Abstract： Drawing upon the transnational input-output analysis， this paper quantifies the status quo and dynamics of Chinese integration into the global value chains (GVCs) via intermediate， valueadded and input-output linkages. We find that the foreign value-added contents in China's products and services tend to increase， and the value-added-based GVCs integration is stronger than the intermediate-based one. China has much closer linkages with the US， Japan， Korea， Chinese Taiwan and Germany， but such linkages with the US and Germany are on the rise while those with Japan， Korea and Chinese Taiwan tend to drop. Most of Chinese sectors tend to import more value added and also export more value added to economies with higher income. For most of Chinese sectors， the output and input-based linkage indices are above 1.5. This shows that China has already deeply integrated into the GVCs through output supply and input demand channels. This paper not only provides an empirical foundation for reflecting on how to upgrade China's location in the GVCs， but also offers policy suggestions for China optimizing the arrangement of economies and sectors when effectively promoting regional economic integration.
Key Words： Global Value Chains (GVCs)； Transnational Inputoutput Analysis； Chinese Economy
JEL Classification： F14， F15， F20

Abstract： This paper estimates the rate of Chinese real economic growth using the global night-time light data and has a try to test the authenticity of the Chinese GDP statistics from a more objective perspective， in order to answer a question debated long. We explore an empirical study of the relationship between GDP and night-time light with Chinese provincial panel data during 1992 to 2012. It shows that there is a significant positive correlation between GDP and night-time light among different methods. Further studies find that the result is robust. The empirical study argues that the night light is a good proxy of GDP. We estimate the rate of Chinese real economic growth from 1993 to 2012 according to the fitted lights and official GDP statistics. It shows that the two kinds of data are not completely in consistent both in national and regional data. Apart from the elimination of statistical techniques， we argue that the local government may exaggerate the growth rate of GDP， which due to the backward system for the local performance evaluation.
Key Words： Economic Growth；Gross Domestic Product； Night-time Light
JEL Classification： O47， E01， O40

Abstract： Based on personal characteristics including ages， education， birth place， connections， etc.， a large body of literature studies the role of local officials' career incentive in political and economic performance. We take a further step to consider the policy making as the outcome of the game among local officials under collective leadership principle. We suggest that under certain power structure and weak institutions， this game and the consequent need to balance power within leadership， play an important role in growing government size and previously failed attempts to streamline the staff. Using the manually collected information about the composition of provincial party stand committees， we construct a measure of interest divergence within provincial leadership during 1992—2011. It is demonstrated that the extent of interest divergence significantly increases the size of senior appointees. This result holds after controlling for local fiscal structure， industrial structure， population size， economic growth， and the power of party secretaries， etc.. Therefore， we suggest that deregulation， imposing constraints on executives， and unifying power and responsibilities are key to controlling government size and delivering reforms within public sector.
Key Words： Power Structure； Government Size； Interest Divergence； Organizations
JEL Classification： H11， D72， C23

Abstract： This paper introduces tax in a standard two-sector structural change model and analyzes the short-run and long-run economic effects of government's fiscal policy. We find that， the tax on the dominant sector of the economy， non-state sector， has effect， while the tax on the state sector has no effect. In the long run， the tax on non-state sector reduces consumption and capital stock in the balanced growth path (BGP). In the short run， a permanent increase of tax on non-state sector boosts consumption but discourages investment. Finally， we calibrate our model and estimate the welfare cost. The numerical simulation shows， the welfare cost of tax in China is equivalent to a 6%—7% reduction of consumption. If we cut down the tax rate of non-state sector by 5%， the welfare cost will decrease by 1.5%； if cut down by 10%， the welfare cost will decrease by 3%.
Key Words： Structural Change； Tax Policy； Two-sector Model； Welfare Analysis
JEL Classification： E62， H20， O41

Abstract：Improving social mobility is important for China to fully explore the value of human capital so as to avoid the middle-income trap. This paper employs CHNS data， Altham index and counterfactual methodology to analyze the trends and causes of China's social mobility. It is found that the inter-generational mobility of urban Chinese experienced an inverse-U type changes. The 1960s cohort and 1970s cohort respectively have the highest and the lowest level mobility， while the mobility of the 1980s cohort lies between the former two cohorts. Education is found as the most important factor influencing social mobility. Education inequality explains a large part of social mobility changes. The effect of education inequality depends on three factors： family background difference， inequality of education system and labor market.
Key Words： Social Mobility； Trends； Causes； Education Inequality
JEL Classification： O15， P16， P36

Abstract： Administrative boundary adjustment is one of the effective tools for central government to promote urbanization. Whether the government-dominated urban expansion could promote population agglomeration needs to be empirically tested. Based on census data in 2000 and 2010 together with prefecture economic datasets， this paper examines city-county merger taking place between 2000 and 2004 to answer this question. Using Entropy Balancing and Matching methods to deal with selection bias problem， we find that city-county merger significantly promotes urban population's growth. These growth effects are mostly coming from migrants from within home counties and from other provinces rather than local Hukou population's growth. In addition， eastern cities and cities with greater market potential have larger growth effects. This paper further explores the mechanisms of the merger effects， arguing that local market integration and urban agglomeration economies help increase firms' productivity and employment. We use industrial micro survey data to justify that argument.
Key Words： City-county Merger； Urbanization； Population Agglomeration； Entropy Balancing； DID
JEL Classification： R10， R50， O10

Abstract： The paper analyzes the impact of innate ability， compulsory education and non-compulsory education on income inequality and intergenerational mobility through constructing a four-period overlapping generation model. We found non-compulsory education plays an important role in explaining the income inequality and intergenerational mobility， besides innate ability. The differences between innate ability among different income groups are not very large， but the gap was enlarged by receiving compulsory and non-compulsory education. The reason is that poor family invests little on children's early education and therefore the quality of school is lower. These results show the attendance of higher education for children from poor families is much less than the children from other income groups. Through policy experiments on three kinds of public educational expenditure investment models， we find increasing public expenditure in compulsory education period (Grade 1—9) is most efficient and effective one， which can compromise the budget constraints of poor families on children's early education investment.
Key Words： Education Investment； Income Inequality； Intergenerational Mobility； Educational Expenditure
JEL Classification： I24， I26

Abstract： Employing China Household Finance Survey(CHFS)data， this paper empirically investigates the effects of the rising housing price on household multi-suite decision and urban household savings rate， estimates counterfactual savings rates of one-suit and multi-suite households and measures average treatment effects of multi-suite decision on urban household savings rate after correcting sample selection bias by using switching regression models. Empirical results show that the rising housing price affects multi-suite decision significantly and positively， and households with higher income， bigger family size， housing demolition experience， and smaller first-suit are more inclined to multi-suite decision.In the real estate market upward phase， the rising housing price has become one of the important factors that push up the savings rate， and has induced people to save more for buying housing and repaying housing debt.Multi-suite decision affects urban household savings rate significantly and positively.The average treatment effect of multi-suite decision on savings rate is 9.9% for a random urban household.The study of this paper provides a new interpretation perspective for the significant increase in the savings rate of urban household in China in the first ten years of this century.
Key Words： Housing Price； Multi-suit Decision； Savings Rate； Average Treatment Effect； Endogenous Switching Regression Models
JEL Classification： D14， R21， R31

Abstract： In the period of transformation， progressive liberalization of interest rate and heterogeneity of corporate ownership structure are two traits of China's economic structure.Based on those two traits， this paper introduces new constraints to Oliner's(1996)standard model of broad credit channel and builds an extended model of broad credit channel for China's monetary policy.This paper puts forward two hypotheses and tests them with a sample of China's unlisted companies during 1998—2007.The finding of this research is that when financial friction remains constant and the interest rate regulation is loosened， the financial accelerator effect of contractionary monetary policy on the economy through broad credit channel will be strengthened instead of weakened.However， the growing proportion of state-owned enterprises in the economy significantly reduces the effect of financial accelerator.The policy implications of this study include that financial friction should be considered in carrying out monetary policy， financial friction reduction should precede complete interest rate liberalization， and the impact of state-owned enterprises' growth should be reviewed given that the financial friction remains constant.
Key Words： Financial Friction； Economic Structure； Broad Credit Channel； Financial Accelerator
JEL Classification： A10， E50， G00

Abstract： This paper analyzes the effect of foreign trade on energy and environment efficiency using the case of China's industrial sectors.For that purpose， two non-radial directional distance functions are adopted to measure the energy and environment efficiency indices.Each sector's historical import and export trade data are built from the United Nations Commodity Trade Statistics.Simultaneous equations with Tobit models are constructed in order to avoid endogeneity problems and the influence mechanisms are further discussed.Our study finds that：(1)Overall， energy and environment efficiency of China's industry is growing at a low level；(2)Foreign trade significantly impacts on energy and environment efficiency improvement via two mechanisms： technology spillover effect by importing and learning by exporting；(3)A mutual cause-effect relationship exists between trade and efficiency， i.e.， industries with high energy and environment efficiency are more active in trade.The empirical results present robust after other control variables are considered， such as R&D investment， environmental regulation， structure of ownership， energy prices， and industrial heterogeneity.
Key Words： Energy and Environment Efficiency； Foreign Trade； Non-radial Directional Distance Function； Simultaneous Equations Model
JEL Classification： F49， Q43， Q56

Abstract： Based on micro data of China between 2002 and 2006， we construct and calculate fixed export cost variable for each industry-region-year group of China and match them to Chinese firms in those groups.We try to study the joint effect of heterogeneous fixed export cost and productivity on firms' export decision.This paper concludes that both the negative effect of fixed export cost and the positive effect of total factor productivity on export propensity are significant.Specifically， in comparison with different productivity-level exporters， those high-productivity non-exporters face higher fixed export cost.We also find that given a higher productivity， negative effect of fixed export cost on firms' export behavior becomes weaker， but the substitution effect between FEC and TFP is not symmetric.In addition， after grouping all exporters based on industry-region-year， we find that both the higher fixed export cost and larger productivity dispersion raise the average export volume in a group.
Key Words： Heterogeneous Fixed Export Cost； Total Factor Productivity； Firm-level Export Decision
JEL Classification：  F10， F12， F14

Abstract： In the experience product market with information asymmetry， the informal reputation mechanism and formal legal system can provide the manufacture which products with potential harm.But the reputation mechanism is challenged of high ‘time cost’， and the product liability is challenged with high litigation costs and low litigation rate.This paper explores the interaction between reputation and product liability with the assumption that the reputation adjustment evolves a Markovian process of past reputation and the present quality produced.Three conclusions are derived.First， there is a qualityreputation saddle point equilibrium based on the assumptions.Second， the strict product liability can reduce the reputational costs.Third， the equilibrium level of quality and reputation under strict liability are higher than that without product liability law.
Key Words： Experience Goods； Reputation Dynamic Adjustment； Product Liability； Vertical Differences
JEL Classification：  K13， L15

Abstract： Using unique mandatory disclosure data on board voting behavior， this study examines the differences in voting behavior between non-controlling shareholder directors and independent directors on board decision making.This study finds that compared to controlling shareholder directors and inside directors， non-controlling shareholder directors are more likely to vote against board proposals while independent directors are less likely to vote against board proposals， non-controlling shareholder directors are more likely to vote against board proposals than independent directors.The paper also finds that， non-controlling shareholder directors are more likely to veto the board proposals in firms with worse performance and in state-owned firms.Independent directors are more likely to veto the board proposals in firms with worse performance and are less likely to veto the board proposals in state-owned firms.These findings suggest that in firms with worse performance and more severe agency problem， non-controlling shareholder directors play a more active role in monitoring controlling shareholder and management while independent directors exhibit riskaverse voting behavior on the board.Further analysis shows that directors' dissent voting can improve firms' future performance.In sum， the study suggests that non-controlling shareholder directors can better monitor controlling shareholder and management than independent directors within the context of highly concentrated ownership structure and weak investor protection.
Key Words： Non-controlling Shareholder Directors； Independent Directors； Directors' Voting Behavior
JEL Classification：  G32， M10