Abstract：This paper investigates the different roles of banks and financial markets in facilitating industry development during different stages of economic development.Bank financing is more efficient than the financial market when industries are characterized by mature technology and products with low risk and steady return of investment.However, in technology-frontier industries where innovation and R&D are crucial to success, the financial market is more supportive than banks.Along with the development of economic and upgrading of industrial structure, the financial structure must change as well.When Chinese industries are dominated by mature manufacturing industries, the bank-oriented financial system provides important support for economic development.During the economic transition and industrial upgrading when many industries approach technology frontier, the importance of the financial market will become more significant.Nonetheless, only based on the improvement of investment environment can the financial market play its role.Our findings are consistent with empirical facts.Moreover, our framework can provide new perspective to understand the past, current and future development of Chinese financial system, as well as the theoretical foundation for Chinese financial reform in order to promote economic transition and industrial upgrading.
Key Words: Industrial Structure; Financial Structure; Development Stage; Bank; Financial Market

Abstract：The lesson of the international financial crisis had shown that the monetary policy which aimed at price stability does not guarantee financial stability and macroeconomic stability.So the financial system needed macro-prudential policy to maintain stability.Because monetary policy and macro-prudential policy were not entirely independent, policy makers need to first confirm the relationship between the two policies in order to effectively carry out economic management.The paper used DSGE model to analyze the effect of the macro-prudential policy and the relationship between monetary policy and macro-prudential policy, the results indicated: first of all, counter-cyclical capital tool for macro-prudential policy was welfare enhancing, and it could be useful to stabilize financial fluctuation; Secondly, macro-prudential policy could support monetary policy, especially when the market suffered financial shock, the support effect would be obvious.So when the authorities conduct the management to the macro economy，they need to realize synergies between the macro-prudential policy and monetary policy.
Key Word: Macro-prudential Policy; Monetary Policy; DSGE Model

Abstract：The optimal monetary policy defined by the traditional framework of monetary policy is built around the quadratic loss function of the central bank.Some existing research has recently showed that the important standard of optimal policy is whether it could make the economy converge to the rational expectation equilibrium.From this perspective, this paper further explores how the different strategic interactions between the central bank and the public lead economy to deviation from the REE.First, it depicts the forming process of macro expectations through introducing adaptive learning in the framework of the New Keynesian Model.Second, we calculate the deviation degree of economy to the REE and the level of mean and volatility of economy by using the method of dynamic numerical simulation under different strategic interactions.Last, we analyze the results above all and distinguish the optimal monetary policy.This paper shows flexible inflation target or mixed nominal income target could be used by the central bank to make the economy steady and develop in harmony.
Key Words: Adaptive Learning; New Keynesian Model; Optimal Policy; Dynamic Simulation

Abstract：Social view of state ownership has long been debated among academic circle，this paper investigates the “economic stabilizer” function of state ownership during the non-normal economic periods.Based on 66937 firm-year observations from 11 Asian regions, we assess the impact of financial crisis on firm capital investment and the function that state ownership has played in an Investment Euler Equation framework.We find that financial crisis do have a negative impact on firm capital investment, while state ownership can alleviate this negative effect, i.e., greater government stakes in banking industry and/or in firm are associated with smaller negative shocks in firm capital investment.Further tests reveal that this phenomenon may due to the investment supply shock and the risk-averse business model adopted by the state-owned banks and firms.Our findings have significant policy implication for re-evaluating the nature of the state ownership and for re-balancing the structure of the state ownership and private ownership in the national economy.
Key Words: Financial Crisis; State Ownership; Capital Investment; Investment Euler Equation

Abstract：By using China Household Finance Survey(CHFS)data, the paper investigates the effect of financial literacy and trading experience on household financial market participation and financial portfolio choices.The paper finds that financial literacy affects financial decision-making significantly: households with high financial literacy are more likely to participate in the financial market and increase their risky asset holdings.Trading experience, measured by the year of stock trading, significantly increases households-risky asset holdings and helps to improve households-probability of earning profit.Furthermore, we find that the improvement of economic and financial environment, the increase of households-net-asset and income, risk prefer and higher education have positive effect on households-financial market participation and their risky asset holdings.Households in the rural area have lower probability of participating in the financial market and less risky asset holding in their portfolio.
Key Words: Financial Literacy; Trading Experience; Financial Market Participation; Portfolio Choice

Abstract：This paper analyzes the synergy effects of industrial structure and city size on productivity of Chinese cities, and estimates the optimal size of cities for a given industrial structure and the marginal benefit of structural upgrading under a constraint of urban scale.The panel data regression estimates of prefectural or higher level cities show that the effects of industrial structure on urban per capita output depend on size of the cities; a city must surpass a threshold size in order to benefit from the home market effects which stems from the linkages of upstream-downstream industries.As the urban population size increases, urban productivity experiences an inverted-U shaped progress and the marginal benefit of urban growth increases as the industrial structure shifts from manufacturing to producer services.The estimation also shows that most cities in China are smaller than their optimal sizes.Therefore, small and medium sized cities should develop manufacturing and promote agglomeration, while developed large cities transition from manufacturing-oriented economies to service economies.
Key Words: Industrial Structure；Linkage Effects；City Threshold Size；City Optimal Size；Structure-Size Synergy Effects
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Abstract：Using the case of feed-in tariff for wind power, the purpose of this paper is to construct a framework for quantifying impact of Chinese renewable energy policy.Based on the principle of real options, this paper introduces an evaluation framework for wind power feed-in tariff policy by recursive stochastic dynamic programme, and takes into account the volatility of traditional energy and national renewable energy target.At a more microeconomic level, market/ enterprise is modeled to maximize the expected value by making R&D decision.Using this framework, the paper quantitatively evaluates Chinese feedin tariff policy for wind power.We find that:(1)current average tariff is sub-optimal and optimal tariff level is higher by internalizing externality of carbon emission reduction into model specification;(2)it may be difficult for wind power industry, including generation, transmission and system balance, to be market-oriented; but(3)this conclusion would be changed if one introduces carbon trading market to be connected with wind power market.
Key Words: Renewable Energy; Policy Quantitative Evaluation;Recursive Stochastic Dynamic Programme

Abstract：In the last decades, laws about entry barriers to the FDI and multinational corporations have been set up in China, such as “Regulations on Foreign Investment Direction” and “Catalogue for the Guidance of Foreign Investment Industries”.In 2013, the Third Plenary Session of the 18th CCP proposed to reform above system, and the related reforms are beginning with the birth of the China(Shanghai)Pilot Free Trade.What are the main effects of entry barriers to foreign investment in China? What may be obtained in the next series of reforms? To solve these questions, this paper does a theoretical research through building a dynamic game model by the new trade theory.The results show that: 1)Setting up entry barriers to foreign investment is a rational choice of developing country‘s government for maximizing social welfare; 2)Deregulation of entry barriers such as establishing free trade zone can bring a series of positive economic performance, such as transfer payments which are transferred from corporation to consumers ,expanding domestic demand, price suppression and expanding output of the domestic products; 3)China(Shanghai)Pilot Free Trade Zone conducts a “negative list” to retain a small part of entry barriers in the free trade zone, such progressive reform is strong rationality.In brief, the reforms of entry barriers to foreign investment may bring positive policy effects.
Key Words：Entry Barriers; China(Shanghai)Pilot Free Trade Zone; FDI; Tariff Policy; Negative List

Abstract：This paper builds a model to investigate the impact of upstream monopoly on downward firm’s quality choice, giving the condition under which upstream monopoly blocks quality upgrading.We then empirically examine the impact of upstream monopoly on firms-quality upgrading.Instead of using the unit value method of measuring product quality, this paper combines the Chinese industrial firm data and Chinese custom data, and uses the regression method to compute the firms- product quality.The results show that: First, higher upstream monopoly is on average associated with higher product quality.Second, the impact of upstream monopoly is heterogeneous across firms and industries, government subsidized monopoly has a negative effect on downstream product quality, and the negative effect is more pronounced for industries with larger extent of downstream competition.
Key Words：Upstream Monopoly；Quality Upgrading; Government Subsidy

Abstract：This paper analyzes the reason for the increase of household and national saving rate under the framework of dual economy rural labor migration. We establish a general equilibrium model for the analysis of household consumption-saving decisions and decompose total saving rate into saving rates of urban households, migrant workers and farmers. Due to the discrepancy in income level and social security, the marginal propensity to save of migrant workers is higher than farmers and urban households. In the process of rural labor migration to non-agricultural department, the amount of migrant workers is increasing as capital accumulation. Their high saving behavior also impels the increase of household saving rate and national saving rate.
Key Words: Rural Labor Migration; Social Security; Subsistence Level of Consumption; Household Saving Rate

Abstract：In the paper, the income distribution pattern is defined as the income shares owned by laborer, capital owner and government.At firm level, the tax system plays an important role in the change of income distribution pattern not only through distribution stage but also through production process.It is found out that labor income share would increase if we reduce indirect taxation, but in the long run we must make labor factor more and more important in the production process; the restructuring of firm would improve capital income share and government income share, so it would reduce labor income share; and the increase of tax burden is a main cause of the sustained high growth of tax revenue in China, but the effects of the design of indirect taxes and double taxation are not so important as some scholars-expectation.I also put forward a cautious and optimistic judgment to the trend of income distribution pattern in China and propose a reform strategy such as “reducing the indirect taxation and improving the direct taxation simultaneously”.
Key Words：Income Distribution Pattern；Tax System；Restructuring of Firm

Abstract：In some Chinese listed firms, new CEOs come neither from internal promotion nor from external recruitments, but rotate among subsidiaries in their business groups.We define this specific CEO turnover with Chinese institutional background as CEO rotations.In this paper, we empirically examine whether CEO rotations will improve firm‘s long-run future performance.This paper finds that CEO rotation plays a distinctive role in management turnover practice in Chinese listed companies.Controlled for the potential influential factors, CEO rotations improve performance more than internal promotions, but less than external recruitments.Such incentive effects come from both external and internal channels.A new CEO who comes from outside the firms will have more possibilities of doing reform and introducing changes on the one hand; on the other hand, the pay-performance sensitivities as well as the incentives of CEOs are increased by re-signing the pay contract around CEO turnover.This paper, therefore, does not only provide the early evidence for the CEO rotation in Chinese listed firms, but also sheds light on policy implications of similar practice in the bureaucratic system for government officials.
Key Words：CEO Turnover; Rotation; Firm Performance; Corporate Governance

Abstract：Schooling is the main form of human capital accumulation, and thus one of the sources of comparative advantage.With the Difference-in-Differences method, we investigate empirically the impact of schooling on exporting.Armed with the occupational skill information provided by O*NET, we construct a series of industrial skill indicators so as to uncover and compare the various channels of schooling.Our empirical results show that, countries with more schooling tend to specialize in industries requiring higher cognitive abilities and more social, basic skills,among other skills.The impact of schooling is mainly realized by exporting more product categories and to more partners.Our study has important implications for China’s education and economic development.
Key Words: Schooling; Comparative Advantage; Skill;O*NET