CONTENTS

An Economic Analysis of Consumption and Carbon Emission Responsibility

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Fan Gang, Su Ming and Cao Jingª«   (ª©4ªª)

International Trade, Pollution Industry Transfer and Chinese Industries¡¯ CO₂ Emissions

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Li Xiaoping and Lu Xianxiangª«    (ª©15ªª)

Measuring China¡¯s Economy: The Proper Use of PPP Methods

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ George J. Gilboy and Zhong Ninghuaª«     (ª©27ªª)

How Stable Is the Money Demand of China in the Long Run?

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Wan Xiaoli, Huo Deming and Chen Binkaiª«      (ª©39ªª)

Saving Rate and Trade Pattern in Long-run under Oligopolistic Market Structure

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Xing Xiaobing and Zhu Zhongdiª«    (ª©55ªª)

The Dual Margin of China Export Growth and Its Determinants

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Qian Xuefeng and Xiong Pingª«       (ª©65ªª)

Empirical Evidence on the Regional Spillover Effects of FDI in China

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhong Changbiaoª«       (ª©80ªª)

Can the Hyper-normal Development of Institutional Investors Stabilize the Market?

¡ª¡ªLeapfrog Development of China¡¯s Fund Industry

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Cai Qingfeng and Song Youyongª«  (ª©90ªª)

Trade Credit, Credit Constraints and Impacts on Efficiency: Empirical Evidences from China

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Shi Xiaojun and Zhang Shunmingª«       (ª©102ªª)

Estimating China¡¯s Output Gap Based on Wavelet Denoising and Quarterly Data

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yang Tianyu and Huang Shufenª«      (ª©115ªª)

The Dual Efficiency Loss of State-Owned Enterprises and Economic Growth 

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Liu Ruiming and Shi Leiª«    (ª©127ªª)

On the Operation Nature and Income of Tenant Farm by Comparison in Modern China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Long Denggao and Peng Boª«    (ª©138ªª)

A Multi-Objective Decision Model of Farmers¡¯ Crop Production

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Liu Ying and Huang Jikunª«      (ª©148ªª)

A Summary for the Forum of International Financial Crisis and China¡¯s Growth

ª«    ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­The Center for Quantitative Economics, SASSª«      (ª©158ªª)

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An Economic Analysis of Consumption and

Carbon Emission Responsibility

Fan Gang, Su Ming and Cao Jing

£¨National Economic Research Institute, China Reform Foundation; Peking University; Tsinghua University£©

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Abstract:The globalization has been imposing great challenges on allocating greenhouse gas (GHG) abatement responsibilities across countries. From a dynamic perspective, we propose the idea of allocating the emission responsibility based on the ultimate consumption, analyze the relationship between ultimate consumption and carbon emission, and measure the consumption-based carbon emission across all the countries from 1950 to 2005 in two scenarios. Our analysis suggests that about 14%¡ª33% £¨maybe more than 20%£©of China¡¯saccumulative domestic emission is induced by the others¡¯ consumption, whereas most developed countries are on the contrary. Based on the new concept of consumption-based carbon emissions, we extend the UNFCCC concept of ¡®the Common but Differentiated Responsibilities¡¯ to allocate fair carbon-consumption rights across countries and propose using a consumption-based carbon-emission right as an important indicator in a future GHG burden-sharing framework.

Key Words:Climate Change; Consumption-based Carbon Emission; Carbon-Consumption Rights

JEL Classification:Q54, H23, P14

International Trade¡¢Pollution Industry Transfer and

Chinese Industries¡¯CO₂ Emissions

Li Xiaoping^1,2ªª and Lu Xianxian¹

£¨1: Zhongnan University of Economics and Law, 2: Institute of Finance and Trade Economics of CASS£©

Abstract:By trade, developed countries may specialize in ¡°clean¡± product and import pollution products from developing countries, then transfer the pollution industries to developing countries. If China has become Pollution Industry Haven by trade, what is the effect of trade on Chinese¡¯s CO₂ Emissions? The article explores it by using the Environmental Input-Output Technique and the trade data between twenty industries of China and G7 countries and OECD. We find that International Trade may decrease the industries¡¯ CO₂ Emissions.

Key Words:International Trade; Pollution Industry Transfer; CO₂ Emissions

JEL Classification:F140£¬F415

Measuring China's Economy: The Proper Use of PPP Methods

George J. Gilboy and Zhong Ninghua

(Center for International Studies, Massachusetts Institute of Technology;

Department of Finance, Hong Kong University of Science and Technology)

Abstract:This article uses Purchasing Power Parities (PPP) price data from the World Bank 2005 International Comparison Program to compare China with other major countries in terms of real economic size, economic structure, as well as development level. The article presents the proper usage of PPP prices and Market Exchange Rates, and points out several common misuses of PPPs in measuring and comparing China's relative international wealth and power. Using the PPP data, the article examines differences in real aggregate productivity, living standards, investment expenditures, and price level of major countries in the world. Furthermore, we have constructed a variable, the Relative Manufactured Goods Price, to characterize the industrialization level of one country. Employing sector-level PPP data, the article compares the total expenditure within various sectors by China and India in 2005, offering insights on both the utility and the limits of PPP analysis in comparing relative development level and comparative advantage in the two economies.

Key Words:Purchasing Power Parities (PPP); International Comparison Program; China's Economy

JEL Classification:E100£¬O500

How Stable is the Money Demand of China in the Long Run?

Wan Xiaoli¹, Huo Deming² and Chen Binkai³

(1. China Finance Research Institute, Southwestern University of Finance and Economics;

 2. China Center for Economic Research, Peking University;

 3. School of Economics, Central University of Finance and Economics)

Abstract:A stable money demand is the basic condition of effective monetary policy. Considering that the China¡¯s economy is becoming more and more open, the paper intensively explored China¡¯s money demand in 1987¡ª2008 considering money substitution effect, by using the Bounds Testing method which is suitable for any kind of time series data(¢ñ(0) or ¢ñ(1)). Our main finding is as following: Primarily, China¡¯s money demand is better captured by considering exchange rate and international interest rate into money model; as the targeting goal of central bank, M1 is better than M2 before 1996, while it is converse after 1996. Furthermore, the money substitution effect and capital flow effect are obvious although the capital account has still been under control in China. The depreciation (appreciation) expectation of RMB could significantly decrease (increase) households and enterprises¡¯ demand for RMB, which indicates that it will be more difficult for China¡¯s central bank to keep independent monetary policy as well as control exchange rate at the same time.

Key Words:Money Demand; Exchange Rate Expectation; Capital Flow; NDF; Bounds Testing

JEL Classification:F031£¬F820£¬F831

Saving Rate and Trade Pattern in Long-run

Under Oligopolistic Market Structure

Xing Xiaobing^a and Zhu Zhongdi^b

(a: Anhui University of Finance and Economic; b: Shanghai Institute of Foreign Trade)

Abstract:This paper constructs a two-factor and two-product dynamic model to analyze the relationship between saving rate and trade pattern in long-run under oligopolistic market structure. We have showed that if oligopolys in different countries will have equal output in equilibrium, then the country with a higher saving rate will have a higher capital-labor ratio in long-run equilibrium, and export capital-intensive goods, import labor-intensive goods, and vice versa. Our conclusion implies that high saving rate is crucial for the industrialization process. So the positive effect of high saving rate on our economic growth should not be underestimated in current time.

Key Words:Oligopoly; Saving Rate; Trade Pattern; Factor Endowment

JEL Classification:D43£¬F11£¬F12

The Dual Margin of China Export Growth and Its Determinants

Qian Xuefeng and Xiong Ping

(Zhongnan University of Economics and Law)

Abstract£ºThe financial crisis exposes sufficiently the vulnerability when China export growth faces the external shock. Based on the heterogeneous firm trade model, using the HS-6 international trade data in 1995¡ª2005, this paper describes the stylized facts of the dual margin of China export growth. We find that, whether on the multilateral or on the bilateral, China export growth mainly depends on the intensive trade margin, the extensive trade margin is very little. The obvious bias to the intensive trade margin of China export growth structure help us understand why the external shock like financial crisis can easily affect China export and the continuous deterioration of the terms of trade even though there is a period of export boom. So, China export growth should turn quickly to the extensive trade margin. Furthermore, using Tobit model, the empirical research shows that there is no common impact mechanisms on the dual trade margin, or exists the difference to some extent. The conclusion will not only provide the more credible empirical support for the above explanation, but also the abundant policy meanings for the trade structure reform.

Key Words£ºHeterogeneous Firm; Dual Margin; External Shock; Export Volatility; Terms of Trade

JEL Classification£ºF140, F430

Empirical Evidence on the Regional Spillover Effects of FDI in China

Zhong Changbiao

(Business School of Ningbo University)

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Abstract£ºUsing data of China¬ðs regions for the period of 1986¡ª2008£¬this paper has developed a spatial dynamic econometric model to analyze regional effects of foreign direct investment. Our key result shows that foreign presence generates spillovers£¬both ¡°intra-regional¡± and¡°inter-regional¡±. This suggests that presence of multinational enterprises in one region stimulates productivity of not only its own region but also other regions. Other findings include evidence of t

he role of ¡°learning by doing¡± and of inter-dependency of output between regions in enhancing regional economic growth. The key findings of the paper have important policy implications.

Key Words: FDI£»¡°Intra-regional¡± Spillovers£»¡°Inter-regional¡± Spillovers£» Panel Data

JEL Classification£ºF230

Can the Hyper-normal Development of Institutional

Investors Stabilize the Market?

¡ª¡ªLeapfrog Development of China¬ðs Fund Industry

Cai Qingfeng and Song Youyong

(Department of Finance, Xiamen University)

Abstract£ºAlong with the great boom in the equity market since the end of 2005, China¡¯s fund industry has witnessed a leapfrog development. This paper examines the relationship between the quick expansion of the fund industry and the market volatility both from the macroeconomic level with TARCH model and from the microeconomic level with panel data model. Our empirical study shows that the leapfrog development of the fund industry fails to lead to a more stable and rational market. On the basis of the empirical results, the paper reflects on the leapfrog development of the fund industry and brings forwards three necessary conditions to make sure that the institutional investors would help to stabilize the market against the backdrop of the weak fiduciary responsibilities concepts, the serious conflicts of interest, the inadequate supervision over the fund industry and fund investors¡¯ immaturity.

Key Words£ºFund; Volatility; TARCH Model; Panel Data

JEL Classification£ºG14£¬ G23

Trade Credit, Credit Constraints and Impacts on Efficiency:

Empirical Evidences from China

Shi Xiaojun and Zhang Shunming

(Beijing University of Aeronautics and Astronautics; Renmin University of China)

Abstract:In view of abstract production function, this paper seeks to address the questions what kinds of efficiency trade credit impacts on and how. We propose a two-staged econometric method which makes definite differences from previous researches. In the first stage, a novel financing constraints measurement in perspective of investment efficiency is first applied. Using a sample of 176 listed companies¡¯ 8 periods data from Shanghai and Shenzhen exchanges, we present concrete evidences on trade credit¡¯s role of easing financing constraints where the ¡°one-step¡± technique under frontier stochastic model is utilized. And in the second stage, Malmquist-DEA is first used to derive different kinds of efficiency. Then impacts of financing constraints on different kinds of efficiency are econometrically analyzed. Scale efficiency is found to be most influenced by financi

ng constraints. Combining the results of two stages together, we argue that by financing constraints easing, trade credit can significantly improve scale efficiency; and it can exert even more improvement on scale efficiency than bank loans by the resources-allocation mechanism.

Key Words:Trade Credit; Financing Constraints; Scale Efficiency; Stochastic Frontier Function; DEA.

JEL Classification:O160, O330

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Estimating China¡¯s Output Gap Based on

Wavelet Denoising and Quarterly Data

Yang Tianyu and Huang Shufen

(School of Economics, Renmin University of China)

Abstract:Using wavelet and quarterly data from 1992 to 2009, the paper estimates the output gap of China. The main conclusions are as follows: (1) the output gap estimated using quarterly data fluctuated more frequently than using yearly data. (2) The output gap fluctuated markedly before 1998Q2, but smoothly after 1998Q2. (3) The frequency of the output gap¡¯s fluctuation is decreasing, and the lasting time of the business cycle is increasing. (4) The decreasing trend of the economy since 2008Q2 has not presented any appearances of turnover. Moreover, the paper proved that the wavelet is more excellent than other methods on estimating the output gap.

Key Words:Wavelet Denoising£»Quarterly Data£»Output Gap

JEL Classification:E100, C490

The Dual Efficiency Loss of State-Owned

Enterprises and Economic Growth

Liu Ruiming and Shi Lei

(CCES, Fudan University)

Abstract: The State-Owned Enterprises¡¯ (SOEs) efficiency loss can be divided into two kinds: First is the efficiency loss of the SOEs£¬Second is the further efficiency loss brought about by the SOEs¡¯ efficiency loss itself. On the basis of the survive predicament of the SOEs£¬this paper introduces a new concept of ¡°Economic growth cumbrance¡± to investigate the SOEs¡¯ efficiency loss again. The view developed in our paper is that the SOEs do not only have efficiency loss in itself but also drag the Private enterprises¡¯ (PEs) development because of the government protection on the SOEs£¬and the whole economic growth would be dragged. The direction we indicate is that it is a inevitable way to take further step in the SOEs reform.

Key Words:Efficiency of SOEs£»Survive Predicament£»Government Protection£»Soft Budget Constraint£»Economic Growth Cumbrance

JEL Classification:E620, L330, O100

On the Operation Nature and Income of Tenant Farm

 by Comparison in Modern China

Long Denggao and Peng Bo

(School of Humanities and Social Sciences, Tsinghua University)

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Abstract: There has been an accepted theory making the economic and historical misunderstanding that the nature and income of tenants were similar to the farmhand, both of them working for the landlord. Actually, the tenant household had become variety of independent farms to create wealth by assembling production factors from his own household, outside landlord and market through personal and impersonal transaction. From the uncertainty of the farm, tenants got the residual claim, entrepreneurial reward and risk revenue. The future reward of their investment in the land and farm could be realizable value by transactions of property right. All of them, comparatively, kept away from the farmhands. The allocation of production factors promoted efficient economy and productive land by transaction of property rights and rent institution. It is a key to understand the energy of tenant farm and small peasant economy in traditional China.

Key Words: Tenant Farm Operation£»Residual Claim£»Farmhand£»Income Comparison£»Al

location of Resource

JEL Classification:N55£¬M13£¬O15

A Multi-objective Decision Model of  Farmers¡¯ Crop Production

Liu Ying^a,b and Huang Jikun^a,cªª

(a: Center for Chinese Agricultural Policy, Chinese Academy of Sciences; b: Beijing Jiaotong University;

 c: Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences£©

Abstract: Farmers¡¯ production decision is based on multiple objectives, including profit maximization, risk minimization, and saving family labor input. Appropriate estimation of weights for multiple objectives is challenge. The conventional approach to estimate the weights often follows Goal Programming, GP. In this paper a new approach, an Adjusted measure based on the First-Order Condition, AFOC, is developed. Based on primary household survey data, we estimate the weights for representative (or average) farmer as well as two different clustered representative farmers. Simulation results demonstrate that the multi-objective decision model based on AFOC estimation performs better than the one based on GP. The estimated weights show that profit is farmer¡¯s first objective, which is followed by saving family labor input and then risk aversion. Farmers with more income from crop sector have higher weights for profit and risk aversion than the other farmers with less income from crops. The weights for objectives change over time. As the off-farm participation rose, the weight for family labor input has been increasing, while others have been falling.

Key Words:Multi-objective; Decision Model; Crop Production; Weights

JEL Classification:Q120

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