Abstract：This paper analyzes the cause of transnational institutional differences from the core of the system and the process of institutional change points. We choose transnational genetic distance as the instrumental variable of institutional difference, and elaborate it as the rationality and validity of the instrumental variable. Utilizing the cross-sectional data of 146 major countries, which constitute 10585 observations each year, we estimate the effect of institutional difference (a variable constructed by 14 factors of three aspects: the difference of political institution, economic institution and institution implementation from the World Bank and the heritage foundation) on multinational income gap. The empirical results show that institutional difference has the positive effect on multinational income gap in the long term between countries, and the influence has a significant upward trend. After controlling the factors of geography, human capital, language and religion, we still have similar conclusions. Different genetic distance measurement indicators and estimation methods show that conclusion is robustness.
Key Words：Institutional Distance; Transnational Income Gap; Genetic Distance; Population Heterogeneity; Estimation of Instrumental Variable

Abstract：Data from WDI show that a developing country is easily caught in the “middleincome trap”. To interpret the mechanism of the “middle-income trap”, this paper focuses on: (1) Based on the empirical framework of economic growth，we make an empirical research on the determinants of economic growth in different income levels and discover that fixed capital investment, FDI and human capital accumulation are the main factors influencing less developed economies while for the upper middle-income level and high level countries, the engines of economic growth change to institutions and R&D. (2) We discuss the possible reasons why developing countries can have rapid economic growth before reaching the middle-income level, while they cannot transform growth mechanisms in the middle-income level. (3) We classify the factors that have influenced China’s economic growth since the reform period and analyze the potential ones for Chinese future development.
Key Words：Middle-income Trap; Economic Growth; Growth Mechanisms

Abstract：The Chinese economic institution is characterized as regionally decentralized authoritarian system, and it leads serious local market fragmentation. Theoretically, judicial independence couldn’t only break the market fragmentation, but also won‘t break the equilibrium institutions which inspirit local government developing economy. This paper takes the geographical rotation of chief justices of higher people’s court as a quasi-experiment to reveal the promotion of judicial independence in China, and finds that: the geographical rotation of chief justices of higher people‘s court significantly and considerably reduces the market fragmentation, and significantly boosts economic growth as well.
Key Words：Market Segmentation; Judicial Independence; Geographical Rotation of Judges

Abstract：The target of this paper is to measure the discrimination effect of household registration system (hukou policy) on urban-rural income inequality. In order to overcome the self-selection problem from hukou type change and the biased problem because of the absence of experiment data, we use the Propensity Score Matching with Difference-in-Difference method to construct counterfactual to evaluate the discrimination effect of hukou on urban-rural income inequality with RUMIC 2007/2008 panel dataset. The results demonstrate that hukou policy does exert significant discriminatory impacts on urban-rural income inequality, while urban hukou increases income level by 3.5% on average. Meanwhile, it actually belongs to a kind of invisible occupation discrimination effect coming from hukou according to the income definition in this paper. After excluding the hukou discrimination, the overall income inequality decreases to a large extent, and the Gini coefficient drops from 0.499 to 0.488. So, it shows a large impact of hukou discrimination on income inequality in China.
Key Words：Household Registration System; Discrimination; Quasi-experiment Evaluation Approach; Income Inequality

Abstract：Housing reverse mortgage loan is one of the main pension way in developed countries, while it has suffered a larger resistance in China. One of main reason is the real pressure from traditional bequest notion. It still lacks relatively strict and unified system demonstration about the process and degree of bequest notion‘s influencing housing reverse mortgage loan. Introducing bequest characteristics of time-varying, this paper expands the life cycle theory model and theoretically proves that the existence of bequest motives can suppress the housing wealth effect and hinders housing reverse mortgaging. At the same time, based on the study about the questionnaire survey data of cities, the paper confirms basically the inference of the theoretical model. Specifically, it can draw the following conclusion: firstly, the old people have a higher housing wealth effect than young people. In other words, as the housing price is rising, the elderly consume more. Secondly, compared with the elderly without bequest motives, the elderly with bequest motives will reduce a lot of housing wealth effects. And especially based on data from household with houses, the paper can find housing wealth effect of the elderly with bequest motives can be reduced to almost 50 percent of those without bequest motives. From this point of view, one of main obstacle of housing reverse mortgage loan in China is the traditional bequest notion, which inhibiting housing wealth effect. Therefore the gradual mode of housing reverse mortgage loan, appropriate pilot inheritance tax and stable housing market will contribute to the realization of housing reverse mortgaging.
Key Words：Housing Reverse Mortgage Loan; Bequest Motives; Wealth Effect

Abstract：Since the lack of research on the informal institutions, our paper studies the effect of religions on the corporate governance. We find that the quality of corporate governance is better in the region which is of stronger religion tradition. Specifically, firms in regions of stronger religion traditions are less likely to violate laws and stipulations from government, are less likely to manage earnings and to get dirty audit opinions. In addition, the above findings are more pronounced in regions with higher quality law environment. Our study provides evidence that informal institutions (religious tradition) have significant effects on corporate governance, and, informal and formal institutions could interact each other complimentarily.
Key Words：Religious Tradition; Informal Rules; Corporate Governance; Law Environment

Abstract：Using webtext extraction and data mining technology, this paper constructed a product-level, high frequency data set of more than 1.5 billion observations from December 2010 to February 2013 to estimate the nominal price stickiness in Chinese commodity market. The results show that: (1) Compared with developed countries, the degree of price stickiness in China is at a low level, with a weighted median price change frequency of 1.23% per day. The median implied duration of price is about 2.7 months with sales and 3.4 months without sales. (2)The degree of price stickiness in eastern and central regions is relatively close and was higher than that of the western region. The price of imported goods is more flexible as well as top 20 goods according to the sales ranking. (3)The distribution of the size of price changes is bimodal, consistent with predictions of State-Dependent Pricing model (Golosov and Lucas, 2007). (4)The intensive margin accounts for 64% of inflation’s variance, indicating that magnitude of price changes is the main source of inflation in China.
Key Words：Nominal Price Stickiness; Time-Dependent Pricing; State-Dependent Pricing; Intensive Margin; Extensive Margin

Abstract：This paper uses the Income Tax Sharing Reform in 2002 to identify the tax enforcement and estimate its effect on the avoidance of corporate income tax. The reform attributes the firms to two tax agencies, National Tax Bureau and Local Tax Bureau, according their established date. Tax competition will decrease the tax enforcement of Local Tax Bureau, while does not affect the National Tax Bureau, so the difference of tax enforcement perfectly measures tax competition. Based on 170 000 firms-data, we find the decreased tax enforcement of Local Tax Bureau induces tax avoidance of firms, which is only robust in firms with enough mobility, such as private firms. These results also explain the helping hand of China local governments and the abnormal increasing of tax revenue.
Key Words：Tax Avoidance; Tax Enforcement; Income Tax Sharing Reform

Abstract：This paper analyzes the risk choice during the process of privatization of state-owned enterprises. Using unique database of fully privatized firms from 1998 to 2011 in China, we employ the Difference in Differences model and find that the corporate risk-taking is significantly increased after privatization. We further test the impacts of property rights institutions and contracting institutions on risk-taking in the process of privatization. The results show that the impact on corporate risk-taking in the process of privatization is more pronounced in provinces with good property rights institutions, while the contract institutions have little explanation. This paper not only provides new explanations from the perspective of privatization for the determinants of corporate risk taking, but also contributes to the further understanding of how different institutions affect the consequences of privatization from the perspective of risk-taking. The results are conducive to clarify the controversy on “The State-Owned Economy Expands and the Private Economy Shrinks” (guojinmintui), and have significant policy implications for further promoting the reform of privatization of state-owned enterprises and improving property rights protection of private firms in China.
Key Words：Privatization; Property Rights Protection; Contract Institution; Corporate Risk-Taking

Abstract：In this paper, we apply the fixed-effect panel SFA model and counterfactual measurement method to analyze the effect of factor market distortions on the energy in China from 1997 to 2009. The main findings are: (1) the factor market distortions have a significant negative impact on the improvement of China‘s energy efficiency; (2) on average, eliminating the factor market distortions can increase energy efficiency by 10% and reduce energy consumption by 145 Mtce per year; (3) the energy loss contributed to factor market distortions is accounting for 24.9%—33.1% of the total energy loss. Therefore, speeding up the process of marketization of China’s factor markets to allow more effective resource allocation, has a great practical significance on building an energy conservation-oriented society.
Key Words：Factor Market Distortion；Energy Efficiency；Energy Loss；Fixed-effect Panel SFA Model

Abstract：Did the welfare effect of trade indicated by the theory of heterogeneous firms happen in China? How do the foreign demand shock and the wage gap affect the transformation behavior of processing traders? To address these questions, we propose a simple heterogeneous firms sorting model in which the stylized facts of economic structure and export trade in China have been incorporated. The model indicates that trade liberalization exerts the welfare effect on the developing countries through a very different channel from that on the developed countries. The processing trade may lower the average level of industrial productivity. However, the processing trade still improves the social welfare by absorbing the surplus labor in the dual economy. The model can also solve both the exporters productivity puzzle and the labor demand puzzle. The paper not only gives a theoretical foundation for the processing trade policy which has been implemented since the reform and opening, but offers some policy implications on promoting the upgrading of processing trade.
Key Words：Processing Trade; Dual Economy; Trade Costs Sharing; Welfare Effect; Transformation Decision