Abstract：The distinction between international and non-international currencies is a typical asymmetric feature in the current global financial system. Such a distinction must impact on the choice of exchange regime and exchange rate by different countries. In this paper, we provide an argument that the exchange regime adopted by LDC’s who issue non-international currencies might be regarded as an accumulation-oriented exchange regime (AOER). Under this regime, the central bank will continuously interfere in the foreign exchange market in order to accumulate international currency, thereby devaluate domestic currency and make trade surplus constantly. This is consistent with the observed distribution of exchange rates and exchange regimes across the world. It can also be demonstrated by a simply dynamic optimization model that reflects the optimum behavior of a central bank from LDC’s. Although AOER might be in contrast to the provision with regard to “currency manipulator” set up by IMF, it is however an optimum choice by LDC’s under the current asymmetrical international financial order, which itself is unfair to LDC’s who issue non-international currencies.
Key Words：Exchange Regime；International Currency；Developing Country

Abstract：Since the reform of Chinese currency regime started in July 2005, the exchange rate of RMB (relative to USD) has increased significantly. Many Chinese MNCs use foreign currency derivatives to hedge exchange rate risk. However, while the relationship between hedging and firm value has been extensively examined in the western countries, there is few research done on the Chinese multinational corporations. Based on a sample of 968 Chinese MNCs between 2007 and 2009, I find a positive relationship between currency derivatives usage and firm value, proxied by Tobin’s Q. The hedging premium is statistically and economically significant and is on average 10% of firm value. This finding has important policy implications in terms of risk hedging policy and strategy and the development of exchange traded currency derivatives market in China.
Key Words：Foreign Exchange Risk; Hedging; Foreign Currency Derivatives; Multinationality; Firm Value

Abstract：We develop an extended NorthSouth Product cycle model in which Southern indigenous innovation is endogenous, discussing the incentive effects of intellectual property rights (IPRs) on indigenous innovation, and the overall effects of IPRs on the North and the South both. Our model predicts these effects depend on the initial skill level and absorptive capacity in the South, and more crucially on market structure due to the nature of North innovation. Under oligopoly due to vertical innovation, tighter IPRs hurts both regions, and it does not induce indigenous innovation. Under monopolistic competition due to horizontal innovation, tighter IPRs benefits both in the short run if skill levels are scarce in the South, and there is no indigenous innovation, too. Tighter IPRs benefits both in the long run if skill levels are abundant, and it induces indigenous innovation. We find that there exists an optimal degree of IPRs protection in the South, which depends on the initial skill level and market structure , and it does induce indigenous innovation ,and may differentiate from that in the North.
Key Words：Intellectual Property Rights; Indigenous Innovation; Incentive Effect
 

Abstract：China’s macroeconomic investment rate seems to be very high in comparing with the world average and that of similar emerging market economies. Is China overinvesting? Existing research focuses on the rate of turn of investment in order to answer this question. We believe that this is wrong since the ultimate measure should be social welfare. However, such analyses are missing in the literature. In the paper, we first construct two measures of China’s investment rate: the domestic investment rate and the national investment rate, which incorporates China’s current account surplus. We then build a benchmark of growth model and then explore the method of backward integration to solve the model. Finally, we compare the optimal investment path of the benchmark model with the actual one and calculate the welfare loss due to the deviation the actual investment rate from the optimal one. We find that China’s average domestic investment rate and national investment rate are 6% and 4% lower than benchmark rate in the 1990s, respectively. However, after 2002, they are 5% and 12% higher than welfare maximizing rate, respectively. As a result, between 1990 and 2008, the total welfare loss is 59% , corresponding to 38% GDP annually.
Key Words：Investment Rate; National Investment Rate; Welfare Analysis of Economic Growth; Backward Integration

Abstract：A large part of China’s government spending is laid for productive purposes. Contrary to the crowdingout effect from both New Classical Macroeconomics and New Keynesian models, China’s private consumption and government spending show robust positive correlationship. In this paper we set up an endogenous growth model in which productive government spending takes forms of both stock and flow. The studies show that government spending crowds out private consumption through negative wealth effect on one hand, and crowds in it through positive productive externality on private capital on the other. Whether private consumption will rise following an increase in government spending depends on which effect is larger. The effect of government spending on private consumption depends on the productivity level and the composition as well as the size of government spending. The size of optimal government spending is equal to its total productivity and the optimal composition of government productive spending is equal to its relative productivity.
Key Words：Private Consumption; Endogenous Growth; Government Productive Spending; Government Spending Composition

Abstract：Aimed at the ruralurban inflation data feature and based on the economic restructuring, this paper tests the stability of ruralurban inflation difference using endogenous structural break ESTAR model to reveal the process of integration of ruralurban commodity market. The results show that the difference ruralurban inflation is stationary process which means that ruralurban commodity market has the integration trend, and the structural break is at 1994. Before 1994, the degree of market segmentation of Chinese ruralurban is bigger than that after 1994, the nonarbitrage interval of ruralurban commodity is wider and the speed of meanreversion is slower than that after 1994. Therefore, ruralurban market integration trend is more obvious after 1994. Transportation costs, information costs, trade barrier explains the trend of urbanrural inflation convergence. These results show that the gradual elimination of ruralurban dual structure and the recently policy of promoting the coordinated development of ruralurban economic significantly promote the urban-rural economic integration process.
Key Words：Urbanrural Economic Integration; Inflation; Dual Structure; Law of One Price

Abstract：Using household survey data covering 20-year period from 1988 to 2007, this paper analyzes the dynamic evolution of employment relations in urban China, and investigates the changes of composition of labor contract types, the factors contributing to the composition changes, and the relative importance of these factors. The analysis shows that the proportion of flexible employment increased since 1988, reached a very high level in 2002, and decreased somewhat after 2007. Extended OaxacaBlinder decomposition shows that the rise of flexible employment is mainly resulted from deregulation and marketization of urban labor market in China. But entering 2007, the importance of deregulation and marketization has diminished. The endowments of workers have been becoming more important to obtain a stable employment.
Key Words：Employment Relations; Labor Market; OaxacaBlinder Decomposition

Abstract：In this paper, traditional energy efficiency index is decomposed to analyze the change of energy efficiency and its determinants on Chinese provinciallevel in 1986—2010. The conclusions drawn are as follows: (1)The main factors that affect the energy efficiency according to their contribution are technical change, inputs substitution and efficiency improvement respectively. In general, total factor productivity has more impact on energy efficiency than inputs substitution effect, and effects of efficiency improvement and technical change keep a close relationship with China’s reform towards market economy; (2) While regional “Energy Efficiency Gap” widen year by year, they show some catchup and convergence trends. Regional energy efficiency disparity presents zonality in China;(3) When it comes to the three factors to regional energy efficiency disparity, the change of input substitution plays the most important role. The conclusions above are helpful to understand the trends of energy efficiency and its determinants of China more accurately, and will also contribute references to the development and improvement of energysaving policies.
Key Words：Energy Efficiency; Total Factor Productivity; Technical Change; Technical Efficiency; Inputs Substitution

Abstract：Objective of this study is to evaluate redistributive effects of personal income tax reform implemented last september in China. We decompose the MT index by income components, in order to investigate deduction and rate of tax of each itemized taxable income component on redistributive role of the personal income tax as a whole. Main conclusion from this study includes that while the reform increased progressivity, it reduced average rate of tax and eventually weakened redistributive role of the personal income tax, and that given deductions and rates of tax for other taxable income components constant, raising deduction of wage and salary (dominant component of the taxable income) increases the progressivity of the total personal income tax first, and reduce it then.
Key Words：Personal Income Tax; Redistributive Effects; Progressivity

Abstract：This paper investigates how private enterprises’ political connection relaxes their financing constraints. Empirical evidence suggests that there are two positive effects of political connection: the information effect and the resource effect. Firstly, political connection has the function of signaling which alleviates information asymmetry between funding suppliers and enterprises. Moreover, politically connected enterprises have easier access to resources which ensures the enterprises higher future earnings. Empirical evidence also shows that the resource effect dominates the information effect. A direct policy implication of this study is that, in order to reduce the private enterprises’ financing difficulty, the authority should build fair market environment, eliminate policy discrimination and give all the enterprises equal access to resources.
Key Words：Political Connection; Financing Constraints; Information Effect; Resource Effect; Private Enterprises

Abstract：Officials scale, public goods supply efficiency and social income gap is the current social issues of concern, this paper tries to put the three questions into a unified framework to analyze. Social production need the official provide a resource aid and public goods by hiring junior officials. When the superior officer cares about private interests, he will make the resources supply be “artificial” scarce, which makes the charge of resource rents from producers by junior officials conveniently. It facilitates the superior officer to charge junior officials’ position rents that resource rents is higher than the external option income. Analysis shows that behavior of rentsetting and rentseeking is one of the main causes of the emergence of the social income gap. A society with better limited public power will have smaller officials scale, more efficient supply of public goods and smaller social income gap.
Key Words：RentSetting; RentSeeking; Officials Scale; Public Goods Supply; Social Income Gap