Abstract：China's government spending is productive and exhibits strong bias to construction and productive investment, the paper adopts the SVAR method to obtain empirical facts of fiscal policy dynamic effects on employment. It reveals that expansionary government productive spending can promote employment, but its effectiveness depends on specific expenditure structure bias, namely, government investment spending stimulates employment, but government service spending tends to reduce employment. The paper sets up a dynamic Neo-Keynesian model with productive government capital, which matches the facts well, and shows that government spending effects on employment is affected by the productivity size and its expenditure structure bias. The transmission mechanism analysis of fiscal policy suggests that government investment spending increases employment through its productivity, investment liquidity constraints and price stickiness. However, at the stage of China's industrialization and transmission economy, more government service spending will reduce employment by its structural labor substitution. Meanwhile, taxes affect laborer's job search effort through the wealth effect and the liquidity constraint effect, hence the real raise of employment rate depends on labor demands increase.
Key Words：Fiscal Policy; Employment; Government Productive Spending; Expenditure Structure Bias

Abstract：How do local governors affect firms'development? Using the data of mayors'turnover, we explore the influence of local governors‘ turnover on firms’ investment in 277 cities for the period of 2000—2008. The result indicates that the turnover results in more investment expenditure and lower investment efficiency; the turnover frequency is positively related to investment volatility. The influence is stronger in state-owned enterprises. Moreover, the influence changes with local governors'attributes. Higher promotion motivation and transferred from other cities make local governors to exert stronger influence in the firms. Our study enriches the literature of political business cycle and government intervention, offering great help to further understanding of local governors'intervention in the firms.
Key Words：Local Governors'Turnover; Investment Expenditure; Investment Efficiency; Investment Volatility

Abstract：The background of gradual market-oriented reform and regional income disparities of China provide some enlightening clues for exploring the economic laws of economic development gap. Through the introduction of specialization and transaction costs, we established a theoretical model of regional income disparity in the inframarginal perspective which reveals the logical relationship between the evolution of division of labor and transaction efficiency under influence of institutional environment, and numerical simulation illustrate that different evolution path of transaction efficiency is an important reason for the development and changes caused by the income gap between regions. Therefore, we think that further improving the market-oriented trading environment of the middle and western regions has a great significance for narrowing regional income disparity in China.
Key Words：Regional Disparity of Income；Transaction Efficiency；Evolution of Division of Labor；Inframarginal Analysis

Abstract：Using the 2008 Rural Household Survey Data, this paper explores the factors influencing Chinese middle and old age rural surplus labors'choice between local employment and migration employment, and analyzes the income differential of different regional employment choice on the basis of selection bias. The results indicate that age, education, health, training and previous migration experience all impact their migration decision. Considering selection bias and un-observed personal characteristics, the income of migrant is much higher than that of local workers. Therefore, for the unskilled aged labors, migration can still bring forth considerable benefits, however, some institutional barriers restricts their migration willingness. Associated with the evidences of peasant worker shortage, return migration and the discussion of Lewis turning point, the paper finally gives some policy implications.
Key Words：Rural Surplus Labor; Selection Bias; Migration; Income

Abstract：This paper deals with the determination of the wage gap among labors'with the background of sticky wages and differentiated skills. Sticky wages do distinguish among various skill levels of labors and significantly lower the exact amount of wages received by the labors. The deterioration tendency of labors wages situation may attribute to the interaction of skills and sticky wages among labors. We conclude the stylized facts of China's labors'wage from sticky wage, differentiated skills and their intersection respectively through employing the data from CGSS 2006. Feasible suggestions include improve labors'skills levels as well as ameliorate demand supply mechanism in the market.
Key Words：Sticky Wages; Differentiated Skills; Wages; Heterogeneity

Abstract：The paper calibrates the match of individual‘s initial wealth and innate ability and its contribution to China's income inequality. We show that when individual has heterogeneity in initial wealth and innate ability the endogenous-labor-supply representative consumer theory still hold and the match between ability and wealth determinates the relationship between economic growth and income inequality. Numerical calibration shows the economic reform in China is tend to be positive match. The correlated coefficient of match decreases from 0.44 to 0.16, and the percentage of income inequality explained by match felled from 26.8% to 8.1%. Calibrating our model also finds that positive relationship between growth and inequality in China, and 10% wealth tax can reduce 2.47 percent of income inequality in 2006.
Key Words：Initial Wealth; Innate Ability; Matching Correlated Coefficient; Matching Inequality; Numerical Calibration

Abstract：This paper attempts to investigate the relationship between both the first and the second moments of firm TFP and those of firm wage using Chinese Industrial Enterprises Database. Major findings from firm-level regressions include: (1) The level of TFP is a significant determinant of the level of wage; (2) The positive effect of TFP on wage is more pronounced in firms with higher average wage; (3) The gap between marginal product of labor and actual wage payment increases with the level of TFP, but the marginal effect diminishes over time. Industry-level regressions reveal that (4) TFP inequality exerts a positive effect on wage inequality and it has a strong explanatory power of the variation of the latter.
Key Words：Income Inequality; Wage; Total; Factor Productivity

Abstract：This paper investigates the optimal two-part tariff contract and resale price maintenance (hereafter, RPM) contract in a vertical restraints model with horizontal externality and asymmetric information. The comparison between the welfare effects of the two contracts has important implication to the antitrust enforcement. Under asymmetric information the upstream producer always prefers RPM to twopart tariff contract. As far as social welfare is concerned, the impacts of RPM on the downstream retailers‘ efforts and consumers'surplus are ambiguous, which depend on the tradeoff between the significance of horizontal externality and that of informational asymmetry. When the externality problem dominates, RPM brings more efforts and higher consumers'surplus than two-part tariff, while the reverse happens when the problem of asymmetric information is more serious. Thus, we argue that the antitrust enforcement on RPM should be under the rule of reason and the antitrust authority should put emphasis on the tradeoff between horizontal externality and informational asymmetry.
Key Words：Resale Price Maintenance; Vertical Restraints; Adverse Selection; Moral Hazard

Abstract：Due to borrowers'strategic complementarities in deciding whether to repay or not, microfinance institutions (MFIs) may suffer borrower runs. By promising punishment for defaulters and choosing suitable capital structure, MFIs can mitigate borrower runs. Studying borrower runs problem in a global game framework, we find: (1) MFIs have incentive to promise too heavy punishment while promising too heavy punishment will reduce credibility of punishment commitment when borrowers avoid paying debts, which may exacerbate borrower runs; (2) As MFIs'private optimal capital ratio is below the social optimal level, government should regulate their capital ratios. (3) The effect of raising capital ratio on mitigating borrower runs is mainly due to decreasing the level of punishment commitment and thus increasing credibility of punishment commitment. Based on our model, we can provide policy suggestions for mitigating borrower runs in microfinance.
Key Words：Microfinance; Capital Ratio; Punishment Commitment; Repayment Incentive

Abstract：Dealing with the population aging problem, as part of the national development strategy in the long run, Chinese government is exploring new longterm care (LTC) benefit programs for senior citizens. Effective actuarial analysis of such programs is based on the knowledge of older person's health statuses, especially the pathways and transitions of LTC status. Using the sample from the latest two waves of Chinese Longitudinal Healthy and Longevity Survey (CLHLS 2005 and 2008), we investigate the transition of individuals between health statuses and their determinants. We describe the evolution of health status by continuous-time Markov chains and model the transition matrices. We also apply this model to estimate the size of frail elderly and expected time they spent in LTC status. The needs for LTC services for the old Chinese are projected to grow substantially, with an estimate of over 10 million older persons, about 6.7% of the elderly population in 2016. Because the female elderly have the relative advantages in survival, but disadvantages in keeping in healthier status, women who need LTC services are 1.8 to 2.4 times of men in the same status. Moreover, women spend twice as much time in LTC status prior to death. Therefore, the frail older women become main demanders of LTC services. By establishing the local actuarial parameter, this study sheds lights on LTC program design and other aging policies.
Key Words：Long-Term Care; Multistatus Transition Model; Projections

Abstract：This paper develops a welfare-based model of monetary policy in an open economy. We examine the optimal monetary policy under incomplete exchange rate pass-through, focusing on the effect of degree of pass-through on transmission mechanisms for monetary policy. We find the optimal monetary policy depends on the degree of pass-through, the openness of the economy and the elasticity of money demand. As the degree of pass-through increases, the response of home optimal monetary policy to home productivity shocks goes up gradually and the volatility of exchange rate rises. Incomplete pass-through can't ensure the relative price of two countries equal their values in the flexible price equilibrium, so the welfare loss will decrease with the increasing degree of pass-through. Through comparing Nash and cooperation equilibrium we find welfare may be improving in cooperation equilibrium under incomplete pass-through that is different from the PCP or LCP case.
Key Words：Incomplete Exchange Rate Pass-through; Optimal Monetary Policy; Welfare Effect

Abstract：To discuss the monetary cooperation between China and ASEAN or other countries, I construct a two country international business cycle model and analyze the relationship between different categories of merchandise trade and international business cycle synchronization. The theoretical model and the empirical test show that the countries'business cycle synchronization is reverse with the scale of consumer goods trade, but moving the same way with product goods. The greater the substitution elasticity of consumer goods, the more decline of business cycle synchronization with the same consumer goods trade size change; the higher the substitution elasticity between import product goods and home production elements, the more increase of business cycle synchronization with the same product goods trade size change. On the basis of this conclusion, I present a new opinion about monetary cooperation between China and ASEAN in the end.
Key Words：Trade Categories; Synchronization; Monetary Cooperation