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: Zixi Liu Author-Email: liu.zixi@mail.shufe.edu.cn Author-Workplace-Name: 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 Title: Promote Competitive Neutrality to Facilitate China’s Economic Development: Outlook, Policy Simulations, and Reform Implementation—A Summary of the Annual SUFE Macroeconomic Report (2019?020) Abstract: Twenty nineteen (2019) marked another year of lethargic growth in the Chinese economy amidst escalated internal and external complexities. Internally, the country’s macroeconomic landscape was overcast continuously by fallen consumption growth, plunged growth in manufacturing investment, rapid accumulation of household debt, risen income inequality, and the overhang of local government debt. The nation’s external conditions did not fare any better, with drastically declined growth in imports and exports, continued trade tensions with the US, and weakened external demand. Based on the IAR-CMM model, which takes account of both cyclical and secular factors, the baseline real GDP growth rate is projected to be 6.0% in 2020 (5.9% using more reliable rather than the official data), with a downside risk. Alternative scenario analyses and policy simulations are conducted, in addition to the benchmark forecast, to reflect the influences of various internal and external uncertainties. The findings emanated from these analyses lead us to stress the importance and urgency of deepening reform to achieve competitive neutrality for China’s transformation into a phase with sustainable and high-quality development. Classification-JEL: E01, E17, E27, E37, E47 Keywords: macroeconomic outlook; alternative scenario; policy simulation; competitive neutrality; reform; systemic risk; resource misallocation Journal: Frontiers of Economics in China Pages: 1-24 Volume: 15 Issue: 1 Year: 2020 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0001-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:1:p:1-24 Template-Type: ReDIF-Article 1.0 Author-Name: Fang Wang Author-Email: wangfang@mail.shufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Hongzhong Yan Author-Email: yan.hongzhong@sufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Duo Zhang Author-Email: zhangduo_sufe@163.com Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Title: The Transition of Thoughts on Grain Control in the Qing Dynasty: A Survey of the Great Debate on the Ever-Normal Granary and Grain Prices in 1748 Abstract: The ever-normal granary system was an official granary management system in ancient China. Throughout its existence, the system functioned as a major means of adjusting the price of grain and provided disaster relief. Few studies on the system touches upon the relationship between grain price fluctuation and the development of the grain market, or the ever-normal granary system and its related economic school of thoughts. Starting with the development of the grain market and the relationship between the price of grain and grain reserves, and through a systematic review of the debate on the ever-normal granary system and grain prices among high-level officials of the Qing government in the 13th year of Emperor Qianlong’s reign (1748), this paper analyzes the historical process and reasons for the change in thoughts on the ever-normal granary system and discusses the historical path of how economic phenomenon gave rise to the clash of economic thoughts that influenced the evolution of this economic institution. Classification-JEL: B15, N55, Q18 Keywords: early Qing dynasty; grain control; ever-normal granary; economic thoughts Journal: Frontiers of Economics in China Pages: 25-55 Volume: 15 Issue: 1 Year: 2020 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0002-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:1:p:25-55 Template-Type: ReDIF-Article 1.0 Author-Name: Dicle Ozdemir Author-Email: ozded129@newschool.edu Author-Workplace-Name: Faculty of Economics and Administrative Sciences, Mugla Sitki Kocman University, Kotekli Kampusu, Mugla, 48000, Turkey Title: Interest Rate Volatility Regimes in Selected Asian Countries: A Univariate Markov Switching Analysis Abstract: Business cycle dynamics are determined by relatively large volatilities in output, consumption, and investment, which leads to cyclical fluctuations in interest rates. Using the Markov switching model, we model the nominal interest rate movements to explain the volatility regime shifts in a set of selected emerging Asian economies. The estimated results provide significant evidence of regime-dependent means, variances, and probabilities in both stable and volatile regimes in selected countries, confirming the existence of two distinct regimes in nominal interest rate movements. In addition, the smoothed probability results of switching autoregressive model show that the model is capable of capturing the two regimes for the corresponding nominal interest rate behaviors. Besides, the results reveal that the stables regimes have higher durations than the volatile regimes. This study also shows the advantage of Markov switching models over conventional regression models, allowing the identification of different regimes for the cyclical behavior of interest rates. Classification-JEL: E58, E43, E44, E32 Keywords: regime switching; Markov regime; nominal interest rate; Asian countries; emerging economies; business cycle; volatility; switching autoregressive model Journal: Frontiers of Economics in China Pages: 56-69 Volume: 15 Issue: 1 Year: 2020 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0003-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:1:p:56-69 Template-Type: ReDIF-Article 1.0 Author-Name: Guangying Xie Author-Email: gmxie00514@ruc.edu.cn Author-Workplace-Name: College of Economics and Management, Zhoukou Normal University, Zhoukou 466001, China Title: How Firms' Ownership Structure Impacts Online Peer-to-Peer Lending Performance in China Abstract: A dramatic surge in online peer-to-peer (P2P) lending emerged in China, where (under conditions of credit deficiency) it took only three years for the size of the P2P lending market in China to reach four times that of the United States and ten times that of the United Kingdom. The literature indicates that ownership structure is an important factor that influences P2P lending firms?performance, while research on the underlying mechanisms remain insufficient. This study analyzes the data of P2P lending companies between June 2016 and March 2017. The results demonstrate that although ownership structure has minimal direct effect on the turnover volume and number of lenders and borrowers, it moderates the effects of firm age, interest rate, and loan term on firm performance. These results enrich the property theory and shed light on how P2P lending firms with different ownership structures could succeed when there is institutional deficiency. Classification-JEL: G21, G28, G32 Keywords: online peer-to-peer (P2P) lending; firm performance; ownership structure; credit deficiency; microfinance; institutional entrepreneurship Journal: Frontiers of Economics in China Pages: 70-102 Volume: 15 Issue: 1 Year: 2020 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0004-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:1:p:70-102 Template-Type: ReDIF-Article 1.0 Author-Name: Xiaoheng Zhang Author-Email: xuyizxh@163.com Author-Workplace-Name: College of Economics and Management, Huazhong Agricultural University, Wuhan 430070, China Author-Name: Xu Tian Author-Email: xutian@njau.edu.cn Author-Workplace-Name: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China Title: Firm-Level TFP Growth in the Chinese Automobile Industry Abstract: China has been the world's largest automobile producer since 2009, but it still lags behind other countries in terms of productivity. Based on the National Bureau of Statistics of China (NBSC) firm-level data and the improved approach proposed by Ackerberg et al. (2015), this paper investigates the contribution of total factor productivity (TFP) growth to the Chinese automobile industry and evaluates the impact of firm entry and exit on TFP growth. The empirical results show that the TFP of the Chinese automobile industry grows at 10.7% per year. Joint venture and foreign-owned firms have a significantly higher TFP growth rate than others. Large-scale firms have a higher TFP growth rate than do small-scale firms, but the latter have caught up after 2004. Moreover, the entry of new firms and exit of old firms significantly improve the aggregate TFP growth rate. Classification-JEL: D24, L11, L62, O47 Keywords: automobile industry; total factor productivity (TFP) growth rate; firm entry and exit; ACF model; ownership structure; China; National Bureau of Statistics of China (NBSC) database; firm size Journal: Frontiers of Economics in China Pages: 103-123 Volume: 15 Issue: 1 Year: 2020 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0005-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:1:p:103-123 Template-Type: ReDIF-Article 1.0 Author-Name: Yifan Liu Author-Workplace-Name: School of Physics, and State Key Laboratory of Optoelectronic Material and Technology, Sun Yat-sen University, Guangzhou 510275, China; School of Economics, Fudan University, Shanghai 200433, China Author-Name: Shi-Dong Liang Author-Email: stslsd@mail.sysu.edu.cn Author-Workplace-Name: School of Physics, and State Key Laboratory of Optoelectronic Material and Technology, Sun Yat-sen University, Guangzhou 510275, China Title: A Global-Optimal Portfolio Theory beyond the R-s Model Abstract: Deviations from the efficient market hypothesis allow us to benefit from risk premium in ?nancial markets. We propose a three-pronged (R, s, H) theory to generalize the (R, s) model and present the formulation of a three-pronged (R, s, H) model and its Pareto-optimal solution. We de?ne the local-optimal weights (wR, ws,wH) that construct the triangle of the quasi-optimal investing subspace and further de?ne the centroid or incenter of the triangle as the optimal investing weights that optimize the mean return, risk premium, and volatility risk. By numerically investigating the Chinese stock market, we demonstrate the validity of this formulation method. The proposed theory provides investors of different styles (conservative or aggressive) an efficient way to design portfolios in ?nancial markets to maximize the mean return while minimizing the volatility risk. Classification-JEL: C02, C32, C51, C61, G11, G14, G32 Keywords: portfolio; R-s model; Hurst exponent; risk premium; volatility; Chinese stock market Journal: Frontiers of Economics in China Pages: 124-139 Volume: 15 Issue: 1 Year: 2020 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0006-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:1:p:124-139 Template-Type: ReDIF-Article 1.0 Author-Name: George J. Jiang Author-Email: george.jiang@wsu.edu Author-Workplace-Name: Department of Finance and Management Science, College of Business,Washington State University, Pullman, WA 99164, USA Author-Name: Guanzhong Pan Author-Email: panguanzhong@126.com Author-Workplace-Name: School of Finance, Yunnan University of Finance and Economics, Kunming 650221, China Title: Analysis of High Frequency Data in Finance: A Survey Abstract: This study examines the use of high frequency data in finance, including volatility estimation and jump tests. High frequency data allows the construction of model-free volatility measures for asset returns. Realized variance is a consistent estimator of quadratic variation under mild regularity conditions. Other variation concepts, such as power variation and bipower variation, are useful and important for analyzing high frequency data when jumps are present. High frequency data can also be used to test jumps in asset prices. We discuss three jump tests: bipower variation test, power variation test, and variance swap test in this study. The presence of market microstructure noise complicates the analysis of high frequency data. The survey introduces several robust methods of volatility estimation and jump tests in the presence of market microstructure noise. Finally, some applications of jump tests in asset pricing are discussed in this article. Classification-JEL: C01, C14, C58, G10, G12 Keywords: high frequency data; quadratic variation (QV); realized variance (RV); power variation (PV); bipower variation; jump tests; market microstructure noise; asset pricing Journal: Frontiers of Economics in China Pages: 141-166 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0007-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:141-166 Template-Type: ReDIF-Article 1.0 Author-Name: Jun Zhang Author-Email: junzh_2000@fudan.edu.cn Author-Workplace-Name: School of Economics and China Center for Economic Research, Fudan University, Shanghai 200433, China Title: Five Basic Insights into the Economic Impact of the COVID-19 Outbreak Abstract: This article analyzes the economic impact of the COVID-19 outbreak, and puts forward with five basic insights concerning the degree of the impact, its duration, its key areas, and its quantitative calculation, among other aspects. The article holds that it is necessary to have a more objective understanding and judgement of how the virus affects the economy, particularly gross domestic product (GDP) growth for 2020Q1 and the entire year. Only on the basis of reasonable analysis can we better grasp measures required to cope with the economic impact, combined with more targeted policy launch and adjustment, so as to speed economic recovery to its normal level. Classification-JEL: E24, E32, G28 Keywords: COVID-19 outbreak; economic growth; supply chain; medium-; small-and micro-sized enterprises (MSMEs) Journal: Frontiers of Economics in China Pages: 167-178 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0008-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:167-178 Template-Type: ReDIF-Article 1.0 Author-Name: Xin Jin Author-Email: jin.xin@mail.shufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics (SUFE), Shanghai 200433, China; Key Laboratory of Mathematical Economics (SUFE), Ministry of Education, Shanghai 200433, China Title: A Bayesian Nonparametric Investigation of the Predictive Effect of Exchange Rates on Commodity Prices Abstract: This study proposes a full Bayesian nonparametric procedure to investigate the predictive power of exchange rates in relation to commodity prices for three commodity-exporting countries: Canada, Australia, and New Zealand. We propose a new time-dependent infinite mixture of a normal linear regression model of the conditional distribution of the commodity price index. The mixing weights follow a set of Probit stick-breaking priors that are time-varying. We find that exchange rates have a positive predictive effect in general, but accounting for time variation does not improve forecasting performance. By contrast, the intercept in the regression and the lagged dependent variable show signs of parameter change over time in most cases, which is important in forecasting both the mean and the density of commodity prices one period ahead. The results also suggest that the variance is a large source of the time variation in the conditional distribution of commodity prices. Classification-JEL: C11, C14, C22, F47 Keywords: Bayesian nonparametrics; Dirichlet process mixture; stick-breaking process; Markov China Monte Carlo (MCMC); predictive likelihood; foreign exchange rate; commodity price Journal: Frontiers of Economics in China Pages: 179-210 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0009-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:179-210 Template-Type: ReDIF-Article 1.0 Author-Name: Yan Song Author-Email: songy2@wpunj.edu Author-Workplace-Name: Department of Economics, Finance and Global Business, Cotsakos College of Business, William Paterson University, Wayne, NJ 07470, USA Title: The Effect of the Interaction between Price and Time Preference on Cigarette Consumption among Pregnant Women Abstract: In this study, I explore smoking behavior among pregnant U.S. women using the 1979 cohort of the National Longitudinal Survey of Youth. The key aspect of this study is the availability of smoking participation data before and during pregnancy. I consider the probabilities of smoking cessation while pregnant as the outcome. I find that pregnant women who smoke are less responsive to price changes when they are more future-oriented. Women who are more present-oriented are more likely to smoke and consume more cigarettes given that they smoke more than those who are future-oriented. Moreover, those who discount the future more heavily are more sensitive to the money price of cigarettes than those who are more future-oriented. I focus on the role of time preference and the interaction between time preference and price in determining these outcomes. Classification-JEL: I11, I12 Keywords: cigarette consumption; price; pregnant women; Probit model; interaction; smoking cessation; time preference Journal: Frontiers of Economics in China Pages: 211-246 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0010-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:211-246 Template-Type: ReDIF-Article 1.0 Author-Name: Serdar Ongan Author-Email: songan@smcm.edu Author-Workplace-Name: Department of Economics, St. Mary's College of Maryland, St. Mary's City, MD 20686-3001, USA Author-Name: Ismet Gocer Author-Email: ismetgocer@gmail.com Author-Workplace-Name: Department of Econometrics, Adnan Menderes University, Aydin 09016, Turkey Title: The Relationship between Interest Rates and Inflation: Examining the Fisher Effect in China Abstract: This study revisits the Fisher effect using a different empirical method that considers a potential nonlinear relationship between interest rates (treasury bond rates) and inflation in China. The rising uncertainty and asymmetric information in financial markets between bond holders and bond issuers suggest such a potential nonlinear relationship. To this aim, we apply Shin et al.’s (2014) nonlinear autoregressive distributed lag (NARDL) model with asymmetric dynamic multipliers for the sample period 2002M7?018M4. The empirical findings reveal symmetric and asymmetric partial Fisher effects for all sample bond rates in China. Furthermore, we find that 20-year bond rates experience the lowest partial Fisher effect. Classification-JEL: E0, E6, E40, E43, G12 Keywords: Fisher effect; nonlinear autoregressive distributed lag (NARDL) model; asymmetric dynamic multipliers; China; treasury bonds; inflation; interest rates Journal: Frontiers of Economics in China Pages: 247-256 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0011-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:247-256 Template-Type: ReDIF-Article 1.0 Author-Name: Yufei Liu Author-Email: yufei.liu@163.sufe.edu.cn Author-Workplace-Name: College of Business and Economics, Shanghai Business School, Shanghai 201400, China Author-Name: Xi Qu Author-Email: xiqu@sjtu.edu.cn Author-Workplace-Name: Antai College of Economics & Management, Shanghai Jiao Tong University, Shanghai 200030, 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 Author-Name: Xiaokun Chang Author-Email: xkchang@shmtu.edu.cn Author-Workplace-Name: School of Economics & Management, Shanghai Maritime University, Shanghai 201306, China Title: Does Population Aging Hinder the Accumulation of Human Capital? Evidence from China Abstract: There is no consensus on the impact of population aging on education investment. To explore this question, we first build an overlapping generations (OLG) model to theoretically analyze the effect of population aging on human capital investment in China, and then test our theory by conducting an empirical study based on micro household data. We find the following. (1) Theoretically, the OLG model shows that population aging has a crowding-out effect on education investment. (2) Empirically, the results show that the share of education and training expenditures decreases by 5.27 percentage points as the ratio of old people in the household increases by 100 percentage points, which confirms the crowding-out effect of population aging on human capital investment. (3) The crowding-out effect is far more intense on urban households than on rural households since health care expenditures will be greater in urban areas as population aging increases. (4) A quantile regression indicates that the negative effect of population aging on the share of educational expenditure is concentrated in households with higher shares of education expenditures. We confirm the robustness of our results using regional fixed effect and instrumental variable (IV) regressions. Classification-JEL: J11, J14, J24, I25, P25 Keywords: population aging; human capital investment; China family panel studies (CFPS); crowding-out effect; education expenditure Journal: Frontiers of Economics in China Pages: 257-281 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0012-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:257-281 Template-Type: ReDIF-Article 1.0 Author-Name: Zhaomin Zhang Author-Email: zhzhmin@szpt.edu.cn Author-Workplace-Name: School of Management, Shenzhen Polytechnic, Shenzhen 518000, China Title: Inter-Region Transportation Costs, Regional Economic Growth, and Disparities in China Abstract: To examine the correlation between regional economic growth and inter-region transportation costs in China, this study establishes a regional economic growth model embedded with inter-region transportation costs based on the Cobb-Douglas production function. Based on a balanced growth empirical model, this study verifies the correlation by conducting a regression analysis of the panel data of 29 provinces, municipalities, and autonomous regions from 1985 to 2015. The empirical results show that: (1) The per capita GDP growth among the three regions (namely, the eastern, central, and western regions of China) meets a conditional convergence trend, and the decreasing of the inter-region transportation costs increases the convergence speed; (2) The per capita GDP growth is in line with the club convergence trend within each of the three regions; (3) The trend of the output elasticity of the inter-region transportation costs shows that the gradual decrease of inter-region transportation costs has a positive correlation with the narrowing of economic disparity after the year 2000, accelerating "common prosperity" across different regions in China. Classification-JEL: O11, O18, R11, R13 Keywords: inter-region transportation costs; regional economic growth; growth differentials; panel data Journal: Frontiers of Economics in China Pages: 282-311 Volume: 15 Issue: 2 Year: 2020 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0013-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:2:p:282-311 Template-Type: ReDIF-Article 1.0 Author-Name: Jiadong Tong Author-Email: tongjd@nankai.edu.cn Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300371, China; APEC Study Center, Nankai University, Tianjin 300371, China Author-Name: Ziliang Yu Author-Email: yuziliang@nankai.edu.cn Author-Workplace-Name: School of Finance, Nankai University, Tianjin 300350, China Author-Name: Jiayun Xu Author-Email: xujiayun321@163.com Author-Workplace-Name: APEC Study Center, Nankai University, Tianjin 300371, China Author-Name: Meng Tong Author-Email: tongmeng1986@ymail.com Author-Workplace-Name: Department of Economics, University of Birmingham, Birmingham B152TT, UK Title: The Belt and Road Initiative and China's Export: A Soft Power Perspective Abstract: Using a newly built soft power index, we examine whether and how soft power affects Chinese firm-level export to the Belt and Road (B&R) countries from 2000 to 2016. We find that soft power has significantly positive effects on both export value and export product types for the B&R countries. These effects are more pronounced than those for non-B&R countries and differ not only between the "Belt" and the "Road" countries but also regional groups, firm ownerships, modes of trade, and sectors. Further analysis shows that soft power increases the intensive margin of exports by approximately three times that of the extensive margin. Thus, our findings provide a new perspective for understanding both the Belt and Road Initiative (BRI) and the contemporary economic evolution occurring in China. Classification-JEL: D22, F14, F42 Keywords: Belt and Road Initiative (BRI); soft power; export; international trade; China Journal: Frontiers of Economics in China Pages: 313-354 Volume: 15 Issue: 3 Year: 2020 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0014-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:3:p:313-354 Template-Type: ReDIF-Article 1.0 Author-Name: Lei Ning Author-Email: ning.lei@shufe.edu.cn Author-Workplace-Name: Institute for Advanced Research, and Key Laboratory of Mathematical Economics of Ministry of Education, 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, and Key Laboratory of Mathematical Economics of Ministry of Education, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Quantitative Analysis of the COVID-19 Pandemic Shock to Household Consumption in China Abstract: We study the impact of the COVID-19 pandemic shock on household consumption in China. Using household survey data, we find that the proportion of liquidity-constrained households increases quickly, but the constraint levels vary across distinct groups. We build a heterogeneous agent life cycle incomplete market model to analyze the long-run and short-run effects of the pandemic shock. The quantitative results reveal a slow recovery of consumption due to three reasons: hiking unemployment rate, declining labor productivity, and worsening income stability. The hiking unemployment rate plays the key role in households' consumption reduction since it simultaneously leads to a negative income effect and upsurging precautionary saving motives. Our paper highlights the importance of maintaining a stable labor market for faster recovery. Classification-JEL: E21, E24, E65, J65 Keywords: COVID-19; pandemic shock; household consumption; labor market; heterogeneousagentmodel; liquidity constraint; unemployment; quantitative analysis Journal: Frontiers of Economics in China Pages: 355-379 Volume: 15 Issue: 3 Year: 2020 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0015-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:3:p:355-379 Template-Type: ReDIF-Article 1.0 Author-Name: Shiyi Chen Author-Email: shiyichen@fudan.edu.cn Author-Workplace-Name: School of Economics and Fanhai International School of Finance, Fudan University, Shanghai 200433, China Title: What Implications Does COVID-19 Have on Sustainable Economic Development in the Medium and Long Terms? Abstract: Given the enormous impact that the COVID-19 pandemic had on China’s economy, helping companies to revitalize post-pandemic economic activities promptly is a priority for the whole society. This necessitates the smooth circulation of production-factors among different economic entities, departments, and regions. The pandemic’s huge impact on the economy is evident in the severely hampered flow of these factors, including labor, materials, and capital. Therefore, using data and digital technology, combined with a contact-free allocation of labor, capital, and materials, to accelerate the flow of production-factors is critical to the post-pandemic economy’s restoration. Such a policy can not only provide a short-term stimulus but also a momentum for China’s mid- and long-term sustainable economic development. Classification-JEL: D24, I18, O10 Keywords: COVID-19 outbreak; factors of production; data; sustainable development Journal: Frontiers of Economics in China Pages: 380-395 Volume: 15 Issue: 3 Year: 2020 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0017-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:3:p:380-395 Template-Type: ReDIF-Article 1.0 Author-Name: Yuanyuan Chen Author-Email: yychen@mail.shufe.edu.cn Author-Workplace-Name: Institute for Advanced Research, and Key Laboratory of Mathematical Economics of Ministry of Education, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Quanlin Liu Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Author-Name: Kun Wu Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Tuition Fees for Higher Education and Intergenerational Mobility in China Abstract: This paper studies the impact of an increase in higher education tuition on intergenerational mobility in China. We develop a theoretical model for the parental decision about the investment on education of children to illustrate the impact from the perspective of borrowing constraint. We consider the Chinese college tuition and subsidy reform around 1986 as a quasi-natural experiment for identifying the policy effect of the reform on intergenerational educational mobility by using the data from the census of 2000 and the China Family Panel Studies (CFPS). We find that an increase in the education burden induced by the reform of college tuition has reduced intergenerational educational mobility, and it is more noticeable in regions with a relatively higher increment in the tuition fee. Our results are robust with consideration of the co-residence bias, government investment in elementary education, and the higher education expansion. Classification-JEL: I21, I28, J62 Keywords: tuition fees of higher education; intergenerational educational mobility; reform of college tuition and subsidy; co-residence bias; borrowing constraint Journal: Frontiers of Economics in China Pages: 396-432 Volume: 15 Issue: 3 Year: 2020 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0016-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:3:p:396-432 Template-Type: ReDIF-Article 1.0 Author-Name: Tunye Qiu Author-Email: u5483577@anu.edu.au Author-Workplace-Name: Crawford School of Public Policy, Australian National University, Canberra 2601-2600, Australia Author-Name: Yuqi Chu Author-Email: 308508390@qq.com Author-Workplace-Name: Department of Economic Management, Suzhou Polytechnic Institute of Agriculture, Suzhou 215008, China Title: Age Patterns of China’s Repeat Migration Abstract: This study analyzes the relationship between the age of first migration and the probability of repeat migration focusing on rural to urban migrants in China. It is based on the data of the 2015 Migrant Dynamics Monitoring Survey (MDMS). The data shows that 52.64% of migrants had experienced repeat migration before 2015, the amount of which is huge. The empirical results indicate an inverted U-shaped connection between age of first migration and the probability of repeat migration. The probability of making repeat migration from rural to urban areas reaches its peak if an individual experienced his/her first migration at around 16 years old. The probability for repeat migration continues to increase before the age of 16 and keeps dropping afterward. Additionally, this study explores the reason for this inverse U-shaped relationship, and it finds that reasons for first migration have great impacts. Specifically, the probability of repeat migration goes up with age if an individual first migrates before age 16 and is accompanied by parents. This probability decreases with age, if an individual first migrates after or at age 16, because of work. Classification-JEL: J21, J41, J61, J62 Keywords: first migration; repeat migration; China's internal migration; age patterns Journal: Frontiers of Economics in China Pages: 433-471 Volume: 15 Issue: 3 Year: 2020 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0018-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:3:p:433-471 Template-Type: ReDIF-Article 1.0 Author-Name: Taiyan Huang Author-Email: taiyanh@sina.com Author-Workplace-Name: Minzu University of China Title: Book Review--Hong Yinxing, Zheng Jianghuai et al., Innovation Drives Industries Up to the Medium-High End of the Global Value Chain Abstract: Classification-JEL: Keywords: Journal: Frontiers of Economics in China Pages: 472-474 Volume: 15 Issue: 3 Year: 2020 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0019-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:3:p:472-474 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, Ontario, K1S 5B6, Canada Title: Symposium on the Economic Impact of the COVID-19 Pandemic: An Introduction Abstract: Classification-JEL: Keywords: Journal: Frontiers of Economics in China Pages: 475-477 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0020-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:475-477 Template-Type: ReDIF-Article 1.0 Author-Name: Suqin Ge Author-Email: ges@vt.edu Author-Workplace-Name: Department of Economics, Virginia Polytechnic Institute and State University, Blacksburg, VA 24061, USA Author-Name: Yu Zhou Author-Email: zhouyu23@vt.edu Author-Workplace-Name: Jinan University-University of Birmingham Joint Institute, Jinan University, Guangzhou 511443, China Title: Social Distancing, Labor Market Outcomes, and Job Characteristics in the COVID-19 Pandemic Abstract: This study investigates the role of job characteristics on an individual¡¯s decisions to follow social distancing policies, work, and apply for unemployment insurance in the United States during the COVID-19 pandemic. We use data that track millions of mobile devices and their daily movements across physical locations to measure whether the devices¡¯ owners leave their homes, or work part-time or fulltime on a given day, and we also collect data on weekly unemployment insurance claims. We find that the presence of jobs with a high work-from-home capacity in a region increases the ability of people to follow social distancing policies and decreases their unemployment risk, whereas the presence of jobs with high physical proximity decreases the incidences of following social distancing policies and unemployment and increases the incidence of work during the pandemic. These heterogeneous responses based on local job characteristics persist even conditional on a broad set of demographic and socioeconomic variables. Classification-JEL: E24, J10, J22, R12 Keywords: work-from-home; physical proximity; social distancing; employment; COVID-19 Journal: Frontiers of Economics in China Pages: 478-520 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0021-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:478-520 Template-Type: ReDIF-Article 1.0 Author-Name: Xiaobo He Author-Email: xiaobo.he@adelaide.edu.au Author-Workplace-Name: School of Business, Shanghai University of International Business and Economics, Shanghai 201620, China; The Centre for Global Food and Resources, The University of Adelaide, Adelaide, South Australia 5005, Australia Author-Name: Fang Xiao Author-Workplace-Name: School of Business, Shanghai University of International Business and Economics, Shanghai 201620, China Title: Unintended Consequences of Lockdowns: Evidence from Domestic Helpers in Urban China Abstract: This paper addresses the reactions of domestic helpers to the Wuhan (Hubei Province) lockdown that began on January 23, 2020. We use a novel dataset containing the information of over 40,000 Chinese domestic helpers registered on a leading professional website from November 2019 to June 2020. The results indicate a declining pattern of short-term labor supply of domestic helpers across 11 major Chinese cities, which shows an increase in the expected monthly wage of domestic helpers in these cities. More importantly, using a difference-in-difference (DID) model, this paper provides some evidence on the existence of labor market discrimination against domestic helpers born in Hubei Province due to employers¡¯ fear of infection. Classification-JEL: J21, J31, J44, J64, J71 Keywords: 2019 novel coronavirus disease (COVID-19); pandemic; domestic helpers; urban; China; labor supply; expected wage; labor market; discrimination Journal: Frontiers of Economics in China Pages: 521-540 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0022-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:521-540 Template-Type: ReDIF-Article 1.0 Author-Name: Yi Che Author-Email: tccheyi@sjtu.edu.cn Author-Workplace-Name: Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200030, China Author-Name: Weiqiang Liu Author-Email: mediocreman@126.com Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics (SUFE), Shanghai 200433, China Author-Name: Yan Zhang Author-Email: zhang_yan@mail.shufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics (SUFE), Shanghai 200433, China Author-Name: Lin Zhao Author-Email: zhao.lin@mail.shufe.edu.cn Author-Workplace-Name: Institute for Advanced Research, Shanghai University of Finance and Economics (SUFE), Shanghai 200433, China Title: China¡¯s Exports during the Global COVID-19 Pandemic Abstract: The global COVID-19 pandemic caused various economic contraction in most countries, including all of China¡¯s major trading partners. Using a difference-in-differences model, this study examines the impact of the COVID-19 pandemic on China¡¯s monthly exports from January 2019 to May 2020. We find strong and robust evidence that China¡¯s exports to countries at high risk from the pandemic experienced a larger decline than exports to low-risk countries after the onset of the pandemic, with the prices of exports increasing significantly. Furthermore, the results of a triple differences model show heterogeneous effects across different industries and goods. Chinese industries located upstream in the global value chain are more vulnerable than those located downstream. Industries with high labor and contract intensity (proxies for processing trade) experienced greater declines than other industries. Exports of goods with high import elasticity of substitution experienced higher prices and moderate volume losses due to the pandemic. Classification-JEL: F0, F1, L6 Keywords: China¡¯s exports; COVID-19 pandemic; global value chain; processing exports; elasticity of substitution Journal: Frontiers of Economics in China Pages: 541-574 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0023-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:541-574 Template-Type: ReDIF-Article 1.0 Author-Name: Yun Wang Author-Email: yunwang0606@ruc.edu.cn, wangyun0606@gmail.com Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Author-Name: Mingyang Yan Author-Workplace-Name: The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen 361005, China Title: Past Experiences, Personality Traits, and Risk Aversion: Evidence from Individual Risk Attitudes during the COVID-19 Pandemic Abstract: Individuals¡¯ risk attitudes play an important role in economic decision making and policy evaluation, particularly in the midst of unprecedented uncertainty caused by the COVID-19 pandemic. We adopt a multiple-price-list elicitation method with real money incentives to measure precisely individuals¡¯ risk attitudes at different stake levels and the extent to which they are affected by personal and social shocks following the COVID-19 outbreak in China. We find that subjects who had previously experienced negative personal shocks are more risk-averse at medium and large stakes but more risk loving at very small stakes. For our sample, COVID-19 has no significant impact on risk attitudes, as it is more likely to be regarded as a social shock. The result indicates that the impact of COVID-19 on individual risk attitudes is not as influential as expected, unless the individual¡¯s personal life is affected directly. Classification-JEL: C83, C91, D81, D91 Keywords: risk attitude; risk instability; behavioral economics; negative shock; COVID-19 pandemic Journal: Frontiers of Economics in China Pages: 575-625 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0024-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:575-625 Template-Type: ReDIF-Article 1.0 Author-Name: Qichun He Author-Email: qichunhe@gmail.com, heqichun@cufe.edu.cn Author-Workplace-Name: China Economics and Management Academy, Central University of Finance and Economics, Beijing 100081, China Title: The COVID-19 Pandemic in a Monetary Schumpeterian Model Abstract: In this paper, following Blanchard and Fischer (1989), I investigate how the presence of the COVID-19 pandemic¡ªthe increase in the probability of death¡ªmay affect growth and welfare in a scale-invariant R&D-based Schumpeterian model. Without money, the increase in the probability of death has no effect on long-run growth and a negative effect on welfare. By contrast, when money is introduced via the cash-in-advance (CIA) constraint on consumption, the increase in the probability of death decreases long-run growth and welfare under elastic labor supply. Calibration shows that the quantitative effect of an increase in the probability of death on welfare is much larger compared to that on growth. Classification-JEL: E52, O42, O47 Keywords: COVID-19 pandemic; cash-in-advance constraint on consumption; Schumpeterian model; long-run growth and welfare Journal: Frontiers of Economics in China Pages: 626-641 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0025-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:626-641 Template-Type: ReDIF-Article 1.0 Author-Name: Yuqing Xing Author-Email: yuqing_xing@grips.ac.jp Author-Workplace-Name: National Graduate Institute for Policy Studies, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan Title: How the iPhone Widens the U.S. Trade Deficit with China: The Case of the iPhone X Abstract: Through an examination of the case of the iPhone X, this paper demonstrates that Chinese companies involved in the production of the iPhone X have moved up along the global value chain. According to the bill of materials, those companies contributed 25.4% of the value added of the iPhone X. About 45% of the value added of the iPhone X originated in Japan, South Korea, and other economies. The iPhone trade remains a significant element of the statistical distortion of the China¨CUS bilateral trade imbalance. In terms of gross value, the import of one iPhone X results in a USD332.75 trade deficit for the US; measured in terms of the value added, however the deficit is a mere USD104. The depreciation of the Chinese yuan (CNY) has very limited power to counterbalance the tariffs imposed by the Trump administration because the foreign value added embedded in Chinese exports is 33.9% on average. Simulation results show that to counterbalance a 25% tariff, the CNY would have to depreciate by 43.3% against the US dollar on average, and to fully compensate for a 25% tariff burden on the iPhone X, a 400% depreciation of the CNY would be necessary. Hedging the risk of the punitive U.S. tariffs by depreciating the CNY is impossible. Classification-JEL: F13, F23, F42 Keywords: China; US; value added; global value chains (GVCs); iPhone; Chinese yuan (CNY) Journal: Frontiers of Economics in China Pages: 642-658 Volume: 15 Issue: 4 Year: 2020 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0026-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:642-658