Abstract：Based on the theoretical framework of the national balance sheet, this paper initially compiles a preliminary sovereign balance sheet of China from 2000 to 2010 through available data and necessary estimation. The results indicate that sovereign equity of every year is positive and gradually rising, showing that there’s almost no possibility for China to experience a sovereign debt crisis in a relatively long time since the government has enough assets for debt liquidation. The analysis on the total leverage ratio of the society (or total debt/GDP) demonstrates that the ratio is generally at a moderate and manageable level because it is higher than that of BRICS countries but far below that of the advanced economies. However, it deserves attention as the leverage ratio rose sharply in recent years. The sectoral study reveals the eminent feature of China’s balance sheet that the corporate debt ratio (as share of GDP) is very high. In 2010, the corporate debt ratio is above 100%, overtaking the threshold of OECD countries, to be highly alert.
Key Words：Balance Sheet Approach (BSA)； Sovereign Balance Sheet； Total Leverage Ratio of the Society

Abstract：Standard is the key parameter of equalization, and equalizing standards should be benefited by unit citizen. There are disparities in raising revenue capacity and delivering expenditure cost in different regions during the supply of basicpublic services, but equalizing transfer formulated by a builtin standardization system ensures that each province would have the fiscal capacity to provide services at the same standard. Firstly, two sets of expense and revenue standardization systems are established on basis of the state average standards developed, where the public services are divided into 9 categories and 24 components. According to policy neutrality principle, the effects of 17 material factors concerning with the magnitude and unit costs in providing services are analyzed, such as population composition, population density, minority, urbanization, labor force price, administration scale, air temperature and heating, altitude, exchange cost, on the disparities in raising revenue capacity and delivering expenditure cost in all provinces. Then the standard expenses and standard revenues are calculated and assessed with factor analysis method, combining with the average standard systems. Finally, by carrying out the full equalization principles and defining the revenue sharing relativities, the fiscal equalizing transfers of 2008 from the central government are distributed among 31 provinces in accordance with their annual per capita relativities formulated. It is found that there is almost no disparity in providing services capacity in accordance with the equalization transfer calculated by the method developed here among all provinces. Comparing with the practical transfers, it is showed that the equalizing outcome can be improved 9%—15% by evaluating the impact on the eastern, middle, west and northeastern regions of China.
Key Words：Equalization of Basic Public Services; Standardization System; Fiscal Transfer Payment; Per Capita Standard Revenue

Abstract：This paper introduces globalization into firms’ pricing mechanism and develops a new inflation dynamics model for China, based on micro foundation. In empirical analysis, we take into account endogeneity and serial correlation in the model, and use instrumental variables projection method to address the inaccuracy problem induced by an extra stochastic noise. The results show that both inflation expectations and inflation inertia drive inflation with similar magnitude. The results also find that foreign output gap outweighs domestic output gap in driving China’s inflation over the past decade. The article provides new evidence and implications for macro economic policies and also offers a possible explanation for the “high economic growth with low inflation” puzzle experienced in China.
Key Words：Globalization; Inflation; New Keynesian Phillips Curve; Monetary Policy; Endogeneity

Abstract：In this paper, we formulate a simple DSGE model driven by news shocks. We introduce two types of real frictions (i.e., consumption habits and investment adjustment costs) in this simple model, because the frictions are the important factors which can generate aggregate comovement. Then, based on this model, we use Bayesian methods to estimate the role of news shocks in driving China’s business cycles since China’s reform and opening up. We find that news shocks are the most important driving force of China’s business cycle and account for more than two thirds of predicted aggregate fluctuations. Finally, we built a largescale DSGE model without nominal frictions in order to examine whether the conclusion of the simple model is robust. Our analysis proves that.
Key Words：News Shocks; Business Cycles; DSGE Model

Abstract：China’s monetary policy has relied more on money procedure than interest rate procedure. However, drawbacks of current money procedure have gradually shown up in recent years, casting doubts and triggering debates over its efficacy. Based on existing literature, this paper built a decisionmaking model of central bank under the framework of Dynamic Stochastic General Equilibrium, taking into account rational expectation under which central bank will optimize intermediate targets according to new information. This paper proved that interest rate procedure would be preferred to money procedure, when volatility of money demand exceeds that of interest rate procedure, aggregate demand and supply by a certain degree. Using data of recent decade, empirical analysis showed that money demand in China has become so unstable that interest rate procedure has already become the optimal choice of monetary policy.
Key Words：Monetary Policy Procedure；Dynamic Stochastic General Equilibrium；Rational Expectation

Abstract：As the executive is an important part of company structure, their resignations have huge impacts on company management. In context of the intensive resignations in the growth enterprise market, this paper studies the executives’ motivation for their resignations, the characteristics of these firms and the market effect caused by these resignations. The paper finds that the executives in firms with overvalued stock and low performance are inclined to resign and there are more resigned executives in familyrelated firms and firms with high issue fee. The growth enterprise market responses negatively to the resignation events and this negative effects are more obvious for shareholding executive resignations. We also find that the “Information Effect” and the “Real Effect” are not significant in these resignations, however, there is a significant “Cashing Effect”. By constructing the cashing motivation index, we enhance this conclusion. And the executives’power to know company’s information impacts their cashing motivation. Our study provides direct evidences to improve the growth enterprise market.
Key Words：Executive Resignation; Growth Enterprise Market; Corporate Governance; Cashing Effect

Abstract：A model is designed to analyze investment strategy of Chinese sovereign wealth fund (SWFs) based on specific investment objectives and investment areas, regarding SWFs as investment vehicle of the overall economy. Firstly, the twofunds separation model shows that the best investment strategy could be divided into two funds, the income SWFs and the strategic SWFs. The first one as the finance investment just aims at the returns after riskadjust, the later as a hedge instrument of the risk of the whole country prefers to invest the strategic industry. Secondly, the research focused on the strategy SWF such as the establish conditions, the optimal scale and how to impact on the whole national welfare. The theoretical analysis and simulation suggest that the establishment of strategic SWFs depends on the increase of the national welfare instead of the returns on investment and the more the strategic SWFs hedges the national development risk, the more the whole national welfare increases.
Key Words：Sovereign Wealth Fund；Strategic Value；National Welfare；Hedge；Twofunds Separation

Abstract：Growing  literature has directly attributed the significant increasing trend of idiosyncratic return volatility in the U.S. and global capital markets over the past few years and the interrelated decline in firms’ product market competition performance and its stock market efficiency to the increasingly fierce economywide competition. This paper focuses on whether our capital market also has such phenomenon? Whether the significant increasing trend of idiosyncratic risk of our listed companies (if) and its performance’s interrelated decline should also attributed to the more intense economywide competition in China? Whether the more concentrated industry structure or firms’ significant product market power can help to alleviate idiosyncratic risk or its frequent return volatility? Based on the related perspective of “structureriskreturn”, the empirical results show that: at least over the past decade, the listed companies’ stock idiosyncratic risk in China is also indeed showing a significant increasing trend; The paper argues that this finding is attributable to the more intense product market competition; despite the significantly divergence of idiosyncratic risk and market risk exists both at home and abroad, the “nature” of divergence was significantly different; and the more concentrated industry structure or firms’ significant product market power can effectively weaken the idiosyncratic risk and stabilize the firms’ stock return.
Key Words：Industry Structure; Product Market Competition; Stock Idiosyncratic Risk

Abstract：Based on the background of managerial compensation of listed companies consisting of astronomical salaries and zero pay, the paper finds that media plays a role in monitoring because there are more negative press coverage in the lists of astronomical salaries and zero pay than other lists. The paper further investigates the mechanism under which the media shape its governance role in China. The investigation means that the media role of monitoring can’t improve lists’ corporate governance because other surveillance mechanism and reputation system have lapsed. Using of the path of government, media can easily form the corporate governance role.
Key Words：Managers’ Compensation; Media; Monitoring; Corporate Governance

Abstract：This paper examines the effect of changes in wage structure and employment shares of state\|owned units on the wage inequality of urban China by using CHIPs data. It applies quantile regressions, Machado & Mata (2005) decomposition and the extension of it to single out respectively the factors representing the change of wage structure and employment shares of the public sector and SOEs that affect urban wage inequality. The econometric results show that after the radical SOEs reform aimed at solving overmanning and improving efficiency in the late 1990s, the sharp fall of the employment share of SOEs reduced urban wage inequality, but the rise of the wage premium to the state sector (versus nonstate sector) raised the urban wage inequality.
Key Words：Stateowned Unit; Urban Wage Income Gap; Quantile Regression; Counterfactual Analysis

Abstract：Based on Fogel’s research, this paper studies the relationship between capital accumulation and consumption and discusses the effect of health on economic growth in an extended Ramsey model with assumption that consumption not only bringing agents’ utility but increasing agents’ health. The paper has two important features: 1) treading health as a simple function of consumption, which allows us to study health and growth in an aggregate macroeconomic model; 2) the existence of multiple equilibria of capital stock, health, and consumption, which is highly relevant to the reality\|rich countries may end up with higher capital, better health, and higher consumption than poor countries.
Key Words：Health Human Capital; Consumption; Economic Growth; Poverty Trap