Economic Research Journal (Monthly)Vol.43 No.10 October, 2008
CONTENTS
Two Papers for the Centennial of the Birth
of Professor Sun Yefang
............................................................................Zhang
Zuoyuan and Mao Tianqi (4)
On the Mechanism of Sustainable Growth:
Evidence, Theory and Policy
............................................................................................The
Research Group (13)
On the Mode of Economic System Reform with
Chinese Characteristics（Ⅱ）
............................................................................The
Research Group of CASS (26)
The Binary Transmission Mechanism of
China's Monetary Policy
——A Research on the “Two Intermediaries,
Two Targets” Model
....................................................................Sheng
Songcheng and Wu Peixin (37)
The Role of the Great Creditors: Do the
Banks in China Have the Monitoring Effect on the Borrowers? ....................................Hu
Yiming, Thomas W. Lin, Li Siqi and Xie Shilei (52)
Research on the Motivation of Insider
Trading
..........................................................Li
Xindan, Song Surong, Lu Bin and Zha Xiaolei (65)
On Income Convergence among China, Hong
Kong and Macau
...............................................................Yao
Shujie, Chun Kwok Lei and Feng Genfu (80)
Regional Factors and the Optimal Provision
of Public Goods
.............................................................................................Zhao
Nong and Liu Xiaolu (93)
Changes in the Spatial Structure of China
Manufacturing Industries and Its Influence on
Regional Specialization.......................................................Chen
Xiushan and Xu Ying (104)
Pension Reform and Household Saving: the
Chinese Case
...........................................................................He
Lixin, Feng Jin and Sato Hiroshi (117)
The Ratio of Education Investment and
Differences in Regional Economic Growth
..................................................................................................................Yu
Lingyun (131)
Resolving System Deficiencies in the
Financial Guarantee of Rural Compulsory Education——Central Transfer Payment
System and the Powers of the Authority Structural Adjustment....................................................................Zhang
Lihua and Wang Chong (144)
A BookReview.....................................................................................Zhao
Renwei (154)
On the Mechanism of Sustainable Growth:
Evidence, Theory and Policy
The Research Group
(Institute of Economics,CASS)
Abstract:China's development environment
has changed as Chinese economy approaches to the
group of middleincome countries. How to
achieve the sustainable growth in the new environment is the main theme of our
paper. According to China's reality, this paper introduces the government
support coefficient in the enterprise's production function, which can be
attained by the maximization of government welfare function. Our analysis shows
that when government has enough resources to maintain its spending, the
government support coefficient is relatively large and the enterprise's
investment will be encouraged by low tax, low resource prices, subsidies and
etc. While the government income is not large enough to realize the social
welfare target, the government coefficient will change and the enterprise can
not enjoy the government support and even will be punished by high tax.
Therefore, the key for new mechanism of China's sustainable growth is to match
government spending to its fiscal potential, and encourage enterprise's
innovation to maintain economic vitality.
Key Words:Economic Growth； Middle Income Trap； Government Transformation
JEL Classification:E690,O160
The
Binary Transmission Mechanism of China's Monetary Policy
——A
Research on the “Two Intermediaries, Two Targets" Model
Sheng
Songcheng and Wu Peixin
(PBoC
Shenyang Branch; PBoC Shanghai HeadOffice)
Abstract:The research, using VAR model and
economic and financial data startingfrom Jan. 1998 and expiring by Jun. 2006,
by econometric methods and theoretical analysis, examines the intermediate
target and transmission channel of China'smonetary policy. The results are as
followings:(1)monetary stock M2 is a goodindicator of China's
monetary policy, which is far and away the best predictive variable among the
five considered;(2) M2 is China's monetary
intermediate target because M2 reacts systematically to
the industrialadded value and CPI andM2innovation is made by central
bank;(3)credit volume is a key channel of the monetary transmission mechanism,
and almost no money channel. Credit is a de facto intermediate target, which
tune macroeconomy and induce the changes of M2 as well, so there are two
intermediate targetscredit and M2, which are fundamentally the same as
the situation before 1998;(4)the two intermediate targets function in different
fieldscredit is for real economy and M2 for financial market, which is
a realistic choice and the central bank has successfully coordinated them very
well. These conclusions are meaningful for the practices of China's monetary
policy, which indicate that we should pay more attention to the credit volume
and take it as the core variable to tune macroeconomy. Of course this monetary transmission
model is only effective temporarily for there are many limitations in it.In the
future, it is necessary to adopt interest rate , which is more informative, as
the intermediate target, which takes the marketization of interest rate and
exchange rate as the preconditions.
Key Words:VAR; Monetary Policy; Empirical
Test; Intermediate Target; Transmission Mechanism
JEL Classification:E520, E590
The
Role of the Great Creditors: Do the Banks in China
Have
the Monitoring Effect on the Borrowers?
Hu
Yiming，
Thomas W. Lin， Li Siqi， Xie Shilei
(Shanghai
Jiao Tong University，University of Southern California，Zhejiang Gon
gshang
University)
Abstract:
Bank loans are major financing recourses
for the firms in China. However, do the banks as the great creditors monitor
the borrows effectively? Two bank loan policies are studied in this work,
one is the loan interest rate and the other is the loan renewal. We find that a
positive pressure transfer effect existing in the relation of the loan interest
rates and the performance of the borrowers, that is the better the performance,
the lower the interest rate. However, a contrary relation is found between the
loan renewals and the performance of the borrowers, that is the worse the
performance, the more possibility to have the loan renewals. Our conclusion is
that the banks in China do monitor their borrowers as the great creditors which
could be observed through the loan interest rates, and the loan renewals
only reflect the bank financing effect, not the monitoring effect.
Key Words:Great Creditor; Bank Monitoring;
Loan Renewals
JEL Classification:G210, G310
On Income Convergence among China, Hong Kong and Macau
Yao Shujie1,2, Chun Kwok Lei3 and Feng Genfu2
(1 School of Contemporary Chinese Studies, University
of Nottingham;2 School of Economics and Finance, Xi'an Jiaotong University; 3
Macau University)
Abstract:Hong
Kong and Macau were reunited with China in the late 1990s as two special
administrative regions (SARs). Due to historical reasons, China lagged far
behind Hong Kong and Macau in terms of per capita incomes. However, rapid
economic growth in China over the last three decades and the bidirectional
inflows of investments and human resources between China and its two SARs must
have brought about a significant convergence of the three economies. China's
economic success have benefited from the integration of its two SARs and the
coastal provinces, especially Guangdong in terms of technological spillover,
massive investment and trade. The economic trickledown, direct investment and
trade must have been important drivers of economic integration and income
convergence. This paper aims to analyze the trend and studies the determinants
of income convergence between China and its two SARs. Both parametric and
nonparametric techniques are employed to quantify the pace of convergence on
per capita incomes in Hong Kong, Macau and the Chinese provinces over a period
of more than 40 years. We find noevidence of convergence in the prereform
period, but strong evidence of both absolute and conditional βconvergence in
the postreform period. Over the reform period, the pace of convergence is less
than 1 per cent per annum without controlling for trade and more than 2 per
cent conditional on trade.
Key Words:Income Convergence; China; Hong
Kong; Macau
JEL Classification:F02, O19, O53
Research on the Motivation of Insider Trading
Li Xindan, Song Surong, Lu Bin and Zha Xiaolei
(School of Engineering and Management, Nanjing
University)
Abstract:After the reform of the
shareholder structure was mainly completed, the Chinese Stock Market will be an
entirely circulated capital market. At the same time insider trading may be
more rampant than before. It's a great challenge to monitor and control the big
shareholder's and institution investor's insider trading, who can take
advantage of information, capital and control right under the entire
circulation. Therefore, it is critical for us to study the motivation of
insider trading and the corresponding effective indexes. Based on the economics
of crime research frame and the theories of behavioral finance, in this paper
we firstly construct the structural equation model to study the motivation to
insider trading, selecting the corresponding indexes, investigating the
relationships among these indexes via questionnaire and other methods, and then
finally educe some valuable conclusions. According to the conclusions, we make
some important suggestions on how to monitor and control the insider trading
under the entire circulation.
Key Words:Insider Trading; Behavioral Motivation;
Economics of Crime; Structural Equation Model
JEL Classification:K22；M52；D82
Changes in the Spatial Structure of China
Manufacturing
Industries and Its Influence on Regional
Specialization
Chen Xiushan and Xu Ying
(Institute of Regional and Urban Economics, Renmin
University of China)
Abstract:Focused on lockin effect, this
paper develops a new measurement of changes in the spatial structure and
improves regional conflict index of industrial structure. We examine
manufacturing industries in China between 1996 and 2005; the results obtained
reveal that agglomeration is a more prominent trend than diffusion，although both of them are
founded during this period. Analyses also suggest that diffusion plays a more
important role in regional specialization than agglomeration, and that regions
whose shares decrease in agglomeration but increase in diffusion face the most
severe conflicts in industrial structure.
Key Words:Lockin Effect; Spatial Structure;
Regional Conflict of Industrial Structure
JEL Classification:R12, R39
Pension Reform and Household Saving: the Chinese Case
He Lixina, b, Feng Jinb and Sato Hiroshia
(a: School of Economics, Fudan University;
b: Graduate School of Economics, Hitotsubashi
University)
Abstract:This paper estimates the effect of
public pension reform on the household saving in urban China and explains the
rise of Chinese household saving ratio in middle and late 1990es from a new
perspective. The 1995—1997 pension reform has caused changes in the pension
wealth of the employees in nonpublic sectors. This exogenous varies of pension
wealth are used to identify the effect of pension wealth on household saving
ratio. Using data from the urban household income survey of 1995 and 1999, we
find that pension wealth has a statistically significant substituting effect on
households saving and this effect is -0.3 to -0.4 on average. However, the
effect varies across different age groups: in the case when the age of the
household head is 35—49, the effect is significant, while in other age groups,
the effect is not significant.
Key Words:Pension Wealth; Household Saving;
Life Cycle Hypothesis
JEL Classification:D12, D91, E21, H55
The Ratio of Education Investment and
Differences in Regional Economic Growth
Yu Lingyun
(Southwest Jiaotong University)
Abstract:Based on Lucas (1988), this paper
bifurcates educational funding sources into government funding and
nongovernment funding and explores their respective impact on longterm
economic growth under equilibrium conditions. The approach to a large extent
depicts the importance of nongovernment educational investment in longterm
economic growth under certain conditions. Based upon the theoretical model
established, empirical analysis was conductedusing panel data in China from the
period of 1996 to 2005, which indicates that government and nongovernment
educational investment have shortterm effect on human capital accumulation and
economic growth in China. Furthermore, in regions where the ratio of
nongovernment educational investment to government educational investment is
low,physical capital investment is the main driver for economic growth while an
increase in nongovernment educational investment has a particularly
significant impact on human capital accumulation.
Key Words:Human Capital; Ratio of Education
Investment; Differences in Regional Economic Growth
JEL Classification:O15, I22, O18
Regional Factors and the Optimal Provision of Public
Goods
Zhao Nong and Liu Xiaolu
(Institute of Economics, CASS Graduate School of
CASS)
Abstract:This Paper analyzes the effects of
two kinds of regional factors on the provision of local public goods. One of
these regional factors is where a public goods locals in the city. The analysis
shows that the social optimal quality of the public goods within the marginal
area of the city is lower than that within the city center. Another regional
factor is the relative location of one public goods to nearby citizens, which
is turned into index marked by citizen's travel radius. While increasing the
travel radius makes it possible for citizens that are far from the public goods
to be able to use the public services, which leads to the rising of the social
optimal quality, it also let the one who is further from the public good to be
the “median voter”. The correlation between public goods' optimal quality and
the travel radius depends on which of these two effects is more intense. The
paper also distinguishes two kinds of public goods as nonsubstitutive and
substitutive goods according to whether they could substitute each other in
meeting citizens' needs and analyzes the differences between their social
optimal quality and quantity, taking into the influences of regional factors.
Key Words:Median Voter; Regional Factors;
Nonsubstitutive Public Goods; Substitutive Pub
lic Goods
JEL Classification:H41, O18, R53
Resolving System Deficiencies in the Financial
Guarantee
of Rural Compulsory Education
——Central Transfer Payment System and the Powers
of the Authority Structural Adjustment
Zhang Lihua and Wang Chong
(Yunan University of Finance and Economics，Nanjing University of Finance and Economics)
Abstract：Because of constraints with the existing financial
system, the lack of macroeconomic policies guidance, and especially the
mismatch between intergovernmental financial authorities, the rural compulsory
education investment system that “invested mainly by the local government,
countybased and grading burden” is hard to provide a comprehensive, longterm
support. In view of the current academic high expectations through innovative
and perfect central transfer payment system for rural compulsory education to
resolve security issues, this paper presents different views: the role of central
transfer payment system was greatly weakened because of its own inherent flaws.
This paper attempts to build framework based on analysis of shortcomings of the
transfer payment in the financial guarantee of rural compulsory education
system, and seek another solution path from intergovernmental expenditure
duties and authority allocation of compulsory education in rural areas.
Key Words： Rural Compulsory Education; Transfer Payment
System; Intergovernmental Authority Structural Adjustment
JEL Classification：H520，H710
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