Abstract：This paper uses a panel of Chinese unlisted industrial enterprises over the period 1998—2008 to analyze the relationship between financial constraint, working capital management and enterprise innovation, by which it explains the enterprise innovation boom in China ever since the end of last century from micro perspective. The contribution of this paper is to directly examine whether working capital used to overcome the bottle that constraints the innovation investment, due to the high adjustment cost and volatility of financing resources. We find that working capital plays an important role on smoothing innovation activities. According to SA index raised by Hadlock & Pierce (2009), we grouped the whole sample into four categories and find that the more serious financing constraints the enterprises suffer, the more important role the working capital plays. Our study shows that though China‘s capital market is undeveloped, Chinese firms can keep innovation going stably by internal fund and working capital management.
Key Words：Innovation; Financing Constraints; Internal Financing; Working Capital

Abstract：Based on the quasi-experiment of the revision of Air Pollution Prevention and Control Law in 2000 (APPCL2000), this paper investigates the impact of environmental regulation on the growth of productivity in China by using the industrial sectors-data from 1994 to 2008.We find that, the APPCL2000 significantly increases the total factor productivity of the waste gas intensive sectors, and it’s marginal effect is increasing over time. It indicates that, the stringent and well-designed environmental regulations should lead to a “win-win” situation in China, which is the environmental quality and total factor productivity being simultaneously improved. At the same time, it indicates that we doesn‘t conclude that the written laws aren’t important in China.
Key Words：Environmental Regulation; Total Factor Productivity; Air Pollution Prevention and Control Law; Difference in Difference

Abstract：Taking advantage of firm survey data conducted during the period of global financial crisis, this paper observes the manufacturing firms‘ response to the shock on labor costs and demand. According to the estimated results on labor demand function, the firms have quite high value of output elasticity around 0.75 to 0.78. The ownwage demand elasticity is -0.40 for unskilled workers and -0.53 for skilled workers while the substitution elasticity between the two types of workers is 0.26. The empirical results indicate that the manufacturing firms are quite responsive to labor costs. In the future, if the policies aiming to maintaining flexible labor market and competitive market for all types of firms, the changes in production factor market will push the economic transformation and upgrading in China.
Key Words：Own-Wage Elasticity; Substitution Elasticity; Shock on Labor Costs; Transformation of Economic Growth Pattern

Abstract：Government is one of the important participators in the economy, whose behaviors have to be constrained by some rules, otherwise there will be no unique equilibrium of the economy or the effect of one policy counteracts with the effect of another. This paper adopts DSGE approach to study the interaction of government buying rule, financing rule and automatic stabilizing rule. It is found that: firstly, when the distortionary tax rate is adjusted according to previous period’s debt, the space of tax elasticity which ensures the existence of unique equilibrium is maximum; secondly, automatic stabilizing rule enlarges the space of tax elasticity; thirdly, among the various compositions of policy rules, the composition of pegging tax rate and weak automatic stabilizing rule is best for stimulus goal of government buying, the composition of pegging tax rate and strong automatic stabilizing rule is best for stabilizing output, and the composition of pegging government debt and weak automatic stabilizing rule is best for stabilizing employment and price level.
Key Words：Fiscal Rule; Equilibrium; Goals of Policies; Distortionary Tax; Transfer Payment

Abstract：This paper analyzes the relationship between financial repression and structural change. We present a simple theoretical model of structural transformation in which the impact of financial repression on unbalanced growth is studied. The model suggests that governments may choose to repress the financial sector to allow for continued development of the industry sector while inhibiting growth in the domestic service sector. We then present empirical evidence of financial repression having a significant negative effect on structural transformation. In countries with higher levels of financial repression, the development of the service sector is held back in favor of continued expansion of the industry sector. The results are robust to different country sample compositions, alternative measures of sectoral structure, and different measures of financial repression. The analysis suggests that financial repression may be an important driver of structural imbalances, especially in countries with heavy state intervention and where the government strongly favors industrial expansion. The findings have direct and important policy implications for governments that are experiencing rapid economic transformation due to high economic growth and that also use financial repression to achieve a long-run industrial output growth.
Key Words：Financial Repression; Structural Transformation; Economic Development

Abstract：Considering firm ownership type, this paper investigates how Chinese monetary policy influences the relationship between bank loan and business credit and provides micro evidence on Chinese monetary policy‘s credit transmission mechanism. Using monetary policy contraction dummy variable and bankers’confidence index, we find the impact of monetary policies on firm borrowing is stronger for non-state firms, via-a-vis for state firms. During monetary policy contraction phase, non-state firms are more likely to obtain net business credit as alternative financing. Evidences in this paper indicate monetary policy credit transmission mechanism on a micro level exists in China, and it also enriches research on macroeconomic policies and firm behaviors. Understanding monetary policy transmission mechanism should help policy-makers find more appropriate monetary policy intermediate target, so as to better adjust economic development.
Key Words：Monetary Policies; Credit Transmission Mechanism; Bank Loan; Business Credit; Ownership

Abstract：We build up a heterogeneous agent life-cycle model to characterize the dynamic consumption choice of economic agents. Estimation is then performed by the method of simulated moment to obtain the model parameters. Counterfactual simulation based on estimated parameters indicates that different pension replacement rate faced by public servants and enterprise employees, which is caused by the “double-track” pension scheme, can account for 24.3% of the life-cycle consumption gap between public servants and enterprise employees. Had the same pension replacement rate as public servants, the life cycle consumption of enterprise employees would raise by 4.84%. Moreover, the less wealth an enterprise employee possesses, the larger stimulating effect of raising replacement rate on consumption he has.
Key Words：“Double-track” Pension Scheme; Life-cycle Model; Structural Estimation

Abstract：In this paper, we build a two-period overlapping generations model with human capital investment and taxes to discuss the effects of exemption and tax rates on income distribution, wealth distribution and economic growth. The model economy is characterized by heterogeneous individuals who differ in physical strength and learning ability. Each individual chooses saving, education time and leisure time to optimize his or her lifetime utility. The main parameters are calibrated using China‘s empirical data. Numerical simulation shows a U shaped relationship between the exemption level of income taxes and the income Gini coefficient. Given the tax rate, there exists an optimal exemption that minimizes the Gini coefficient. When exceeding the optimal value, the exemption increases both the Gini coefficient and growth rate. In order to reduce the inequality of income distribution, the exemption should be adjusted as income grows. In general, the income tax rate exhibits an inverse relationship with the economic growth rate, which indicates the tradeoff between equity and efficiency.
Key Words：Heterogeneous Agents; Income Tax; Redistribution Policy

Abstract：Based on China’s Urban Household Survey (UHS) conducted by National Bureau of Statistics from 2002 to 2007, this paper studies the relationship between government land supply, housing prices and urban household savings in China. The results reveal that the rising housing prices have induced people to save more: one percentage point increase in housing prices have led urban household savings rate to rise by 0.067 percentage points, which account for 45% of the increasing saving rate during 2002 and 2007. Further research shows that the rising housing prices have mainly affected people with lower income levels, rent a house or own a small house. Meanwhile, the housing prices have not only affected the young people, but also the old people. We use government land supply as an instrument of housing price to alleviate the endogeneity problem. 2SLS regression results show that the less the land supply, the higher the level of housing prices, the higher the household savings rate. This study implies that it is difficult to stimulate domestic demand effectively by targeting on consumption itself. To expand consumption demand in long run, the government should focus on the supply side. The most important way is to reform the existing fiscal system and reduce local government‘s incentive to create profits from land.
Key Words：UHS; Housing Price; Household Saving; Land Supply

Abstract：Basing on the two-stage public goods experiment, this paper sheds light on the distribution of individuals’ heterogenous preferences and the direct and indirect effects of social role on the public goods provision. The experimental results indicate that the individuals’ decision-making behaviors in public goods are heterogeneity, and the free-riding of free-rider and self-serving bias in conditional cooperators are two typical facts in the public goods experiment, which play a crucial role in the understanding of the aggregation behavior in public goods. And the results also show that different types of individuals’ preferences have distinct effects on voluntary contribution of public goods game, while the social roles such as gender and the identity of cadres have significant effects on public goods provision, whose effects are direct and indirect that via the heterogenous preferences. These results are in favor of the theory of the direct and indirect effects of social role on public goods provision.
Key Words：Public Goods Experiment；Heterogeneity；Identity

Abstract：This paper studies the role of subnational leaders in economic growth using city-leader pair data collected from 241 cities in China’s 18 provinces for the period 1994—2008. A unique feature of China’s institutional arrangements is that local leaders are often moved from one city to another. This allows us to compare leaders across cities. We find that leaders matter for local economic growth. Further exploration shows that our sample does not suffer from biased attrition and our estimates of the leader effects are robust to transitory shocks and are not affected by nonrandom moves of leaders. Using the leaders’ personal effects estimated from our test, we find that more capable leaders are more likely to get promoted although their chances are nuanced by their ages. We also find that local economic growth is not a good predictor for promotion after leaders’ personal effects are controlled.
Key Words：Local Leaders; Economic Performance; Promotion Tournament