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Frontiers of Economics in China

, Volume 9 Issue 4

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IPR, Trade, FDI, and Technology Transfer
Tan Li,Larry D. Qiuaa
Front. Econ. China. 2014, 9 (4): 529-555.
Abstract   PDF (276KB)

In this survey, we discuss how intellectual property rights (IPR) protection in the South affects trade flows, foreign direct investment (FDI) flows, and technology transfers from the North to the South. We also discuss optimal IPR policies and their effect on innovation. Our discussion covers both theoretical studies and empirical evidence. This survey is both comprehensive and critical. It aims to give readers the current state of IPR and globalization literature. Some issues have been studied more thoroughly, whereas for others the surface has only been scratched upon. This survey gives readers a clearer picture of the literature and may help them find future research topics.

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Effects of Trade and Financial Links on the Transmission of GDP Growth
Paul Armstrong-Taylor
Front. Econ. China. 2014, 9 (4): 556-572.
Abstract   PDF (322KB)

Using panel analysis of quarterly data from 14 developed countries between 1980 and 2012, I examine the channels by which GDP growth transmission has taken place, and how the transmission of growth has varied with time and global growth. I find that countries with large, open banking sectors and trade deficits tend to transmit growth more strongly than other countries. Transmission effects seem to have become stronger over time and are stronger in periods of slow economic growth.

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Chinese Online Unemployment-Related Searches and Macroeconomic Indicators
Zhi Su
Front. Econ. China. 2014, 9 (4): 573-605.
Abstract   PDF (8932KB)

Official monthly unemployment data is unavailable in China, while intense public interest in unemployment requires timely and accurate information. Using data on web queries from lead search engines in China, Baidu and Google, I build two indices measuring intensity of online unemployment-related searches. The unemployment-related search indices identify a structural break in the time series between October and November 2008, which corresponds to a turning point indicated by some macroeconomic indicators. The unemployment- related search indices are proven to have significant correlation with Purchasing Managers’ Employment Indices and a set of macroeconomic indicators that are closely related to changes in unemployment in China. The results of Granger causality analysis show that the unemployment-related search indices can improve predictions of the macroeconomic indicators. It suggests that unemployment- related searches can potentially provide valuable, timely, and low-cost information for macroeconomic monitoring.

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International Trade with Increasing Returns in the Transportation Sector
Haiwen Zhou
Front. Econ. China. 2014, 9 (4): 606-633.
Abstract   PDF (333KB)

In this general equilibrium framework, the transportation sector is modeled as a distinct sector with increasing returns. A more advanced technology has a higher fixed cost but a lower marginal cost of production. Even with both manufacturing firms and transportation firms engaged in oligopolistic competition and optimally choosing their technologies, the model is tractable and results are derived analytically. Technology adoptions in the manufacturing sector and transportation sector are reinforcing, and multiple equilibria may exist. Firms choose more advanced technologies and the prices decrease when the size of the population is larger.

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The Risks and Dynamics of Health Care Expenditures in Urban China: An Illustration in Kunshan City
Guan Gong,Hongmei Wang,Lingli Xu
Front. Econ. China. 2014, 9 (4): 634-660.
Abstract   PDF (790KB)

This paper examines the individual financial risk of health care expenditures over time in urban China, using longitudinal health expenditure data from 2005 to 2007 in Kunshan City, Jiangsu Province, China. We find that the stochastic process of log total health care expenditures is well represented by the sum of an AR(3) process and a white noise process. Simulating this model, we find that the urban health insurance system protects enrollees from the risk of catastrophic health care expenditures by bearing the majority of the health care expenditures. However, out-of-pocket health care expenditures represents a considerable risk to an individual’s financial status.

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Bank Credit, Firm Entry and Exit, and Economic Fluctuations in China
Ling Feng,Yizhong Guan,Zhiyuan Li
Front. Econ. China. 2014, 9 (4): 661-694.
Abstract   PDF (10552KB)

This study explores how a worsening bank credit quality affects firms’ entry and exit decisions (i.e., changes in the extensive margin), and how the extensive margin variation amplifies the transmission of financial and technological shocks to the real economy. Using a vector autoregression (VAR) model, our empirical evidence indicates that deteriorating Chinese bank credit conditions have a significant negative influence on net firm entry to the market. To explore the potential mechanism behind the stylized fact, we establish a dynamic stochastic general equilibrium (DSGE) model featuring fixed production costs, loss-related bank credit quality shocks and an endogenous balance sheet constraint which restricts the aggregate credit supply by the level of the banks’ net worth. Model simulations indicate that the interaction of financial constraints and the extensive margin variation amplifies the impact of bank credit shocks on the real economy. When banks experience loss-related financial shocks, bank credit tightens, which increases firms’ external financing costs. When the firms’ expected income is not sufficient to cover the fixed production cost, some firms exit from or stop entering the market. As a result, the economy displays a severe recession and a slow recovery.

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Energy Consumption, Economic Development and Temperature in China: Evidence from PSTR Model
Xiaoli He,Hongwu Wang,Haoran Pan
Front. Econ. China. 2014, 9 (4): 695-712.
Abstract   PDF (484KB)

Since the 1980s, the Chinese economy has developed rapidly, with an average annual growth rate around 10%. Energy consumption in China has greatly increased as well. This paper investigates the relationship between energy consumption, economic development and temperature in China by adopting provincial panel data from 1990 to 2011. Different from existing studies, in this paper, we use a panel smooth transition regression (PSTR) model to estimate the non-linearity relationship. Four different threshold variables including two lagged endogenous variables and two important exogenous variables have been considered. We find that energy intensity and the ratio of gross capital formation are suitable for the non-linearity model. The estimated elasticities of time dynamic indicate that energy consumption is income inelastic and temperature inelastic. Elasticities of real income at first increase and then decrease, however, elasticities of temperature gradually increase after the year 1993. Last of all, we propose some policy implications.

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8 articles