Abstract:The market oriented economic transition in China since 1978 has led to remarkable economic achievement. In this study, we use the NERI index of marketization and a panel data model to investigate quantitative contribution of marketization to China’s TFP and economic growth. The result indicates that marketization contributed 145 percentage points to China’s annual economic growth rate during the period from 1997 to 2007, which accounts for 392% of TFP. Marketization significantly improved resource allocation. Economic transition in China has not yet completed. Future growth sustainability will rely on further market\|oriented reforms.
Key Words:Marketization; Economic Transition; Growth; Total Factor Productivity

Abstract:This paper investigates the relationship between corruption, public expenditure efficiency and economic growth in China, both theoretically and empirically. Within the traditional endogenous growth model of public expenditure, we first establish a general equilibrium model, where corruption is introduced to the model through its impact on effective public expenditure. The model is solved numerically using parameters from the actual practice of Chinese economy. The results imply that public expenditure efficiency positively affects economic growth, while corruption indirectly affects economic growth through its impacts on public expenditure efficiency. Using provincial data from 1998 to 2008 in China, our empirical study, based on various static and dynamic panel data models, provides strong evidence for the theoretical implication. All these findings point to a fact that although the detailed mechanisms through which the corruption affects economic growth have not been explored explicitly in China, corruption may have negatively affected economic growth in China by reducing public expenditure efficiency.
Key Words:Corruption; Public Expenditure Efficiency; Economic Growth

Abstract:This paper discusses the comovements in the inflation cycles of BRICS and the influencing factors. This paper shows that there are strong comovements in the inflation cycle fluctuations of BRICS. Using SPSS factor analysis and cluster analysis methods, this paper draws the conclusions that the comovements of BRICS’ inflation cycles result in large parts from the combined effects of the world inflation fluctuations and the nature of large developing countries. The inflation cycles of BRICS can be divided into the “ups and downs” type and the more stable type. China’s inflation cycle lies between these two types, but has more “ups and downs” tendency. The conclusions of this paper make a reflection of the reasons for the formation of BRICS’ cooperation mechanisms and the necessity for BRICS to strengthen economic cooperation and policy coordination in the future, and at the same time provide a reference for the current policies in controlling inflation of China.
Key Words:BRICS; Inflation Cycle Comovements; Factor Analysis; Cluster Analysis

Abstract:Using China’s manufacturing firm level data during 1998—2001, this paper examines the effect of firms’ export behavior on their pay structure in China. We focus our study on the new exporters. We first adopt a matching method to select the nonexporters and construct our comparison group for the 456 newly export firms. Then a Differencein Difference (DID) is employed to investigate the causal effect of firms’ export decision on their employees’ earnings. This paper finds that after controlling for firm size, firm age, ownership and geographic location etc., there is no significant improvement in the firm’s employee wages after it started to export. Such conclusion remains the same for various robustness tests, like using different matching criteria and various matching methods, considering firms’ ownership, export intensity, delayed wage response as well as using a longer period sample (2000—2006). Based on these findings, we conclude that despite the fact that exports play an ever increasing role in China’s total economic growth, there is no strong evidence that supports the positive role of export in improving employees’ earnings.
Key Words:Exports; Wage; Manufacturing Firms; DifferenceinDifference

Abstract:Using a micromodel with heterogeneity in labor and firm, this paper investigates the determinants and mechanisms of labor share under China’s institutional circumstances. The main findings can be boiled down to the following three points. Firstly，such factors as wage rates, the production technology and tax burden have diverse effects upon labor share in firm level. Secondly, in firm level，the monopoly in product market and the restructuring of firm always have negative effects on labor share，and profit sharing usually has positive effect upon labor share, so it is quite helpful to control labor share in macrolevel by means of the policies being relative to these factors. Last but not least, the wellbeing of employees, employers and government will be improved all together on condition that the firm has the rights to choose the structure of target and the ratio of profit sharing under some special rules. These conclusions imply that profit sharing is beneficial to build a society with the texture of “growth with equity” and realize the aim of “two promotions” in income distribution.
Key Words:Bargaining Power; Restructuring of Firm; Tax Burden; Profit Sharing; Labor Share

Abstract：Housing has already become one of most important livelihood problems concerned by Chinese society. This paper studies the impacts of housing on the household happiness. Our theoretic model contributes to the existing literature by introducing two important channels from housing to happiness: liquidity constraints and precautionary savings. Based on the theoretic framework, this paper empirically analyzes the impact of homeownership on household heads happiness using China urban household survey data collected from 41 cities in 2009 Several important findings are derived. First, the effect of homeownership on happiness is significant different among different types of house property rights: owning commercial houses significantly improves happiness; while owning noncommercial houses does not have any significant impacts on happiness. Second, the ‘marginal’ happiness derived from the number of commercial housing does not decline. Further study shows that, the marginal utility of housing for people with strong precautionary savings motive and those who are more likely to be liquidity constrained is not declining, while the marginal utility of housing for people with weak precautionary savings motive and those who are less likely to be liquidity constrained is declining. These results strongly support our theoretical results.
Key Words： Homeownership; Happiness; Liquidity Constraints; Precautionary Saving

Abstract：Using 1991—2006 CHNS panel data, this paper investigates by period the change in the incomerelated inequalities of health and health care utilization among Chinese residents. The basic method is to decompose the change in the inequalities of health and health care utilization within each period into two parts: the change associated with change in income distribution, and the relative change in health status or health care utilization of residents of different incomes, i.e., health mobility or mobility of health care utilization. By using this method, this paper solves the problem in research on health inequality or health inequity based on crosssectional data, gets some new results and provides targeted policy recommendations.
Key Words： Health; Health Care Utilization; Mobility; Income; Panel Data

Abstract：In response to the extensively existing phenomenon of “one solution” governance in coal mine safety regulation, the paper introduces and argues the important proposition “safety regulation fluctuations” which combines inadequate regulation and excessive regulation and furtherly analyzes its formation mechanism. This study shows that Chinese coal enterprises are operating with two alternate constraints of high level and low level and the occurrence of serious accidents is the turning point of alternation, which attributes to local governments dual objective constraints of economic growth and social stability. Based on the data from 2001—2010, the paper examines the effects of safety regulation fluctuations on coal production with nonlinear STR model. The effects turn out to be asymmetric, that is, the effect is bigger when safety regulations run at lower level and smaller when safety regulations run at higher level. The asymmetric effects may have negative influences on coal mines production expectation and on prevention against the major accidents occurrence.
Key Words： Safety Regulation Fluctuations；Suspend Production for Rectification；Asymmetric Effect；STR Model

Abstract：To differentiate the helping hand view from grabbing hand view of government in state firms, this paper tests whether local state acquirers are less likely to make interprovince mergers than private acquirers and the economic consequence. This paper finds that the local state acquirer has a lower tendency to make interprovince mergers; the local stateowned acquirers get lower abnormal returns in interprovince mergers than those in intraprovince mergers, and the interprovince mergers will bring heavier tax burdens and higher bank financing costs to the local state firms. Above evidences indicate that relative to intraprovince mergers of local stateowned acquirers, interprovince mergers lead to less support from the local government, and thus the negative economic consequence, supporting the helping hand view. The policy implication of our paper is that the helping hand will limit the access to resources of private firms, distort the scarce resources allocation, and deter economic growth.
Key Words： InterProvince Mergers; Acquirer Returns; Helping Hand; Grabbing Hand

Abstract：Using corporate lending data from a large stateowned bank in China from 2002 to 2009, this paper studies the information asymmetry and probability of default in the credit market. The paper finds that collateral has overall positive effect on the probability of default. However, when the corporate heterogeneity is considered, the effect of collateral on probability is different. The effect of collateral is negative for high credit corporations but positive for the low credit corporations. This paper provides direct evidence of the existence of both the adverse selection and the moral hazard in the credit market.
Key Words： Asymmetric Information; Corporate Heterogeneity; Probability of Default; Credit Risk

Abstract:This paper develops a general equilibrium model to study how the “exorbitant advantage” works, whether it is sustainable, and what may be the consequences if it is removed. Its main findings are: (1) the center country that issuing the reserve currency enjoys the “exorbitant advantage” in the sense that her current account deficit can be financed by the periphery country’s reserve holdings. The “exorbitant privilege” is predicated on the overvaluation of the reserve currency which may be caused by a higher rate of money growth in the center country; (2) the “exorbitant advantage” is not likely to be sustainable in the long run; (3) if the “exorbitant advantage” is removed, the value of the reserve currency will depreciate, the terms of trade will change against the periphery country and sector composition will change in favour of the tradable sector in the center country and in favour of the non\|tradable sector in periphery country. If the center country repays her debt by printing money instead of raising taxes, the depreciation of the center country’s currency and the deterioration of the periphery country’s terms of trade will be more drastic but the changes in sector composition in both countries will be less pronounced.
Key Words:“Exorbitant Privilege”; International Currency; External Imbalances; Foreign Debt; Internal Adjustment

Abstract:Free trade agreements are prolific.  This survey first introduces a framework which helps us pin down the most important questions to ask. Some issues have been well addressed in the literature, but some have not. Trade creation and trade diversion has been the dominating idea in the welfare analysis of FTAs and in policy debates. The politicaleconomy approach is an appropriate one to explain why countries form FTAs. The literature has successfully analyzed the externalities of FTA, that is, an FTA’s effects on outsiders. The externalities induce other countries to join existing FTAs or form new FTAs, resulting in more FTAs and larger trading blocs. More researches should be done to explain how countries form FTAs and who are more likely to form FTAs. To answer these questions, we need models with more structures like bargaining and negotiations.
Key Words:International Trade; Free Trade Agreement; Welfare; WTO