Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

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A new monetary phenomenon: An analysis of the co-existence of the external appreciation and the domestic inflation of RMB
BEI Duoguang , ZHU Xiaoli
Front. Econ. China. 2008, 3 (3): 327-355.

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Since 2002, RMB has shown a phenomenon which is the co-existence of the external appreciation and the domestic inflation. This new monetary phenomenon has been strengthened in the context that US dollar depreciates internationally and that domestic economy is overwhelmed with excessive liquidities. The new monetary phenomenon is the reflection of the real economy that continuing trade surplus, triggered robustly by the export-driven economy, which brings a huge amount of foreign exchange reserve and accelerates sequentially the expansion of domestic money supply. Furthermore, a refrained appreciation of RMB tends to deteriorate the domestic inflation, which is not simply a traditional concept of CPI but a broad inflation parameter including a variety of asset prices. It is sure that the new phenomenon is becoming a new challenge to the macroeconomic equilibrium as well as the decision maker of monetary policy.
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Research on the choice of RMB exchange rate regime ―Analysis based on the welfare
Front. Econ. China. 2008, 3 (3): 356-379.

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From the perspective of welfare, by synthesizing the normative and empirical analysis, this paper applies the framework of “new open economy macroeconomics” to the qualitative and quantitative researches on the choice of RMB exchange rate regime in the short and medium run. It sets up the structural model, takes the economical data during 1985–2005 to perform both the positive and simulative analysis, and it is shown that: with the increases of international real demand and international price index, in order to improve the welfare of people, the RMB exchange rate regime should be more flexible.
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Regional disparity of factor endowment and agricultural labor productivity in China
XIN Xiangfei , LIU Xiaoyun
Front. Econ. China. 2008, 3 (3): 380-409.

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Since the introduction of the household responsibility system, China’s agricultural economy has been growing with the enlargement of regional labor productivity disparity. Based on the traditional decomposition technique for
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The institutional change under lobbying and the distribution of power ―The case analysis on the changes in land ownership system in China in 1978
SUN Shengmin
Front. Econ. China. 2008, 3 (3): 410-429.

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In this paper, we develop a model of institutional change of land property right in China, which include the influences of lobbying and the political power division in 1978. The model illustrates how extra gains are produced under different institutions and how lobbying and political power division can affect the change. It is clear that the institutional innovation has something to do with the leaders’ legal income, the cost of institutional change and the conversion rate. Given the pattern of leader’s power division, it is the best way for the people in rural areas to change their institutional framework, and it is efficient to mix local and central governmental policies. And lobbying and leading power division can affect the direction and the course of institutional changes that would lead different result among different areas.
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Redemption puzzle of open-end fund market in China
LU Rong , XU Longbing , XIE Xinhou , CHEN Baizhu
Front. Econ. China. 2008, 3 (3): 430-450.

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We examine the performance-flow relationship(PFR) in Chinese open-end fund market and find that PFR is negative and concave. The shape of PFR indicates that investors’ choice does not pose an incentive mechanism on fund managers: The better an open-end fund performs, the higher the net redemption rate is. We argue that return volatility, dividend and fund size are also important factors on investors’ choice making. Such results are valuable for fund management to reduce this redemption puzzle.
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Price linkages between Chinese and world copper futures markets
LI Xindan , ZHANG Bing
Front. Econ. China. 2008, 3 (3): 451-461.

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The purpose of this paper is to investigate the time varying relationships between the Chinese copper futures market and its London counterparts. Rolling correlation and rolling Granger causality test show that with the development of the Shanghai copper futures markets?it has stronger connections with its London counterpart and it plays more and more important role in the price discovery process. There is a long run relationship between the Shanghai futures exchanges (SHFE) and London Metals exchanges (LME) copper futures prices. The influence of LME on SHFE is greater than that of SHFE on LME. The research will shed light on the openness of the Chinese copper commodity markets and on the nature of cross-market information transmission.
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Estimates of China capital input index by industries(1981―2000)
SUN Linlin , REN Ruo-en
Front. Econ. China. 2008, 3 (3): 462-481.

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The purpose of this paper is to report estimates of capital input index classified by industries in China from 1981 to 2000. We estimate capital stock based on the perpetual inventory method, and then estimate the flow of capital service and capital service price consistently with the capital compensation in input-output table. In our study, we discuss various assumptions and adjustments made on the data and estimation implementation.
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An equilibrium analysis of the revenuemaximizing multinational enterprise
HU Songhua
Front. Econ. China. 2008, 3 (3): 482-495.

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Departing from the traditional profit-maximization assumption underlying the theory of the multinational enterprises (MNEs), this paper proposes a model of the revenue-maximizing MNE subject to the profit constraint. The nonlinear programming techniques are used for the equilibrium analysis of the MNE’s decision-making. A set of optimal conditions is derived regarding the quantity of output, volume of intra-firm trade, allocation of multinational production, as well as transfer prices in both exogenous and endogenous cases. Under the context, a comparison of the behavioral differences is made between the revenue-maximizing MNE and the profit-maximizing MNE.
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8 articles