Abstract:This paper employed a simple accounting framework for the effect of resource misallocation on TFP，estimated the effect of China’s large share of agricultural employment on the aggregate productivity. The main findings are that labor misallocation has a major negative impact on the TFP since 1978, and the effect behaves a cycle tendency, as the China’s institutional reform. Using different index alternatively, we quantifies the effect range from -2% to -18%. By decomposing the aggregate effect into two sub effect, we find that the depressing effect of labor misallocation mainly due to the wage disparity between agricultural sector and non agricultural sector.
Key Words:Labor Misallocation; Dual Economy; Structural Change; TFP

Abstract:Based on the IO table of year 1997, 2002 and 2007, this paper calculates the industries’ similarity matrix and conceives a new variable measuring the inter-industry technology spillover. Using a sample of 35 industries ranging from 1997 to 2008 and by incorporating the newly conceived variable into the production function, we focus on the analysis of inter-industry spillover effects on the productivity of industries. The empirical analysis shows that inter-industry technology spillover has a significantly positive impact on the productivity of each industry. The marginal effect of technology spillover on industry’s productivity is 0.348, which is larger than that of the direct R&D. The scrolling-regression with fixed window width also shows the expand trend of the inter-industry spillover effects. Moreover after analyzing the four clustering industries, we find that the inter-industry spillover effects within the same cluster are much stronger than the spillover effect between different clusters.
Key Words:Industries’ Similarity; Technology Spillover; Indirect R&D; Panel Data Model

Abstract:Investigating the driving force of China economic growth from final demand perspective can provide new ideas for the transformation of China economic development pattern. With the systematic analysis of the input-output data issued by NSB, the driving force of China economic growth from 1987 to 2007 is researched on the basis of non-competitive input-output model. Result shows that: (1) The pulling effect induced by final demand (including consumption, investment, and export) has been weaken. The current production-induced effect is mainly in the industrial sector, and quickly shifts from light to heavy industry. (2) The structure of China economic dependency between 1987 and 2007 has changed fundamentally from “domestic dependent” to “export-oriented”. (3) Final demand is the main driving force of China economic growth, but final demand structure has changed during this period. In addition, this paper provides suggestions for China economic transformation and also expands the conclusion of Lau et al.
Key Words:Final Demand; Economic Growth; Input-output; Induced and Dependency Structure

Abstract:Based on the double dividend hypothesis, imposing carbon tax and financing cuts in social contribution will permit a double dividend to be obtained: the mitigation of CO2 emissions and stimulation of employment creation. In the real world, many European countries successfully obtained a double dividend effect by changing tax distortions. Because China is also facing the same dilemma, so it’s an important issue for analysis of Chinese double dividend for mitigation and employment. We adopted a VAR model to carry out a simulation method and found that it hasn’t a significant effect on the output and employment in the two sector’s world when we add a 10 Yuan/ton carbon tax. A revenue-neutral green tax reform which increases the personal tax credit will never increase employment in the short term in China. However, the reform of the tax system to promote the development of China’s low-carbon economy may well be a second-best option.
Key Words:Carbon Tax; Green Jobs; Double Dividend Hypothesis

Abstract:This paper discusses theoretically and empirically channels through which local public infrastructure expenditure interaction in China. On one hand, local governments have the incentive to expand infrastructure investment to pump up GDP growth rate; on the other hand, the positive externality of infrastructure investment will give adjacent areas the urge to take “free ride”, resulting in downfall of infrastructure investment in these areas.  Two different types of adjacency matrix are choosed to identify interactions. Using Chinese prefecture areas data from 2002 to 2005, the results show that areas within the same province exhibit positive correlation in public infrastructure expenditure, while adjacent areas geographically exhibit negative correlation. 
Key Words:Yardstick Competition; Spillover; Spatial Econometrics; Externalities

Abstract:The reform of ‘County Directly Administrated by Province’ has been put into practice in some regions of China for several years. Does the reform damage the city’s interests? This paper uses the county data from 1999 to 2008 in China to do some empirical analyses by system GMM method. This paper finds that “Expansion County’s Authority” can increase the city’s fiscal revenue, but decrease the fiscal expenditure. However, the effect of “County Directly Administrated by Province” in fiscal system is reversed. “Expansion County’s Authority” can improve the city’s economic growth rate, but restrain the development of tertiary industry. Also, the effect of “County Directly Administrated by Province” in fiscal system is reversed. Both of the reform methods can control the expanding of city’s population and improve the city’s environment quality. So we can not conclude the reform could damage the city’s interests and block the urbanization of China. It is necessary to study every reform methods’ gain and loss to make best use of the advantages and bypass the disadvantages.
Key Words:County Directly Administrated by Province; Fiscal Expenditure; Economic Growth; City’s Scale; Environment Quality

Abstract：The paper decomposes RMB real exchange rate using data from January 1997 to September 2010 and the result shows that the deviation from law of one price of tradables accounts for 60%—80% of real exchange rate fluctuations, while the relative prices of tradables and nontradables only accounts for 20%—40%. This means that analysis of RMB real exchange rate will be more focused on the analysis of tradables instead of placing emphasis on the relative price changes of nontradables. Further analysis reveals that the dominant role of the tradables is related with economic development stage. However, the aforementioned conclusion does not signify that the traditional “BalassaSamuelson Effect” is invalid. In fact, when the deviation of law of one price has been controlled in the model, the “BalassaSamuelson Effect” still remains as a significant factor in China. But such effect plays a relatively minor role in comparison to the contribution of the deviation from law of one price of tradables.
Key Words：Real Exchange Rate; Deviation of Law of One Price (LOOP); BalassaSamuelson Theorem

Abstract：Autoregressive model only containing own lag factor is commonly used to measure inflation persistence, but the model can not effectively reflect the influences of the inflation expectation and volatility on the inflation persistence. Based on an autoregressive model, a dynamic model of inflation containing inflation persistence, learning expectation and fluctuating characteristic is built. The dynamic model reflects the changing trends and dynamic characteristics of the inflation level from the mean and volatility. For the above models can not effectively reflect the institutional change of inflation, this paper also introduces markov switching model to measure the state transition characteristics of the inflation level. Empirical studies of the dynamics of inflation in China are given respectively based on the autoregressive model under quantile regression, the dynamic model built in the paper and the markov transformation mechanism model. Analysis shows that: Chinese inflation has strong persistence characteristics; The formatting mechanism of inflation persistence is complex in China, and learning expectations can only partially explain inflation persistence; The state switching time for the inflation level is long; Chinese inflation and its volatility has a positive relationship. Finally, some specific recommendations are given.
Key Words： Inflation; Inflation Persistence; Learning Expectation; Switching Mechanism; Monetary Policy

Abstract：To measure the monetary supply excess and its nonlinear adjustment effects to inflation and economic growth, this paper expands the existing model of money demand using threshold cointegration on the base of operating characteristics of monetary policy. Furthermore, aiming at the conditions of money supply excess, this paper reveals the shock effects of money supply excess to inflation and economic growth by setting generalized impulse response function. The results show that there is liquidity excess in China after 2009Q3 and the liquidity excess extent becomes bigger and bigger. At 2010Q3, the exless degree of M1 and M2 is 12.56% and 11.31% respectivdy. The monetary police can be divided into monetary supply insufficient regime and monetary supply excess regime. China is in the monetary supply excess regime from 2009Q3 to 2010Q3. The central bank carefully implements tightening monetary policy and the adjustment effects of monetary police are bigger in monetary supply excess regime. The shock effect of monetary supply excess to economic growth and inflation is positive in the first  two years about, and turns to negative in following  3 years about. Those results indicate that the loose monetary policy should withdraw from practice, but the withdraw speed should not be too fast and the operation of monetary policy should be flexible.
Key Words：Monetary Supply; Financial Crisis; Nonlinear Adjustment; Shock Effect

Abstract:Our paper provides a thorough analysis of Chinese outbound merger and acquisitions from 1994 through 2009. We find that on average, Chinese outbound merger and acquisitions produced positive abnormal returns as measured on the announcement date, and a nonnegative abnormal return in 3year long term performance, which indicates a successful “Go Global” strategy of Chinese Government. However, privatelyowned firms experienced greater wealth effects than government-owned firms. Further, mainlandlistings underperform HK and US listings, glamour firms outperform value firm significantly.
Key Words:Event Study；Overseas M&A；“Go Global” Strategy

Abstract:In this paper, we investigate whether fair value accounting is associated with an overreaction of stock returns by the approach of event study. This paper finds that there is a significantly positive association between the overreaction of stock returns and the unrealized gain or loss on the changes of fair value in the trading financial assets in the financial sector at the estimation windows rather than at the event windows. Further tests suggest that the extent to which the overreaction in a bull market is double of the extent to which the overreaction in a bear market in Chinese financial sector. Our evidence not only supports the argument that the marktomarket accounting regime amplifies both the stock bubbles and the stock initial negative shocks but also indicates the asymmetry of stock overreaction on the marktomark regime in different market situations. Moreover，we modify the approach of event study suitable for the issues of the marktomarket measure.
Key Words:Fair Value; Overreaction of the Stock Returns; Event Study

Abstract:Based on theoretical analysis and empirical researches on the causes, impacts and management of local government debts under fiscal decentralization, this paper inquiries lessons of local debt management from the mature fiscal federalism economies. Meanwhile, local government debts in transition economies during decentralization reform are taken into account. We come back to the local government debt problems in China, which are more complicated due to other related issues, such as imperfect tax-sharing system, distorted incentives to local government, local financing platform problem, macroeconomic management, and fiscal policy stimulation. Hence, based on the unique Chinese institution and economic background, further studies on China’s local government debts are imperative and influential.
Key Words:Fiscal Decentralization; Local Government Debt; Soft Budget Constraint