Abstract:The dynamic relationship between inflation and economic growth is the basis for the macrocontrol , however，there isn’t a clear and valid result about the complex relationship between inflation rate and GDP growth in linear and static framework. This paper builds the inflation and GDP growth’s nonlinear dynamic system model (GDPCPINLDS) based on Mar. 1996 — Dec. 2009 GDP growth, CPI and M2 growth rate of quarterly data. The empirical results reveal that China’s optimal growth rate of GDP and CPI is 1051% and 206%, and the GDP growth rate without inflation is 892%. As a whole，China’s economic growth and inflation stay in suboptimal and nonequilibrium operation state, both moves towards the same direction. Optimal control experiments showed that the only control M2 growth rate can not be fully realized target, GDP growth must focus in order to achieve “the twelfth fiveyearplan”target and to minimize social loss. Therefore，we recommend that GDP growth should be oriented to control, and tight monetary policy is based, at the same time, established joint control of a strong mechanism with a variety of means of control, to ensure that the GDP growth and CPI target to achieve precise in “the twelfth fiveyearplan” period .
Key Words:China; Inflation; GDP Growth; Relationship; Equilibrium; Optimal Control

Abstract:Using a unique sample of 166 Chinese banks across 29 regions for the 1999—2009 periods, this paper first investigates their relations between bank risk taking (Zscore) and legal protection. Second, this paper investigates the channels which influence bank risk taking, such as the relations between bank loans and legal protection. Also this paper further investigates the relation between each part of bank Zscore (we can disaggregate bank Zscore into three parts) and legal protection. This paper finds stronger legal protection (especially better protection of intellectual property right) is associated with a higher level of bank loans, higher level of bank performance, lower level of bank CAR (capital asset ratio) and greater bank risk taking. The conclusions show that enhances the construction of legal institution and supervision of bank capital is important.
Key Words:Bank Risk Taking；Bank Loans；Legal Protection

Abstract:This paper, based on a recent literature survey together with the economic and financial evidence from 2000—2010 in China, explores the effect of monetary policy stance on banks’ risk taking with the method of systemic GMM for dynamic panel data. The empirical result shows that the bank risktaking is significantly influenced by monetary stance as well as market structure and the balance sheet quantities of commercial banks, which indicates that monetary policy is not neutral from a perspective of financial stability and its decision should be made in the framework of macroprudential regulation, moreover, coordination between monetary policy and financial supervision should be enhanced to facilitate the stability of economy and finance.
Key Words:Monetary Policy Stance; Risk Taking; Financial Stability; Macroprudential

Abstract:This paper explores the main affecting factors of local government expenditures through a simple model of local fiscal expenditure decision under the condition of intergovernmental fiscal equalization. Using a panel data set from 1995 to 2006, we study the incentive properties of transfer payment on the fiscal expenditure behaviors of local governments. The findings indicate that transfer payment not only bring about flypaper effect, but also lead to the fungible problem among local public expenditures. That means the local government pursues more productive fiscal expenditure and deviates from the responsibility of provision of basic public goods. For the local governments in underdeveloped areas, the analysis also shows it will pursue more expenditure of capital construction and administrative expenses, after obtaining more redistributing fiscal funds. This study suggests building fiscal equalization redistribution system, not only to further formalize the transfer payment institution, it is more important to exercise a close supervision over local fiscal budget process.
Key Words:Transfer Payments; Fiscal Equalization; Structure of Fiscal Expenditure; Flypaper Effect; Fungibility Effect

Abstract:This article constructed a CGE model of Chinese hightech industry and analyzed the impacts of the finance and taxation policy on hightech industry development and the industrial structure adjustment based on this model. The results show that the finance policy can promote the increase of the added value of hightech industry more effectively compared with the taxation policy, but the taxation policy may play a more important role in the internal structure adjustment of the hightech industry and elevate its low added value ratio. Under the finance policy, hightech industry promotes the output growth of its related industries. However, under the taxation policy, the hightech industry can hardly promote the development of other industries except agriculture and consumer goods industry. When making finance and taxation policy, the government should lay stress on the independent development and innovation ability with consideration of shortterm adaptability and longterm strategy to promote the scientific development of hightech industry and rationalization of industrial structure adjustment.
Key Words:Finance Motivation Policy; Tax Preference Policy; Hightech Industry; Industrial Structure; CGE Model

Abstract:Bilateral Investment Treaty（BIT）is a bilateral agreement signed by two countries to promote and protect bilateral investments. As a specific bilateral institutional link of the home and host countries, BIT provides different protections from that of the institutional environments, thus exerting an influence on the FDI location strategies of the multinational firms. This study builds a framework of bilateral investment treaties, institutional environments of the home and host countries and outward FDI location choices of emerging market multinational firms. Using data of Chinese listed firms from 2003 to 2009, this paper shows that, (I) BITs encourage and promote investments of firms from one of the signatory countries to the other; (II) BITs have more effect in promoting firms to locate in signatory countries with a worse institutional environment; (III) BITs can help firms overcome the drawbacks of the institutions of home country and play a significant role in promoting nonSOEs to invest in signatory countries.
Key Words:Bilateral Investment Treaties; Institutional Environments; Outward FDI; Location Choices

Abstract：The paper analyzes the dynamics of overall specialization about proportion of different exports in details and influences to economic growth caused by the experience changes depend on the semi-parametric generalized additive model and provincial panel data in different levels, differs from the literatures which only emphasize extensive and intensive margin of export. The results show that Chinas exports are actually taking a non-linear path of gradual specialization. The accelerating specialization trend is possible after per capita income reaches a certain level. At the same time, this road generated a significant adverse impact on Chinas economic growth and long existence. Moreover, the conclusions will not change because of different degrees of freedom, the choice of measurement indicators and different data levels, and keep robust after controlling endogeneity from independent variables. Therefore, China needs to gain the benefits of efficiency, scale and externality brought by specialization through striving to increase technology content in export products. Simultaneously, it is focus direction of export structure adjustment that reverse the intrinsic specialization inertia undoubtedly in next step.
Key Words： Export Structure；Overall Specialization；Factor Allocation；Economic Growth

Abstract：This paper firstly investigates how monetary policy influences the financing constraints and investment efficiency. this paper finds that loose monetary policy will reduce the companys financing constraints of family firms. In addition, this paper finds that the impact of monetary policy on investment efficiency is non-linear. Finally, This paper investigates the impact of monetary policy on the equity value from the perspective of real option. We observe that the loose monetary policy will increase the equity value of growth options for high-profitability firms, and the tight monetary policy will increase the equity value of put options for low-profitability firms. The empirical results will be helpful to understand the economic rule of capital-follow-profitability under different government interventions. Moreover, from the perspective of investment and valuation, this study will be helpful to evaluate the impacts of macroeconomic policy on the microeconomic entities, and then help the government develop appropriate economic policies to promote the well-functioning of macroeconomic system.
Key Words： Monetary Policy; Financing Constraints; Investment Efficiency; Equity Value

Abstract：In this Post-crisis era, Chinas economy is now facing a big challenge. With the change of the global economic environment, it is a critical period now for Chinas economic transition. This situation strongly requires Chinese industry enterprises innovation. And only in this way, Chinas enterprises could survive in international competition. In this paper we will discuss the performances of innovation of Chinas enterprises. As we know that this is a hot research topic in recent years, and there are a lot of relevant literatures, both in foreign and domestic journals, on the R&D performances. However, there are still some main drawbacks in the existing literatures. For example, self-selection in the firms R&D inputs is seldom discussed, and R&Ds cumulative effect on production has not yet been emphasized. These drawbacks motivate us to propose an appropriate way to evaluate the efficiency of the innovation performance. In the theoretical part of this paper, we establish models of firms innovation determination and production function. To avoid possible model misspecification, we adopt Chamberlains random effect approach to estimate the binary probit choice model which determines whether an enterprise engages in R&D activity, and then use the probit fitted value as the IV of R&D input in the linear regression of production function. By using a dataset containing more that 30000 firms in different economic sectors in China from year 2005 to 2007, our empirical result shows that the elasticity of R&D on the added value is 55%, which implies that traditional approach underestimated the efficiency of R&D input for the Chinas industrial enterprises.
Key Words：Innovation；R&D；Cobb-Douglas Production Function；IV Regression；Chamberlains Random Effect Approach

Abstract：It is very important to understand the formation mechanization and efficiency of the labor income in China for the success of industrial upgrading and avoiding into the middle income trap. We use the non-competitive input-output model to analyze the evolution and the causes of Chinese labor income share mainly from the view of demand structure and the efficiency of technology from 1987 to 2007 The result shows that the structure of final demand, the import substitution of final demand, the industrial structure, the return rate of labor, the import intermediate input and the input-output structure can interpret 11%, 2%, 14%, 38%, 2% and 33% of the change of labor income share. Moreover, we find the driving effects of the components of final demand on labor income has declined greatly and the driving emphasis of final demand has transferred, which leads the remarkable decline of Chinese labor income share from 1997 In addition, the change of efficiency of technology including the return rate of labor, the import intermediate input and the input-output efficiency also makes the labor share decrease.
Key Words： Labor Income Share; Structure of Final Demand; the Non-Competitive Input-Output Model

Abstract：This paper evaluates the relationship among minimum wage, average wage and employment in Chinese manufacturing firms based on the exogenous variation of city-level minimum wages from 1998—2007 It is found that if the minimum wages increase by 10%, then the average wages in firms would pick up by 04%—05%, though there are some heterogeneity in the effect of minimum wage on various firms in different industries and asset per capita levels. The minimum wage policy would contribute more to the average wages hikes of labor intensive firms or firms with lower asset per capita than to other firms. With regard to the employment, it is shown that every raise of minimum wage by 10% would lead to significant employment loss by 06% or so. The policy makers should balance the positive effect of minimum wage on the income distribution and its negative effect on the employment as far as the labor regulation is concerned.
Key Words： Minimum Wage; Average Wage; Employment

Abstract：The estimation of intergenerational income elasticity will be inaccurate without considering labor migration.  Using local instrumental variable, this paper incorporates labor migration and regional traits when we estimate the intergenerational income elasticity. The results suggest that intergenerational income elasticity of migrants is less than half of those that stay. The key problem of intergenerational income mobility in China is that some people were trapped by the low income kind of intergenerational transmission, which can be weakened through migration. We also attempt to identify the possible influence of path, and find that educational factor plays an important role in determining the intergenerational income elasticity. Migration enforces this influence. Thus, the government should further release the restrictions over labor migration and allocate educational resources appropriately, in order to increase intergenerational income mobility and achieve social equity.
Key Words： Intergenerational Income Mobility; Migration; Local InstrumentalVariable