity Assets；Contingent Liabilities；Default Risk

Abstract：This paper studies policy competition for a foreign-owned multiproduct monopolist firm producing two products that are horizontally differentiated between two countries of different size. This paper shows that the equilibrium outcome of FDI competition is determined by the interaction between the market size effect and the cannibalization effect, and countries subsidy policies. Welfare effects of competition for FDI are derived; in particular, This paper shows that the competing countries may Pareto strictly gain from or Pareto strictly lose from FDI competition.
Key Words：Foreign Direct Investment (FDI); Policy Competition; Market Size; Cannibalization; Welfare

Abstract：The credibility of applied econometrics is an important issue, and its core lies in the scientific combination of economic theory, statistics with mathematics. Based on the three focused discussions among econometricians, this paper clarifies the essence of the econometric way of exploring real economic world. In China, the abuse and misuse of econometric method in empirical work has attracted wide attention. This paper elaborates three sources of the credibility: the stochastic specification, identification of causal effect among economic variables and the evaluation on statistical adequacy. To improve the credibility of the applied econometric studies, we need to draw upon the achievements of the credibility revolution and change the modes of research and teaching.
Key Words： Credibility Revolution; Stochastic Specification; Identification of Causal Effect; Statistical Adequacy

Abstract：Mainstream theory of incomplete contracts lack the rigor foundation of its theory to explain why the contracts are incomplete, which leads to some contradictions in the theoretic framework. Many researches in terms of incomplete contracts focus on the complete contracts. This paper attempts to study the incomplete contracts from the analysis of evolutionary economics, and emphasizes that incomplete contracts should be explained in the light of incomplete knowledge. We regard the bounded cognition as the theoretic foundation of incomplete contracts, and explain the function, emergence and evolution of incomplete contracts. Finally, this paper considers the role of authority in incomplete contracts from the new insight.
Key Words：Incomplete Contracts; Evolutionary Economics; Bounded Cognition

Abstract：Under globalization, environmental issues have been increasingly giving a global content with the international mobilization of resources. This paper uses an open macroeconomics framework that integrates environmental factors with economic growth, trade, employment, and population migration. The literature review shows a clear North-South “environmental inequality” under the international division of labor. Firstly, issues of environment and economic growth have experienced three stages that are “The Limit to Growth” theory proposed by Roman Club, Environmental Kuznets Curve (EKC), and the debate of EKC. The problem of environmental quality and economic growth seems the two sides of a coin, which cannot be obtained at the same time. However, developing countries become the “pollution haven”, because of the international labor division. Secondly, enterprises may lose some “brown employment” for environmental regulations, but environmental protection can also create “green employment”. However, there is still argument about whether environmental protection will benefit the employment situation of developing countries. Finally, environmental migration has become significant in some countries due to rapid environmental deterioration. The environmental migration resulted from climate change may reach 50 million to 700 million till 2050 However, the environmental pressure and migration ability are very different between developed and developing countries, but such literatures are so limited.
Key Words：Environmental Kuznets Curve Hypothesis; International Trade; Environmental Regulation; Employment; Environmental Migration