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Forthcoming Papers

Joseph Stiglitz

An Agenda for Reforming Economic Theory


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.


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.


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. 


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.


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.


Bas van Leeuwen, Yi Xu, Jan van Zanden

Urbanization in China, ca. 1100–1900



This paper presents new estimates of the development of the urban population and the urbanization ratio for the period spanning the Song and late Qing dynasties. Urbanization is viewed, as in much of the economic historical literature on the topic, as an indirect indicator of economic development and structural change. The development of the urban system can therefore tell us a lot about long-term trends in the Chinese economy between 1100 and 1900. During the Song the level of urbanization was high, also by international standards – the capital cities of the Song were probably the largest cities in the world. This remained so until the late Ming, but during the Qing there was a downward trend in the level of urbanization from 11–12% to 7% in the late 18th century, a level at which it remained until the early 1900s. In our paper we analyse the role that socio–political and economic causes played in this decline, such as the changing character of the Chinese state, the limited impact of overseas trade on the urban system, and the apparent absence of the dynamic economic effects that were characteristic for the European urban system.


Zhiwu Chen, Kaixiang Peng, Weipeng Yuan

Usury, Market Power and Poverty Traps: A Study of Rural Credit in 1930s’ China



This paper studies the cross-regional variation of interest rates in China in the 1930s. Based on county-level data from the Buck (1941) rural surveys, we examine factors that may have influenced rural interest rates in pre-1949 China. Since the quality of institutions that define property rights and facilitate contract enforcement is important for such transactions as land tenancy arrangements, we treat land tenancy rate (or, percentage of owner-farmers) as a proxy for institutional quality. Contrary to the popular belief among historians and economists that usury or high interest rates caused persistent poverty, we find that while the monopoly-exploitation hypothesis has little explanatory power, a region’s institutional quality and income level are persistent and significant determinants of interest rates. Thus, poverty is a key driver of high rates of interest.  Economic growth and the development of market institutions are crucial for lowering high interest rates and combating usury.

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