Abstract： Socialist political economy with Chinese characteristics (SPECC) is the latest development of Marxist political economy in contemporary China. The nationality of SPECC consists of the particularity of basic position， standpoints and methods， and the particularity of basic national conditions and practices. The internationality of SPECC consists of the worldwide economic theoretical generality of human common values included in the nationality of SPECC， and the worldwide sharing of each nation's theories and experiences. Both nationality and internationality require innovation. It is suggested that SPECC should be based on China's conditions and practices， absorb China's traditional cultural essences， draw lessons from other nations' helpful theoretical and practical results， present theoretical viewpoints independently and originally， and construct the academic system as well as the discourse system with distinctiveness， which could build the characters and advantages of SPECC， and contribute Chinese wisdom to world economic development and economic theoretical improvement.
Key Words： Socialist Political Economy with Chinese Characteristics; Nationality; Internationality; Innovation and Development

Abstract： The comparison of international experiences shows that the growth leaps， from the middle-income stage to the high-income one， are in-arguably differentiated. However， three aspects of uncertainty and risk are commonly shared： (1) The proportion of manufacture industry (MI as abbr.) declined accompanied with industrial depressions， and the proportion of service industry (SI as abbr.) increased with the population drift and Baumol cost disease， which distort the long-term efficiency through short-term random fluctuations. (2)The subordinate of the SI to MI， as a consequence of professionalization， is robust， such that the knowledge accumulation in service industry cannot be significant. A SI's separated growth path from MI， driven by knowledge production and allocation， is hardly realistic. (3) The lack of mechanism for compensation based on consumption efficiency， as the cornerstone， blocks the efficiency of knowledge production and allocation and the upgrading path of human capital structure. Reconstruction of the efficiency mode， with the knowledge elements and human capital accumulation as the core， might be the main challenge to step over the middle-income stage. Facing the difficulties during the transition period， China should conform to the trend of the service industry factorizing， avoid over-expansion of service industry and promote the coordinating development of manufacture and service. In addition， we should reform institutions to accelerate the progress of reconstruction of efficiency mode.
Key Words： Growth Threshold; Uncertainty; Knowledge Process; Efficiency Mode Remodeling

Abstract： Population size and land area are the two most important natural features of large countries. The existence of the large country effect and the condition of its existing can be inferred from the two natural features. The per capita income has a positive relationship with land area， but an inverted U-shaped connection with population size. Under land area and other conditions given， if the population size of a country is moderately high， the per capita incomes in this country will be higher than that in a small country. However， if population size is too large， the large countries will weaken or reverse its large country effect due to the over-crowded population. It is further showed that the effect of large country will possibly be weakened or reversed due to market transaction cost， differences of economic structure and the lower openness between countries. Obviously， it requires certain conditions to form the effect of large country. The relationship between national scale and the gap between rich and poor is not simply linear.
Key Words： Effect of Large Country; Economic Structure; Income Gaps across Countries

Abstract： The central bank can use tit for tat strategy to make its policies. This strategy is， if the public cooperates with the central bank policy， then the central bank implements a modest policy. This strategy reflects how central bank policies respond to public reaction， and makes up for the shortcomings of the traditional policy rule. We develop this strategy to the theory and model level， putting forward a second type of time inconsistency as well as a second type of reputation for the central bank. Based on this strategy， we construct a repeated asymmetric payoff prisoner's dilemma game model，and analyze the benefit mechanism of the interactive relationship between the central bank and the public. This paper proves that under this strategy and incomplete information condition， the model can represent cooperative behavior， so the central bank can use this strategy to cause the public to cooperate with its policies. This gives out a totally new theory that can lead to public cooperation with the central bank policy.
Key Words： Cooperative Behavior; Reputation Game Model; Policy Rules; Tit-for-Tat Strategy; Asymmetric Payoff Prisoner's Dilemma

Abstract： This paper investigates price transmission mechanisms between CPI and PPI. A nonlinear chaos model (MNMG) is proposed to examine linear and nonlinear transmissions between the two price indices. Empirical evidence shows that： (1) CPI responds to the changes of PPI at an average lag of 1-4 months， and PPI responds to the changes of CPI at an average lag of 1-2 months; (2) both the production chain mechanism and the price expectation mechanism work significantly underlying the transmission between PPI and CPI; (3) the production chain mechanism plays a more important role underlying the transmission from CPI to PPI， and the price expectation mechanism plays a more important role underlying the transmission from PPI to CPI. The results suggest expectation management for the current deflation in the industry section of Chinese economy.
Key Words： Consumer Price Index; Producer Price Index; Price Transmission; Price Expectation

Abstract： With the development of urbanization and industrialization， economic growth and the improvement of people's living standard contribute to continuous growth of China's resident electricity consumption. Different from the secondary industry， China's residential electricity consumption depends more on the increase in the quantity of household appliance and the time they work， which is driven by resident income growth， urbanization and other factors. Based on the diffusion model， we conduct an empirical analysis of panel data of five kinds of appliance in China's 30 provinces during 1998—2012 Results show that rise in resident income and urbanization rate has a positive impact on the ownership of urban household appliances， while the increase in household appliance price has a negative impact. With the continuous growth in urban resident income， its impact on the purchase of household appliance gradually declines， while the influence of urbanization process is getting more and more obvious. Considering the relatively apparent “lock-in effect” on household appliance in China， in the process of urbanization， the government can carry out policies on household energy-efficient appliance subsidy， energy efficiency upgrading to stimulate purchase of household energy-efficient appliance and promote technological upgrading of enterprise， in order to promote energy conservation and emission reduction.
Key Words： Diffusion Model; Income Distribution; Urbanization; Electricity Appliance Price

Abstract： This paper for the first time proposes an empirical framework for inclusive growth， under which policy's efficiency and distributive impacts can both be assessed.This paper applies this framework to China's rural infrastructure and a large sample of individual-level data， providing estimates of growth and distributive impacts of physical infrastructures of telephone and tap water in rural China.They all are found to promote rural income growth， helping narrow the rural-urban gap in China.More importantly， the poorer gained more than the richer from these infrastructures， implying benign distributive effects In addition， the more experienced and the better educated benefited more than their counterparts.This paper sheds light on the positive and important role in which infrastructure plays to promote inclusive growth in rural China.
Key Words： Inclusive Growth; Infrastructure; Efficiency Impact; Distributive Impact; Inequality

Abstract： Using Chinese micro enterprise data， this paper investigates the impact of external regulation on SOE performance and reformation， with the establishment of SASAC as a policy shock. First， we show that strengthening external regulation can increase SOE profit， and the impact is mainly by scale up the production and increasing the production efficiency. Second， strengthening external regulation also generates a positive effect on SOE reformation， which improves the operating performance of restructured enterprises with the fully release of system transformation. Last， strengthening external regulation has a bigger effect on SOE performance in the upstream sector， but it generates a greater effect on SOE reformation in the mid-downstream sector with high market competition. In this paper， we find that strengthening external regulation plays a positive role in SOE reform， but in order to make a further reformation and promote economic growth， the key lies in introducing the market competition mechanism.
Key Words： SASAC; External Regulation; SOE Reform

Abstract： Though researchers have confirmed that VC-backed IPOs would exhibit outstanding performance，there is little in the extant literature about the in-depth reason of that phenomenon.From the view of firm innovation，we analyze the impact of VC-backed firms' innovative ability on their post-IPO performance based on the data of China A-share market between 2003 and 2012 We have three baseline findings. First，VC can improve the innovation of firms before their IPOs. Second，within the class of VC-backed firms，firms which possessed granted patents before IPO would show lower underpricing level and higher long-term return compared with the ones without granted patents. Third，firms lacking in innovation perform similarly with non-venture capital-backed firms.In short，innovation has a strikingly positive influence on the performance of VC-backed IPOs and the establishment of innovation is exactly the essence for venture capital-backed firms to obtain better performance.
Key Words： Venture Capital；Innovation；IPO；Performance

Abstract： Anti-corruption causes huge impact on the political environments， which changes the trade-off between pursuing promotion and avoiding political risk for SOE managers. The conclusions are as follows. Firstly， during the anti-corruption， SOEs managers tend to be more inactive (overactive) if the incentive to avoid political risk is stronger (weaker) than to pursue promotion， leading to under-investment (over-investment). Secondly， either inactive or overactive incentive will deteriorate the capability to capture investment opportunity. Besides， after anti-corruption， under-investment has more negative impact on firm value than before. Finally， the overall effect of anti-corruption on investment distortion is insignificant in SOE. This study contributes to the literature on the relationship between the political incentive and firm investment. The conclusions can be helpful for the regulator to rectify inactive or overactive SOEs managers.
Key Words： Anti-corruption; Inactive; Overactive; Under-investment; Over-investment

Abstract： The income distribution effect of tax policy has been a hot issue for policy maker and academia. Based on the payroll tax deduction reform in 2008， we find that it stimulates corporations to increase the total wage through increasing the average wage and holding the number of staff constant， due to the reducing tax cost of payroll caused by payroll tax deduction reform. Further analyses reveal an increase in employee's average wage， a reduction in income gap between top management and employee， and an improvement in total factor productivity (TFP) during the post-reform period. The above effects are more pronounced in firms with a lower level of wage， non-state-owned enterprises， and firms with a lower level of cash dividend ratio. In sum， our findings suggest that the payroll tax deduction reform lead to a positive income distribution and then improve the productivity.
Key Words： Payroll Tax Deduction; Income Gap; Total Factor Productivity

Abstract： Though “implicit” and not included in the debt covenants， government guarantee has long been present and has a strong effect on the pricing of corporate bonds in Chinese market. This study is to make implicit government guarantee explicit， and we extend square-root diffusion model and use a Kalman filter approach to estimate government effect with the finding that AA rated bonds issued by central and local government owned enterprises have predicted bailout possibility of 39.7% and 6.7% respectively， while those AA+ rated have 33.9% and 1.2%.
Key Words： Implicit Government Guarantee; Bond Pricing; Term Structure of Interest Rate; CIR Affine Model

Abstract： G-S mechanism was proved to be matched with a stable performance in resource allocation when the price mechanism cannot fully play its role in society to allocate resources.However， IIRSD mechanism was currently used to match with the public rental housing in China. In this paper， we simulated real matching with public rental housing in laboratory and used Yaohao random sequence to generate the order of individuals' priority as waiting with the incomplete information environment， in order to investigate individuals' strategy in expressing their preferences under the both G-S and IIRSD mechanisms. We also analyzed the relationship between the strategic behavior and individuals rational behavior or risk preferences; computed and tested personal utility and changes in overall welfare;built a fair distribution of envy free index to measure the fairness of matching consequences， which directly compared the effect of both mechanisms in fair， efficient and non-strategic aspects. This study also has been tested the robustness of experimental results by changing the design， the number of group matches and simulating all the possible orders of priority. These experimental results show that G-S mechanism can promote not only the individuals to express their true preferences， and also is more fair and efficient design than IIRSD mechanism.
Key Words： Public Housing Allocation; IIRSD Mechanism; G-S Mechanism; Fair Distribution of Envy Free Index