Abstract:This report probes into the mechanisms of China’s urbanization and fiscal expansion, explores the transformation of government character during the structural transition from industrialization to urbanization, expounds the future boundary and risks of the government behavior. Since entering the new millennium，the boom of China’s urbanization activates the reevaluation of land and propels the “land finance” directly, which promoted public infrastructure investment, land urbanization and regional economic growth. However, the supply property and intertemporal distributional effects of land induces macroeconomic risks. Rising quickly of real estate prices impede ruralurban migration and result in deindustrialization process. Our quantitative analysis demonstrates that, although the expansion of land finance and public expenditure directly accelerates the process of urbanization and changes the discount path on the timeline, the sustainable development of urbanization will be confronted with many challenges if the premature process of land urbanization limits increasing returns to scale and the structures of fiscal revenues and expenditures could not be changed. The emergence of these problems necessitates the transformation of government functions and fiscal system to promote a sustainable economic growth driven by urbanization.
Key Words:Urbanization；Land Finance； Fiscal Expansion；Economic Growth

Abstract:The existing international investment theory makes multinational corporations as research subject. It thinks that the main advantage resources of multinational corporations conducting overseas investment are the firm advantages and the host country’s location advantages. This understanding has certain rationality, but its shortcoming is that: it seriously neglected the role of home country in outward foreign investment, thus difficult to fully explain the outward investment of contemporary developed countries and emerging countries. This paper establishes a supplementary explanation framework for multinational investment theory: a home country is the cornerstone of a country’s overseas investment enterprises; the level of national income and the development level of service sector provide the basic conditions for overseas investment. Home countries, with different conditions and different endowments, created the industry advantages, scale advantages, location advantages, organization advantages and other specific advantages for investment abroad. These advantages from home countries are also the sources of competitive advantages for domestic firms participating in international investment, at the same time have significant affects.
Key Words:International Investment; Countryspecific Advantages

Abstract:By using slacksbased sequential directional distance function, this paper calculates the new industrialization growth performance of China’s provincial industrial sectors in 1985—2009. Then it analyzes the characteristics of regional distribution and its evolution about new industrialization growth performance with an emphasis on the perspective of regional development strategy and industrial policy. We find that regional imbalanced development strategy implemented at the beginning of reform and opening up promoted the eastern industry while it also significantly widened the gap between coastal and inland industry. Under the influence of highly energyconsuming industries moving westward, series of regional coordination policies implemented after 90s did not effectively change the polarization pattern of new industrialization between coastal and inland industry. Upgrading of industrial structure due to hightech industry clustering in eastern has successfully offset the negative effects caused by the accelerated development of heavy industry since 1998. Thus it highlights the importance of hightech industry in growth mode transformation of new industrialization in the future.
Key Words:Growth Model of Industry; Growth Performance of New Industrialization; SSL Index; Regional Disparity

Abstract:How about the integration of domestic market in China? Based on the trade gravid model, using the regional inputoutput table and taking the border effect as the index of regional nonintegration, this paper estimates the level of the integration of domestic market and the share of product’s homogeneity and local protection which contributed to trade border effect. This paper finds that: the border effect is only about 731—761 between regions, which being slightly above the ones existing between the states of U.S.A in 1993 and being far below the ones within the E.U, the share of product’s homogeneity contributed to border effect is about 12—14%, and other shares of border effect is originated in the local protection of investment. These results indicate that there doesn’t exist the serious fragment in the domestic product market and there is the room of improving the level of the integration of domestic market through removing the trade barrier between regions.
Key Words:Border Effect; Intraindustry Trade; Local Protection

Abstract：This paper firstly estimates the quantity of CO2 emissions for 30 provinces of China covering the years from 1997 to 2008, then uses the panel data to investigate the relationship between the Chinas CO2 emissions and trade openness comprehensively and objectively. Based on the different model settings, static and dynamic panel model, we implement different instrumental variable strategies, external instrumental variable, lagged explanatory variable and a combination set of internal instrumental variables in the dynamic model to control the endogeneity of the related variables. The empirical results show that trade openness increases CO2emissions and carbon intensity of Chinas provinces, international trade has a negative impact on Chinas environment, the effect of environmental gains from trade is overwhelmed by the effect of race to the bottom, but Chinas current trade environmental situation has certain objective reasons. In the long run, the government should strengthen environmental regulation.
Key Words： Trade Openness; Carbon Dioxide Emission; Instrumental Variable

Abstract：Considering the pressure on the currency appreciation and the abundance of dollar assets universally held by China and the emerging economies nowadays whose corporate finance mainly rely on domestic banks, this paper extends Bernanke et al. (1999) BGG model to a small open economy to study optimal exchange rate regime and the determinants in those countries. The conclusion shows that the choice of exchange rate regime is directly related to the proportion of U.S. dollar assets and the financial accelerator effects. Managed floating regime is the most appropriate exchange rate regime in emerging market economies for it avoids “the liquidity trap” which would happen under floating regime in the appreciation crisis and lowers the welfare loss which is relatively larger in the fixed exchange rate system. Finally, considering Chinas current situation, we give the corresponding countermeasures and suggestions.
Key Words： Dollar Assets; Financial Accelerator; Exchange Rate Regime

Abstract：Since 2005, China deploys a currency basket as a reference unit for monitoring exchange rate changes and as an anchoring mechanism for the formation of the central parity. Designing an appropriate weighting scheme can also enhance the fundament to increase exchange rate volatility in further exchange rate reforms. This paper derives the optimal currency basket in terms of its contribution to minimize the fluctuation of Chinas external account and find that it is best for China to form a currency basket that leans towards the dollar, the euro and Japanese yen, with the dollar taking up about 40% of the total weight. Then this paper employs pooling mean group(PMG) method to estimate the dynamic ECM panel data model, and figures out whether Chinas currency basket policy has already met its objection, the result robustly shows its effect on minimizing the sensibility of chinas export and import to exchange rate.
Key Words： Currency Basket; Exchange Rate Regime; Optimal Currency Weight; Cointegrated Panel; PMG

Abstract：Although these have been so many theory papers looking into the value of commitment in the contracting process, empirical analyses remain rare. In this paper, by investigating the ownership split reform in China, we empirically analyze the role of commitment. Our results show that commitment plays an important role in the contracting process:It decreases the reform costs for the nontradable shareholders and tradable shareholders also positively respond to the commitment.Thus,overall making commitment has economic value and is a Pareto improvement. However,our further analyses also reveal that not all nontradable shareholders can make credible commitment that would be accepted by tradable shareholders:The economic value of commitment depends on the reputation and also on the contracting environments.This implies that governments dedicate to improving contracting environments will be helpful to improve economic efficiency.
Key Words： Commitment; Contracting Process; Ownership Reform

Abstract:This paper studies the credit behavior of rural households from the perspective of social network. The study is based on the 2009 Financial Survey in rural China covering 1951 households in 81 villages. Study first finds that rural households with larger social network are more active in terms of credit behavior. It means that social network has played a key financing instrument for rural households to balance cash flow and increase its liquidity. Second, as a traditional method to finance through social network, its importance has been decreasing with the socioeconomic development. The research contributes to the understanding of current status and future development of rural household credit behavior, and of further reforming financial system in rural China. However, the sustainability and stability of the credit behavior through the traditional social net remains a topic for future research.
Key Words:Social Network; Agricultural Finance; Farmers’ Credit Behavior

Abstract:This paper reports an experiment with one principal and multiple agents, the features of which are that the principal has the right to make contract information observable or unobservable to all agents and these agents have unequal productivity. By analyzing the selection, implementation and results of these contracts, this paper finds that the principal tends to make contracts unobservable or provide more similar contracts. Also, this paper finds that gift exchange effect between the principal and the agent is very prominent, although the level is affected by vertical unfairness, information structure and competition. The main reason leading to these results is that some individuals have social preferences such as fair consideration. This conclusion can help us understand contracts in the economic society.
Key Words:Contract Theory; Principalagent; Gift Exchange; Experimental Economics

Abstract:Based on the assumptions in the independent private value auction model, this paper studies the first price sealed-bid auction model with two parameters of a reserve price and a commission rate. This paper concludes that (1) the bidder’s equilibrium bidding strategy is deceasing in the commission rate and increasing in the reserve price; the bidder’s expected revenue is deceasing in both the commission rate the reserve price. (2) there exists an unique optimal reserve price for the seller, which is deceasing in the commission rate. (3) for the first time we consider the case in which the reserve price might be determined by the auction house; in this case, there also exists an unique optimal reserve price for the auction house, which is also deceasing in the commission rate. (4) the optimal reserve price for the auction house is less than that for the seller. (5) for the first time, we consider a problem of the auction house’s optimal commission rate and give conditions for its existence. (6) the seller should try to set the optimal reserve price by himself instead of the auctioneer in order to maximize his expected revenue; the auction house should set the optimal commission rate to maximize his expected revenue which is limited to the auction law.
Key Words:Independent Private Value Auction Model; Firstprice Sealed-bid Auction; Optimal Commission Rate; Optimal Reserve Price