Structural Reform and Industrial Growth in Chinaª¥

¡­¡­¡­¡­¡­¡­¡­¡­Zhang Jun, Chen Shiyi and Gary H. Jeffersonª« (4)

China's Transition and Development Model Under Evolving Regional Competition Patternsª¥ª«

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Tao Ran, Lu Xi, Su Fubing and Wang Huiª« (21)

Reasons for the Decline of Labor Shareª¥¡ª¡ªFrom the Angle of Laborsaving Technical Progress

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Huang Xianhai and Xu Shengª« (34)

 Enterprises Productivity and Its Sources: Innovation or Demand Push?

 Liu Xiaoxuan and Wu Yanbing ª« (45)

Monetary Policy Transparency and Disinflation: An Empirical Evidence from China    ª«

¡­¡­¡­¡­¡­¡­Zhang He, Zhang Daiqiang, Yao Yuan and Zhang Pengª«ª©55

Empirical Test of Nonª²linear Effects of Fiscal Policy in China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wang Liyong and Liu Wengeª«(65)

The Measure and Uses of Seigniorage of PBC(1986¡ª2008)

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhang Jianhua and Zhang Huaiqingª« (79)

The Destination of Informal Employment

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wu Yaowuª« (91)

Disparities Fluctuation in Urban and Rural Income and Its Impact to Economic Efficiencyª¥

¡­¡­¡­¡­¡­¡­¡­¡­¡­Tian Xinmin, Wang Shaoguo and Yang Yonghengª« (107)

Border Effect of Market Potential and Interª²External Market Integration

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhao Yongliang and Cai Guoweiª« (11)

Investor Protection and Firm Capital Structure

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­...Shen Yifeng, Xiao Min and Lin Taoª« (131)

Technology Choice, Upgrade of Industrial Structure and Economic Growth

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Huang Maoxing and Li Junjunª« (143)

A Book Review

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhang Zhuoyuan and Wang Hongmiaoª« (152)

A Summary of the 3rd China Lixin Risk Forum

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Jia Dekui and Yuan Minª« (157)

Structural Reform and Industrial Growth in China

Zhang Jun, Chen Shiyi and Gary H. Jefferson

(Fudan University)    (Brandeis University)

Abstract:China's industry has experienced robust growth under

 persistent structural reform since 1978. By estimating the stochastic frontier function, we find that the averaged TFP growth has exceeded the quantitative growth of inputs since 1992, but the contribution of productivity to output growth declines after 2001. Using a decomposition technique, we then find that the effect of factor reallocation due to structural reform, sometimes referred to as structural bonus, has contributed to TFP growth substantially, but it too declines over time. Empirical analysis reveals that reforms in factor markets and industrial structure significantly account for the overall trend and the sectoral heterogeneity of structural bonus during the industrialization process.

Key Words:Structural Reform; Factor Allocative Efficiency; Productivity Change; Industrial Growth

JEL Classification:L16£¬D61£¬O14£¬D24£¬O41

China's Transition and Development Model Under Evolving

Regional Competition Patterns

Tao Ranª¬a, Lu Xiª¬a, Su Fubingª¬b and Wang Huiª¬c

(a: Center for Chinese Agricultural Policy, Chinese Academy of Science;

b: Department of Political Science Vassar College, the United States;

c: School of Public Administration, Zhejiang University)

Abstract:On the basis of an analysis of the evolving regional competition patterns, this paper proposes a framework to understand the political economy behind the high growth in China's past three decade's economic transition. We study how changing centralª²local fiscal relations and stateª²business relations reshaped the constraints faced by revenueª²maximizing local governments in different periods of China's transition and how it conditioned the shift of local governments' behavior from regional protectionist policies in the early period of reform to a ¡®race to bottom¡¯ style competition since the middle 1990s. It is argued that neither the theory of ¡®Markeª²preserving Federalism with Chinese Characteristics¡¯ nor the theory of ¡®Tournament Competition of Political Careers¡¯ can account for China's growth in transition. It is also argued that China's present ¡®race to bottom¡¯ style development model is not sustainable economically, socially and ecologically.

Key Words:Centralª²Local Fiscal Relation£» Stateª²Business Relation£» Regional Protectionism; Race to Bottom Competition

JEL Classification:H200£¬H710£¬Q150

Reasons for the Decline of Labor Share

¡ª¡ªFrom the Angle of Laborª²saving Technical Progress

Huang Xianhai and Xu Sheng

(School of Economics, ZheJiang University)

Abstract:Based on the theory of Hicks factorª²biased technical progress, this paper deduces a formula to decompose labor share's change. It is found that the change depends mainly on three factors: multiplier effect, capital deepening and the progress of laborª²(or capitalª²) saving technology. With these findings, we use dynamic least squares (DLS) to estimate the elasticity of labor marginal output in China's laborª²intensive and capitalª²intensive sectors, and then decompose their labor share's change during 1990¡ª2006. The result shows that capital deepening will increase labor share, while multiplier effect whose value is between zero and one will contract this positive drive. And the key cause of a declining labor share in both sectors is laborª²saving technical progress. In order to stabilize the labor share, we should understand that there is a limit to the longª²term influence of capital deepening and pay more attention to the capitalª²saving technical progress and the development of laborª²intensive industries.

Key Words:Labor Share; Per Capita Wage; Productivity; Labor saving Technical Progress

JEL Classification:O11, O30, E25

Enterprises Productivity and Its Sources: Innovation or Demand Push?

Liu Xiaoxuan and  Wu Yanbing

(Economics Institute, Chinese Academy of Social Science)

Abstract: Based on the panel data of enterprises survey in 2000¡ª2004, we used t

he methods of DEA and Malmquist index to measure and decompose productivity of 1022 sample firms. We found the growth rate of productivity is decreased during the period, and it mainly caused by the stagnation of technical progress. We also found the firms productivity depend on push power of market demands very much, and it largely depend on the funds from State Banks. Our regression results confirmed the productivity of enterprises is very significant positive correlation to support by external raised funds. Otherwise, non-state enterprises, which have no enough supports by the banks or other securities in market, could not get enough room to promote productivity more rapidly than state firms. Therefore the growth rate of productivity would tend to be decreased.

Key Words: Productivity; DEA and Malmquist Index; Efficiency; Technical Progress; Chinese Enterprise

JEL Classification:D240£¬D290

Monetary Policy Transparency and Disinflation:

An Empirical Evidence from China

Zhang Heª¬a, Zhang Daiqiangª¬b, Yao Yuanª¬b and Zhang Pengª¬b

(a: Finance School, Renmin University of China; b: Business School of Jilin Univ

ersity)

Abstract£ºBased on a general theoretical framework, this paper first considers the deterministic factors of inflation, finds that the inflation depends on the forecasts from both central bank and private sector. Then assuming the existence of asymmetric information, we find that the improvement of monetary policy transparency will not only decrease the inflation bias, but also diminish the degree of fluctuation of inflation. Based on China¬ðs data, the empirical result shows that the sacrifice ratio in the first period of improving transparency during disinflation episodes is significantly higher than that of transparency improved, which implies that the low sacrifice ratio during the late 1990s in China was highly due to the improvement of monetary policy transparency.

Key Words£º Monetary Policy Transparency; Disinflation; Sacrifice Ratio

JEL Classification£ºE42, E52, E58

Empirical Test of Nonª²linear Effects of Fiscal Policy in China

Wang Liyong and Liu Wenge

(School of Economics, Central University of Finance and Economics)

Abstract£ºIn this paper, we provide a theoretical model about nonª²linear effects of fiscal policy in China according to the general disequilibrium model of Barroª²Grossman, and then we test the conclusions from theoretical analysis above with MSVAR model. The results show that effect of fiscal policy on economic growth in China is non linear. In the regimes, such as 1953¡ª1982, 1987¡ª1990 and 1994¡ª1995, the effect of fiscal policy is nonª²Keynesian, which is resulted from shortage economy and government¬ðs quantity restrictions; While in the regimes: 1983¡ª1986, 1991¡ª1993 and 1996¡ª2004, the effect of fiscal policy is Keynesian, when our economy is suffering from inadequate effective demand. Finally, after retesting the reasons of nonª²linear effects from expectation views concluded in overseas literature, we find that initial fiscal conditions and magnitude of fiscal consolidations are not necessarily related to nonª²linear effects of fiscal policy.

Key Words£º Fiscal Policy; Nonª²linear Effect; Regime Switching; Nonª²Keynesian Effect

JEL Classification£ºC32, E62, O23

he Measure and Use of Seigniorage of PBC(1986¡ª2008)

Zhang Jianhua and Zhang Huaiqing

(The Research Bureau of PBC, The University of International Business & Economics)

Abstract£ºThe research related to assets and liabilities of PBC is involved with seigniorage which is the main source of income. So the measure of seigniorage is the starting point for discussion of many problems. The article discusses the opportunity cost seigniorage and monetary seigniorage at length, and measures seigniorage of PBC, and analyses uses of seigniorage of PBC. Moreover, the article analyses issues related to assets and liabilities of PBC.

Key Words£º Seigniorage of PBC

JEL Classification£ºE58, E42

The Destination of Informal Employment

Wu Yaowu

(Institute of Population and Labor Economics, CASS)

Abstract£ºIn recent years, Chinese government has been focusing its labor market policy on formalizing the market. This paper evaluates the appropriateness of the focus by addressing two questions: should informally employed work force be converted into being formally employed? How should the government regulate the formalization process? On the one hand, return on education to an employee in informal labor market, which is flexible and efficient, is not lower than that in formal labor market. On the other hand, with a city¬ðs economic development, the significance of informal labor market tends to decrease accordingly. These facts suggest that formalizing labor market should not be the focus of the government¬ðs labor market policy and that the government should dedicate itself to sustaining its economic development, instead of forcing employers and employees to sign formal contracts.

Key Words£º Informal Employment; Instrumental Variable; Return on Education

JEL Classification£ºJ210,J490

Disparities Fluctuation in Urban and Rural Income and Its

Impact to Economic Efficiency

Tian Xinmin, Wang Shaoguo and Yang Yongheng

(Capital University of Economics and Business)

Abstract:

This paper is inherited in the new classical dual economic theory. Linked with the regional economic theory and the theory of urban fittest demographic theory, we established a theoretical model in developing country with rural surplus labor to explain the interacted relationship among rural surplus labor migration, income disparity in urban and rural labors, and the economic efficiency. Also, we show the fluctuation of the income disparity. Finally, we take a practical study to the reality of China.

Key Words:Disparities in Urban and Rural Income; Economic Efficiency; Migration of Rural Surplus Labor

JEL Classification:R230

Border Effect of Market Potential and Inter¡ªExternal Market Integration

Zhao Yongliang and Cai Guowei

(School of Economics, Jinan University;  Lingnan College, Zhongshan Un

iversity)

Abstract:Based on threeª²Regional NEG model, this paper uses China¡¯s provinces d

ata for years 1985¡ª2006 to estimate market potential function. The result shows that China's market demand potential has increased over time, while existing a downward trend from the west to the east. In addition to the geographical location and differences in economic structures, border variable has an important impact on market potential. Our further study found that border effect is negatively related to market integration which means internal market integration can promote the integration of external market.

Key Words:Market Potential; Border Effect; Market Integration

JEL Classification:F120£¬F150

Investor Protection and Firm Capital Structure

Shen Yifeng, Xiao Min and Lin Tao

(School of Management, Xiamen University)

Abstract:

This paper develops an investor protection enforcement index from the ¡°Selfª²assessment and Improvement Plan" disclosed by 1184 listed companies in China's stock markets. Using firmª²level data, we explore the impact of investor protection on the capital structure of listed companies. Our empirical evidences show that the investor protection is one of the important determinants of capital structure choice and there is significant negative correlation between investor protection and the debt ratio and debtª²equity ratio. We find that investor protection and its enforcement can explain the difference of external financing behavior among Chinese listed companies. It is necessary to enhance the protection of shareholder's rights, the full disclosure of information, and the enforcement of investor protection to lower the cost of equity and to improve our security market.

Key Words:Investor Protection; Corporate Governance; Capital Str

ucture

Technology Choice, Upgrade of Industrial

Structure and Economic Growth

Huang Maoxing and Li Junjun

(College of Economics, Branch of National Research Center of Comprehensive \=

Economic Competitiveness, Fujian Normal University)

Abstract:Technology supporting is important to sustainable development of province economy. It is necessary to choose appropriate development of technology and the accumulation degree of toª²beª²selected technology system in province economy This paper analyses the inner relationship between technology choice, upgrade of industrial structure and economic growth through constructing model with 31 provinces¡¯ panel data of China from 1991 to 2007, finds that technology choice and approximate capital deepening would promote upgrading of industrial structure, improve labor productivity and economic growth rapidly.

Key Words:Technology Choice; Upgrade of Industrial Structure; Province; Economic Growth

JEL Classification:O18, O33