Summary： Since the 1980s, China has introduced advanced technology and equipment abroad on a large scale, which has helped it move from imitation to innovation and prompted its rapid and persistent economic growth This paper analyzes China's innovation path from both an economic viewpoint and a perspective offered by the conclusions on innovation experience drawn from a late-developing large country It aims to provide a deep understanding of the theoretical logic and historical necessity of China's innovation path, to construct a discourse system with Chinese characteristics, and to offer information about China's experience and decisions as a reference for other late-developing large countries by developing an innovation path policy framework for large countries.
This paper discusses China's innovation path as a large country from the perspective of economics First, it outlines China's innovation path before using a self-consistent logic analysis framework to interpret this path in terms of economic theory, which includes the formation of a large country's innovation strength due to its market size, the selection of imitation and innovation strength due to its late development, and the cultivation of independent innovation strength due to its economic transitionIn addition to summarizing China's innovation path, this paper puts forward some policies and suggestions to promote the transformation and upgrade of China's economy by shifting from imitation innovation to independent innovationThe author reviews the classical discourse on technology innovation of Mao Zedong, Deng Xiaoping, and Xi Jinping, focusing on the important contributions of Xi Jinping to Chinese technology innovation theory, and summarizes the results of the research conducted by domestic and foreign economists on Chinese technology innovation theory.
This paper uses statistical analysis to describe the classic features of large countries' innovation paths; comparative analysis to clarify the characteristics of technological innovation in large countries, which are different from those in small ones; and theoretic analysis to decompose China's innovation path in development economic theory The main data resources used are extracted from the International Statistical Yearbook, China Statistical Yearbook, China Statistical Yearbook on Science and Technology etc.
This paper concludes that the strength of China's market size results in innovation strength, that the technology gap produces imitation strength, and that economic transition breeds independent innovation strength China reasonably makes use of its scale advantage as a large country and catch-up advantage as a late-developing country, and currently promotes its economic transition and upgrade by cultivating its independent innovation strength Regarding policies, the findings suggest that (1) the scale advantage and high technological demand scale of large countries speed up the pace of technology innovation; (2) the timely promotion of innovation style transition helps to realize the upgrade from imitation to innovation when a country's technical level reaches that of developed countries; (3) mastering core technology in key industries is necessary to enter the highest level of the international industrial value chain and enhance international competitiveness.
This paper is innovative, as it provides a theoretical framework to analyze technology innovation in large and late-developed countries, which are two logical points internally coordinated and informed by the concepts of “from market size to catch-up to economic transition” and “from large countries' advantage to backwardness advantage to independent innovation”. At the same time, it gives a brief summary of this framework, namely innovation demand that combines the market demand and a country's demand, innovation style that combines imitation and innovation, and the operating mechanism that combines market regulation and government control Future research may analyze and summarize each key industry's technology innovation experience under these frameworks
Keywords： Technological Innovation; Market Scale; Late-developing Catch-up; Economic Transition

Summary： As the monetary policy operation of the People's Bank of China represents the parallel regulations of interest rate and quantity instruments, neither a single interest-rate rule nor a quantity rule can fully reflect the actual implements of monetary policies in China Moreover, the timing of these two instruments' use is not consistent, and thus the central bank's specific choice of policy actions is discretionary We refer to this special monetary policy operation as the mixed operation and the corresponding policy rule as the mixed rule The literature on the single rule ignores the existence of the mixed rule, which evidently deviates from practice Hence, it is necessary to establish a reasonable form of the mixed rule and use it to analyze and compare the applicability of various monetary policy rules, which should help us to understand the actions of the central bank, and improve the practices of monetary policy.
In this paper, we develop a New Keynesian DSGE model in which monetary policy follows the mixed rule regarding inclusiveness and discretion Based on this model, we introduce the following shocks in the economy: the technology shock, the consumers' preference shock, the investment technology shock, the government expenditure shock, and the monetary policy shock Using both calibration and Bayesian methods, we separately estimate the parameters in the model under the interest rate rule, quantity rule, and mixed rule and compare the difference in forecasts, forecast standard deviations, and RMSE between data and estimated values under these three rules The results show that when we compare only the single interest rate and quantity rules, the interest rate rule fits better to the real economy than the quantity rule, and neither are suitable for matching the inflation data When we compare the three rules simultaneously, we find that a mixed monetary policy better matches the economic performance and inflation data.
Moreover, we use the deviation of consumption as the index of welfare fluctuation to measure the regulation efficiency of monetary policy under these three rules in the presence of external shocks Our analysis indicates that when the technology shock or the investment technology shock happens, the central bank uses the mixed rule to regulate the economy, leading to the fastest recovery and minimum welfare loss, which means that the mixed rule is better fitted than either the sole interest rate rule or quantity rule When the monetary policy shock happens, the social welfare loss is at its maximum under the quantity rule, followed by the mixed rule, and at its minimum under the interest rate rule Given the differences in economic applications and model settings, this means that the adoption of rules is more conducive to the improvement of social welfare than the adoption of random and unexpected monetary policy operations In short, the new mixed rule dominates the interest-rate rule and quantity rule both positively and normatively.
Regarding academic research and the operation of monetary policy, our paper suggests that if we study China's economy based on the general equilibrium framework, it may be biased to use only the single interest rate or quantity rule to describe the central bank's behavior; a mixed rule is better suited to our national conditions Based on the current economic situation, when the central bank uses monetary policy to intervene in the economy, its selective use of interest rates and quantitative tools for portfolio operations is still the most efficient Moreover, the central bank should follow the rules of operation to reduce the unexpected policy operation.
In other words, our paper takes the first step in the comparative analysis of these three rules Future research may extend to two aspects In terms of economic meanings, we may investigate the micro foundation of the central bank's monetary policy interventions, and further explore the three monetary policy rules considering issues of action mechanism and timing selection In relation to empirical studies, we may examine the applicability of monetary policy rules for time-varying parameters at different stages of the economic period and economic cycle, and further test forward-looking monetary policy rules
Keywords： Interest Rate Rule; Quantity Rule; Mixed Rule; Comparative Study; DSGE

Summary： The recent global economic crisis saw a sharp decline in output However, the accompanying declines in Chinese export and world trade volume were sharper and almost twice as big The failure of traditional models to account for these developments suggests that the behavior of trade in exceptional circumstances may still be poorly understood Traditional trade theory intrinsically fails to explain the quantitative relationship between economic uncertainty and trade, as the classical trade model is based on full information and sufficient rational assumptions Popular analytical tools used to explain bilateral trade flows, such as the gravity equation, entirely fail to consider the effect of uncertainty.
To date, the analysis of the effects of uncertainty on trade has remained largely confined to exchange rate volatility Studies have generally found that the effect of exchange rate volatility on aggregate trade flows is “fairly small and by no means robust”. Yet, a crisis of confidence and an increase of uncertainty may easily curtail international trade, as investment and consumption decisions are put on hold (Taglioni & Zavacka, 2012).
Knight (1921) defines uncertainty as peoples' inability to forecast the likelihood of events happening Uncertainty is a broad concept that can refer to fluctuations in macroeconomic variables (such as GDP, total consumption, and investment), or fluctuations in microeconomic variables (such as corporate returns, war, climate change, and economic events) Macro and micro uncertainties have typical inverse cycles Uncertainty increases in times of economic recession and decreases as economy booms (Baker & Bloom, 2013) Short-term uncertainty leads to a longer period of economic activity decline that lasts for some time This phenomenon is referred to as the “uncertainty trap”.
Against both the recent increase of China's export volatility and the overreaction of trade to exogenous shocks during crises, this study investigates the statistical and causal relationship between uncertainty and China's export volatility We construct cross-country panel data on stock market volatility as proxies for the second moments of business conditions The study arrives at the following findings (1) From a quantitative viewpoint, uncertainty and external shocks have a negative effect on China's exports, and the magnitude of the effect in the short term is much larger than the traditional considerations of supply, demand, and exchange rate (2) The two-stage least squares estimations using disaster data as instrumental variables show a stable negative causal relationship between uncertainty and China's export growth (3) The effects of uncertainty on China's exports have heterogeneous characteristics, such as different countries, export scales, and periods These findings mean that creating a stable and orderly economic environment should be the primary choice for policymakers, and that companies should focus on scientific and effective predictions of future demand to limit the effects of uncertainty on export growth.
This study enriches and expands the current research in the following ways First, it explains the volatility of China's total exports in relation to external uncertainty by extending specific economic variables to general confidence or psychological shocks This differs from supply-demand and other practical economic theories used to interpret the paradigm of China's export growth Second, the VAR model quantitatively presents the effects of the intensity and duration of uncertainty on Chinese exports, and compares the effects of uncertainty, exchange rate, and supply and demand on those exports Third, this study helps us to better understand the potential negative effects of globalization and thus identify external risks to China's exports Finally, this study uses natural disasters, terrorist attacks, political shocks, and other exogenous shocks as instrumental variables of uncertainty to solve potential endogenous problems
Keywords： Uncertainty; Export Growth; Disasters; Second Moment Shock

Summary： There is a mismatch between the geographic structure of finance supply and the development demands of the real economy. Although the literature considers the effects of a financial system on the real economy from the perspective of financial function (Merton, 1995), research on the relationship between the geographic structure of a financial system and the real economy is inadequate, with limited literature focusing on countries in transition. Geographic position affects the external fund availability of enterprises (Klagge & Martin, 2005; Agarwa & Hauswald, 2010) and thus leads to the difference in enterprises' productivity (Butler & Cornaggia, 2011).
The effect of geographic distance on financial transactions is divided into two categories: one that suggests that distance upraises transaction cost, and one that proposes that information asymmetry hinders risk control. As a result, financial institutions and manufacturing enterprises are inclined to co-locate. The clustering of a large amount of financial institutions helps to promote the productivity growth of both local enterprises and enterprises in neighboring cities. The continuous evolution of financial clustering results indifferent-level financial centers that are formed in the same geographic space. In the context of China's transitional economy system, the spillover effect of financial centers also reflects evident administrative level characteristics and administrative geographic boundaries. As the financial center of a province, the provincial capital is not only capable of improving its own financial supply, but is also capable of ameliorating the fund availability of other cities in the province. Thus, the centralization and decentralization of financial geographic structures-in particular, the position of financial centers and local finance in the national financial system-affects the productivity growth of enterprises.
Using the matched data of the Chinese Industry Enterprises Database and Urban Financial Development Data, this study's findings show the following. First, local financial development can promote the productivity growth of local enterprises. Additionally, the construction of regional financial centers has a promoting effect on the productivity growth of enterprises in both the city center and neighboring cities. Second, local financial development has a positive effect on the productivity growth of small and large enterprises and start-ups, while the construction of financial centers has a promoting effect on large enterprises and start-ups of a certain age in surrounding cities. Local financial development has a limited effect on the productivity growth of local state-owned enterprises (SOEs). It even has a hindering effect on the productivity growth of undersized SOEs; however, it has a promotion effect on the productivity growth of non-SOEs. Moreover, the construction of financial centers has a positive effect on the productivity growth of SOEs of different scales in surrounding cities, but has only a promoting effect on the productivity growth of large-sized non-SOEs. Third, the optimization of a financial geographic structure helps enterprises to reduce financing costs and carry out innovation activities.
The conclusions have implications for financial supply-side structural reform policy, which should promote the optimization of financial geographic structures. On the one hand, increasing and improving local financial supply are important ways to solve the financing difficulty of medium, small, and micro-sized enterprises; start-ups; and private enterprises by loosening the access control of the financial market. On the other hand, according to the national economic geographic structure, the central government can plan the spatial distribution and scale level of financial centers and break the administrative geographic border of financial function spillovers by promoting financial marketization reform and integration processes.
Keywords： Financial Center; Local Finance; Distance; Information Asymmetry; Total Factor Productivity

Summary： Many scholars use total factor productivity (TFP), the core variable for estimating the mode of economic growth, to judge the sustainability of economic growth patterns (Solow, 1957; Krugrman, 1994; Zhang, 2002; Young, 2003; Hu, 2003; Zheng et al., 2005). However, a country can achieve higher TFP growth in the short term through policy reforms, factor replacement, and other efficiency improvements, although these changes have only one-off level effects. With a gradually weakened growth effect, TFP growth also declines. In the long term, with the economic development of a country, the technology gap between domestic and foreign industries gradually narrows; thus, TFP growth mainly depends on independent innovation (Lin et al., 2007; Zheng, 2008).
Establishing the link between innovation and TFP from the new product's perspective, this study considers the driving force of new products on TFP in Chinese manufacturing in recent years, based on how new product contributions have changed TFP. The driving force of a new product on TFP is composed of the change in quantitative effect, which refers to the ratio of new product value to total industrial output value, and the change in efficiency effect, which refers to the ratio of new product TFP to TFP. The sum of the changes of these two effects is equal to the change in the driving force of the new product on TFP. The difficulty to estimate the driving force of the new product on TFP resides in the estimation of the new product TFP.
Based on the new product technical efficiency approach (Zhang & Shi, 2011), this study further considers the dynamics of new product TFP. Estimating the new Product Orientation Malmquist Index by the directional distance function proves to be infeasible, as the output is divided into new and old products. Referencing the Global Malmquist-Luenberger Index (Oh, 2010), this study establishes a new Product Orientation Global Malmquist Index to estimate the change in new product TFP, its technical efficiency, and its technological progress. This study also considers the changes in the driving force of the new product, its quantitative effects, and its effect on the efficiency of TFP in Chinese large and medium-sized industries between 2001 and 2010.
The results show that the new product TFP in Chinese manufacturing comes mainly from technological progress, and that the role of technical efficiency is very small. The new product TFP is lower than TFP, and the TFP of Chinese manufacturing is mainly driven by old products. In short, the growth of new product driving force on TFP in Chinese manufacturing is almost stagnant. After 2008, both quantitative and productivity effects of new product driving force on TFP improved. The new product driving force for technical progress has achieved a faster growth, but the new product driving force for technical efficiency has declined. Analysis of the factors that affect the new product driving force reveals that enterprise size and non-state-owned enterprises do not significantly affect its growth, while FDI has a negative effect and exports and R&D both have positive effects.
Based on these results, the following suggestions are provided. Future research may improve the evaluation system of scientific research achievements and strengthen the production management of new products. Additionally, blindly pursuing the rapid growth of GDP should be avoided, as appropriate slowdown may help the transformation from an old driving force into a new one. Attention should be given to strengthening the connotative new product growth, enhancing its driving force, strengthening the support to private enterprises and especially innovative private enterprises, and encouraging the introduction of innovation-oriented FDI. Enterprises should also improve their innovative efficiency; increase their R&D investment and support for talent, capital, and technology; strengthen and improve their scientific research management; and enhance their innovative efficiency.
Keywords： Total Factor Productivity; New Product; New Driving Force; Global Malmquist Index

Summary： The Chinese government is committed to resolving overcapacity Nevertheless, to this day overcapacity is unresolved and has even worsened Therefore, the question considering why China's overcapacity pattern is difficult to change remains to be answered The discussion of this issue has important practical significance for the structural transformation and sustainable development of China's future economy.
This study argues that market mechanism theory can explain part of the phenomenon but cannot fundamentally explain overcapacity in China Conversely, the government promotion theory proposes that surplus capacity stems from the unreasonable investment system and the government's benefit actuation.
The literature lacks direct and micro empirical evidence about the motivation of local government behavior One direct consequence is that even if the support means and policy tools are improved and optimized, due to an internal incentive mechanism, the local government often continues to “innovate”, which ultimately fails to truly resolve overcapacity This study makes some attempts to provide micro empirical evidence of the government promoting overcapacity industries from the perspective of fiscal pressure, and to explore the empirical effect of “pressure type” fiscal incentives on overcapacity creation and problem resolution, which offers further evidence in favor of government promotion theory Arguably, certain industries still make benefits in taxes and profits when they have a certain degree of excess capacity, which is the basis of fiscal incentives.
Empirical results show that a reduction in the value-added tax (VAT) sharing rate increases the number of new enterprises in overcapacity industries at the two-period lag time, and we find that the new capacity cannot be directly absorbed, thus reducing enterprises' capacity utilization The common trends (placebo and reverse causality tests) indicate that the change in the VAT sharing rate has an exogenous nature In addition, we find that this conclusion is not affected by economic cycles and local government's competition Finally, we do not find that the transfer payment scale increases, which means that a reduction in the VAT sharing rate creates some fiscal pressure The alternative competition test shows that the development of overcapacity industries does not come from the reduction in tax collection effort The development of overcapacity industries can alleviate fiscal pressure, as we find that the VAT tax is not significantly negative at the two-period lag The policy analysis shows that past capacity policy cannot effectively restrict the development effect of the tax sharing rate change, and that local fiscal pressure is an important reason for China's overcapacity problem.
This study makes the following main contributions First, the empirical results of this paper further verify the incentive effect of fiscal centralization proposed by Tao et al (2009) The municipal government increases the support economy after the tax centralization, which provides the most direct micro empirical evidence for Chinese “pressure type” fiscal incentives Second, the empirical results show that fiscal incentives are the key reason for the formation of and difficulty eliminating excess production capacity in recent years Third, the study demonstrates the effect of tax centralization on the promotion of the development of local industries with excess capacity However, it shows that tax centralization is not the only policy affecting overcapacity, which means that any policy shocks that reduce local finance may improve local government's dependence on overcapacity industries This also provides some enlightenment for the supply-side reform In addition to resolving current overcapacity industries, we should prevent other high-tax industries from evolving into new overcapacity industries We should also pay attention to the stabilization of local financial resources in the reform process
Keywords： VAT; Tax Sharing Rate; Fiscal Stress; Excess Capacity

Summary： China's progress in poverty reduction over the last 30 years is enviable. Income poverty has been dramatically reduced. With the implementation of the $1 per day (PPP) poverty standard， the poverty rate (headcount ratio) in China fell from 28.9% in 1989 to 6.7% in 2010. At the same time， China's Gini coefficient remains high， despite its decline over the last 10 years. Today， the types of public transfers for urban and rural families in China mainly include the minimum livelihood guarantee scheme (known as Dibao， for people who have lower per capita income than the local minimum living standard)， reforestation subsidy， agricultural subsidies， subsidies to wubaohu (for low-income， blind， disabled， elderly persons， and young persons who have no means to support themselves)， subsidies for especially poor households， work injury subsidies (for immediate family members)， and emergency or disaster relief. Public transfers for individuals (excluding Dibao， and other household transfers) include unemployment insurance payments， family planning subsidies for one-child families， subsidies for the elderly without social insurance， disability benefits， and poverty subsidies for health expenditure. Social assistance for urban and rural residents accounts for the largest proportion of public transfers， with an increase from RMB153 billion in 2003 to RMB2198 billion in 2014. This leads to the following question: what is the role of public transfers in income inequality and poverty change?
To evaluate the effects of public transfers on inequality and poverty， some researchers have compared the program participants with a control group of people possessing characteristics relevant to program participation by running counterfactual simulations. In addition， partial equilibrium and decomposition analysis serve to assess the welfare effects of public transfers. This paper analyzes the effects of public transfers on income inequality and poverty in China， based on a linked top-down and bottom-up (TD-BU) model that integrates an econometrically estimated micro-simulation (MS) model and a computable general equilibrium (CGE) model. Data from the 2012 China Family Panel Studies (CFPS) conducted by the Social Science Research Center of Peking University， China， are used to construct the social accounting matrix for China (SAM)， which is the foundation of CGE. The SAM is obtained mainly from the 2012 Input-Output tables of China and consists of 17 sectors in total. The model assumes that when doubling public transfers， the government balance is kept fixed with two different financing options: either an increase in direct taxes to households and firms or a growth in indirect taxes. The model also considers that labor supply adjusts to changes in the tax-benefit schedule and in the general equilibrium effects of public transfers on the whole economy.
The integrated model calculates the public transfer changes in MS and simulates the variations in labor supply of different skills before communicating with CGE. Variables such as wages for different skills of workers are then generated. Wages as exogenous variables are fed back to MS to derive a new labor supply of different skills， which are then fed back to CGE as exogenous variables， thereby generating new wages for different skills of workers that communicate with MS. This iterative process continues until the difference in the values of labor supply of different skills between two consecutive iterative steps is close to zero.
The results show an increase in GDP when consumption increases and a minor reduction in labor supply when the direct tax option is chosen to increase public transfer payments. The direct tax option gives a higher reduction in income inequality than the indirect tax option. Doubling public transfer payments leads to a two-percentage-point reduction in poverty when we use the direct tax option and a one-percentage-point reduction when we use the indirect tax option.
Keywords： Public Transfers; Poverty; Income Inequality; Integrated Computable General Equilibrium and Micro-simulation

Summary： According to the poverty standards determined by the World Bank in 2009 (i.e. $125 per person per day)， the number of people in poverty decreased by 754 million between 1981 and 2011， which accounts for more than 70% of total poor population worldwide. However， the scale of the poverty-stricken population in the central and western China is still large. The poverty-stricken population is poorer， the cost of poverty reduction is higher， and the alleviation of poverty is more difficult. In 2015， a survey of poverty-stricken population shows that 441% of poverty is illness-caused poverty， which becomes one of the main causes of poverty amongst Chinese urban and rural households. China established Urban Resident Basic Medical Insurance (URBMI) Institution in 2007， aiming to provide basic medical and health services to urban low-income people， which is considered as one of the most direct and effective poverty reduction policies.
Using URBMI micro-data from 2007 to 2011， this paper analyzes the impact of insurance policy on household income， specifically focusing on households who suffered from catastrophic medical risks. In addition， to identify the poverty alleviation effect of URBMI on urban households， this paper examines the heterogeneity in households with different income levels. Given URBMI system is a non-compulsory social health insurance， which is paid by households and partially subsidized by the government， this paper utilizes the treatment effect model to mitigate the self-selection bias in sample selection and to eliminate the non-time-varying individual characteristics. Also， the treatment effect model is used to evaluate the degree of poverty alleviation effect in different income groups. Moreover， this paper employs the first-lagged dynamic panel model to study the impact of URBMI on household income and to explore the possible lags in the effectiveness of the URBMI system.
The results show that the URBMI policy has a significant effect of poverty alleviation on low-income urban households. More specifically， participating in the URBMI system increases the household per capita income growth by 1378%.In other words， if the average household income is RMB 86206， then 1378% increase in household per capita income implies an equivalent increase of RMB 11879 This positive effect is further enhanced over time， by increasing family education and labor training expenditure， and the improved health status. The results indicate that， participating in the URBMI system can effectively mitigate the impact of disease risk on households， which can reduce the illness-related poverty. However， there is heterogeneity in the effect of poverty alleviation in households with different incomes. In particular， the positive impact of URBMI on low-income households is much smaller than that of middle and high-income households. This finding highlights the phenomenon of “target shifting” in the design of healthcare policy， which has influenced the precision of policy implementation and resulted in unexpected outcomes. Therefore， it is important to precisely design deductible rules， and to ensure that individual payments and deductible standards are linked to household income level. Also， it is suggested to gradually increase the proportion of medical insurance reimbursement based on the targeted degree of poverty， which will not only alleviate individual's medical expenses burden， but also enhance fairness in the system.
This paper makes significant contributions in the following three aspects. Firstly， this paper directly investigates the impact of URBMI policy on household income， and explores the possible underlying channels and mechanisms. Secondly， this paper analyzes the effect of URBMI policy on the poverty alleviation of households (with different income levels)， as well as the hysteresis effect. Finally， this paper discusses the impact of URBMI policy on households' (with different income levels) ability to manage risks， when confronting the risk of serious illness， and further evaluates the precision of the anti-poverty effect of the healthcare system.
Keywords： Urban China; Health Insurance; Poverty alleviation

Summary： To further enhance security levels and reduce the economic burden of catastrophic health expenditure， China's government issued The Guidance Policy to Carry Out Critical Illness Insurance Program in 2012. This policy identifies the standard of catastrophic health expenditure according to disposable income per capita， but does not design reimbursement modes in detail according to each insured's economic condition and healthcare cost level.
Based on household and individual micro data (Urban Residents Basic Medical Insurance Survey 2007—2011)， we explore the catastrophic health expenditure standard and analyze the mechanism behind the multi-level medical security system that reduces catastrophic health expenditure， which in turn affects the use of medical services. We also evaluate the effects of different reimbursement modes to reduce the medical burden and the incidence of catastrophic health expenditure.
This study makes three main contributions. First， based on Grossman (1972)， we introduce the catastrophic health expenditure budget constraints， and conclude that the sensitivity of medical demands differs from the sensitivity of medical service prices. Without the catastrophic health expenditure， medical service price elasticity is less than 1， while with the catastrophic health expenditure， it is elasticity greater than 1. In empirical analysis， using the panel threshold regression method， we find that when the household annual out-of-pocket medical expenditure accounts for about 44.13% of income， the individual medical service price elasticity changes as previously described. Hence， we conclude that this value should be China's catastrophic health expenditure standard.
Second， in empirical analysis， we indicate that catastrophic health expenditure not only is the comprehensive result of the current income， health status， and medical cost， but also has long-term effects on the future， causing a new round of catastrophic health expenditure. Therefore， the results of the treatment effect model show that if catastrophic health expenditure occurs， individual income and health will reduce by 0.1163% and 7.9947 units， respectively， and medical expenditure will increase by 0.6344%.
It should be emphasized that critical illness insurance is a secondary compensation program for medical expenditure， except for the Basic Medical Insurance Program. The purpose of such a design is to reduce the amount of individuals' out-of-pocket medical expenditure. At the same time， due to the increase in the medical service reimbursement ratio and the reduction of the medical service price expectation， critical illness insurance is likely to greatly release medical service demands and increase the incidence of catastrophic health expenditure in the future.
Finally， given China's current practical experience and previous studies， we derive three types of critical illness insurance reimbursement modes. Mode 1 is the typical mode of the current reimbursement mechanism， and Modes 2 and 3 are both improvement proposals. We also simulate and predict the incidence of catastrophic health expenditure under these three reimbursement modes. The results show that all three reimbursement modes can reduce the incidence of catastrophic health expenditure as a whole. The mode that takes the whole household as the compensation object and the whole household's catastrophic health expenditure as the compensation standard is clearly more suitable than the other two modes.
Due to insufficient data， we do not discuss the differing effects of outpatients and hospitalized medical services on prices， which may cause some deviation in the simulation and prediction of medical expenditure. In addition， as the critical illness insurance policy standard and enforcement time schedule differ significantly in each region， future research may identify its effects more clearly and precisely in the next few years.
Keywords： Catastrophic Health Expenditure；Critical Illness Insurance；Health Care Utilization；Multi-level Medical System

Summary： Demographic change often shows a long-term trend. If age has an effect on one's risk attitude and portfolio selection， the demographic structure will systematically influence the financial market risk structure. In most economic models， the constant risk aversion hypothesis that does not consider the possibility that the risk attitude of an economic entity varies with age may bias the mechanism of how a demographic structure affects the macro economy. This study aims to verify the time-varying risk aversion in one's life cycle， and to predict the corresponding change it brings to the financial market risk structure.
First， we present a simple theoretical model to describe the time-varying characteristics of investors' risk aversion， and the factors that may affect the change in risk aversion. Second， we aim at building micro and macro empirical models. At the micro level， risk aversion is measured as subjective risk aversion， risky market participation， and investment portfolio. The subjective risk aversion data are directly obtained from the China Household Finance Survey (CHFS)， while the latter two， labeled as objective risk aversion， are constructed from one's risky market participation and from the ratio of risk-free assets to risky assets in one's portfolio. The methods include the ordered logit model， Tobit model， and semi-parametric model. At the macro level， the data are extracted from the World Bank World Development Indicators Database (WDI)， Global Financial Development Database (GFD)， and Health Nutrition and Demographic Database (HNPS). Third， we attempt to test the robustness by changing the alternative databases， conducting quantile regressions， and using a particular financial crisis subsample. Lastly， we check the demographic effect on the returns of financial assets， which provides a further discussion of the risk aversion law.
Both the theoretical and empirical models reach consistent conclusions. The risk aversion of an economic entity exhibits time variability in the life cycle. At the micro level， risk aversion monotonically increases with age. At the macro level， the risk aversion of an economy changes with the population's average age. Specifically， the young population tends to take more risks， while the middle-aged and elderly populations tend to show higher risk aversion and more conservative risk preferences. The rate of return on financial assets can also be explained from a demographic perspective. The juvenile population increases the rate of return on financial assets， while the middle-aged and elderly populations act in the opposite way. In fact， after considering risk preference， the time variance of people's risk aversion does not show the same pattern as traditional life cycle theory suggests.
In this paper， macro and micro data show that the assumption of constant risk aversion is too strong in many economic models， and thus it needs to be re-evaluated to describe reality more accurately. We construct several indicators of risk attitude from the 2011 and 2013 CHFS data， which are large surveys of Chinese household finance covering almost 10，000 families across China. From a macro perspective， we use the detailed demographic data on a 5-year basis and the financial and behavioral factors from 126 countries. Fundamentally， the risk aversion in one's life cycle can be summarized as “the older the individual， the stronger his or her risk aversion”. This provides a potential hint for setting risk aversion parameters in subsequent research. Moreover， this paper extends the study of time-varying risk aversion to a macro scale.
The implementation and reform of China's population policy brings a dramatic change in the age structure of the population. The global population is also subject to a substantial demographic structure adjustment. The conclusions of this paper can help to predict the financial market risk structure from a demographic perspective.
Keywords： Risk Aversion; Life Cycle Theory; Demographic Structure; Financial Market Risk Structure

Summary： Economists have shown a growing interest in intergenerational persistence in social mobility, focusing on not only sustainable development but also social equality. Intergenerational mobility between two generations is crucial to society for several reasons. First, it is an important indicator of the equality of opportunity. Second, intergenerational mobility plays an essential role in economics and development. The literature on the topic finds a higher degree of persistence of social status across generations. Additionally, it demonstrates a mutual causal relationship between intergenerational mobility and economic development. As development promotes mobility while higher inequalities hinder it, the empirical question regarding the recent changes in intergenerational mobility in China has garnered attention.
In this paper, we study the structure of intergenerational mobility trends in 20th century China. Intergenerational mobility is defined as the changes in social status between two generations. In 2011, the Gini coefficient rose to 0.61 and the income share held by the top 10% households in China exceeded 57%. The data used are nationally representative data from Chinese households, and contain multigenerational information. Mobility trends are estimated from cohorts of children born between 1930 and 1985. The proxy for an individual's social status is the individual's educational attainment. Therefore, mobility is measured by the changes between people's educational attainment and their father's educational attainment.
Our research focuses on finding what lies behind China's mobility trends. We use the decomposition method proposed by Kerm (2004) to examine the sources of mobility trends, by further dividing total mobility into mobility caused by relative movement (called exchange mobility) and mobility caused by structural changes containing both overall growth (growth mobility) and redistribution (disperse mobility). In contrast with the stable social mobility of advanced industrial countries, our results show a robust inverted U-shape mobility trend in 20th century China. There is an increasing trend of mobility among cohorts born between the 1930s and 1960s. For those born after the 1960s, intergenerational mobility is continually declining. After eliminating the mobility level obtained from structural changes (growth and redistribution) in education, the relative movement between generations also presents an inverted U-shape. Benefitting from high-speed economic growth, intergenerational educational growth is thus the most important factor to explaining intergenerational educational mobility in China. In short, mobility is largely aided by the development of a higher social ladder.
Our study contributes to the literature in several ways. First, it provides empirical evidence of disentangled intergenerational mobility trends across economic and political reforms. Second, it provides a comprehensive understanding of the sources of mobility by conducting a sub-group analysis of rural-urban citizens. Third, it overcomes several of the important concerns of empirical studies of intergenerational mobility. Intergenerational mobility studies have primarily collected multigenerational information from within households, which has caused an estimation bias due to the absence of data on children who do not live with their parents. The China Household Finance Survey, which this paper consults, was specially designed for collecting multigenerational information. Benefitting from this survey design, we not only obtain multigenerational information on those who live in the same household, but also information on parents who live separately, and even on those who have passed away. It makes our data more representative and able to address the question of how social mobility trends change in the long term.

Keywords： Intergenerational Mobility; Decomposition; Institutional Changes; China

Summary： The recent literature led by Spolaore & Wacziarg (2009) and followed by others focuses on the “fundamental factors” for economic development, such as geography, history, and even genes. Gene distance has proved to be an obstacle to technological diffusion, as longer genetic distance implies a longer time of divergence and thus more cultural variations between populations, leading to discrimination, mistrust, misunderstanding, and barriers to communication. However, three questions remain unexplored. Is genetic distance an accurate measure for cultural variations in China, given that China is the world's oldest living civilization and possesses a unique culture and history? How do cultural variations influence technology diffusion? Is it possible to mitigate the effects of cultural variations with other factors?
This paper uses Chinese dialectical distances as its measure for cultural variations. Most of the inhabitants in China speak Chinese, yet speak different Chinese dialects. Chinese has 10 major dialects and many sub-dialects. Moreover, the dialects are low in intelligibility. Dialectical distance is thus a more accurate measure of cultural variations than genetic distance in China, as ethnic assimilation in China occurs on an extremely large scale and has a long history, which significantly disturbs the correspondence between gene and culture.
With dialectical distance as the measure of cultural variations, we study its effects on technology diffusion through institution diffusion. Institutions can be significant to protect the property rights of investment for technology adoption and to prevent obstruction from interest groups. The technology frontier has a good institution for technology adoption. The complementary diffusion of technology can be difficult when cultural variations hinder institution diffusion. China's prefectures have a formal institutional framework, but they also have diverse local legal systems, policies, and informal institutions, partly as a consequence of culture variations.
First, a conceptual framework is presented to describe the intergenerational transmission of culture and to show the direct effects of culture on innovation and the barrier effects of cultural variations on technology diffusion. A dataset of 36 prefectures is then constructed with three key variables: institutional diffusion, measured by the gap of the World Bank's Property Rights Protection Index; technology diffusion, measured by the gap of the World Bank's IT Index; and dialectical distance, constructed with the dialectical intelligibility index by linguists. Ordinary dialectical distance is used to capture the direct effects of culture. Finally, taking Shanghai as the technology frontier, the relative dialectical distance is used to capture the barrier effects of cultural variations on technology diffusion.
The results show that only the latter is significant, implying that cultural variations increase technology disparity not because of their direct effects on innovation, but because of the barrier effects on technology diffusion caused by mistrust, misunderstanding, discrimination, and communication barriers. More importantly, institution diffusion is hindered by cultural variation. China's prefectures have a formal institutional framework, but they also have diverse local legal systems, policies, and informal institutions, partly as a consequence of culture variations.
The final focus is the interaction between dialectical distance and other factors. The effects of dialectical distance are found to be mitigated by human capital, immigration, and FDI, all of which foster technology diffusion. The effects are also mitigated by technology adoption in history measured by treaty ports forced to be open, number of Christians, and number of modern factories around 1900, all of which are associated with exogenous technology shocks from the West. Thus, we conclude that policies are possible to foster technology diffusion albeit cultural variation as barriers is stubborn per se.
Keywords： Dialect; Cultural Distinction; Institutions; Technology Diffusion