Abstract： Other than money-in-utility (MIU) or cash-in-advance (CIA) model, the search model of money is based on explicit money micro-foundation. We extend Faig & Li (2009) neoclassical money search framework to analyze the effect of credit trading on the welfare cost of inflation. We find that: on one hand credit trading increases welfare by alleviating the budget constraint of buyers, but on the other hand it decreases welfare by increasing the cost of holding money. Whether the total welfare effect of credit trading is positive or negative depends on which effect dominates. After calibration, our numerical result shows that the welfare cost of inflation decreases as the scale of credit trading increases. The paper suggests that to develop financial market and to enlarge the scale of credit trading system will have significant impact on social welfare.
Key Words：Money Search; Credit Trading; Welfare Cost of Inflation
JEL Classification：E32, E40, E52

Abstract：This paper introduces the dual-track interest rate system into the New Keynesian DSGE model to analyze the efficiency of it, the reform of it and the optimal monetary policy. We find out that the efficiency of the dual-track system is not only correlated to the distortion of financial market but also to that of product market. To minimize the welfare cost, the government should decrease the distortion of the two markets until the dual-track system becomes inefficient and abolish it as soon as it becomes inefficient. In the short run, the monetary policy transmits mainly through the channel of regulated interest rates. The discretionary-reacting rule obtains more than the sole-reacting rule in a higher order.
Key Words：Dual-track System; Monetary Policy; Demand Effect of Investment
JEL Classification：  E52, E44

Abstract：This paper aims at exploring the impact of financial liberalization on rural households’ credit availability. Using data of the National Rural Fixed-point Survey (NRFS) over the period 1999—2009 and multiple financial liberalization measures, we show that financial liberalization significantly depresses households‘ credit availability from formal financial channels. Divided by loan usage, the agricultural production loan is significantly depressed by the liberalization, while living consumption loan is not affected. Furthermore, the extent of depression is influenced by the industrial investment opportunity. The more agricultural investment opportunities (industrial investment opportunities) imply a lower (higher) extent of depression, which suggests that the source of depression is the capital transfers between agricultural and industrial sectors.
Key Words：Financial Liberalization; Rural Households Credit; Credit Depression; Capital Transfers
JEL Classification：  R51, Q14, C50。

Abstract：It has become an urgent proposition faced by China scholars and policymakers whether the quality of China‘s export products get promoted. Using China Customs Database with more than 25 million data in year 2000—2006, the major crucial findings of this paper lie below, based on Demand Structure Model(DSM) and multiple instrument variables.(1) In general, the quality of China’s export products has a slight downward trend, but the curve appears U type change; (2) the quality of export products in private samples appears significant U type change and a slight downward trend, while the trend upward in all other samples; (3) a core factor leading to the U type curve can be explained by a large number of low quality private samples entering and exiting export markets in short times; (4) private and foreign samples have important positive contributions to the growth of China‘s export product quality. Among them, private samples contribute the highest, while the SOEs’ contributions significantly negative. All the above findings provide not only empirical evidence understanding changes and motivations of Chinas export product quality, but also meaningful reference for China‘s foreign trade policy adjustment.
Key Words：Quality of China’s Export Products; U Type Curve; Ownership; Entry and Exit Effects
JEL Classification：  F10, F12, F14

Abstract：Based on labor participation model and labor supply model, this paper investigates the effects of old-age security on labor supply by using rural household survey. The results show that old-age security system has a remarkable effect of labor supply. Covering the old-age insurances tends to decrease labor participation rate and labor supply level, especially for agriculture labor supply. The pension has a rather prominent income effect, which stimulate rural residents to reduce labor supply. Although pension doesn‘t decrease agricultural labor participation rate, may reduce agricultural labor supply level. Various types of old-age security system have different effects of labor supply. The New Rural Pension tends to encourage rural residents stay in agriculture and rural, but the Urban Employee Pension and the Migrant Workers Comprehensive Pension tend to motivate them move to urban and engage in non-farm employment, and the Landless Farmer Pension tends to them quit from the labor market. Social security system is accelerating change of the labor market, we should seek to a social security system adapting with current labor market and economic development in China.
Key Words： Old-age Security; Labor Supply; Labor Participation Rate
JEL Classification：D13, J22, H55

Abstract：From the perspective of dynamic economic assimilation, this paper studies the wage gap between rural migrants and urban workers in China. We developed a new nonlinear instrumental variable regression method, which fully accounted for the specific data structure, to correct the inherent endogeneity problem in the migrant assimilation issue. The empirical results show that rural migrants‘ relative earnings rise by 0.8% per year following migration, which means migrants’ wage will finally catch up with urban workers in 10—58 years. Education increases the initial wage of migrant but does not accelerate the assimilation process. Both training and social network have a positive effect on the assimilation rate. Our results indicate that rural migrants not only suffer from a low initial wage, but also have a relatively low assimilation rate, which results in a long-term disadvantage in the urban labor market. Our findings suggest that social training and public employment guidance service for rural migrants is critical to urbanization.
Key Words：Migrant; Wage Gap; Assimilation
JEL Classification： J61, J15

Abstract：This paper mainly analyzes the governance effects of local officials in China through constructing tax competition models. We consider two different governance measures of the central government, one is to reduce the intensity of political incentives, and the other is to enhance the strength of anti position-related consumption. We focus mainly on the governance effects of these two measures. When the intensity of political incentives is reduced by the central government, local officials will decrease the provision of development-oriented public goods and increase position-related consumption, but the provision of livelihood-oriented public goods will not be changed. When the strength of anti position-related consumption is enhanced by the central government, local officials will decrease position-related consumption and increase the provision of both development-oriented and livelihood-oriented public goods. When two measures are simultaneously adopted, the governance effects will be offset to some degree, and the eventual outcomes will depend on which effect dominates, however, the provision of livelihood-oriented public goods will be inevitably increased no matter which effect is stronger. We also introduce the environmental pollution into the residents‘ objective function, and find that the critical level of marginal pollution plays an important role in determining the governance effects on the residents’ welfare.
Key Words： Central Government; Local Officials; Political Promotion; Position-Related Consumption; Governance Effects
JEL Classification：H11, H41, H77

Abstract：Two local government incentive mechanisms prevail in China: promotion tournament of officials and fiscal revenue sharing. This paper compares social welfare under these two mechanisms based on a model with sequential games between the central government and local government. Given the tremendous regional differences in endowments and economic development level in China, we find that the incentive mechanism based on tournament of officials not only curbs the regional cooperation, but also induces lower level of effort from local officials than the fiscal incentives. Moreover, the fiscal incentive beats the official tournament in terms of maximizing the central government’s utility and social welfare.
Key Words：Promotion Tournament; Fiscal Incentives; Regional Cooperation；Social Welfare
JEL Classification：H77，R11

Abstract：The literature focuses on the effect of technology on the environment, while, they pay little attention to the effect of the direction of technology. This paper introduces the direction of technical change and environment quality to the two-sector model, and discusses the effect of directed technical change and the variation of urban and rural lands on the environmental quality, and measures the level of the effect on environmental quality using numerical simulation. It shows that the improvement of environmental quality can be achieved through innovation of clear technology and controlling the size of land. When the demand of urban and countryside land is exogenous, the pollution is determined by the clean and dirty technology. While it is endogenous, clean and dirty technology have direct effect on environmental quality, and also affects the environmental quality through changing the land‘s kinds and sizes. The results of numerical simulation show that under different directions of technology change, the environmental quality, urban land size and economic output could not do grow coordinately. There is crowding out effect of environmental quality on urban lands and economic output in the current path of technology change. Only through improving clean technology innovations, environmental quality, and economic growth develop coordinately.
Key Words： Directed Technical Change; Urban Land Size; Environmental Quality
JEL Classification：O13, O33, 047

Abstract：This paper focuses on the universality of conditional cooperation, effects of punishment and social capital on conditional cooperation. Three hypotheses associated with the external validity of experiments are proposed, which are tested with the students by using traditional experiment and the workers by artificial field experiment. Main findings of this study are: 1) Conditional cooperation is a common phenomenon, and is relatively stable, although there are differences between cooperation levels of different groups; 2) Punishments of public good experiment have endogenous premiums, but the premiums of different groups may have different directions and different mechanisms; 3) There is a significant positive correlation between social capital and the level of cooperation, but the mechanisms of impacts may be different in different populations. Results of this paper can provide a more robust theoretical and experimental basis for policy-makers to design different incentive systems according to the characteristics of different populations, in order to promoting social cooperation.
Key Words：Conditional Cooperation; Punishment; Social Capital; Social Network; General Trust
JEL Classification：B52, C91, C93, Z10

Abstract：Based on the stateowned listed companies from 2003 to 2012 in China, the paper explores the influence of governance involvement of disciplinary commission on managers‘ private benefits. Classified the managers’ private benefits into monetary private benefits and non-monetary private benefits, the paper finds that: the governance involvement of disciplinary commission has the significant negative influences on the managers‘ non-monetary private benefits, and has no influence on the managers’ monetary private benefits. When examining the moderating effects of several conditions, the paper further finds that: when the disciplinary commission involves the board, when the CEO is a Party Membership, or when companies are central state-owned companies, the negative relationship between the governance involvement of disciplinary commission and managers’ non-monetary private benefits will be stronger.
Key Words：State-owned Companies; Disciplinary Commission; Governance Involvement; Private Benefits; Empirical Study
JEL Classification： D22, G30, M12

Abstract：Volatility is a common characteristic of stock market, it has an important impact on the decision of capital allocation and valuation. Over the past three decades, income distribution around the world has shown a trend of deteriorating. Meanwhile, stock market volatility has also increased dramatically. This paper investigates into the relationship between income inequality and long-term stock market volatility both theoretically and empirically. Theoretical analysis shows that in the presence of entry cost, deterioration of income distribution will decrease stock market participation, which will reduce risk sharing between shareholders. Endogenous or exogenous disturbance will cause stock market to be more volatile. Empirical results document a strong positive relationship between cross-country stock market volatility and cross-country income inequality, and such relationship is stronger in developing countries than in developed countries.
Key Words：Income Inequality; Volatility; Asset Pricing
JEL Classification：D31,G12,G15

Abstract：Recently, the establishment of the margin transactions institution in China‘s stock market provides an ideal research background to empirically study the effect of short-sale constrains on stock mispricing. We exploit the natural experiment (plasticizer event in wine industry) to the shock of the listed companies in wine industry and empirically test the effect of short-sale constrains on stock mispricing. According to short-sale constrains on stock, we construct four hedge portfolios, and find our investment strategy produce a daily excess return 0.5%, standard deviation 1.5%, and Sharpe ratio 33%. The empirical results indicate the portfolios achieved high return with low risk. Further regression analysis find the stocks with short-sale constrains are seriously overvalued, and the fundamental value of stock does not contribute to explain the mispricing. Our evidences suggest that the short-selling restrictions lead to the stock overvalued, short-selling helps to correct mispricing, and improve the stock market efficiency. We design a hedge strategy with short-selling and event-driving, producing significant excess return.
Key Words：Short-sale Constrains; Mispricing; Trading Strategy; Margin Transactions
JEL Classification：G11, G14