Economic Research Journal (Monthly)Vol.43 No.7 July, 2008
CONTENTS
Services Outsourcing: Revolution of
Contract Forms and Its Implication
--------------------------------------------------Jiang Xiaojuan (4)
Energy Embodied in Goods of International Trade
in China: Calculation and Policy Implications
-------------------------------Chen Ying, Pan Jiahua and Xie Laihui (11)
Institutional Constraints on FDI
Productivity Spillovers: The Case of China
--------------------------------------Jiang Dianchun and Zhang Yu (26)
Economic Convergence in Transition Economy
of China: An Empirical Study with a Nonlinear
Timevarying Factor Model-----------------------------------------------He
Yifeng (39)
Passthrough of RMB Exchange Rate to Chinese Domestic Prices
---------------------------Shi Jianhuai, Fu Xiongguang and
Xu Wei (52)
Reserve Requirements, Reserve Requirements
Tax and Money Control in China: 1984—2007
---------------------------Zhang Xiaohui, Ji Zhihong and Cui Yong (65)
Government Preference, Public Goods Supply
and Fiscal Decentralization in Economic Transition
-----------------------------------Ding Juhong and Deng Kebin (78)
The Voluntary Contribution Mechanism of
Public Goods: An Experimental Research
----------------------------------------Zhou Yean and Song Zifeng (90)
Health Care Demand and Choice of Medical
Treatment
----------------------------Wang Jun, Chang Zhongze and Liu Hong (105)
The Impacts of Population Age Structure on
Household Consumption in China: 1989—2004
-----------------------Li Wenxing, Xu Changsheng and Ai Chunrong (118)
Political Connection and Market Valuation:
Evidence from China Individualcontrolled Listed Firms-----------------------------------Wu
Wenfeng, Wu Chongfeng and Liu Xiaowei (130)
Cognitive Rationality and the Development
of Methodological Individualism
-----------------------------------Huang Kainan and Cheng Zhenyu (142)
A Summary of the 2nd China Lixin Risk Forum------------Jia
Dekui and Yuan Min
(156)
Services Outsourcing: Revolution of Contract
Forms and Its Implication
Jiang Xiaojuan
( Policy Research Office of the State Council )
Abstract:As a new form of global industrial
organization, services outsourcing has important value to study. After
explaining outsourcing with contractual theory, analyzing the particularity of
human capital in services and its impacts on services contracts, we argue that
services outsourcing contract is a combination of two forms of contracts, which
is respectively market contract and firm contract, and what's more, it has
acquired the advantages of both forms. The combination form increases the
degree of specialization, improves the economy of scale, promotes the
accumulation of human capital, and affords more employment for developing
countries. Services outsourcing will accelerate services innovation, increase
labor productivity. It is a revolution of industrial orga
nization and a new driver of growth. China should participate in the global division of labor system more positively to promote
services development.
Key Words: Services Outsourcing; Services;
Human Capital; Contractual Theory
JEL Classification: L800, J240, J410
Energy Embodied in Goods of International Trade in China:
Calculation and Policy Implications
Chen
Ying, Pan Jiahua and Xie Laihui
(Research Center for Sustainable Development, Chinese Academy o
f
Social Sciences)
Abstract:In recent years, China's energy
demand and Greenhouse gases (GHG) emissions have grown very fast, in which
quite an amount of was exported as energy embodied in goods of international
trade rather than consumed domestically. In this paper, starting from the
concept of embodied energy, energy embodied in goods of international trade in
China during 2001—2006 is calculated quantitatively based on InputOutput energy analysis
approach. The results show that China is a net exporter of embodied energy
through international goods trade although China has become a net importer of
oil since 1993. In 2002, the total amount of energy embodied in export was about
410 million tce (tons of coal equivalent). Reducing that in import about 170
million tce, net export of embodied energy was about 240 million tce, which
occupied about 16% of primary energy consumption in same year increasing about
150 million tce in China. With rapid growth of international trade, the net
export of embodied energy went up to about 630 million tce, 162% higher than
that of 2002, assuming no constructive changes of InputOutput relations among sectors.
In addition, possible sources of errors in calculation and the policy
implications of embodied energy are discussed based on the results.
Key Words: International Trade； Embodied Energy； Inputoutput Analysis； GHG emissions
JEL Classification: F18, Q43, Q56
Institutional Constraints on FDI Productivity
Spillovers:
The Case of China
Jiang Dianchun and Zhang Yu
(Institute of International Economics, Nankai University)
Abstract: This paper analyzes the impacts
of Chinese economic transition on productivity spillovers of foreign direct
investment (FDI). It argues that the flawed domestic institutions tend to
diminish FDI spillovers, because the institutions make new technologies being
underpriced, and
domestic firms being crippled, and therefore the domestic firms have little
incentive and deficient ability to learn from foreign MNEs or make innovations.
Our empirical evidences support the theoretic arguments well: the growth of
Chinese domestic firms' productivity is mainly a result of the underlying
institutional changes, rather than the presence of FDI. An improved
institutional environment tends to be helpful for the local firms to benefit
from the technology diffusion of FDI.
Key Words:FDI; Productivity Spillovers; Economic
Transition; Economic Institution
JEL Classification:F21，P310，L290
Economic Convergence in Transition Economy of China:
An Empirical Study with a Nonlinear Timevarying Factor Model
He Yifeng
(Guanghua School of Management, Peking University)
Abstract:China is undergoing a transition
process from a planned economy to a market economy and from a big agrarian
country to a powerful industrial country. In this process, different regions
may show “shortrun temporary divergence with
final longrun
convergence". Traditional methods employed in studying economicconvergence
may wrongly treat it as evidence against convergence. To deal with this case
correctly, we should consider heterogeneity and allow them to have their own
time path. So we need nonlinear timevarying factor model. This paper emp
loys this model to test economic
convergence in China. After rejecting the hypothesis of nationwide convergence, we further
use a clustering method and find three convergence clubs in China. Our findings
also show that Shanghai and Guizhou do not belong to any convergence club,
which is new to the extant study. In the end, we give some explanation to how
these convergence clubs are formed.
Key Words: Economic Convergence； Transitional Economy； Nonlinear Time Varying Factor
Model； Clustering
Method； Convergence
Club
JEL Classification:C330, O470
Passthrough
of RMB Exchange Rate to Chinese Domestic Prices
Shi Jianhuai, Fu Xiongguang and Xu Wei
(Peking University)
Abstract: The paper studies the passthrough of RMB exchange rate to
various domestic prices during the period of 1994—2007 The main findings are as follows: (1) One percent exchange rate
appreciation results in 052 percent decline in import price after seven quarters and 038 and 020 percent decline in producer
price and consumer price respectively after twelve quarters. (2) The
contribution of exchange rate shocks is modest in explaining domestic price
variance, but exchange rate shocks have disinflation impact on domestic price
after RMB exchange rate regime reform in July 2005 (3) The passthrough of RMB exchange rate to
different classified consumer price index is significantly different. The passthrough of RMB exchange rate to
food, cloth and household facilities is higher than that to the others.
Key Words:RMB Exchange Rate；Exchange Rate Passthrough；Import Price；Consumer Price Index
JEL Classification:C32，E31，F31
Reserve Requirements, Reserve Requirements Tax and
Money Control in China: 1984—2007
Zhang Xiaohui, Ji Zhihong and Cui Yong
(People's Bank of China)
Abstract: In recent years, PBC has carried
out monetary policy by means of reserve requirements policy frequently in an
effort to drain the excess liquidity in the banking system. But just like other
government taxes, reserve requirements maybe have an optimal required reserve
ratios(RRRs). When the RRRs have been overraised to the optimal level, the effect of reserve requirements
policy in money control and liquidity sterilization should also be withered due
to the loss of the “tax base". Thus, we establish a theoretical model and analysis
framework and make the corresponding econometric test and empirical analysis.
The main conclusions are as follows: The optimal RRRs in China at present is about 23 percent. If the RRRs need be further raised above 23 percent,
the monetary authority should adjust the deposit and loan interest rates, the
bank spreads or the reserve requirements interest rate to expand the use space
of the reserve requirements policy.
Key Words:Reserve Requirements; Reserve
Requirement Tax; Money Control; Monetary Policy
JEL Classification:E61, E33, F41
Government
Preference, Public Goods Supply and
Fiscal
Decentralization in Economic Transition
Ding
Juhong and Deng Kebin
(China Centre for Economic Studies, Fudan University;School of Management, Guang
dong
University of Foreign Studies)
Abstract:
In economic transition the different
preference between the central government and local government deeply affects
fiscal decentralization and the incentive structure. This paper analyses the
course of the difference based on Besley's model and designs an incomplete
contract model of central and local government. It explains the decision of
decentralization in China. This paper proves that in the early development of
economy because of underdecentralization the local government asks central government to
increase the degree of decentralization. But with the development of economy,
it will be overdecentralization
and the local government will ask centre government to decreases the degree.
However, if the economy goes a step further, the decentralization will achieve
a equilibrium. The paper also discusses that with more people and worse
economy, the degree of decentralization will increase; while with less people
and better economy the degree will decrease.
Key Words:Government Preference; Public
Goods; Fiscal Decentralization
JEL Classification:H11, H41, H77
The Voluntary Contribution Mechanism of Public Goods：
An Experimental Research
Zhou Yean and Song Zifeng
（Renmin University of China）
Abstract:
This paper analyzes the effects of group
size, marginal per capita return, endowment and social relationship to public
goods contribution in a classical public goods environment, and verifies
different theories explaining it and then illuminates that the social
preferences of agents have some fixed stability by comparing the results to
those of experimental studies in other countries. This conclusion is very
important to our understanding of various behaviors in economic activities,
especially the voluntary contribution mechanism of public goods.
Key Words: Public Goods; Voluntary Contribution;
Experimental Economics
JEL Classification: C92, C72, H41, D71
Health
Care Demand and Choice of Medical Treatment
Wang
Jun, Chang Zhongze and Liu Hong
(Central University of Finance and Economics)
Abstract: Employing a Multinomial Logit
model, we empirically examine how an individual makes the choice of medical
treatment among selfcare, community healthcenter, county hospital, metropolitan hospital
and private hospital, in urban and rural China respectively. We use the data
from a randomized household survey combined with an area health resource file
in 2005. The results indicate significant urbanrural difference in demand for medical care. The
paper suggests that policy makers, aimed at improving health care access as
well as reducing health care costs, should take account of the heterogeneous
health care demand behavior.
Key Words: Medical Care Demand; Empirical
Analysis
JEL Classification:D120, I100, I180
The Impacts of Population Age Structure on
Household Consumption in China: 1989—2004
Li Wenxinga, Xu
Changshengb and Ai Chunrongc
(a,b: School of Economics, Huazhong University of Science and Technology; c: Uni
versity of Florida)
Abstract: This paper conducts a dynamic
panel analysis of the impacts of population age structure（measured by the youth
dependency ratio and the old dependencyratio）on household consumption using panel data from
Chinese provinces during the peried 1989—2004. The results suggest that the
youth dependency ratio hasa negative but small impact on the household
consumption, while the old dependency ratio does not have a significant impact
on household consumption. Hence the change of population age structure can not
explain the lack of household consumption in China. In addition, we find that a
strong habit persistency in consumer preference is the key reason for increased
saving rates during the period of rapid economic growth.
Key Words:
Chinese Population Age Structure;
Dependency Ratio; Household Consumption; Dynamic Panel Data; GMM Estimation
JEL Classification:D12, D91, E21, J10
Political Connection and Market Valuation:
Evidence from China Individualcontrolled Listed Firms
Wu Wenfeng, Wu Chongfeng and Liu Xiaowei
(Antai College of Economics and Management, Shanghai Jiao Tong University)
Abstract：This study purposes to examine the link between
political connection and market valuation in Chinas listed firms. Using 1,046
samples of individualcontrolled firms during 1999—2004, we find that firms having local
government political connections have a higher market valuation than those
having central government political connections, while there is no significant
relationship between political connection and market valuation. Moreover, our
result shows that in provinces with higher governmental intervention on the
economics sectors, local government political connections have positive effect
on the market value. The more severe the local governments intervention, the more
positive effect of the local government connection on the firm value. We also
show evidences that this local government political connection is helpful to
get shortterm
loans from banks.
Key Words：Political Connection; Market Valuation; Individualcontrolled Firms
JEL Classification：G28，G32，G34
Cognitive Rationality and the Development of
Methodological Individualism
Huang Kainan and Cheng Zhenyu
(Center for Economic Research, Shandong University; Institute of Econ
omics, Shan Dong Academy of Social Sciences)
Abstract：By the research on individual rationality, the
paper considers that rationality is neither complete constructivist nor
complete ecological, but has cognitive meanings. Considerable theories such as
behavioral economics, cultural evolution theory and neuroscience all disclose
the cognitive feature of rationality. We conclude that cognitive rationality is
more general concept of rationality, which represents the new theoretic trend
of the combination between economics and cognitive sciences, and also can
provide a more general and empirical hypothesis for economics. This article
also discuss the meaning of cognitive rationality and the features of
individual preference, knowledge, constraint and behavior, finally we discuss
the development of methodological individualism in the light of cognitive
rationality and its enlightenment for Chinese economics research
Key Words： Cognitive Rationality; Constructivist
Rationality; Ecological Rationality; Methodological Individualism
JEL Classification：A110, B250, D700
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