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Forthcoming Papers

Joseph Stiglitz

An Agenda for Reforming Economic Theory


Justin Yifu Lin

China’s Growth Deceleration: Causes and Future Growth Prospect



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.  


Guoqiang Tian

Deceleration of China’s Economic Growth: Causes and Countermeasures



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 1979-2010. 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 delayed adoption of 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 build a limited government that is capable, accountable, effective and caring, with strengthening the rule of law.


Yuanyuan Chen, Shuaizhang Feng, Yujie Han

Research on the Education of Migrant Children in China: A Review of the Literature



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 examinations 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 progresses have 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.


Kevin X. D. Huang

Growth and Cycles in China’s Unbalanced Development: Resource Misallocation, Debt Overhang, Economic Inequality, and the Importance of Structural Reforms



The recent China 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 constrain. 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.


Xianchun Xu

The Slowdown of China’s Economic Growth in Terms of Statistics



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, export demand has 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.


Mohsen Bahmani-Oskooee

Malaysia-Japan Commodity Trade and Asymmetric Effects of Exchange Rate Changes



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 industry, 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 were industry-specific at best.  


Stephen Martin

Kreps & Scheinkman with Product Differentiation



Kreps and Scheinkman's (1983) 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.


Yong Wang

Is China's Recent Growth Slowdown Mainly due to Demand or Supply? —— A Simple Model Analysis and Perspectives of New Structural Economics



China has been experiencing persistent growth slowdown in the past decade. What is main cause for this slowdown and what policy recommendations should be provided? In this paper, a simple model is used to illustrate the key differences between Prof. Justin Lin and Prof. Guoqiang Tian in their arguments, and their logical predictions are examined and confronted with real-life data. Conclusion is reached that China’s growth slowdown is mainly driven by negative and persistent external demand shocks. Further discussions from the perspective of New Structural Economics are provided to show how policy recommendations are different from the standard Keynesian argument and why structures are endogenous and relevant.

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