Template-Type: ReDIF-Article 1.0 Author-Name: Jonathan E. Leightner Author-Email: jleightn@aug.edu Author-Workplace-Name: Johns Hopkins – Nanjing University Center, Nanjing University, Nanjing 210093, China College of Business Administration, Augusta State University, Augusta, Georgia 30904, USA Title: China’s Fiscal Stimulus Package for the Current International Crisis: What does 1996–2006 Tell Us? Abstract: This paper uses Bi-Directional Reiterative Truncated Projected Least Squares (BD-RTPLS) to estimate annual ∂GPP/∂G and %∂GPP/%∂G multipliers for China’s 31 provinces between 1996 and 2006 (GPP = Gross Provincial Product and G = government spending in the province). In order to account for the influence of omitted variables, BD-RTPLS produces a separate ∂GPP/∂G and %∂GPP/%∂G estimate for every observation in the data set. I find that ∂GPP/∂G and %∂GPP/%∂G were highest in 1996 while China was drastically cutting government spending to curb inflation, were lowest in 1997 during the Asian Financial Crisis, slowly rose between 1998 and 2004, and then declined some in 2005 and 2006 when the Chinese yuan was slowly appreciating. Classification-JEL: E62, E65, N15 Keywords: fiscal policy, China, crises, stimulus Journal: Frontiers of Economics in China Pages: 1-24 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0001-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:1-24 Template-Type: ReDIF-Article 1.0 Author-Name: Huayi Yu Author-Email: rucyhy@gmail.com Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Title: China’s House Price: Affected by Economic Fundamentals or Real Estate Policy? Abstract: Many theory and empirical literature conclude that house price can reflect economic fundamentals in the long-term. However, by using China’s panel data of 35 main cities stretching from 1998 to 2007, we find that there is no stable relationship between house price and economic fundamentals. House price has deviated upward from the economic fundamentals since government started macro-control of the real estate market. We consider that the mechanism between the house price and economic fundamentals is distorted by China’s real estate policy, especially its land policy. Meanwhile the policy itself is an important factor in explaining the changes of China’s house price. Then we estimate the dynamic panel data model on house price and the variables which are controlled by real estate policy. The result shows: land supply has negative effects on house price; financial mortgages for real estate have positive effects on house price; and the area of housing sold and the area of vacant housing, which reflects the supply and demand of the housing market, has negative effects on house price. We also find some differences in house price influence factor between eastern and mid-western cities. Finally, we propose policy suggestions according to the empirical results. Classification-JEL: E31, R20, R31 Keywords: house price, economic fundamental, real estate policy, dynamic panel data model Journal: Frontiers of Economics in China Pages: 25-51 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0002-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:25-51 Template-Type: ReDIF-Article 1.0 Author-Name: Jinhai Yan Author-Email: yjh1588@sina.com Author-Workplace-Name: School of Public Affairs, Xiamen University, Xiamen 361005, China Author-Name: Lei Feng Author-Email: flfl@sina.com Author-Workplace-Name: Department of Land and Real Estate Management, School of Public Administration, Renmin University of China, Beijing 100872, China Author-Name: Helen X. H. Bao Author-Email: hxb20@cam.ac.uk Author-Workplace-Name: Department of Land Economy, University of Cambridge, Cambridge CB39EP, UK Title: House Price Dynamics: Evidence from Beijing Abstract: To study the house price dynamics in China, this paper extends the traditional life-cycle model by incorporating land supply, regime shifts and government regulation factors. The models are estimated with an error correction framework using quarterly data from 2000 to 2007 in Beijing. The conclusions are as follows. (1) There exits a stable co-integration relationship between house price and fundamentals; land supply and financial regimes are also important determinants of long-run equilibrium house prices. (2) Short-run dynamics depend on changes of fundamentals and the adjustment process of housing market. Land supply has a significant impact on house price fluctuations while demand factors such as user costs, income and residential mortgage loan have greater influences. The adjustment speed of real house prices to the long-run equilibrium has been reduced significantly since 2005 which means exogenous shocks can cause prolonged deviation of real house prices from the equilibrium level. Classification-JEL: R21, R31, R38 Keywords: house prices, house price dynamics, regime shifts, macro-regulation Journal: Frontiers of Economics in China Pages: 52-68 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0003-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:52-68 Template-Type: ReDIF-Article 1.0 Author-Name: Jinwen Zhao Author-Email: jinwen101@163.com Author-Workplace-Name: School of Finance, Dongbei University of Finance and Economics, Dalian 116025, China Author-Name: Hui Gao Author-Email: gao_hui1018@163.com Author-Workplace-Name: School of Statistics, Dongbei University of Finance and Economics, Dalian 116025, China Title: Impact of Asset Price Fluctuation on China’s Monetary Policy: An Empirical Analysis Based on Quarterly Data, 1994–2006 Abstract: The strenuous fluctuation in global asset price in recent years has had a profound impact on the economic and social development of every country. An empirical analysis indicates that asset prices (the stock price index and real estate prices) are important endogenous variables affecting the interest rate reaction function of central bank monetary policy. With expected inflation as a given, each one percentage point rise in output gap will cause a 0.79 percentage point reduction in interest rates by the central bank and each one percentage point rise in real estate price will result in a 2.2 percentage point rise in interest rates. The stock price index does have an influence on the trends in monetary policy, but it is less salient than the impact of housing prices. We also show that monetary policy that employs asset price as an endogenous variable increases the central bank’s control in seeking to attain its objectives. Therefore we suggest that the central bank should make asset price fluctuation an endogenous variable and incorporate it into its forward-looking interest rate rule, in order to facilitate the healthy development of China’s markets for real estate, stocks and derivatives, energy and bulk commodities and maintain rapid, smooth, sustainable and harmonious economic development Classification-JEL: E52, E63, C51 Keywords: asset prices fluctuation, monetary policy, interest rate rule, Extended IS curve, Cointegration Test Journal: Frontiers of Economics in China Pages: 69-95 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0004-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:69-95 Template-Type: ReDIF-Article 1.0 Author-Name: Meng Li Author-Email: mli7211@yahoo.com.cn Author-Workplace-Name: College of Economics, Shenzhen University, Shenzhen 518060, China Title: A CGE Analysis of Oil Price Change Abstract: As Chinese economy system has been depended more on the import of petroleum with the development of China, the change in the price of international oil have caused concern among economists and policy makers. This paper is to present a financial Computable General Equilibrium (CGE) model of the Chinese economy which integrates real economy and financial sectors, and to apply it to quantitatively evaluate the impacts on Chinese economy caused by international oil price changes. And the model endogenously determines the exchange rate, covering fixed, partially flexible, and completely flexile exchange rate system to consider the effect of foreign oil price changes from the point of view of macro and industrial aspects. Finally, this paper presents concluding remarks. Classification-JEL: C68, F33, G14 Keywords: oil price, CGE model, economic system, policy simulation Journal: Frontiers of Economics in China Pages: 96-113 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0005-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:96-113 Template-Type: ReDIF-Article 1.0 Author-Name: Hao Zhou Author-Email: hao615@sina.com Author-Workplace-Name: Institute of Industrial Economics, Jinan University, Guangzhou 510632, China Author-Name: Wei Zou Author-Email: zouwei@whu.edu.cn Author-Workplace-Name: School of Economics and Management, Wuhan University, Wuhan 430072, China; Title: Income Distribution Dynamics of Urban Residents: The Case of China (1995–2004) Abstract: Using a 1995–2004 panel data of Chinese urban residents, we investigate the dynamics of income distribution in cities. According to Kernel estimates of the relative income distribution of Chinese cities, we find that: (1) the national across-city distribution of per capita GDP exhibits an apparent unique-peak distribution in 1995 and an “emerging multiple-peak” one in 2004; (2) for prefecture-level cities, income distribution has evolved to an “apparent multiple-peak” distribution from a unique-peak one; (3) the income distribution of county-level cities maintains a unique-peak curve; (4) most of the income dynamics of urban residents originates from prefecture-and-higher-level cities. We sample three representative provinces and study the urban income dynamics respectively. The analysis suggests that within a single province, urban income distribution evolves from unique-peak to twin-peak curve; while among provinces, income convergence is evident for urban residents. In addition, we measure the incidence of poverty in cities based on our income dynamics analysis, and find that the ratios of people living below absolute poverty line have been decreasing at cities of all levels. Classification-JEL: O11, O15, O18 Keywords: dynamics of income distribution, kernel density estimation, urban poverty Journal: Frontiers of Economics in China Pages: 114-134 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0006-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:114-134 Template-Type: ReDIF-Article 1.0 Author-Name: Hiroshi Sato Author-Email: Author-Workplace-Name: Graduate School of Economics, Hitotsubashi University, Tokyo 186–8601, Japan Title: Growth of Villages in China, 1990–2002 Abstract: This paper examines the economic and noneconomic determinants of growth disparity among Chinese villages between 1990 and 2002. By estimating a growth equation, first, we confirm a significant positive effect of the initial level of human capital, as well as the initial condition of physical infrastructure. Second, social capital measured by the degree of stable social relations at the village level is also a significant growth-promoting factor. The policy implications of our findings are that public policy promoting social stability in rural areas should be strengthened, as well as increasing financial support for rural education and infrastructure construction, especially in lower income regions. Classification-JEL: Keywords: regional disparity,growth regression,social capital,rural China Journal: Frontiers of Economics in China Pages: 135-149 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0007-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:135-149 Template-Type: ReDIF-Article 1.0 Author-Name: Fang Cai Author-Email: caifang@cass.org.cn Author-Workplace-Name: Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing, 100073, China Title: Chinese Rural Reform in 30 Years: An Analysis in Terms of Institutional Economics Abstract: Both from history and logic, the rural reform is the starting point for China’s overall economic reform. The gradualism, inherent logical evolution and interest conflict of reform in China all have their origins in rural reform. The thirty-year’s rural reform can be viewed as the adjustment of urban-rural relations by different period. This study adopts the analytical framework of institutional economics to clearly demonstrate the whole logic process of institutional transition, then from the international comparative perspective, generalizes some basic experiences in China’s rural reform and the lessons for developing and transitional countries. On the basis of judging different stages of economic development, this paper also sums up the new challenges faced by rural reform and discusses its prospects for the next reform. Classification-JEL: Q1, Q15, Q18 Keywords: rural reform, gradualism, institutional economics Journal: Frontiers of Economics in China Pages: 150-168 Volume: 5 Issue: 1 Year: 2010 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0008-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:150-168 Template-Type: ReDIF-Article 1.0 Author-Name: Angang Hu Author-Email: anganghu@tsinghua.edu.cn Author-Workplace-Name: Center for China Study, School of Public Policy and Management, Tsinghua University, Beijing 100084, China Author-Name: Shenglong Liu Author-Email: liu_s_long11@163.com Author-Workplace-Name: Center for China Study, School of Public Policy and Management, Tsinghua University, Beijing 100084, China Title: Transportation, Economic Growth and Spillover Effects: The Conclusion Based on the Spatial Econometric Model Abstract:This paper tests the external spillover effects of the transportation on China’s economic growth from the theoretical and the empirical perspectives. Based on a logarithm production model, this study first proves the existence of the positive externality in the transportation. After that, the authors collect the data of the 28 provinces in China from 1985 to 2006, and use a relatively advanced spatial econometric method to test the positive externality. After constructing a spatial econometric model, the authors use the Maximum Likelihood (ML) method to estimate this model. According to the theoretical model and the empirical results, this article reaches the following conclusion: (1) The positive externalities in the transportation do exist; (2) From 1985 to 2006, the transportation contributed 24.8 billion yuan to China's GDP every year: in this 24.8 billion yuan, 19.6 billion comes from the direct contribution and the rest 5.2 billion comes from the external spillover effects; (3) The summation of the direct contribution and the external spillover effects to the economic growth is on average 13.8% every year. Classification-JEL: L90, O18, R41 Keywords: transportation, spillover effects, spatial autoregressive model, spatial moving average model, maximum likelihood estimation Journal: Frontiers of Economics in China Pages:169-186 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0009-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:169-186 Template-Type: ReDIF-Article 1.0 Author-Name: Xiaohui Liu Author-Email: libyxiaohui@126.com Author-Workplace-Name: Chinese Finance Research Institute, Southwestern University of Finance and Economics,Chengdu 610074, China Author-Name: Conglai Fan Author-Email: fancl@nju.edu.cn Author-Workplace-Name: School of Economics, Nanjing University, Nanjing 210093, China Title: The Model and Empirical Estimation of the Optimal Flexibility of RMB Exchange-Rate Regime: A Study Based on the Price-Stabilization Abstract: Under the Mundell-Fleming-Dornbusch (M-F-D) framework, the paper develops a stochastic model to study the optimal choice of RMB exchange rate regime based on two objectives, namely the exchange rate stabilization and price stabilization. The paper finds that different policy objectives will lead to different optimal choices of RMB exchange-rate regime. If the central bank aims to stabilize the price level, the optimal choice would be a certain type of intermediate regime, or the optimal choice would be a fixed one if it aims to stabilize the RMB exchange rate. Based on the model, the paper empirically estimates China's open economy parameters and uses them to estimate the optimal flexibility of RMB exchange rate regime. The paper points out that China should allow more exchange rate changes to absorb its foreign exchange market pressure in order to stabilize the general price level, which indicates that China should move toward a more flexible exchange rate regime. Classification-JEL: F41, F33 Keywords: exchange rate regime flexibility, price stabilization, exchange-rate stabilization, exchange market pressure Journal: Frontiers of Economics in China Pages: 187-209 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0010-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:187-209 Template-Type: ReDIF-Article 1.0 Author-Name: Yizhong Wang Author-Email: wangyizhong@zju.edu.cn Author-Workplace-Name: College of Economics, Zhejiang University, Hangzhou 310058, China Title: The Internal and External Equilibrium Exchange Rate of RMB: 1982–2010 Abstract: This paper estimates fundamental equilibrium exchange rate of RMB based on internal and external balance of China’s economy. The findings indicate that RMB real exchange rate is overvalued in the period of 1982–1991, but the extent of the undervaluation has an enlarging trend since 2004. Then, we put forward a new theory called “Prior Equilibrium Exchange Rate” and apply it to RMB, finding that real effective exchange rate of RMB need to be appreciated about 20% between 2008 and 2010, and the appreciation range of bilateral nominal exchange rate between RMB and the world’s key currencies depends on the objective functions of the government. Policy implication indicates that decision makers need to refer to equilibrium exchange rate which is derived from different theories and to make great efforts to adjust it towards equilibrium level and establish RMB “Prior Equilibrium Exchange Rate.” Meanwhile, policymakers should implement a potential objective interval system of exchange rate appreciation. The appreciation range of bilateral exchange rate of RMB against USD from 2008 to 2010 may be set between 6% to 10%. Classification-JEL: F31, F32, F41 Keywords: real exchange rate, current account, prior equilibrium exchange rate Journal: Frontiers of Economics in China Pages: 210-231 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0011-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:210-231 Template-Type: ReDIF-Article 1.0 Author-Name: Qiong Li Author-Email: joansonlee2000@yahoo.com.cn Author-Workplace-Name: Strategic Planning Department, The People’s Insurance Company (Group) of China, Beijing 100084, China Author-Name: Zhiwei Wang Author-Workplace-Name: School of Economics, Peking University, Beijing 100871, China Title: The Taylor Rules and Macroeconomic Fluctuation in China: 1994–2006 Abstract: The correlation and controllability of money supply as the intermediate object of monetary policy is gradually weakening, the argument that interest rate substitutes the money supply for the alternative object is hotly discussed. According to the Taylor rule and its extensions, this paper has a positive analysis on the efficiency of Taylor-type rules in China through historical analysis, policy reaction function approach and co-integration technology of time series analysis. This paper draws a conclusion that Taylor rule is unstable in China, and less correlation can be found between interest rate and the output gap, and the central bank focus on the inflation target rather than economic growth. Therefore, the central bank should abide by the simple rule of inflation targeting. Classification-JEL: F41, G28, G32 Keywords: Taylor rule, historical analysis, GMM test, co-integration analysis Journal: Frontiers of Economics in China Pages: 232-253 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0012-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:232-253 Template-Type: ReDIF-Article 1.0 Author-Name:Jianping Shi Author-Email: shjp@cufe.edu.cn Author-Workplace-Name: School of Finance, Central University of Finance and Economics, Beijing 100081, China Author-Name: Yu Gao Author-Email: gaoyu0212@126.com Author-Workplace-Name: School of Finance, Central University of Finance and Economics, Beijing 100081, China Title: A Study on KLR Financial Crisis Early-Warning Model Abstract: The financial crisis early-warning models were improved gradually with the continued regional financial crises that provided a wealth of empirical data by the end of last century. However, none of the crisis early-warning models correctly predicted the global financial crisis in 2008. Previous researches show the KLR model have better performance, so we reviewed the crisis early-warning system based on the KLR model using the recently data. This paper first tested the KLR model, and made some amendments based on the actual economic environment. Then we re-test the modified model, which show an improved performance. At last, the future crisis probabilities of some selected countries are predicted by using the amendatory model. Classification-JEL: G21, G32, G33 Keywords: KLR model, emerging market, financial crisis, early-warning system Journal: Frontiers of Economics in China Pages: 254-275 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0013-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:254-275 Template-Type: ReDIF-Article 1.0 Author-Name: Yang Lu Author-Email: lusanmao2002@yahoo.com.cn Author-Workplace-Name: Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing 100732, China Title: Do Environmental Regulations Influence the Competitiveness of Pollution-Intensive Products? Abstract: According to "Pollution Haven Effect," in order to circumvent stringent environment standards, polluting industries in developed countries will be chosen to locate into developing countries; another way is that developed countries increase imports of pollution-intensive products instead of producing by their own, both of which can contribute to the changes of comparative advantages in the past 30 years. Since 1990s, many scholars have paid special attention on whether environmental regulations affect the trade patterns or not, but the conclusions are ambiguous. This paper, based on the Heckscher-Ohlin-Vanek (HOV) model and using 95 and 42 countries sample data in year of 2005, is an empirical analysis which shows that: (1) according to the estimated results based on the “environmental governance” index calculated by CIESIN, environmental regulations do not change the comparative advantages of five types of pollutionintensive goods; (2) On the other hand, when the per capita income is considered as an endogenous indicator of environmental regulation, environmental regulation will significantly promote the comparative advantages in chemical products, iron and steel products and paper products, though environmental regulations do not take any influence on non-metallic minerals products and non-ferrous metals products. I think that appropriate level of environmental regulation can promote a comparative advantage in pollution-intensive goods. Classification-JEL: F18, C31 Keywords: environmental regulation, pollution-intensive product, comparative advantage, trade pattern Journal: Frontiers of Economics in China Pages: 276-298 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0014-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:276-298 Template-Type: ReDIF-Article 1.0 Author-Name: Fuxiang Wu Author-Email: fxiangwu@nju.edu.cn Author-Workplace-Name: School of Business, Nanjing University, Nanjing 210093, China Author-Name: Zhibiao Liu Author-Email: zbliu@nju.edu.cn Author-Workplace-Name: School of Business, Nanjing University, Nanjing 210093, China Title: Microeconomic Analysis on the Growth of Trade Volume in China: 1978–2007 Abstract: The gravity equation is usually employed by researchers in the field of international trade to explain the growth of a country's imports and exports volume, especially the manufactured goods. But in China, variables in the model, such as exchange rate, tariff, transportation cost, and spatial distance etc., are not sufficient to explain the riddle of China's growth in trade volume. In fact, this growth in China's trade volume is owing to the disintegration of production in the process of economic globalization, to the multinational corporations’ (MNC) vertical outsourcing of their manufacturing processes and procedures, and to the timely readjustment of Chinese enterprises on their strategies of participating in the international intra-product specialization. In this paper we establish an equilibrium model of intra-product specialization dominated by MNCs, and do some empirical tests on the growth in trade volume in China by using the variables including technological conditions of trade, similarity of economies, policy conditions of trade, disintegration of production and level of per capita capital equipment. The empirical results support our basic judgments. Classification-JEL: B21, P33 Keywords: riddle of China’s growth in trade volume, microeconomic analysis, intra-product specialization Journal: Frontiers of Economics in China Pages: 299-324 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0015-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:299-324 Template-Type: ReDIF-Article 1.0 Author-Name: Xiuyan Liu Author-Email: lxiuyan320@tom.com Author-Workplace-Name: School of Economics & Management, Southeast University, Nanjing 210096, China Author-Name: Xingmin Yin Author-Email: yin1953@fudan.edu.cn Author-Workplace-Name: School of Economics & Management, Southeast University, Nanjing 210096, China Title: Spatial Externalities and Regional Income Inequality: Evidence from China’s Prefecture- Level Data Abstract: Based on panel data of 282 prefectures in China from 1999 to 2004; we explore the relationship between market potential, employment density and per capita GDP by using a dynamic panel data approach. It is found that the externalities arising from market potential and employment density have a positive and significant effect on local income. Moreover, both absolute and standardized elasticity of market potential externalities are pronounced, which suggests that market potential has a greater impact on regional disparity. Classification-JEL: L690, O140 Keywords: spatial externalities, income inequality, market potential, dynamic panel Journal: Frontiers of Economics in China Pages: 325-338 Volume: 5 Issue: 2 Year: 2010 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0016-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:2:p:325-338 Template-Type: ReDIF-Article 1.0 Author-Name: Shusong Ba Author-Email: bashusong@gmail.com Author-Workplace-Name: School of Economics, Huazhong University of Science and Technology, Wuhan 430007, China Research Institute of Finance, Development Research Center of the State Council, Beijing 100017, China Author-Name: Shanshan Shen Author-Email: shanshan4087@yahoo.cn Author-Workplace-Name: School of Economics, Huazhong University of Science and Technology, Wuhan 430007, China Title: Research on China’s Export Structure to the US: Analysis Based on the US Economic Growth and Exchange Rate Abstract: Due to the rapid appreciation of RMB, the consistent declining of the US economy and other uncertain factors, China’s export volume to the United States has declined. The paper first chooses six industries to divide them into three groups based on per capita possession of capital, then employs the monthly data from 2001 to 2008 to carry out EG two-step cointegration test, and finally analyzes the impacts of the US economic growth and the exchange rate variability on different export industries. Empirical results show that the labor-intensive industries are most susceptible to fluctuations brought by economic growth and real exchange rate, while those industries with higher per capita possession of capital are less susceptible to external factors. In the short run, the export of labor-intensive products gives an advantage to China’s foreign trade development, but in the long-run, these industries will be affected greatly by various uncertain factors and the advantages of China’s labor-intensive export industries will disappear with the shift of the international division. Therefore, the only way to guarantee the dominant position of China’s foreign trade is to develop capital and technology intensive export industries and upgrade export structure. Classification-JEL: F1, F4 Keywords: real exchange rate, export structure, economic growth Journal: Frontiers of Economics in China Pages: 339-355 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0101-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:339-355 Template-Type: ReDIF-Article 1.0 Author-Name: Jinbin Wang Author-Email: wjinbin@ruc.edu.cn Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Author-Name: Nan Li Author-Email: lisouth2003@yahoo.com.cn Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Title: Exchange Rate Pass-Through: The Case of China Abstract: This paper studies the degree of the exchange rate pass-through (ERPT) to import and consumer prices in China with both the ratio of China’s imports to GDP and domestic prices of China’s main trade partners going up. Statistic results show that the degree of ERPT is somehow less than the degree of marginal cost plus mark-up pass-through of exporters, and econometric analyses reach the same conclusion. Besides, the ERPT to import prices is found to be high while the ERPT to CPI is low owing to some factors that obstruct the import prices pass-through channel to domestic CPI. But this situation has been changing significantly since August 2005. Thus, a more flexible exchange rate system is needed for China to absorb the price shock from aboard efficiently. Classification-JEL: F41, G12, G31 Keywords: exchange rate pass-through, cost mark-up, CPI Journal: Frontiers of Economics in China Pages: 356-374 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0102-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:356-374 Template-Type: ReDIF-Article 1.0 Author-Name: Jingtao Yi Author-Email: jingtaoyee@hotmail.com Author-Workplace-Name: School of Business, Renmin University of China, Beijing 100872, China Title: China’s Equilibrium Exchange Rate Dynamics 1994–2004: A Cointegration Analysis Abstract: Motivated by the global debate on the possible revaluation of the Chinese currency, the RMB, in recent years, the objective of this paper is to measure the equilibrium value of the RMB exchange rate through the macroeconomic balance approach in order to produce an assessment of the RMB in terms of periods of misalignment. The empirical evidence indicates that although there turns out to be an increasing degree of the RMB undervaluation in these measures from 2003 to 2004, the RMB is not substantially undervalued in both measures of real effective exchange rates and nominal bilateral exchange rates against the US dollar over the full period 1994–2004. Classification-JEL: F41, G12, G31 Keywords: equilibrium exchange rate, foreign exchange, Chinese Renminbi, macroeconomic balance, cointegration Journal: Frontiers of Economics in China Pages: 375-392 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0103-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:375-392 Template-Type: ReDIF-Article 1.0 Author-Name: Bing Zhang Author-Email: zhangbing@nju.edu.cn Author-Workplace-Name: School of Management and Engineering, Nanjing University, Nanjing 210093, China Author-Name: Xindan Li Author-Email: xdli@nju.edu.cn Author-Workplace-Name: School of Management and Engineering, Nanjing University, Nanjing 210093, China Title: Currency Appreciation and Stock Market Performance: Evidence from China Abstract: This paper analyzes the relationship between the change of the exchange rate and the performance of the Chinese stock market after exchange rate regime and split share structure of stock market reformed in 2005, which is important for us to understand the linkages and mechanisms between the two markets deeply. We find that the exchange rate is highly related with the stock market, and there exists long-term cointegration. The results demonstrate that in the long term, the relationship between the two variables mainly belongs to flow-oriented model; Shanghai A Share index is influenced by the exchange rate, yet Shanghai B Share index has shown less indication of long term interrelation with the exchange rate. In the short term, the relationship between the two variables mainly belongs to stock-oriented models, there are inter influence between the stock market and the exchange market. The paper further analyzes the possible influence of different sector indices to exchange rates. Finally, the paper puts forward some advices and policy suggestions. Classification-JEL: F31, G15, C22 Keywords: exchange rate, stock price, cointegration Journal: Frontiers of Economics in China Pages: 393-411 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0104-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:393-411 Template-Type: ReDIF-Article 1.0 Author-Name: Jisheng Yang Author-Email: yangjisheng770@163.com Author-Workplace-Name: School of Economics, Huazhong University of Science & Technology, Wuhan 430074, China Title: Expectation, Excess Liquidity and Inflation Dynamics in China Abstract: By introducing the shocks from individual activities into the Hybrid New Keynesian Phillips curve (HNKPC), we investigate the inflation dynamics and the effect of excess liquidity in China. According to the estimation result, some soundly conclusions can be drawn. Firstly, the empirical results indicate that the HNKPC is consistent with the nature of inflation dynamics in China, which posits the inflation dynamics as the combination of backward looking adaptive expectations and forward looking rational expectations. Moreover, defining excess liquidity by M2, the elasticity of inflation defined by CPI to excess liquidity is approximately unit, which reveals that the quasi-money is the main force behind inflation. The nature of inflation expectation and the effect of excess liquidity all provide the evidences that tight monetary policy is effective to curbing inflation in China. Classification-JEL: C33, E31, E51, R12 Keywords: inflation, Hybrid New-Keynesian Phillips curve, expectation, excess liquidity Journal: Frontiers of Economics in China Pages: 421-429 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0105-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:421-429 Template-Type: ReDIF-Article 1.0 Author-Name: Zhanyu Ying Author-Email: zhanyuying@263.net Author-Workplace-Name: School of Finance, Central University of Finance and Economics, Beijing 100081, China Title: Study on the Measurement of China’s Financial Intermediation Ratio in Terms of Stock: 1992–2006 Abstract: In terms of China’s financial intermediation ratio (FIMR) in stock, we make a thorough empirical study on the change of the ratios during 1992–2006. We find that: The monopoly position of bank credit in the financing channel of non-financial sector is weakened, but bank credit is still the most important financing channel for non-financial sector. There is a structure change in the financing channel of government sector and its FIMR is increasing. Though the scale of non-banking financial institutions underwent rapid development during 1992–2006, their role in social financing cannot be evenly matched with banking system. It is the change of various economy behaviors that induce the changes of FIMR in China. Classification-JEL: E51, E58, O12, O16 Keywords: financial intermediation ratio, stock index, financial structure Journal: Frontiers of Economics in China Pages:430-444 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0106-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:430-444 Template-Type: ReDIF-Article 1.0 Author-Name: Huihua Nie Author-Email: niehuihua@263.net Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Author-Name: Mingyue Fang Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Author-Name: Tao Li Author-Workplace-Name: School of Economics, Central University of Finance and Economics, Beijing 100081, China Title: China’s Value-Added Tax Reform, Firm Behavior and Performance Abstract: China reformed value-added tax (VAT) by removing investment from the tax base in northeastern provinces in 2004, which is a “natural experiment” of its tax system. Using difference-in-differences method, this paper for the first time investigates the impact of VAT reform on China firms’ fixed asset investment, employment behavior, innovative activities, and productivity, and furthermore discusses the impact of firm behavior on industrial structural upgrade and employment with a firm-level panel data of large and medium-sized manufacturing enterprises in China. We find that VAT reform significantly promotes firms’fixed asset investment, and increases firms’capital-labor ratio and productivity; while enhancement of firms’ productivity is mainly achieved by means of substituting labor with capital, rather than independent technology innovation; meanwhile, VAT reform distinctly decreases employment. Our findings have essential policy implications on the extension of VAT reform in the entire China. Classification-JEL: H250, L210, L250, J230 Keywords: value-added tax, firm, fixed asset, labor, employment Journal: Frontiers of Economics in China Pages: 445-463 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0107-z File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:445-463 Template-Type: ReDIF-Article 1.0 Author-Name: Min Gong Author-Email: mgong@xmu.edu.cn Author-Workplace-Name: Center for Macroeconomic Research, Xiamen University, Xiamen 361005, China Author-Name: Wenpu Li Author-Email: wpli@xmu.edu.cn Author-Workplace-Name: Center for Macroeconomic Research, Xiamen University, Xiamen 361005, China Title: Assessing the Role of Aggregate Demand and Supply Shocks in China’s Macroeconomic Fluctuation Abstract: The combination of a high growth rate and low information has been observed since the late 1990s in the Chinese economy. Should the fact be considered as a result of greatly improved supply capability or should the fact reflect the improvement in the government’s aggregate demand management? In this paper, we try to assess the role of aggregate demand and supply shocks in China’s macroeconomic fluctuation. We use a bivariate structural VAR model to investigate macroeconomic dynamics for China within the aggregate-demand and aggregate-supply framework, using the quarterly data in the period of 1996Q1–2005Q4. Our principal findings are following: (1) China’s high growth shall be associated more with greatly improved supply capability, especially after its WTO entrance. The expansionary aggregate demand policies may have limited effects to raise the growth rate in the post-1996 in China. This result suggests that we need a more pro-growth policy stance in order to maintain a high and stable growth. (2) The low inflation in that period is driven primarily by weak aggregate demand rather than supply factors. Classification-JEL: E3, C32, O53 Keywords: macroeconomic fluctuation, structural VAR, supply and demand shocks, China Journal: Frontiers of Economics in China Pages: 464-488 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0108-y File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:464-488 Template-Type: ReDIF-Article 1.0 Author-Name: Jiyong Chen Author-Email: cjyhubei@163.com Author-Workplace-Name: Economics and Management School, Wuhan University, Wuhan 430072, China Author-Name: Wei Liu Author-Workplace-Name:Economics and Management School, Wuhan University, Wuhan 430072, China Author-Name: Yibo Zhang Author-Workplace-Name: Economics and Management School, Wuhan University, Wuhan 430072, China Author-Name: Yangyi Sheng Author-Workplace-Name:Development Research Center, The People’s Government of Guangdong Province, Guangzhou 510031, China Title: An Empirical Study on FDI International Knowledge Spillovers and Regional Economic Development in China Abstract: This article has constructed a framework to analyze the relationship between national innovation investments, international knowledge spillover due to FDI and regional technological progress. We use the panel data sample in 1992–2006 from China’s 29 provinces (municipalities or autonomous regions) to test the impact of China’s regional R&D investments, international knowledge spillovers of FDI on its regional technological progress. It reveals that the local investments in science and technology are the most important factors to promote technological progress; for the structure and quality of China’s current FDI, the knowledge spillover effects from FDI, especially through the FDI enterprises’ manufacturing activities, are not obvious; the local gains in its technology development from FDI depends on its economic and technological level. Based on the above conclusions we give the corresponding policy recommendations for China’s FDI policy and regional economic development. Classification-JEL: F21, O33, R11 Keywords: FDI, knowledge spillover, China regional economic development Journal: Frontiers of Economics in China Pages: 489-508 Volume: 5 Issue: 3 Year: 2010 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0109-x File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:3:p:489-508 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Jesus Herrerias Author-Email: herreria@eco.uji.es Author-Workplace-Name: Department of Economics, Universitat Jaume I, Castellón 12071, Spain Title: The Causal Relationship between Equipment Investment and Infrastructures on Economic Growth in China Abstract: There is agreement in the literature on economic growth concerning the transitory effects of capital accumulation on the process of economic development. However, controversy arises if this effect is permanent. In this sense, the key point is the embodied technological progress and whether supply factors predominate among the determinants of capital accumulation. Only in this case should expect long-run effects of capital accumulation on economic growth. Inspired by this idea, I focus the study on two elements accounting for economic development—equipment investment and productive infrastructure and I also analyze the type of the empirical relationship that exists between them. The results indicate that equipment investment and infrastructures have played a significant role in accounting for long-run growth in China. However, I do not find empirical evidence supporting any relationship between the two types of investment. In addition, I find that foreign trade has stimulated output and equipment investment in the long run. Finally, it is found that innovation activities encourage equipment investment in the long run. Classification-JEL: F43, O40, O47, O53 Keywords: China, openness, equipment investment, infrastructures, growth Journal: Frontiers of Economics in China Pages: 509-526 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0110-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:509-526 Template-Type: ReDIF-Article 1.0 Author-Name: James Laurenceson Author-Email: j.laurenceson@uq.edu.au Author-Workplace-Name: School of Economics, University of Queensland, Queensland 4072, Australia Title: The Impact of Volatility on Growth in China Abstract: China’s path to emerging as the world’s second largest economy has not been a smooth one. This paper considers whether the volatility of growth has had an impact on the trend rate of growth. In doing so it aims to promote a better understanding of the determinants of China’s impressive trend rate of growth and also shed light on questions such as whether the trend rate of growth might have been even higher had the government and central bank been better able to offset volatility. Utilizing a GARCH-M model, the results of the empirical analysis suggest that the impact of volatility has been either positive or insignificant, but not negative. Classification-JEL: E32, O40 Keywords: China, volatility, output growth, GARCH-M Journal: Frontiers of Economics in China Pages: 527-536 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0111-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:527-536 Template-Type: ReDIF-Article 1.0 Author-Name: Liqun Zhou Author-Email: zhoulq@nankai.edu.cn Author-Workplace-Name: Nankai Institute of Economics, Nankai University, Tinajin 300071, China Author-Name: Liangke Xia Author-Workplace-Name: Nankai Institute of Economics, Nankai University, Tinajin 300071, China Title: ChinHow R&D Investments Influence TFP Growth: Evidence from China’s Large and Medium- Sized Industrial Enterprises Abstract: This paper investigates the potential channels through which R&D may influence TFP growth using industry-level panel data of China’s large and medium-sized industrial enterprises over the period of 2000–2007. Comparing with existing literature, we provide a closer look of the relationship between R&D and TFP growth by decomposing TFP growth into efficiency change and technical change components using Malmquist productivity index and distinguishing between upstream R&D spillovers and downstream R&D spillovers. We find TFP grow slightly during 2000–2007, and R&D investment indeed serves as an engine of productivity growth just as endogenous growth theories argued, which is largely because R&D accelerates technical progress even it also results in enlarging technical inefficiency. However, we find a robust negative effect of downstream R&D spillovers on TFP growth, the effects of upstream is positive but not statistically significant. In addition, we do not find the positive effects of human capital on TFP as endogenous growth theories indicated, but find human capital severs as “assimilation device” for R&D spillovers both in promoting TFP growth and increasing technical efficiency even the effects on technical progress is adverse. Classification-JEL: D24, O31, O32 Keywords: R&D investment, human capital, TFP growth, Malmquist produc- tivity index Journal: Frontiers of Economics in China Pages: 537-558 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0112-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:537-558 Template-Type: ReDIF-Article 1.0 Author-Name: Yue L Author-Email: yueleenk@126.com Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300071, China Title: Analysis on the Disparity in Economic Growth and Consumption between Urban Sector and Rural Sector of China: 1978–2008 Abstract: This paper designs a theoretical model of excess per-capita income growth and brings forward such indices as excess per-capita income, per-capita base consumption and decreasing factor as well as the corresponding measurement methods. It studies from a brand new aspect the disparity between the economic growth in urban sector and rural sector of China in the past 30 years after the reform and opening-up, together with the disparity between the effects of such growth on consumption. The research results show that: At present the problem of the duality of urban and rural sector of China is still serious; the impaired amount of economic growth in urban sector is larger than that in rural sector while the impairing strength in rural sector is higher than that in urban sector; and it is vital to increase the excess per-capita investment in rural sector in order to effectively strengthen consumption related policies. Therefore, promoting urbanization but reasonably controlling the urbanization progress while strengthening the infrastructure construction in rural areas would be the efficient approach to reduce the impairing strength over the economic growth, to build up consumption market, to improve the duality of economy and to realize sustainable development. Classification-JEL: E21, P24 Keywords: excess per capita income, per capita base consumption, excess per capita consumption, speed of urbanization, rural infrastructure construction Journal: Frontiers of Economics in China Pages: 559-581 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0113-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:559-581 Template-Type: ReDIF-Article 1.0 Author-Name: Jin Song Author-Email: songjin511@yahoo.com.cn Author-Workplace-Name: School of Economics and Business Administration, Beijing Normal University, Beijing100875, China Author-Name: Shi Li Author-Email: lishi@bnu.edu.cn Author-Workplace-Name: School of Economics and Business Administration, Beijing Normal University, Beijing 100875, China Title: Ownership and Earnings Inequality in Urban China Abstract: Along with advances in urban state-owned enterprise reform, fast growth of private sector and changes in the wage structure, earnings inequality in urban China has been increasing. Using data from the 1988 and 2007 waves of the urban household survey conducted by China Household Income Project, this paper attempts to examine the impact of the change in ownership structure on earnings distribution in urban China. We find that developing non-state-owned enterprises (nonSOEs) or privatization of state-owned enterprises (SOEs) enlarge earnings inequality, but the difference in earnings level between the two sectors is small. Although workers in SOEs receive higher income than in nonSOEs, the difference is more caused by endowment difference rather than coefficient differences. Introducing market power to wage determination system is more influential to the rising earnings inequality which leads more rewards on working experience and educational attainment. Classification-JEL: J16, J31, J71 Keywords: ownership, earnings, inequality, urban China Journal: Frontiers of Economics in China Pages: 582-603 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0114-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:582-603 Template-Type: ReDIF-Article 1.0 Author-Name: Xinhua Gu Author-Email: xinhuagu1@yahoo.ca Author-Workplace-Name: Faculty of Business Administration, University of Macau, Macao, China Title: A Synthesized Discussion on the Macao Monetary Reform Abstract: The prolonged RMB appreciation affects Macao deeply and requires a major monetary reform without further delay. What we propose for Macao reform as an optimal choice includes shifting its monetary anchor to the strong RMB, revaluing its domestic currency to the original level, and setting up a sovereign wealth fund for autonomous growth. This proposal is based on Macao’s economic fundamentals such as trade competitiveness, business relations, real welfare, monetary stability, and genuine development. We also recommend a monetary union of Macao with Hong Kong as the 2nd-best choice of reform by introducing what we term the SAR dollar Classification-JEL: E43, E59, F36 Keywords: monetary reform, Macao, Hong Kong, the Mainland of China Journal: Frontiers of Economics in China Pages: 604-621 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0115-z File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:604-621 Template-Type: ReDIF-Article 1.0 Author-Name: Xuanhua Xu Author-Email: xuxh@mail.csu.edu.cn Author-Workplace-Name: School of Business, Central South University, Changsha 410083, China Author-Name: Bin Pan Author-Email: panbin109@163.com Author-Workplace-Name: School of Business, Xiangtan University, Xiangtan 411105, China Title: Capital Liquidity and Residents’ Consumption Decision: An Asymmetry Analysis of Economic Prosperity Abstract: Among the current literatures that discuss the influence exerted on residents’ consumption behavior by capital liquidity, some often independently decide the demarcation point of the liquidity restriction that affects residents’ consumption behavior, without taking into account when the economy is flourishing whether residents will be influenced by the restriction of the liquidity that their consumption behaviors can not be fully carried out. We introduce a threshold model which varies according to the actual GDP and other financial indicators (money supply, average stock index and balance of bank loans) to discuss residents’ consumption behavior in China under different economic states. The empirical results show that when the economy flourishes or resuscitates, residents’ income of the same period have not notable influence on their consumption, which suggests that residents’ consumption behavior does not considerably change according to the fluctuation of the current income, but conforms with the constant income-life cycle hypothesis. Moreover, two estimated values 0.7504 and 0.8597, as economic boom measures, all fall in the boom stable stage—basically consists with the early-warning index of the macro-economy boom issued by National Bureau of Statistics of China. It shows that the macro-economic boom is not notablely influenced by capital liquidity, so is residents’ consumption behavior. Classification-JEL: E37, O16, P24 Keywords: residents consumption behavior, capital liquidity, threshold model Journal: Frontiers of Economics in China Pages: 622-639 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0116-y File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:622-639 Template-Type: ReDIF-Article 1.0 Author-Name: Wei Lü Author-Email: weilu008@gmail.com Author-Workplace-Name: School of Public Finance and Taxation, Dongbei University of Finance and Economics, Dalian 116023, China Author-Name: Yun Zeng Author-Workplace-Name: School of Public Finance and Taxation, Dongbei University of Finance and Economics, Dalian 116023, China Title: Institutional Constraints, Double Imbalances and Policy Option—Global Financial Crisis and China’s Fiscal Policy Abstract: With the enormous development of China’s economy, we re-implement the proactive fiscal policy not only to response to the global financial crisis, but also to take advantage of the opportunity to resolve the institutional constraints, transform China’s economic growth pattern, keep stability and promote the sustainable growth of the economy. So the goal of fiscal policy should weigh easing the economic crisis against long-term stability and the development of economy. The past experiences of fiscal policy practices in China indicate that the traditional simple counter-cyclical fiscal policy may be able to pull the economy out of recession, but it has little effect on automatic recovery of the economy. Therefore, the fiscal policies need to hang on the entire reform process and the whole economic structure adjustment. This paper firstly reveals the root of “double imbalances” and institutional constraints, then analyzes the paradox between such constraints, and discusses the space of positive fiscal policy. Classification-JEL: H21, H3, H4, H73 Keywords: institutional constraints, external imbalance, internal imbalance, fiscal policy, policy option Journal: Frontiers of Economics in China Pages: 640-656 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0117-x File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:640-656 Template-Type: ReDIF-Article 1.0 Author-Name: Jie Meng Author-Email: mengjie@ruc.edu.cn Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Title: Labor Theory of Value and the Uncertainty in Capitalist Economy Abstract: This article aims to offer a reply to Steedman’s critique of Marx’s labor theory of value. Although this critique having been there for about three decades, the anti-critiques from Marxists are up to date flawed with fatal limitation, losing sight of an important dimension of labor theory of value, i.e., without taking it as a theoretical tool of understanding the uncertainty rooted in capitalist mode of production. The first part of this article reviews the controversy initiated by Steedman. Part 2 discusses Marx’s dual theory of market value and Rubin’s interpretation. Our view is that, if Rubin’s interpretation is accepted, a refutation of Steedman’s critique towards Marx will be impossible. Part 3 of this article explores the possible reconstruction of market value in the perspective of the dynamics in the pivoting of market value. We concludes that, the relationship between the standard condition of production and value is not, as argued by Steedman, of deterministic and one-directional character. For Marx, labor theory of value is applied to analyze the uncertain relation between the means and the end, the condition and the result of capitalist production. Meanwhile, another reply is attempted towards the negative comment on labor theory of value made by contemporary evolutionary economist such as Hodgson. In our view, Marx’s labor theory of value is not irrelevant as claimed by Hodgson to the main topics of evolutionary economics such as variety and “natural selection.” It is through labor theory of value that Marx explains the co-evolution of technology and economy. Classification-JEL: B24, D46 Keywords: uncertainty, labor theory of value, Rubin, Steedman Journal: Frontiers of Economics in China Pages: 657-676 Volume: 5 Issue: 4 Year: 2010 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0118-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:657-676