We study the roles of local financial development and foreign direct investment, and more importantly, their interaction with one another, in local capital allocation, based on Chinese industrial and regional data. Our main finding is that, although local financial development and FDI each individually tended to improve the efficiency of local capital allocation during the sample period, they tended to compete and crowd out each other’s effect, so that one impaired the individual function of the other. In particular, there exists a threshold value for local financial development, above which an increase in FDI reduces the efficiency of local capital allocation, rather than improve it. On the other hand, there exists a threshold value for FDI, above which further development in the local financial system lowers the efficiency of local capital allocation, rather than increase it. Our estimations suggest that the levels of FDI and local financial development in some relatively more developed Chinese regions have already surpassed such threshold values. We provide some interpretations of our findings and we discuss potential policy implications.

China is experiencing a nutritional transition accompanied by its rapid economic growth. However, the relationship between income growth and nutritional improvement is still unclear. In contrast with the biased indirect method, this paper employs a direct method to estimate the income elasticities of 22 nutrients using household survey data to fill the gap in the current literature. Our results indicate that the income elasticities of most nutrients are smaller than that which is stated in the current literature using the indirect method, and vary for different income groups.

Local governments often charge developers impact fees to finance local public goods. This has been practiced in Chinese cities for more than two decades; however, no empirical studies have tested the effect of impact fees on real estate prices. Using a panel data set for 35 large- and medium-sized cities from 1998 to 2008, we find that impact fees lead to a significant increase in real estate prices. For a given city, an increase in impact fees by one yuan leads to an increase of about 5 yuan in the price of newly-built housing; a 1% increase in impact fees leads to an increase of 5 percentage points in the housing price index and 7 percentage points in the land price index.

This paper investigates the correlation and feedback relationships between the Hong Kong Hang Seng Index (HSI), the Hang Seng Chinese Enterprise Index (CEI) and the S&P 500 Index (SP). We divide the indexes into two separate periods, from the inception of the CEI in 1994 to the stock market crash in 2000, and from 2001 to 2011. Our results show that the feedback relationship between the CEI and the SP is stronger after 2000. As the feedback relationship grows stronger, the diversification benefit reduces for US investors who utilizes the CEI as a tool for diversifying into Chinese markets.

China has undergone a rapid epidemiological transition from infectious diseases to chronic diseases. Using data from the China Health and Retirement Longitudinal Study (CHARLS), this paper documents the profile of chronic diseases among older Chinese people, estimates the impact of the onset of chronic diseases on the labor supply, and examines the correlation between the prevalence of chronic diseases, a household’s medical expenditure and the role of health insurance in reducing medical costs. Empirical results show that the prevalence of chronic diseases is extremely high among older Chinese people and increases sharply with age. We find significant negative effects from the onset of chronic diseases on an individual’s livelihood at work. The estimation results by age and education suggest that the labor supply of the older and more highly educated people is more sensitive to the onset of chronic diseases. We also show that there can be a substantial indirect loss of individual and household income due to the onset of chronic diseases by limiting the labor supply. We find that the prevalence of chronic diseases is significantly associated with higher out-of-pocket medical expenditure. The reduced-form estimation results suggest that people with insurance have lower medical expenditure caused by minor chronic diseases, but this is only the case for women and urban residents. However, health insurance contributes little in reducing medical expenditure caused by major chronic diseases.

We introduce a rapid grid search method in solving dynamic programming problems in economics. Compared to mainstream grid search methods, by using local information of the Bellman equation, this method can significantly increase the efficiency in solving dynamic programming problems by reducing the grid points searched in the control space.

In this paper we consider infinite horizon multilateral bargaining with alternate offers. We prove that there exists only one stationary subgame perfect equilibrium outcome and it corresponds to the unique invariantmeasure of a column stochastic matrix. We characterize this stationary subgame perfect equilibrium outcome in a closed form, and also extend the approach to the multilateral bargaining with random moves.

This paper is an application of delay differential equations to entrepreneurship and unemployment. It shows that the results of empirical studies can be replicated through a simple DDE. The paper also carries out a comparative study between a solution of a DDE and the observation of cyclic behaviors. The calculated delay (and growth rate) of the entrepreneurship DDE for the US and Spain is 1.25 years (1.25), for Ireland is 1.75 years (0.89), and for the UK is 2 years (0.78). The delay (and growth rate) of the unemployment DDE for the US and Ireland is 1.5 years (1.04), for Spain is 2 years (0.78), and for the UK is 2.5 years (0.62).