Template-Type: ReDIF-Article 1.0 Author-Name: Zhiqi Chen Author-Email: zhiqi.chen@carleton.ca Author-Workplace-Name: Department of Economics, Carleton University, Ottawa, K1S 5B6, Canada Title: Symposium on the Causes of and Policy Responses to the Deceleration in China's Economic Growth: An Introduction Abstract: Classification-JEL: Keywords: Journal: Frontiers of Economics in China Pages: 1-2 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0001-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:1-2 Template-Type: ReDIF-Article 1.0 Author-Name: Guoqiang Tian Author-Email: gtian@mail.shufe.edu.cn Author-Workplace-Name: School of Economics and Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China; Department of Economics, Texas A&M University, College Station, TX 77843, USA Title: Deceleration of China's Economic Growth: Causes and Countermeasures Abstract: China's economic growth has been declining continuously at a rapid rate since 2011. It dropped to 6.7% in 2016 by more than 3% from nearly 10% average growth rate during 1979¨C2010. As for its causes, there are different interpretations among Chinese economists. One of the interpretations, which is held by some scholars including Justin Yifu Lin, is that external and cyclical factors are the main causes for the decline. The author disagrees with this viewpoint and holds that the root cause of economic deceleration is the delay in deep institutional reforms. An inclusive economy and state coercive capacity are two essential ingredients for sustaining economic prosperity. China must further enhance economic inclusiveness, and accelerate its transition into an efficiency-driven and innovation-driven economy through deepened comprehensive marketization reforms. Meanwhile, it should further strengthen the rule of law to build a limited government that is capable, accountable, effective and caring. Classification-JEL: F43, O17, O38, O47, P11 Keywords: China's economic growth; causes and countermeasures; deep institutional reforms; deceleration; inclusive economy; efficiency-driven; innovation-driven; external and cyclical factors Journal: Frontiers of Economics in China Pages: 3-25 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0002-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:3-25 Template-Type: ReDIF-Article 1.0 Author-Name: Justin Yifu Lin Author-Email: justinlin@nsd.pku.edu.cn Author-Workplace-Name: Institute of New Structural Economics, Peking University, Beijing 100871, China; Institute of South-South Cooperation and Development, Peking University, Beijing 100871, China; National School of Development, Peking University, Beijing 100871, China Title: China¡¯s Growth Deceleration: Causes and Future Growth Prospect Abstract: China¡¯s growth decelerated substantially after 2010. This paper argues that the main cause for the deceleration is external and cyclical, China has a potential growth rate of 8%, the economy has good investment opportunities and resources, and China is likely to achieve a medium-high growth rate of around 6.5% in the coming years. The paper also examines the various structural reforms that can help China to release its growth potential and complete the transition to a well-functioning market economy. Classification-JEL: E32, F43, O38, O47 Keywords: China; economic growth deceleration; causes; countermeasures; external factors; cyclical factors; structural reforms; growth potential; well- functioning; market econmy; hig-growth rate; medium-high growth Pages: 26-52 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0003-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:26-52 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin X.D. Huang Author-Email: kevin.huang@vanderbilt.edu Author-Workplace-Name: Department of Economics, Vanderbilt University, Nashville, TN 37235, USA; Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Growth and Cycles in China's Unbalanced Development: Resource Misallocation, Debt Overhang, Economic Inequality, and the Importance of Structural Reforms Abstract: The recent China's growth slowdown is both cyclical and secular, driven by external and internal factors. In this article, I highlight several key internal factors that have hindered China's growth in recent years. These include worsening misallocation of resources and declining growth of total factor productivity, plus rising household income inequality and debt overhang in the face of tightened liquidity constraint. All of these show the urgency for deepening reforms in China's key macroeconomic landscapes in order to remove institutional barriers and distortions deep-rooted in the nation¡¯s economic and financial structure, and to correct fundamental imperfections of its social- economic system. I argue that such reforms are of critical importance for China's pursuit of healthy and sustainable growth and of balanced and adequate development going forward. Classification-JEL: E01, E17, E27, E37, E47 Keywords: growth slowdown; distortion; resource misallocation; total factor productivity (TFP); debt overhang; income inequality; liquidity constraint; reform Pages: 53-71 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0004-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:53-71 Template-Type: ReDIF-Article 1.0 Author-Name: Xianchun Xu Author-Email: xuxch3@sem.tsinghua.edu.cn Author-Workplace-Name: School of Economics and Management, Tsinghua University, Beijing 100084, China Title: The Slowdown of China's Economic Growth in Terms of Statistics Abstract: The paper discusses the falling back of economic growth from four aspects. From the aspect of production, the traditional industry has the greatest impact on the falling back of economic growth. From the perspective of demand, the consumption demand, investment demand, and export demand have jointly caused the falling back of the economic growth, in which the pulling function of investment demand is more obvious. From the standpoint of cardinality, the growth rate of the economy is restrained by the increase of economic scale. From the perspective of production factors, changes in the supply of labor force affect the falling back of economic growth rate. Classification-JEL: E21, E22, E23, E24 Keywords: China's economic growth; falling back; statistical data; demand; labor force; production; economic scale Pages: 72-79 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0005-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:72-79 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin X.D. Huang Author-Email: kevin.huang@vanderbilt.edu Author-Workplace-Name: Department of Economics, Vanderbilt University, Nashville, TN 37235, USA; Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Guoqiang Tian Author-Email: gtian@mail.shufe.edu.cn Author-Workplace-Name: Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China; Department of Economics, Texas A&M University, College Station, TX 77843, USA; School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Yuqin Wang Author-Email: wang.yuqin@sufe.edu.cn Author-Workplace-Name: Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Tackle China's Economic Complexities by Deepening Reform and Opening Up: Macroeconomic Outlook, Policy Simulations, and Reform Implementation¡ªA Summary of the Annual SUFE Macroeconomic Report (2018¨C2019) Abstract: Faced with complicated external and internal challenges, China's economy continues to see sluggish growth in 2018. Rapid accumulation of household debts, exacerbation in income inequality, tightened real sector liquidity, escalated trade tensions with the US, and weakened external demand pose key problems in China¡¯s macroeconomic landscape. The status quo is exacerbated by soaring uncertainty and weakening confidence in the face of persistent resource misallocations and institutional distortions, which cast more shadow on the already dampened consumer sentiment, sluggish private investment growth, and fallen foreign reserves. This summary report highlights the urgency of deeper structural reforms for tackling the various internal and external problems. Based on the IAR-CMM model, with both cyclical and secular factors taken into consideration, our baseline forecast of real GDP growth rate is 6.4% (6.1% using more reliable instead of the official data) in 2019. Alternative scenario analyses and policy simulations are conducted to assess the consequences of possible downside risks and the corresponding policy options needed to ensure the assumed growth targets. These analyses lead us to conclude that comprehensively deepening reform and opening up, which should be both rule-of-law based and market-oriented, with well-designed and well-conceived strategies that properly weigh short-, medium-, and long-term benefits and costs, should continue to be set as the guidance for China¡¯s transformation into a phase with sustainable and high-quality growth. Classification-JEL: E01, E17, E27, E37, E47 Keywords: macroeconomic outlook; alternative scenario analysis; policy simulation; risk; reform; complex status-quo; resource misallocations; market-oriented Pages: 80-109 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0006-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:80-109 Template-Type: ReDIF-Article 1.0 Author-Name: Nidhi Bagaria Author-Email: nidhi365@gmail.com Author-Workplace-Name: Department of Economics, Jamia Millia Islamia, New Delhi-110025, India Author-Name: Saba Ismail Author-Email: sismail@jmi.ac.in Author-Workplace-Name: Department of Economics, Jamia Millia Islamia, New Delhi-110025, India Title: Export Performance of China: A Constant Market Share Analysis Abstract: In the light of the fact that there has been substantial growth in China's exports in last three decades, particularly after China joined the WTO in 2001, this article investigates the major sources of China's export performance during 2002¨C2014 by using the constant market share (CMS) model. In this study, exports are further decomposed in three categories based on their technological intensity using Lall (2000) classification on 3 digit SITC Revision-3 data provided by UN Comtrade via WITS database. The categories are high technology, medium technology and low technology. It is found that growth of China's exports has, moreover, remained above world exports growth in all three categories during the period of study. The analysis reveals that export performance is mainly attributed to its competitive strength in the global market, though decreasing trend has been observed in the competitiveness of all three categories. Increasing cost of labor and appreciating RMB could be the causes behind decreasing competitiveness of Chinese exports. Product structure effect, on an average, has turned out to be negative in all the categories which is the most disturbing aspect of China's export performance. On the other hand, geographical structure effect has positive impact on export performance of high-technology based exports whereas it has negative impact on export performance of low-technology and medium-technology based exports. China being the world's largest exporter, decreasing competitiveness and wrong product structure effect could adversely influence its export performance in particular and its growth in general. Classification-JEL: F13, F14, F15 Keywords: constant market share (CMS); China's share in world exports; export performance; market share effect; product structure effect; geographical structure effect; competitiveness; hi-tech Pages: 110-130 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0007-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:110-130 Template-Type: ReDIF-Article 1.0 Author-Name: Haiwen Zhou Author-Email: hzhou@odu.edu Author-Workplace-Name: Department of Economics, Old Dominion University, Norfolk, VA 23529, USA Title: Coordination Costs, Market Size, and the Choice of Technology Abstract: Impact of coordination costs and market size on a firm's choice of technology is studied in a general equilibrium model in which firms engage in oligopolistic competition. A firm establishes an organizational hierarchy to coordinate its production. First, it is shown that an increase in market size leads a firm to choose a more specialized technology. Second, surprisingly, a robust result is that an increase in the level of coordination efficiency leads a firm to choose a less specialized technology. Classification-JEL: L13, D43, O14 Keywords: division of labor; coordination efficiency; technology choice; hierarchy; market size Pages: 131-148 Volume: 14 Issue: 1 Year: 2019 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0008-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:131-148 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph E. Stiglitz Author-Email: jes322@columbia.edu Author-Workplace-Name: Business School, Graduate School of Arts and Sciences (Department of Economics) and School of International and Public Affairs, Columbia University, New York, NY 10027, USA; Chief Economist of The Roosevelt Institute Title: An Agenda for Reforming Economic Theory Abstract: In this article, Nobel Prize Laureate Joseph Stiglitz argues that the standard macro-economic paradigm has failed not only to predict the crisis but also to provide insights into the design of a regulatory framework that would make a recurrence less likely. He points out that many of the underlying assumptions of the standard paradigm always seemed implausible and many of its predictions, such as those concerning the micro-economic behavior of the constituents (firms and households), are inconsistent with the empirical evidence. He then identifies a number of key modeling challenges, what he views as key ingredients that have to be incorporated in any model that is going to describe economic fluctuations or be the basis of a well-designed regulatory or monetary framework. Classification-JEL: B15, B22, B41, C52, C53 Keywords: macro-economic models; market failures; financial crises; systemic risk; regulatory framework Journal: Frontiers of Economics in China Pages: 149-167 Volume: 14 Issue: 2 Year: 2019 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0009-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:149-167 Template-Type: ReDIF-Article 1.0 Author-Name: Yuanyuan Chen Author-Email: yychen@mail.shufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China; Key Laboratory of Mathematical Economics (Ministry of Education), Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Shuaizhang Feng Author-Email: shuaizhang.feng@foxmail.com Author-Workplace-Name: Institue for Economic and Social Research, Jinan University, Guangzhou 510632, China Author-Name: Yujie Han Author-Email: hanyujie1989@gmail.com Author-Workplace-Name: Institue for Economic and Social Research, Jinan University, Guangzhou 510632, China Title: Research on the Education of Migrant Children in China: A Review of the Literature Abstract: With the rapid urbanization and mass internal migration in China during the past several decades, the population of children who migrate with their parents to the cities has now reached over 35 million. The education of migrant children poses significant challenges to China's hukou based education system. In this paper, we first review the policy developments and descriptive studies related to migrant children's education to offer a comprehensive view of the issue. We then provide in-depth examination of several important quantitative literatures, including the effect of parental migration on children's education, schooling choices of migrant children and their impacts on school performance, peer effects of migrant children in urban public schools. Overall, although considerable progress has been made regarding migrant children's education in China, more fundamental policy reforms are necessary to improve the quality of migrant children's education at the compulsory education level and beyond. Classification-JEL: I28, J15, O15 Keywords: migrant children; education; public schools; migrant schools; compulsory education; hukou Journal: Frontiers of Economics in China Pages: 168-202 Volume: 14 Issue: 2 Year: 2019 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0010-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:168-202 Template-Type: ReDIF-Article 1.0 Author-Name: Stephen Martin Author-Email: smartin@purdue.edu Author-Workplace-Name: Department of Economics, Purdue University, West Lafayette, IN 47906, USA Title: Kreps & Scheinkman with Product Differentiation Abstract: Kreps and Scheinkman (1983)'s celebrated result is that in a two-stage model of a market with homogeneous products in which firms noncooperatively pick capacities in the first stage and set prices in the second stage, the equilibrium outcome is that of a one-shot Cournot game. This note derives capacity best response functions for the first stage and extends the Kreps and Scheinkman result to the case of differentiated products. Classification-JEL: D21, D43, L12, L13 Keywords: Kreps and Scheinkman; capacity choice; Cournot; oligopoly; product differentiation Pages: 203-219 Volume: 14 Issue: 2 Year: 2019 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0011-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:203-219 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-Email: bahmani@uwm.edu Author-Workplace-Name: Center for Research on International Economics and Department of Economics, University of Wisconsin-Milwaukee, WI 53201, USA Author-Name: Muhammad Aftab Author-Email: maftab@comsats.edu.pk Author-Workplace-Name: Department of Management Sciences, COMSATS University Islamabad, Islamabad 45550, Pakistan Title: Malaysia-Japan Commodity Trade and Asymmetric Effects of Exchange Rate Changes Abstract: Asymmetry analysis is a new norm in applied research and the link between the trade balance and the exchange rate is no exception. In this paper we investigate the asymmetric response of the trade balance of each of the 60 industries that trade between Malaysia and Japan. We find short-run asymmetric effects of exchange rate changes on the trade balance of 50 industries (including the two largest industries), short-run adjustment asymmetry in 47 industries, and short-run impact asymmetry in 30 industries. However, short-run asymmetric effects lasted into the long run only in limited number of industries. Results are industry-specific at best. Classification-JEL: F14, F31, F41 Keywords: Auto Regressive Distributed Lag (ARDL); asymmetry; 60 industries; Malaysia; Japan; trade; exchange rate Pages: 220-263 Volume: 14 Issue: 2 Year: 2019 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0012-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:220-263 Template-Type: ReDIF-Article 1.0 Author-Name: Guanfu Fang Author-Email: guanfufang@suibe.edu.cn Author-Workplace-Name: School of Business, Shanghai University of International Business and Economics, Shanghai 201620, China Author-Name: Guanliang Hu Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, Chinaa Author-Name: Lan Yao Author-Email: yao.lan@mail.shufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Reference Dependent Preference and Labor Supply: Evidence from China Abstract: This paper investigates the daily labor supply decisions of Hangzhou cabdrivers. We find that Hangzhou cabdrivers' wage elasticity is significantly positive, their working decisions are largely affected by shift time, and crude proxy variables for income; hours targets can hardly explain their working behavior. Nevertheless, Hangzhou cabdrivers are still affected by reference dependent preference. Using new empirical strategies, we show that cabdrivers are more likely to continue working when wage rates are unexpectedly low and more likely to quit when wage rates are unexpectedly high. Classification-JEL: J22, J31, L92 Keywords: reference dependent preference; wage elasticity; labor supply; income shock Pages: 264-301 Volume: 14 Issue: 2 Year: 2019 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0013-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:264-301 Template-Type: ReDIF-Article 1.0 Author-Name: Farkhondeh Jabalameli Author-Workplace-Name: Faculty of Economics, University of Tehran, Tehran 1417466191, Iran Author-Name: Ehsan Rasoulinezhad Author-Email: e.rasoulinezhad@ut.ac.ir Author-Workplace-Name: Faculty of World Studies, University of Tehran, Tehran 1417466191, Iran Title: Do BRICS Have Similar Disaggregated Trade Patterns with Different Regions? Abstract: This is the first study attempting to investigate the patterns of BRICS' imports and exports with five United Nations regional groups: the African, Asia-Pacific, Eastern European, Latin American and Caribbean, and Western European and Others. A panel data gravity trade model with series from 2001 to 2016 was used to estimate the gravity variables in the models. The main results provide evidence that reinforced the dissimilarities in the foreign trade patterns of BRICS with these five regional groups. The econometric results substantiated that BRICS' foreign trade patterns are sensitive to changes in the economies of trading partners from the more developed regions. This is evidence for stronger economic ties between BRICS and the more developed regions such as Western Europe and Asia-Pacific. It also reveals the trade convergence of BRICS in these developed regions. Classification-JEL: C21, C23, F10, F14 Keywords: BRICS; foreign trade pattern; disaggregated trade data; gravity model Pages: 302-328 Volume: 14 Issue: 2 Year: 2019 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0014-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:302-328 Template-Type: ReDIF-Article 1.0 Author-Name: Dani Rodrik Author-Email: dani_rodrik@hks.harvard.edu Author-Workplace-Name: John F. Kennedy School of Government, Harvard University, Cambridge, MA 02138, USA; CEPR Research Fellow Title: Where Are We in the Economics of Industrial Policies? Abstract: Research on industrial policy has taken off, leading to a better understanding of when such policies effectively harness economic development. This article reviews the recent literature on the economics of industrial policies. Until recently, empirical studies on industrial policies came largely in one of two types: detailed country/region studies and cross-industry or cross-country econometric studies. I point out that the country/region studies had the usual problem that it was difficult to trace the effects of success to specific industrial policies, while the econometric studies suffered from the problem of misspecification. I show that a new generation of work has been moving us beyond the largely ideological debates of the past to a more contextual, pragmatic understanding. Classification-JEL: L50, O25 Keywords: industrial policy; economic development; China; South Korea; Latin America Pages: 329-335 Volume: 14 Issue: 3 Year: 2019 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0015-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:3:p:329-335 Template-Type: ReDIF-Article 1.0 Author-Name: Yunpeng Sun Author-Workplace-Name: School of Economics, Tianjin University of Commerce, Tianjin 300134, China Author-Name: Jingjia Zhang Author-Email: vanillajiajia@163.com Author-Workplace-Name: APEC Study Center, Nankai University, Tianjin 300071, China; Collaborative Innovation Center for China Economy, Nankai University, Tianjin 300071, China Title: Effectiveness of Monetary Policy in China: Evidence from Factor-Augmented Vector Autoregression Model Abstract: Since 2002, the People's Bank of China has frequently used both quantity-based direct monetary instruments and price-based indirect monetary instruments to promote economic growth and stabilize price level. Specifically, this study estimates 13 three-variable factor-augmented vector autoregression (FAVAR) models to explore how two types of monetary instruments affect China's economy and price level. Overall, we find that monetary policy has positive effects on China's economy and price level. Second, this study clearly states that the effectiveness of China's monetary policy on the economy has depended on China's quantity-based direct monetary instruments since 2002. Third, the effectiveness of quantity-based direct monetary instruments on China's economy and price level is dependent on the significant and positive effects of quantity-based direct monetary instruments after the 2008 financial crisis. Fourth, the significant and positive effects of price-based indirect monetary instruments on China's economy and price level before 2008 cannot fundamentally change their current insignificant effects on China's economy and price level. Classification-JEL: E02, E31, E52 Keywords: China's monetary policy; quantity-based direct instruments; price-based indirect instruments; factor-augmented vector autoregression model (FAVAR) Pages: 336-370 Volume: 14 Issue: 3 Year: 2019 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0016-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:3:p:336-370 Template-Type: ReDIF-Article 1.0 Author-Name: Leo H. Chan Author-Email: lchan@uvu.edu Author-Workplace-Name: Woodbury School of Business, Utah Valley University, Orem, UT 84058, USA Author-Name: Maritza Sotomayor Author-Email: maritza.sotomayor@uvu.edu Author-Workplace-Name: Woodbury School of Business, Utah Valley University, Orem, UT 84058, USA Author-Name: Donald Lien Author-Email: Don.Lien@utsa.edu Author-Workplace-Name: College of Business, University of Texas San Antonio, San Antonio, TX 78249, USA Title: Impacts of the Contributions of FDI and Remittances on the Economic Growth in Asia and Latin America: A Comparative Study Abstract: Foreign direct investment (FDI) and foreign remittance have been the main sources of external capital inflows for many developing countries. FDI has been credited as the main driver of rapid economic growth in many Asian countries/regions in recent decades. However, this effect of FDI on long-run economic growth has not been observed in Latin American countries. Now, the question is whether FDI and an increase in foreign remittances in the past two decades have achieved expected positive results in terms of economic growth for emerging economies. This study uses a generalized method of moments (GMM) dynamic panel model to quantify the impacts of FDI and foreign remittances as sources of foreign capital for Asia and Latin America. Our findings suggest that FDI and remittances perform differently in different regions in terms of their impacts on GDP growth. Countries that have specific policies (i.e., industrial policy, domestic content requirement, and export production targets) for FDI are likely to derive more significant benefits from FDI and remittances. Developing countries that are emerging or lagging should learn from the countries with positive outcomes and implement similar policies. Classification-JEL: C33, F21, O10, O19, O47, O57 Keywords: foreign direct investment (FDI); Asia; China; Latin America; panel data; remittances Pages: 371-400 Volume: 14 Issue: 3 Year: 2019 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0017-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:3:p:371-400 Template-Type: ReDIF-Article 1.0 Author-Name: Yi Che Author-Email: tccheyi2005@hotmail.com Author-Workplace-Name: Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200030, China Author-Name: Zuojun Fan Author-Email: 18878701208@139.com Author-Workplace-Name: China-ASEAN Research Institute, Guangxi University, Nanning 530004, China Author-Name: Yan Zhang Author-Email: zhangyan2007722@aliyun.com Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Title: The Effect of Land Reallocation on Off-Farm Employments in Rural China Abstract: Could land reallocation partially explain the decision of off-farm employment of farmers in rural China? Using an individual-level survey data, we find that there is no effect of land reallocation on the individuals' decision on off-farm employments. However, there is a robust negative effect of land reallocation on the amount of time that villagers devote to off-farm work. The first result is attributed to the large earnings difference between farm and nonfarm work; the second result is attributed to the fact that village leaders reallocate land from households short of farm labor to households that farm intensively. Classification-JEL: R13, Q15 Keywords: land reallocation; off-farm work; two-stage framework; rural China; efficiency Pages: 401-427 Volume: 14 Issue: 3 Year: 2019 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0018-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:3:p:401-427 Template-Type: ReDIF-Article 1.0 Author-Name: Kanang Amos Akims Author-Email: akimsk@unijos.edu.ng Author-Workplace-Name: Department of Economics, University of Jos, Jos 930001, Nigeria Author-Name: Dianah Mukwate Ngui Author-Workplace-Name: School of Economics, Kenyatta University, Nairobi, Kenya Title: Productivity and Export Performance: Micro-Level Evidence from the Manufacturing Sector in Nigeria Abstract: This paper investigates how productivity influences firms' exports. Various firm characteristics are employed to test the self-selection hypothesis alongside the effects of firms' productivity on their share of exports in total sales. Using a pseudo-panel data set constructed from the firm-level data for the manufacturing sector in Nigeria, we find no evidence that higher productivity influences the decision on whether or not a firm would participate in exports. However, it is established that higher productivity increases the share of exports in total sales of firms that are already participating in foreign markets. A policy implication of our result is that Nigeria can realize a larger share of manufactured exports in total merchandise exports by directing efforts towards improving primarily the productivity of firms that are already involved in exports. Classification-JEL: D24, F12, F14 Keywords: productivity; self-selection; export performance; manufacturing sector Pages: 428-460 Volume: 14 Issue: 3 Year: 2019 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0019-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:3:p:428-460 Template-Type: ReDIF-Article 1.0 Author-Name: Guojin Chen Author-Workplace-Name: Department of Finance, School of Economics, Xiamen University, Xiamen 361005, China; Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen 361005, China Author-Name: Runze Zhang Author-Workplace-Name: Postdoctoral Workstation, Guosen Securities, Shenzhen 518001, China Author-Name: Xiangqin Zhao Author-Email: xqzhao@xmu.edu.cn Author-Workplace-Name: Department of Finance, School of Economics, Xiamen University, Xiamen 361005, China Title: Economic Policy Uncertainty and Stock Risk Features Abstract: In this paper, we introduce economic policy uncertainty by using a stochastic discount model. Via parameter calibration and static analysis, we investigate the dynamic characteristics of stock risk on different policy uncertainty. On this basis, we test the channel through policy uncertainty affects stock risk by empirical simulation, and the effect of policy uncertainty on stock risk formation by portfolio analysis, in order to verify the applicability of the theoretical model in China. Finally, the panel model is used to quantitatively analyze the relationship between policy uncertainty and stock risk. The results show that policy uncertainty can inereuse stock risk through enterprise cash flow, discounting factors and correlation coefficient. The effect is still significant after controlling traditional risk factors, corporate heterogeneity, and external environmental factors. Companies that are non-state-owned, have lower returns on invested capital and lower asset growth rate manifest greater stock risk when policy uncertainty is higher. The magnitude of the effect of policy uncertainty on stock risk is larger when the economy is weaker and the policy environment is more unstable. Classification-JEL: D78, D81, E52, E62, E63 Keywords: economic policy uncertainty (EPU); stock risk; transmission mechanism; panel regression Pages: 461-495 Volume: 14 Issue: 3 Year: 2019 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0020-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:3:p:461-495 Template-Type: ReDIF-Article 1.0 Author-Name: Qihong Liu Author-Email: qliu@ou.edu Author-Workplace-Name: Department of Economics, University of Oklahoma, Norman, OK 73019, USA Author-Name: Jie Shuai Author-Email: shuaijie@gmail.com Author-Workplace-Name: Wenlan School of Business, Zhongnan University of Economics and Law, Wuhan 430073, China Title: Multi-Dimensional Product Differentiation Abstract: We analyze product differentiation in a multi-dimensional model with non-uniform consumer distribution. The level of product differentiation is measured by both unit transport costs and firms’ locations. Our analysis concerns both measures. First, fixing firms’ locations, we show that equilibrium prices can increase or decrease with unit transport costs. The overall result depends on the interplay of a shifting effect and a rotating effect—the latter exists only in multi-dimensional models. Second, fixing unit transport costs, we find that under non-uniform distribution, there may exist no equilibrium where firms maximize differentiation on one dimension but minimize differentiation on other dimensions. Instead, there may exist an equilibrium where firms choose intermediate locations, contrary to common findings in existing studies which assume uniform distribution. Classification-JEL: D43, L13, L40 Keywords: multi-dimensional model; product differentiation; unit transport costs; location choice; consumer distribution Pages: 497-535 Volume: 14 Issue: 4 Year: 2019 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0021-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:4:p:497-535 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Peng Author-Email: mkpeng2007@gmail.com Author-Workplace-Name: Boston Consulting Group, 10 Hudson Yards, New York City, NY 10001, USA Author-Name: Dongkai Jiang Author-Workplace-Name: Witzcredit Risk Analysis, 362 Milford Court, New Town, PA 18940, USA Author-Name: Yingjie Wang Author-Workplace-Name: KPMG, 5001 Shennan E Rd, Diwang Tower, Luohu District, Shenzhen 518001, China Title: Forecasting Chinese Corporate Bond Defaults: Comparative Study of Market- vs. Accounting-Based Models Abstract: This paper provides the first empirical study on bond defaults in the Chinese market. It overcomes the deficiencies of existing methods, which suffer from lack of actual default data for back testing. With newly available bond default data, we analyze the roles of market variables against accounting variables under various models. While we find that Merton's market-based structural model and KMV's Distance to Default exhibit languid discriminating power compared with hazard models that have carefully constructed predictors, other market variables carry significant information about bond defaults and could help improve on models with only the accounting variables. This implies that the collective intelligence of the market could somehow mitigate the distortion caused by misreported accounting information. Further, model performance can be significantly improved by adding predicting variables that link an individual financial measure to the broader market performance, such as the relative margin—a business environment proxy introduced in this study. We not only shed light on the default behavior of the Chinese bond market, but also provide a promising approach to improve the variable selection process. Classification-JEL: B41, C58, F65, G15, G17, G32, G33 Keywords: bond default; Chinese bond default; bankruptcy forecast; hazard model, Merton model; accounting variables; Z-score; LASSO regression Pages: 536-582 Volume: 14 Issue: 4 Year: 2019 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0022-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:4:p:536-582 Template-Type: ReDIF-Article 1.0 Author-Name: Qing Shi Author-Workplace-Name: School of Economics, Shanghai University, Shanghai 200444, China Author-Name: Chen Wang Author-Workplace-Name: Institute of Finance and Economics Research, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Wei Wang Author-Email: wangwei2@mail.shufe.edu.cn Author-Workplace-Name: School of Public Economics and Administration, and Shanghai Key Laboratory of Financial Information Technology, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Liquidity Shock, Credit Constraint and the Development of Private vs. State-Owned Enterprises Abstract: Based on firm level data for the period of 1998–2007, this paper attempts to explain the growth differences between private enterprises and state-owned enterprises (SOEs) in China, in the context of liquidity shocks, and institutional and financial environments. It is found that (1) when liquidity tightens, the private enterprises face stricter credit constraints than SOEs, which restricts the development of private enterprise; (2) when liquidity becomes abundant, private enterprises face fewer financial limitations and grow much faster than SOEs; (3) the effect of liquidity shocks on the growth rate gap between private enterprises and SOEs has weakened during the period 2002–2007. These findings reveal that the credit discrimination against private enterprises can be mitigated by improving institutional and financial environments, which weaken the effects of liquidity shocks on firm growth. Classification-JEL: O16, E51, D22 Keywords: liquidity shocks; credit constraint; state-owned enterprises (SOEs); private enterprises Pages: 583-603 Volume: 14 Issue: 4 Year: 2019 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0023-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:4:p:583-603 Template-Type: ReDIF-Article 1.0 Author-Name: Hiroya Akiba Author-Email: hiroyaakiba@hotmail.com Author-Workplace-Name: Waseda University, Shinjuku, Tokyo 169-8050, Japan Title: Sustainability of Monetary-cum-Exchange Rate Policy in China Abstract: This paper theoretically considers the long-run sustainability of China's monetary-cum-exchange rate policy under the impossible trinity. Two different models are examined: One sterilizes current net foreign assets (NFAs) and the other focuses on NFAs realized in the previous period. Under the de facto opening of financial flows, sterilization yields a negative risk premium in uncovered interest parity (UIP) that triggers a feedback increase among capital inflows. Here, stability depends on the magnitudes and the combination of structural and policy parameters. It is shown that if current capital inflows are sterilized, the monetary-cum-exchange rate policy in China offers a sustainable solution for exchange rates that are relatively stringently managed. However, such a solution can be obtained for relatively flexible or moderately managed rates if sterilization policy is implemented on the previous period's inflows. Classification-JEL: F31, F32, E51, E52, E58 Keywords: sustainability; monetary-cum-exchange rate policy; impossible trinity; sterilized intervention; capital inflow Pages: 604-628 Volume: 14 Issue: 4 Year: 2019 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0024-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:4:p:604-628 Template-Type: ReDIF-Article 1.0 Author-Name: Lixue Wu Author-Email: wulixue@sina.com Author-Workplace-Name: Institute of Industrial Economics, Chinese Academy of Social Sciences (CASS), Beijing 100836, China Author-Name: Cheng Liu Author-Email: liucheng1353@163.com Author-Workplace-Name: National Academy of Economic Strategy, Chinese Academy of Social Sciences (CASS), Beijing 100028, China Title: Project Matching and Overcapacity in China Abstract: Based on the features of China's project investment, we consider the formation of production capacity as a matching behavior between local governments and investment enterprises. Using the search and matching model, we illustrate that the excess capacity in China mainly results from the asymmetry between the gains from and contribution to the project matching: The capacity will be excessive when the proportion of local governments' return exceeds its contribution to the project, and the more unbalanced the return–contribution relationship, the more severe the overcapacity. Meanwhile, we test this theoretical prediction based on a quasi-natural experiment: the reform of administrative approval system. The empirical results show that the reduction of the local governments' return–contribution ratio will significantly raise the capacity utilization rate and mitigate the overcapacity. Industry-specific regression results further indicate that governments' return–contribution asymmetry is more prominent in industries dominated by state-owned enterprises, high-monopoly industries, heavy industries, and industries with serious overcapacity. This paper offers a novel mechanism of overcapacity, a theoretical criterion for judging optimal capacity, and some new regulatory tools with the micro foundation. Classification-JEL: E02, E22, H11, L60 Keywords: overcapacity; project matching; local government; reform of administrative approval system Pages: 629-669 Volume: 14 Issue: 4 Year: 2019 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0025-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:14:y:2019:i:4:p:629-669