Economic Research Journal (Monthly) Vol.50 No.4 April, 2015 |
• The Effect Evaluation on Chinese Expansion Openness under Economic New Normal |
Abstract:The main standards of “open bonus” with quantitative growth of foreign trade and FDI inflow in the openness scope refracted the economic development mode in the past with high speed growth rate and building capacity as well as quantity demands. It may be impossible to have satisfied results from development trends of the world division of labor as well as trade and investment in the coming years, if we continued to follow the appraisal thinking on the openness economy in priority on the speed and scale of foreign trade and FDI inflow growth. In contrary, does it mean that it's not successful for the development of openness economy in China if there is nothing of the brilliant indicators? So we have to discuss the topic of transformation of the appraisal thinking. This paper argues that Chinese open outside has appeared one completive new thinking since the 18th National Congress of CPC, and provided the basis on the effect evaluation in the new round openness; the openness strategy at moment pushed by government has involved new conception, thus it's necessary for openness economy to set up the new development indicators in the future including the thirteenth five-year development planning.
Key Words:Economic New Normal; “Open Bonus”; Effect Evaluation
JEL Classification:F18, F43 |
…………………………Pei Changhong (4) |
• The Breakdown of the Quantity Theory of Money in China after 2008 Financial Crises |
Abstract:After 2008 Financial Crises, the breakdown of the Quantity Theory of Money in China displays a new feature that expansionary monetary policy with high money supply has not caused inflation it is supposed to be, while it goes with the soaring housing price and government deficit. This paper builds up a dynamic general equilibrium model in the presence of housing sector and government deficit. It shows that the booming of housing bubble and government deficit will enhance money demand of households and government and then lower velocity of money as well as inflation rate. This indicates that housing bubble and government deficit are the key factors in the breakdown of the Quantity Theory of Money in China after the Financial Crises. Moreover, the busting of housing bubble will make the QTM revival and increase inflation rate by 0.5 percents.
Key Words:Quantity Theory of Money; Inflation; Monetary Policy; Housing Sector; Government Deficit
JEL Classification:C63, E31, E41, H62 |
…………………………Chen Yanbin, Guo Yumei and Chen Weize (21) |
• Credit Inflation, Virtual Economy, Resource Allocation and Endogenous Growth |
Abstract:In this paper we study the credit inflation initiated by the banking system. We introduce money via the production function, which imposes an upper limit for the banks to increase credit inflation. The banks can reap revenue(similar to seigniorage revenue)from credit inflation. If the majority of the revenue goes to the entrepreneurs, then the balanced growth rate will be higher. In contrast, if the majority of the revenue is retained by the banks, then it will attract more labor into the banking sector. Less labor left to be employed by the entrepreneurs would lower the return to entrepreneurship, ending up lowering long-run growth. In this case the government might pursue more expansionary monetary policy, forming a vicious cycle. In proper situation, the government may find it desirable to gradually give up expansionary monetary policy in certain areas that rely more on virtual economy, avoiding a substantial shock to the economy.
Key Words:Credit Inflation; Resource Allocation; Entrepreneurial Innovation; Economic Growth
JEL Classification:E31,G21,O41 |
…………………………He Qichun and Zou Hengfu (36) |
• Administrative Monopoly, Political Patronage and the Extra-Cost of the State-Owned Firms |
Abstract:Rent-seeking of entitlements sharply increases firms' management cost. This paper measures the lost efficiency of the state-owned firms resulted from administrative monopoly and entitlements rent-seeking, based on the dynamic response mechanism of firms' management cost to stake holders, market status and economic environment. Empirical research and counterfactual comparative simulation experiments show that, political patronage significantly increases management cost of state-owned firms, their management efficiency is only about one-third of private firms. The management cost of state-owned firms and collective-owned firms shows rigidity and is insensitive to the change of macroeconomics and market environment, while the sensitivity of private firms to economic environment is 5.5 times of state-owned firms. Market monopoly can help reduce management cost for private firms, but has negative effect on state-owned firms. The measurement result of external market environment shows that, the overall market environment has become worse since 2008. Therefore, an effective way to optimize stated-owned economic layout and structure is to open up private capital in core monopoly areas and make it play a marketable role in stock equity allocation.
Key Words:Ownership Property; Political Patronage; Administrative Monopoly; Management Cost
JEL Classification:D24, H32, C12 |
…………………………Yang Jisheng and Yang Jianhui (50) |
• Country Portfolio and Business Cycle Transmission |
Abstract:China now is in possession of massive amount of US dollar bonds while the US and other developed countries hold FDI and other equities in China. To analyze the influence cast on international business cycle transmission by the heterogeneity of these mutually held assets, this paper establishes a two-country DSGE model, introduces financial market friction and analyzes the role played by mutually held equity assets and debt assets. The theoretical and empirical study of this paper shows that no matter it is the debt assets that are mutually held or the equity assets, the incompleteness of the financial market increases the external impact on domestic market. However, the more equity assets that are mutually held the more synchronization of two countries' economy while the more debt assets the less. Further analyses show that the incompleteness of financial market and the mutually holding of assets have led to the asymmetrical transmission of business cycle between China and the US, and they can be used to explain the huge negative impact of the 2008 Financial Crisis.
Key Words:Country Portfolio; Financial Accelerator Effect; Business Cycle Transmission
JEL Classification:F36, E44, F42 |
…………………………Mei Dongzhou and Zhao Xiaojun (62) |
• The Effects of US Dollar Exchange Rate Adjustment on Sino-US Bilateral Trade |
Abstract:What effect does a weakening US dollar(USD)have on Sino-US bilateral trade during 2002—2012? Constructing the perfect and imperfect substitute trade models of homogeneous goods(HG)and differentiated goods(DG)between US and China, this paper uses statistical comparison and GMM estimation to show that firstly, US export of HG to China occupies a large share, and if the imperfect substitute model were used directly, such a study would induce the estimation bias of US HG and DG export aggregation to China to exchange rate change. Using Rauch classification, I match the most disaggregated 5-digit and naked 4-digit HG and DG trade data, which reduces the bias of product trade aggregation response to exchange rate change to the utmost extent. Secondly, the mathematical model confirms that the exchange rate sensitivity of US real export of DG to China under imperfect substitute model is different from that of US real export of HG to China under perfect substitute model, and so is US real import from China. Thirdly, the weakening USD can improve US trade balance of organized exchange HG(OHG)with China, make US trade balance of referenced price HG(RHG)indefinite, whereas worsen US trade balance of DG with China, and result in the deterioration of US trade balance with China. The rise of real exchange rate volatility works against US exports of HG, DG and full goods to China, and also works against US imports of DG and full goods from China, but cannot hinder the increase of US import of HG. Therefore, it is difficult to exaggerate the role of weakening USD on improving US-China trade imbalance, and it would be more favorable for promoting US-China product trade if real exchange rate volatility were better smoothed.
Key Words:A Weakening USD Adjustment; OHG; RHG; DG; Sino-US Bilateral Trade
JEL Classification:E52, F14, F31 |
…………………………Shen Guobing (77) |
• Chinese-style Tax-Sharing System, Tax Collection Centralization and Tax Competition |
Abstract:Focusing on the corporate tax reform in China, the paper puts the dynamic role of the central government into the tax competition between provinces. In theory, the point of views in this paper is, comparing to the hypothesis of “top-down yardstick competition”, the hypothesis of tax competition between jurisdictions is more suitable to explain the tax strategic interaction between Chinese regions; Chinese-style tax-sharing system could mainly avoid the vertical tax competition issues; the center government has an incentive to increase the extent of tax collection centralization to compress the space of tax competition between local governments. In the empirical, the paper uses the dynamic spacial instrumental variables model to test the effects of tax collection centralization on tax competition between provinces during 2002—2007. The empirical results show that, there was some extent of tax competition between regions, tax collection centralization increased the effective tax rate and offseted the level of tax competition between provinces.
Key Words:Chinese-style Tax-Sharing System; Tax Collection Centralization; Tax Competition
JEL Classification:H77, H25, P35 |
…………………………Xie Zhenfa and Fan Ziying (92) |
• The Ownership Basement of China's Under Urbanization: Theory and Evidence |
Abstract:Why does China's urbanization process lag behind? Why does the urbanization performance among various regions of China have such huge differences? This paper provides a perspective of ownership structure to unlock this puzzle, considering the character of “double dual structure” in China's economic transition. The paper finds that under the premise of the relative rural surplus labor force in the past of China, urban enterprises “pull” force for the rural surplus labor plays an important role in the process of urbanization. The ownership structure of the enterprises and the demand for employees impact regional urbanization. State-owned enterprises(SOEs)are commonly capital-biased and tend to drag on the overall economy, whose demand for labor force is relatively small, so that the higher the proportion of state-owned, the lower employment scale. The reduction of employment opportunities means that the rural surplus labor absorptive capacity of urban enterprises is limited, further the process of urbanization lags behind. Using provincial panel data(1985—2011)of China, we find that the State-owned proportion significantly inhibits the process of urbanization. To some extent, the lag of China's urbanization partly derives from the lag of China's ownership reform. The policy implication of this paper is that, in order to speed up the urbanization and the household registration system reform, it is important to change the ownership structure.
Key Words:Ownership Structure; Under Urbanization; Double Dual Structure; Employment
JEL Classification:E24, O18, R23 |
…………………………Liu Ruiming and Shi Lei (107) |
• SOEs Reform's Impact on Economic Growth |
Abstract:This paper investigates how the Stated Owned Enterprises(SOEs)reform influences economic growth, and constructs a Computable General Equilibrium model which reflecting Chinese economic characteristics, separating the production from SOEs or not SOEs, to estimate SOEs reform's impact on economic growth. We find that SOEs reform can enhance economic growth through raising marginal output of capital, improving allocation efficiency of capital, increasing TFP growth rate and exerting the spillover effect on other firms. Results of numerical simulation show that economic growth rate benefits significantly from SOEs reform: If every 5% of the SOEs are reformed year by year in the next 10 years, the economic growth rate can averagely raise 0.33 percentage point every year; and the yearly average raise of the economic growth goes separately to 0.47 or 0.50 percent point if 10% and 20% of the SOEs are reformed. With the background of searching and exploring endogenous driving force for economic growth, promoting SOEs' reform steadily and actively is very important for China to enhancing the economic efficiency and promoting economy growth.
Key Words:SOEs Reform; Economic Growth; CGE Model
JEL Classification:E17, C23,D58 |
…………………………Xu Zhaoyuan and Zhang Wenkui (122) |
• A Structural Explanation on the “Divergence” Between the CPI and PPI |
Abstract:Since 2000, China's two major price indexes CPI and PPI have diverged for many times, especially in the last three years(2011—2013). This inversion growth of the different price indexes has weakened the ability of the central bank to stabilize the aggregate price level. By constructing a three-sector DSGE model, we explore the structural causes of the divergence between the CPI and PPI. It is shown that the flow of labor among different sectors has promoted the expansion of the service sector and contraction in the agricultural sector. The CPI rose up while the PPI experienced a short-term rise and then began to decline, thus resulting in a “divergence” between the CPI and PPI. The three-sector model constructed in this paper is not only good at explaining the divergence between the CPI and PPI, but also used for the study of the effectiveness of monetary policy under current China's dual economic structure.
Key Words:Divergence between CPI and PPI; Monetary Policy; Three-Sector Model; DSGE
JEL Classification:E31, E51 |
…………………………Lv Jie and Wang Gaowang (136) |
• The Internationalization of Chinese Stock Market: Based on Information Spillover |
Abstract:Using Directed Acyclic Graph and Information Spillover Index approach, this paper explores return and volatility spillovers across Chinese and 16 other major stock markets with data spanning over twenty years. We find that on one hand the dynamic of return and volatility spillover show significant difference. The return spillovers display a significant increasing trend, while the volatility spillovers are more influenced by extreme events like financial crisis and they are more volatile and uncertain. On the other hand, the internationalization level of Chinese stock market has increased since 2005 and shows clear characteristics of uniqueness, periodicity, asymmetry and localization. Our findings have important implications for policy-makers and international investors.
Key Words:Information Spillover; Co-movement; Directed Acyclic Graphs; Spillover Index; Financial Crisis
JEL Classification:G10, G15, F36 |
…………………………Liang Qi, Li Zheng and Hao Xiangchao (150) |
• Does Short Selling Improve Price Efficiency in the Chinese Stock Market? Evidence from Natural Experiments |
Abstract:The introduction of margin trading mechanism in the Chinese stock market provides a natural experimental environment for studying how short selling affects price efficiency. Using the margin trading data between April 2009 and December 2013, this paper compares the price efficiency for stocks that are eligible for margin trading and those that are not eligible, and the price efficiency before and after an approval(or denial)of margin trading for individual stocks. Our empirical evidence suggests that the introduction of margin trading mechanism significantly improves stock price efficiency. We also find there is a positive correlation between short-selling flow and price efficiency. A further study shows that margin trading can function as a mechanism for mitigating information asymmetry, increasing market liquidity and stock ownership breadth.
Key Words:Short Selling; Price Efficiency; Margin Trading; Short-selling Flow
JEL Classification:G14, G12, G10 |
…………………………Li Zhisheng, Chen Chen and Lin Bingxuan (165) |
• Treaty Ports, Railroad, and Industrialization in Modern China |
Abstract:Treaty ports and railroads play very important roles in modern China's industrialization. This paper investigates their impact on the erection of modern industrial establishments by employing quasi-experiment method. The results prove the argument of Jia(2014)that treaty ports evidently promote economic development, and suggest that railroads not only strengthened the influence of treaty ports, but play a similarly important role in late Qing dynasty. Furthermore, I analyze main mechanism that treaty ports and railroads work through. Treaty ports' influence on foreign invested company is significant in early industrialization and none of them is evident impetus of specialization among industrial sectors. Finally, I use international trade and domestic food price to analyze the different effects of treaty ports and railroads on external circumstance of industrialization. I find that treaty ports promote international trade significantly whereas railroads facilitate integration of domestic market.
Key Words:Treaty Ports; Railroads; Industrialization; Modern China
JEL Classification:N65, N75 |
…………………………Liang Ruobing (178) |
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