CONTENTS
Capital Mobility in China and Other Newly Industrializing Countries in Asia
·························He Dexu, Yao Zhanqi and Yu Shengguo(4)
Monetization, Velocity and Output:Modified CIA Constraint and China's Experience
···································· Zhao Liuyan(17)
Seigniorage maximizing and Inflation in China:1952—2004
·······························Wu Hanhong and Cui Yong (27)
The Relationship between Light and Heavy Industry of China's Industrialization Since 1949
·································Wu Li and Wen Rui (39)
Technical Choice and Technical Progress of China's Inudstries:1985—2003
·····························Chen Yong and Tang Zhuchang (50)
Output Attraction,Economic Evolution and the Boundary of Property Rights in Incremental
Reforms——Dynamic Research on the Economy Evolution Path in China
·····················Jiang Shuxia, Dong Baomin and Zhang Xiaobo(62)
A Spatial Model of Technology Competition between Foreign Direct Investment and
Domestic Enterprises
······························Xue Qiuzhi and Luo Laijun (75)
A Theoretical Analysis of Lack of Reputation among Chinese Firms
·························Cai Hongbin, Zhang Hu and Yan Xuyang(85)
Indirect Lawenforcement Cost,Indirect Harm and Selective Lawenforcement
····························Dai Zhiyong and Yang Xiaowei(94)
Intergenerational Mobility of Offfarm Job Opportunities in Rural China
···································Xing Chubing (103)
Application of NonLinear Dynamics in the Field of Macroeconomics:A Survey
····································Chang Zhongze(117)
Capital Mobility in China and Other Newly Industrializing Countries in Asia
He Dexua,Yao Zhanqib and Yu Shengguoc
(a,b: Institute of Finance and Trade Economics,CASS；
c: School of Economics and Management, Hainan University)
Abstract:
There are four empirical methods which have been applied to evaluate the
capital mobility in developing countries. These include measures of the magni
tude of gross capital flows， Edwards model， savinginvestment correlations，
and the scope for sterilization of the effects of reserve movements on the domestic
money supply. This article doesn't only apply the first three tests to assessthe
degree of capital mobility in China， but also apply the first two methods to make
a comparison of capital mobility between China and the other newly industrializing
countries（NICs） in Asia， such as India， Indonesia， Malaysia， South Korea，
Philippines， Singapore and Thailand. The evidence suggests that all of the NICs
in Asia can be considered financially open. The result also suggests that the capital
mobility in China is the lowest among the NICs in Asia. Lastly we evaluate the capital
mobility in China with Kalman filter. But there is no evidence that the stricter
capital mobility regulation in china have taken have more effects after the Asia
Crisis in 1997. We also find capital mobility is lower in China than that in the
other NICs in Asia which influenced very much in the Asia Crisis before 1997.
We draw a conclusion that the step by step measure rather than the jacobinical
step is the most suitable policy for the openness of capital market in developing
countries.
Key Words:Capital Mobility；Magnitude of Capital Flows；Correl
ationship between Saving and Investment； Edwards Model； Kalman Filter
JEL Classification:F210，P330
Monetization, Velocity and Output: Modified CIA Constraint
and China's Experience
Zhao Liuyan
(School of Economics, Peking University)
Abstract:
This paper modifies the traditional cashinadvance (CIA) constraint in the
following two ways. First, it allows only a fraction of the capital goods
and consumption goods to be subject to the CIA constraint. The fraction is assumed
to depend on institutional shocks, i.e., the changes of monetization and credit
enhancing transaction. Second, it allows the transaction frequency of money is
influenced by inflation. Thus we can study the effects of real and nominal shocks
on velocity and output in a general equilibrium framework closed to China's realities.
When investment and output changes are considered in the theoretical model,
monetization and creditenhancing transaction have no determinate impacts
on money and velocity, and inflation will not necessarily lead to lower investment
or money demand. The results are different from those of partial equilibrium
analysis or traditional CIA models. The empirical results validate the above
theoretical predictions. Though lower inflation will reduce velocity, monetization
will not reduce it significantly. Hence, the decline of velocity should not be
explained solely by monetization and institutional changes hypothesis.
Key Words:Monetization; CIA; Structural VAR
JEL Classification:E410, C320
Seignioragemaximizing and Inflation in China: 1952—2004
Wu Hanhong(Renmin University of China)〓
Cui Yong(People's Bank of China)
Abstract:
This paper constructed a money demand function based on the cashinadvance model.
In this setting, we infer the equatons of seignioragemaximizing inflation
rate and seignioragemaximizing growth rate of money under the premise that
government earn revenue through seignioragemaximizing subjecting to the money
demand function. We estimate the function according to the year data of Chinafrom
1952 to 2004. The result suggests that in order to maximize the seigniora
gerevenue and avoid superinflation, The money authority should control the
growth rate of money under 22—24% and control the inflation rate under 11—14%.
Key Words: Seigniorage; Inflation; Cashinadvance Model; Monetary Policy
JEL Classification:
E410，E580，D110，C220
The Relation Between Light and Heavy Industry of
China's Industrialization Since 1949
Wu Li
(Institute of Economics,CASS)
Wen Rui
(Jiangxi University of Finance and Economics)
Abstract:
In the process of China's industrialization from 1949 to 2005, the relation
between China's light industry and heavy industry had experienced three major
transformations. During 1949—1978, the period of pursuing strong capacities,
China had been putting emphasis on heavy industry and ignoring light industry；
During the period of wealthseeking, from 1979—1997, agriculture, light industry,
and heavy industry were emphasized equally. During 1998—2005, China entereda period
of seeking new road of industrialization. During this period, the government and
enterprises are seeking new growth points for China's economy throughs
tructure adjustments, in order to achieve rapid development. By analysis of the
three periods of China's industrialization, this paper believes that there are
five mistakes about the “light and heavy” of China's industry should be corrected.
Key Words:
Industrialization； Heavy Industry； Light Industry； Industrial Structure
JEL Classification:
E210，E290，L120，O140
Technology Choice and Technical Progress of
China's Industries: 1985—2003
Chen Yong and Tang Zhuchang
(Fudan University)
Abstract:
This paper evaluates the technology choice of China's industries from
1985 to 2003, computes China's industries' technical progress (TFP). Based on th
eoretical analysis on the relationship between technology choice and technical p
rogress, the paper, using industries' panel data, makes positive tests. Major
findings and conclusions include:(1) There were two periods of industrial heavil
ization and chemicalization in 1991—1995 and 1999—2003, and accelerated capital
deepening in 1993—1998 and decelerated after 1999;(2) Industries saw technical
progress in 1990—1993 and 1999—2003, in which period the progress owed to technical
efficiency and technical change respectively;(3) Generally, industries with ahigh
proportion of monopoly or SOEs have outstanding technical progress while weak
performance in technical efficiency, and industries with intense competition are
on the contrary;(4)In China's industries, there are not cointergration between
technology choice(capital deepening) and technical progress or technical efficiency,
which means, though capital Granger causes technical change positively(not vice versa),
the effect is trivial.
Key Words:
Technical Choice; Technical Progress; Capital Deepening; Panel Data
JEL Classification:
D240，E220，L160
Output Attraction, Economic Evolution and the Boundary
of Property Rights in Incremental Reforms
——Dynamic Research on the Economy Evolution Path in China
Jiang Shuxiaa, Dong Baominb and Zhang Xiaoboc(a,c:Department of Finance,
School of Economics, Xiamen University;
b: Department of Economics, University of International Business and Economics
)
Abstract:
The theories of institutional evolution considered institutional vicis
situdes as the process of learning and selfadapting to environment. Under the
condition of sufficient information and lack of explicit constraint, institution
will converge to its optimal path in some way. However, insufficient information
, institutional compatibility of real economy, the constraints of property right
and institutional efficiency facing by transformation economy will change the paths
and results of institutional convergence. With the analyzing frame of Barro
(1991) and Skott(1999), the paper insights into the longterm equilibrium path
of institutional evolution under some constraints and draw a brandnew
outlineofinstitutional evolution in the way of evolutionary equation. At the same time,
with a group of macroeconomic data, the paper proves the analyzing ability of this model.
Key Words:
Output Attraction; Institutional Evolution; Boundary of Property Rights
JEL Classification:
B250，D230，D590
A Spatial Model of Technology Competition between Foreign Direct
Investment and Domestic Enterprises
Xue Qiuzhi, Luo Laijun
(Management School of Fudan University)
Abstract:
Various studies focus on technology spillover effect of FDI in China,and neglect
the influence of geographical factor and enterprise behavior. Basedon Wang and
Blomstrom's endogenic theory model, this paper induces geographical factor and makes
further study on spillovers from FDI, including both technology transfer behaviors
of Foreign Direct Investment and technology learning behaviors of domestic
enterprises.
Key Words:Technology Transfer; Technology Learning; Technology Spillover
JEL Classification:F200,F410
A Theoretical Analysis of Lack of Reputation among Chinese Firms
Cai Hongbina, Zhang Hub and Yan Xuyangc
(a,b: Guanghua School of Management, Peking University)
(c: School of Economics, Beijing Technology and Business University)
Abstract:
Ａ widely spread phenomenon in China is that firms seem to lack incenti
ves to build reputation. In this paper we build a repeated game model to analyze
the economic and institutional factors behind this phenomenon. The existing lit
erature mainly focuses on the most efficient equilibrium in repeated games. We
think that the right approach to study reputation issues in China is to focus on
the least, not the most, efficient equilibrium, and analyze factors affect the
equilibrium moves from the low efficient to high efficient state. In our model,
in equilibrium firm reputation is a dynamic process. Under certain conditions, f
or a sufficiently long time, even the least efficient equilibrium will move to the
high efficient state. The total social welfare depends on how fact such a transition
takes place. We characterize the time needed for such a transition, and
analyze the factors affecting the transition speed. We find that the relatively
low trust level in China, the insufficient market institutions, the insufficient
competition, and the relatively low technology level, all contribute to the slow
transition from the low efficient state to the high efficient state.
Key Words:Reputation； Repeated Game； Efficiency
JEL Classification:C700, D800, L140
Indirect Lawenforcement Cost, Indirect Harm
and Selective Lawenforcement
Dai Zhiyong1〓Yang Xiaowei2
(1. Zhejiang University; 2. Beijing Normal University)
Abstract:
The lawenforcement draws great attention under the background of comp
lete law regime. Most scholars attribute the nonenforcement of law to high
direct cost of lawenforcement. Their explanation is of great success except
that they ignored one special phenomenon of selective lawenforcement which means
the law is always enforced differently under different circumstances. This paper
explains it as an intended behavior of government which tries to minimize the total
cost including direct and indirect harm, direct and indirect lawenforcement
cost with residual rights of lawenforcement to realize its political, economic
or social targets when facing different situation.
Key Words:
Selective Lawenforcement; Residual Rights of Lawenforcement; Indi
rect Lawenforcement Cost; Indirect Harm
JEL Classification:D860, D780, K420
Intergenerational Mobility of Offfarm Job Opportunities in Rural China
Xing Chunbing
(School of Economics and Business Administration, Beijing Normal Univ
ersity)
Abstract：
This article estimates the effect of house heads job opportunities onthose
of their sons in the 1990s. Using a longitudinal data set (CHNS), cross section
estimates show that the intergenerational correlation of offfarm job opportunities
decreased in the 1990s, indicating rising mobility. Human capital explains part
of the correlation. Timeinvariant factors account for significant part of the
correlation as well, especially in the early 1990s. In fixed effect models,
the intergenerational correlation increased.
Key Words： Offfarm Job; Intergenerational Mobility; Fixed Effect
JEL Classification：C350, J620, O150
Application of NonLinear Dynamics in the Field of Macroeconomics：A Survey
Chang Zhongze
(Central University of Finance & Economics)
Abstract：
This survey summarizes some uses of nonlinear dynamics in the realm of
macroeconomics. Nonlinear dynamics has flourished in the stage of dynamic
economic analysis since the 1980s,it is an important attempt of breaking linear
paradigm. Nonlinear analysis often comes to significant conclusions which differ
from equilibrium analysis：outputemployment system exhibits nonlinearity and
asymmetry under the outside shocks,the positivefeedback mechanism exists between
the economic decline and the economic increasement.Macroeconomic policies have
asymmetric effect on economy. Capital market is not random walk,chaos universally
exists in the capital market. Nonlinear dynamics provides a new train of
thought for Chinas macroeconomic researchers.
Key Words： NonLinear Dynamics；Macroeconomics；Asymmetry；Chaos
JEL Classification：C400,E000,E630,G100
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