The US Federal Reserve (Fed) has raised interest rates frequently since 2021, leading to the tightening of global liquidity and more challenges for global macroeconomic stability. This has provoked concerns among academics and policymakers about the spillover effects of US monetary policies. This paper explores the channels through which these contractionary monetary policy spillovers affect other countries' macroeconomics, particularly which factors amplify the impact of the policy during the process of transmission.
This paper first collects quarterly data for 44 advanced and emerging economies and then uses the local projection method to identify factors that may affect the spillover effects of the US contractionary monetary policy. The results show that when a country has greater financial openness, more financial frictions, stronger procyclical capital flows, and uses a fixed exchange rate regime, the negative impact of spillovers from the Fed's contractionary monetary policy on the country's macroeconomy is strengthened, while the impact of trade openness is not significant.
Based on the identified factors, this paper subsequently constructs a multisectoral open macroeconomic model to examine the transmission channel and amplification mechanism of the US contractionary monetary policy shock. The results show that tightening US monetary policy increases interest rates worldwide, which directly leads to increases in the domestic benchmark interest rates in other countries. On the one hand, the rate of increase in interest rates is higher under a fixed exchange rate system, leading to higher financing costs for companies. On the other hand, the increase in US interest rates has put pressure on other countries to manage their capital outflows. The higher the level of financial openness, the larger the scale of capital outflows. Following the impact of financial frictions, deposit and loan premiums in the financial market have increased by a large margin and amplified further through the financial accelerator mechanism and the procyclical characteristics of capital flows. As a result, the availability of credit has greatly shrunk, while investments and outputs have spiraled downward. Therefore, under a higher degree of financial openness and financial frictions, a country may experience stronger negative shocks from US monetary policy changes. In addition, considering procyclical cross-border capital flows, economic downturns may increase the country's sovereign risk premium and amplify the effect of external shocks. Compared a managed floating exchange rate regime, the use of a fixed exchange rate regime alleviates monetary mismatches and increase sovereign premiums in financial intermediation sectors. However, the domestic benchmark interest rate increases more significantly; therefore, the real borrowing costs for enterprises are higher, resulting in a more severe negative impact of the US contractionary monetary policy on credit, investments, and output.
This paper makes three contributions to the literature. First, while there are already abundant empirical studies on the heterogeneity of the impact of the Fed's monetary policy spillovers, few studies have been able to consistently incorporate and examine multiple country characteristics using a local projection model. This paper not only incorporates traditional factors, such as exchange rate system and trade openness, but also discusses various novel factors, such as financial openness, financial frictions, and the procyclicality of capital flows, providing innovative conclusions and empirical support for our theoretical model analysis. Second, current discussions of the US monetary policy transmission channels are mostly based on empirical research. Few theoretical studies discuss the roles of different country characteristics in transmitting economic shocks. This paper further constructs an open economy model with multiple financial frictions based on Bernanke et al. (1999) and Iacoviello (2015). In addition, the paper analyzes the amplification effect of the characteristics of different countries on the transmission of external shocks from the Fed's contractionary monetary policy, which provides a benchmark theoretical framework for further research. Third, some theoretical studies of the exchange rate regime and US monetary policy spillover have focused on the exchange rate trade channel, while others have focused on the financial channels. This paper uses a general equilibrium framework to comprehensively consider how the exchange rate system affects the transmission of Fed policy shocks under the joint effect of these two channels. The results supplement and enrich the relevant research.

Inter-regional inflation differentials within an economy are affected by multiple factors, such as the effectiveness of monetary policy and the coordinated development of regional economies, and have been a focus of research since the establishment of the euro. The prevailing research method in this field is based on the theory of the Balassa-Samuelson effect (hereinafter referred to the BS effect), which was originally used in the dichotomy framework as the basis of a cross-border real exchange rates model. However, it remains under debate whether BS effect theory can be applied within a country, and whether there are new features within a country is also highly noteworthy.
Regional inflation differentials are particularly important for a large country like China, which has undergone rapid economic transformation and upgrading in recent decades. Moreover, inter-regional competitive growth is recognized as an important driving force of China's “economic miracle”. Thus, the Penn-BS effect paradigm based on the perspective of growth and productivity is especially relevant for analyzing the inflation differentials between regions in China. However, very few studies take this perspective, and there are also some problems that need to be clarified.
In this study, we adopt the Penn-BS effect analysis paradigm for the first time to examine the basic pattern, the fluctuation sources, and then the driving forces of inflation differentials. We use the spatial econometric model to study the mechanism of formation of medium-to long-term inflation differentials within China and find that the theoretical core of the BS effect applies to the inflation differentials within China. However, we also find that the theoretical core of the BS effect shows new characteristics, which may be related to the breaking of the original dichotomy framework under the servitization trend of manufacturing.
We begin by examining the basic pattern the regional inflation differentials in China from the perspective of economic growth and analyzing whether the Penn effect or the Kaldor effect applies to China. Based on the inflation and growth data of 28 provinces in China from 1992 to 2019, we find that the inflation differentials within China follow the basic law of the Penn effect. We adopt the amount of Jinshi in each region during the Ming and Qing dynasties as an instrumental variable and perform a robustness test, and find that the abovementioned conclusions remain unchanged.
Whether the Penn effect seen in China can be explained by BS effect theory depends on the structural sources of the inflation differentials. We adopt the variance decomposition method of Betts and Kehoe (2008) and use two indicators—variance and mean squared error—to decompose the contributions of different factors in the fluctuation sources of the inflation differentials within China. We find that deviations from the law of one price and the relative price effect are both important sources. The former is more important than the latter in most cases, and spatial adjacency also has a highly significant impact the inflation differentials. In addition, this result shows that the traditional paradigm of BS effect analysis remains necessary within an economy. Moreover, the prominent position of the deviation from the law of one price is also a paradox in the analysis of the BS effect.
Given the significant spatial correlation of inter-provincial inflation in China, we establish a spatial Durbin model to analyze whether the core of BS effect theory, namely the positive correlation between inter-departmental relative productivity and inter-departmental relative price, applies within China. For the first time, we use a spatial weight matrix that is constructed using inter-regional trade and geographic distance data. We find that relative productivity in a region has a significant and positive direct effect on the local internal real exchange rate, indicating the presence of the BS effect, but has a negative spatial spillover effect. In terms of spatial heterogeneity, the western region's relative productivity has the greatest direct effect, and negative spatial spillover effects mainly occur between regions with strong heterogeneity. We also find that the greater the division of labor markets among regions, the stronger is the BS effect, which means that the existence of obstacles to labor mobility underpin the occurrence of the BS effect within a country.
Furthermore, we find that there is a negative relationship between relative productivity and overall inflation rate, which represents another paradox. However, this finding is consistent with the domestic BS effect theory proposed by Changjiang and Sheng (2021), which holds that the dichotomy framework is no longer in line with the characteristics of modern service industries. Instead, it is necessary to divide the service industry into the productive service industry and the life service industry, and then adopt a three-sector framework. The key conclusions of this theory are confirmed in this paper and offer a preliminary explanation for the two paradoxes mentioned above. That is, these paradoxes can be considered to reflect the new characteristics of the BS effect within a country and represent the main mechanism of formation of regional inflation differentials in China.

Starting in 2014, China introduced a series of regulatory measures to prevent or resolve the risks associated with shadow banking. A key regulation is the “Guiding Opinions on the Regulation of Asset Management Business of Financial Institutions,” which was issued in April 2018 and is commonly known as the “New Asset Management Regulations.” This regulation aims to address specific issues, such as multi-layered nesting, rigid redemption commitments, and regulatory arbitrage, while also guiding the flow of social funds toward the real economy and effectively controlling systemic risks.
China's shadow banking sector is typified by wealth management products, trust, and entrusted loan businesses, with bank wealth management products being the largest component. Funds raised through wealth management products by commercial banks are often channeled into non-standard assets through complex shadow banking systems in efforts to seek high returns. This leads to serious problems, such as fund idling and maturity mismatch, thereby accumulating substantial risks. The New Asset Management Regulations effectively restrain the issuance of bank wealth management products and reduce bank risks.
Commercial banks can issue wealth management products to alleviate competition for funds from other banks and non-bank financial institutions. Thus, these products generate supplementary finance under interest rate liberalization. If banks' issuance of wealth management products is hindered, it may lead to deposit competition between commercial banks. According to data released by the People's Bank of China, structured deposits, which had zero year-on-year growth in April 2017, grew by nearly 50% in March 2018, with the year-on-year growth rate of personal structured deposits approaching 80% in July 2018. This rapid growth of deposits is largely driven by banks offering attractive high deposit interest rates. However, the high cost of deposits may be transmitted to the real economy through loans. Therefore, while the New Asset Management Regulations have effectively mitigated risks, it remains to be determined whether they have also intensified deposit competition between banks, and whether the persistently high cost of deposits is the root cause of problems such as expensive financing for enterprises. Exploring these issues can reveal how to regulate banking competition, promote coordination between financial regulation and monetary policy, and reduce comprehensive financing costs for enterprises, thereby supporting the high-quality development of the real economy.
Accordingly, this study manually collects micro-level data on deposit interest rates, loan interest rates, and the outstanding balance of wealth management products at the bank level from semi-annual data of listed banks for 2014-2020. The New Asset Management Regulations are treated as an exogenous quasi-natural experiment, and a difference-in-differences model is employed to explore the risk prevention and credit tightening effects of shadow banking regulation at the commercial bank level. The results show that the New Asset Management Regulations cause banks that rely substantially on wealth management products to reduce credit allocation to high-risk industries, indicating the regulations' risk prevention effect. Furthermore, the regulations directly impact banks' funding sources, forcing banks in the experimental group to increase deposit interest rates and engage in deposit competition, resulting in credit tightening effects.
The key contributions of this paper are as follows. First, this paper enriches the literature on the impact of financial regulation on credit supply. Previous studies mainly focus on capital and liquidity regulation, with limited examination of shadow banking regulation, and primarily discuss the impact of regulation on the total volume of credit supply, paying less attention to credit prices. Second, this paper broadens the literature on the impact of shadow banking regulation on commercial banks. Many studies analyze the relationship between the New Asset Management Regulations and systemic risk and financial stability from a macro perspective, and a few studies examine the interaction between the regulations and individual firms from a micro perspective. However, few studies investigate how shadow banking regulation affects bank risks and credit supply. Third, this paper contributes to the literature on the relationship between bank liabilities and assets. Most scholars focus on the impact of bank liability structure on bank assets, whereas few scholars explore how bank liability (deposit) costs affect bank decision-making and transmit to the real economy. Finally, this paper empirically explores the relationship between shadow banking regulation and the transmission of monetary policy, and provides policy recommendations for how regulatory authorities can strengthen macro-prudential supervision and coordination with monetary policy.

This paper explores whether the current fiscal inputs are working as they should and if the policy implementation costs are too large (i.e., the input economics). In exploring these issues, one of the key tasks is to assess the fiscal cost of creating jobs under the current labor market conditions. This paper assesses the feasibility of fiscal policies by analyzing the input economics.
To assess the fiscal cost of job creation in China and evaluate the role of fiscal policy in promoting employment in China, this paper uses the Accelerated Depreciation of Fixed Assets Policy for empirical analysis. This policy was issued because the slowdown of investment growth in the manufacturing industry after 2014 hindered firms' transformation and upgrades. This slowdown also impeded a development goal, that is, to accelerate the transformation of economic development patterns and speed up the construction of an innovative country, which was issued by the Third Plenary Session of the 18th Central Committee of the Communist Party of China in 2013. This fiscal policy specifies that enterprises' new fixed assets in six industries can adopt an accelerated depreciation method after January 1, 2014. These six industries comprise biopharmaceutical manufacturing; specialized equipment manufacturing; manufacturing railway, vessel, aerospace, and other transportation equipment; manufacturing computers, communication equipment, and other electronic equipment; manufacturing instruments and meters; and information transmission, software, and information technology services. Specifically, the newly acquired instruments and equipment for all enterprises in the above six industries after January 1, 2014 (including self-built materials), with a unit value not exceeding 1 million yuan, allowing a one-time charge to current costs and expenses, deducted in the calculation of taxable income, no longer divided into years to calculate depreciation are considered. The unit price of these newly acquired instruments and equipment with a value of more than 1 million yuan can be depreciated over a shorter period or by using an accelerated depreciation method. If a shorter depreciation period method is applied, the minimum depreciation period cannot be less than 60% of the minimum depreciation period as prescribed in the Corporate Income Tax Law. If an accelerated depreciation method is applied, the double-declining balance or sum-of-years-digits depreciation methods can be used.
Using the quasi-natural experiment of the Accelerated Depreciation Policy, this paper uses 2010-2016 panel data from about 285 prefecture-level cities and the difference-in-differences method to assess the impact of tax cuts on employment and calculate the fiscal costs required to create new jobs. This paper finds that tax cuts generally increase employment. Regions that experienced hard economic shocks before the implementation of the policy experienced significant employment growth, suggesting that the policy could stabilize and expand employment. Using regression results, this paper calculates the policy cost and the number of jobs created by the policy in our preferred situation. The findings show that an employment multiplier for taxes is about 3.56; that is, for every 100,000 yuan in tax cuts, about 3.56 jobs are created, which is equal to a “cost per job” of 28,100 yuan (at 2014 prices). This result accounts for about 60% of the average wage level in 2014. Although this cost is generally lower than that in developed countries, it is not small considering China's national conditions. In the short term, fiscal policies can be used to increase economic growth and employment. However, it is necessary to make an overall plan for using funds, implementing performance evaluations, and preparing for future policy adjustments.
This paper makes the following contributions to the literature. First, this is one of the first papers to adopt a standardized, rigorous approach to assess the fiscal cost of job creation in China, which is rich in theoretical and applied value. While existing studies focus on examining the significance of the employment effects of fiscal policies in China statistically, this paper further assesses the fiscal cost of individual job creation. On the one hand, this provides theoretical support for China to continue to stabilize and expand employment through fiscal policies. On the other hand, fiscal expenditure standards are the basis for fiscal budgeting and the cost calculation in this paper also provides references for employment-related policies and project budgeting. Second, this paper uses macro data to examine the employment effects of fiscal policy, which overcoming some limitations of micro-firm samples. The results show major improvements in two aspects: most micro-firm databases mainly include large firms and the findings cannot be easily extrapolated to the whole market players, and studies based on micro-firm samples mainly focus on the effects of policies on incumbents, which cannot capture the changes in firms entries or exits at the extensive margin and ignores the spillover effects due to industry and supply chain linkages. Using macro data at the regional level, this paper improves the reliability and external validity of the findings in the literature.

Social conflicts (such as physician-patient disputes, labor disputes, and debt disputes) can undermine effective social development. Economic theory suggests that incomplete contracts are an important source of social conflict, and the conflicts themselves can be regarded as unhedged financial risks (incomplete markets). Policy-wise, financial innovation (like insurance) can complete a market, resolve conflict, enhance social harmony, and achieve Pareto improvement. However, no “smoking gun” evidence for this important theoretical idea has been offered, due to the lack of sufficient policy counterfactuals.
In this study, we regard social conflict such as disputes as a risk state and leverage the unique and appropriate quasi-natural experiment of the gradual implementation of compulsory medical liability insurance in China. We draw on the provincial medical damage liability dispute data published by both “China Judgements Online” and the “Magic Weapon of Peking University” (beida fabao) from 2011 to 2019. We apply a multi-period difference-in-differences (DID) method to identify the causal effects and mechanism of liability insurance on physician-patient disputes, to test how financial innovation such as insurance can resolve social conflicts by enhancing social trust. This helps to make contracts and markets more complete, improve efficiency, and promote social harmony. The empirical results show that the average number of medical disputes per 10,000 inpatients, as obtained from the two databases, decreases significantly by at least 0.290 and 0.207, respectively. We test the heterogeneous treatment effects and the parallel trend based on heterogeneity robust estimators to ensure the validity and robustness of our DID identification strategy.
We further identify how compulsory medical liability insurance can achieve Pareto improvement. First, it significantly reduces instances of medical disputes and completes the contract by enhancing trust between physicians and patients, due to a more complete market. The average number of hospitalization days for public hospitals in the treatment provinces increases by at least 0.297. Second, this insurance reduces per capita medical expenses by reducing the level of defensive medicine. The per capita medical expenses of public hospitals in the treatment provinces decrease by at least 322.062, thus improving treatment efficiency. Third, this compulsory insurance also makes the insurance markets more complete and encourages insurers to take on a more effective supervisory role in reducing information asymmetry (adverse selection and moral hazard). The loss ratios of medical liability insurance businesses in the treatment provinces decrease by at least 0.343. Therefore, Pareto improvement is achieved, which benefits all parties.
Our study has important policy implications. First, we show that financial innovation such as liability insurance is an efficient tool for solving social conflicts, promoting social harmony, and maintaining long-term social stability. This reveals how financial innovation can be practically used to solve incomplete market problems caused by incomplete contracts. Second, we also demonstrate that insurance can enhance social trust, which can complete the contract and thus increase the efficiency of socioeconomic activities. Therefore, financial innovation (such as insurance innovation) can solve the problem of incomplete contracts. This extends beyond the medical market, and our methods and analysis framework can be applied to other markets, such as those for other credence goods and those in which contracts are highly incomplete, such as education, labor, and financial markets. Third, unhedged risks are a major constraint to economic development and social progress. Incomplete markets are essentially an indication that the space spanned by financial contracts is not full. To address the incomplete market problem, identifying the relevant missing markets and then creating the relevant financial contracts (such as Arrow securities) to complete the markets is necessary. However, the decentralized system may not spontaneously generate corresponding financial contracts, and appropriate government interventions are often necessary. Therefore, efficient markets and effective government often go hand in hand, which illustrates China's institutional advantages.
Finally, our study provides an important academic foundation for understanding the high-quality development of both medical and insurance markets. The empirical results show that government interventions can achieve Pareto improvement under incomplete markets and that compulsory medical liability insurance is a Pareto-efficient institutional innovation that can promote the high-quality development of the medical system. Education, labor, and financial markets are key to China's high-quality development, and financial innovation can assist in promoting the development of these markets.

The distribution of high-quality medical resources in China is regionally uneven. When patients seek health care in other regions, they must pay their medical expenses upfront and then undergo complex reimbursement procedures, which affects the accessibility of high-quality medical resources. Against this background, China has been continuously improving its policy for cross-provincial direct settlement of inpatient expenses since 2016. In 2018, China launched a pilot project for the direct settlement of outpatient expenses. Since the implementation of this policy, patients who meet the referral standards have not needed to pay upfront and the reimbursement rate follows the policy in the home city, and the medical insurance directory of the visiting city is used. Regions with relatively scarce medical resources are not only the main sources of patients seeking cross-regional medical treatment but also face significant pressures on their operation of medical insurance funds. While the direct settlement of outpatient expenses is convenient for patients to seek health care in other regions, it may lead to a burden on regional medical insurance funds, which is a problem that deserves attention.
We evaluate the effect of the direct settlement of cross-provincial outpatient expenses using a regression discontinuity design for the reimbursement data from the urban employee basic medical insurance (UEBMI) fund for a third-tier city in the Yangtze River Delta. After the policy was implemented, we find that cross-provincial outpatient visits increased while inpatient admissions decreased. The total outpatient visits and inpatient admissions, medical expenses, medical insurance expenditures, and out-of-pocket expenses all decreased. These results indicate that cross-provincial inpatient admissions substitute for outpatient visits before outpatient direct settlements. This paper shows that the direct settlement policy encourages patients in areas lacking medical resources to seek cross-provincial medical treatment. In addition, the policy can significantly reduce medical insurance expenses by decreasing the number of medical visits. Also, the policy has a more significant impact on patients with high health-care demand and social status than patients with mild illness. These results suggest that the policy does not have the effect of siphoning mildly ill patients from the local area.
This paper provides policy implications for the policy development for the cross-provincial direct settlement of medical expenses in China. First, continuously improve the direct settlement for outpatient expenses and expand the scope of direct settlement for outpatient clinics. Second, accelerate the construction of national and provincial regional medical centers, promote the expansion and sinking of high-quality medical resources, and extend them to patients. Third, improve the hierarchical diagnosis and treatment system and strictly regulate the referral system to promote the referral system to promote the diversion and referral of patients with mild illness and reduce the phenomenon of disorderly medical treatment. Fourth, promote the unification of the national medical insurance the unification of the national medical insurance reimbursement directory to improve the phenomenon of “different prices for the same treatment for the same disease.” Fifth, construct medical insurance payment methods and medical insurance supervision mechanisms that are compatible with direct settlement of medical expenses, effectively preventing and controlling risks in fund operations, and optimizing the allocation of medical resources.
This paper makes three main contributions to the literature. First, we use empirical methods to investigate the effect of the cross-provincial direct settlement of the outpatient expenses policy on medical insurance expenditure. Second, this paper compares and explores the different impacts of this policy on different patients. Third, this paper examines whether the direct settlement policy has led to a significant outflow of patients with mild illnesses and evaluates the negative impact that it may have on local medical institutions.

Climate change has adverse effects on the banking system, and interest in climate change in banking and finance has increased in recent years. In February 2020, the Basel Committee on Banking Supervision established the Task Force on Climate-related Financial Risks. However, climate-related financial risks in the Chinese banking system have not received much attention, even though China is one of the countries most severely affected by climate disasters.
In this study, we extend the literature by examining whether climate change is associated with banks' discretionary loan loss provisions. Furthermore, we suggest that earnings management may be a consequence of climate-related financial risks in the banking industry. Specifically, we hypothesize that in the presence of climate change risk, a bank's management team has a better excuse to manipulate earnings via loan loss provisions. First, a bank's management team is motivated to manipulate earnings. Due to the separation of ownership and control, a bank's management team has sufficient incentives to manipulate earnings to satisfy their own interests. Second, from the perspective of the costs and benefits of bank earnings management, manipulation of earnings can result in significant regulatory costs. We argue that the regulatory costs of earnings management decrease in the presence of climate change risk, thus increasing the benefits of earnings management, leading a bank's management team to increase their earnings management behavior. On the one hand, due to information asymmetry between regulators and banks, it is difficult for regulators to estimate the actual impact of climate risk on banks and how much loan loss provision banks should set aside. On the other hand, the change in financial performance due to climate risk is not related to a bank management team's ability, and thus there is no reputational cost suffered by a management team's manipulation of their bank's earnings in the name of climate risk. Therefore, it is reasonable to manipulate bank earnings in the presence of opportunism of bank managers and climate risk.
We use annual reports from 2007 to 2019 to construct a comprehensive sample of China's local commercial banks. First, we document a positive link between climate change and banks' discretionary loan loss provisions after controlling for bank fixed effects and year fixed effects. The effects are statistically and economically significant. We also exclude an alternative explanation and conduct a series of robustness tests. Second, we find that decreased manipulation costs for a bank's management team and a lack of bank disclosure of climate risk information lead to banks engaging in earnings management in the name of climate risk. Specifically, decreased manipulation costs are manifested in the fact that current climate-risk shocks do not negatively affect a management team's compensation in the current period. In addition, banks' lack of information disclosure makes it difficult for external supervisors to detect banks' earnings management in the name of climate risk. Third, we find that this positive association is nonsignificant for banks with low earnings growth rates but significant for banks with high earnings growth rates. Consistent with “cookie jar reserves” practice, we find that earnings hidden by a bank during natural disasters are released by the bank in the first year after the natural disaster to achieve income smoothing. Finally, we find that banks that face increases in regulation from the China Banking Regulatory Commission and China Securities Regulatory Commission at the time of listing cease participating in earnings management practices in the name of climate change.
In this study, we contribute to the literature in several ways. First, we complement the literature on climate change impacts—which focuses on the impact of climate change on individuals and firms—by exploring the impact of climate-related financial risks on bank earnings management. Second, we extend the literature on the identification and motivation of bank earnings management. To the best of our knowledge, this is the first study to introduce a climate change-induced motivation for bank earnings management. This addresses the issue of whether and to what extent climate-related financial risks affect financial reporting quality. Finally, our study has significant policy implications. In November 2021, the Basel Committee on Banking Supervision issued a public consultation on principles for the effective management and supervision of climate-related financial risks. This consultation seeks to promote a principles-based approach to improving banks' risk management and supervisors' practices related to climate-related financial risks. Nevertheless, little attention has been paid to the climate-related financial risks that China may encounter in addressing climate change. The findings of the current study echo public consultation on climate-related financial risks and provide insights not only to academics but also to the banking industry and regulators in China.

This paper is based on a quasi-natural experiment of the smart city pilot in 2012 and uses panel data from 141 districts and counties in the Yangtze River Delta Urban Agglomeration from 2007 to 2019. It adopts a spatial panel Dubin difference-in-differences model to examine the impact of smart city construction on energy consumption and environmental pollution, and verifies the mechanism whereby smart city construction impacts energy conservation and emission reduction. The empirical results are as follows. (1) Smart city construction significantly promotes energy conservation and emission reduction; the energy conservation effect is greater than the emission reduction effect; and energy consumption plays an important role in the emission reduction effect of smart city construction. (2) The energy conservation and emission reduction effects of a smart city have four underlying mechanisms: technological innovation, industrial structure upgrading, consumption-mode innovation, and smart transportation transformation. However, these four potential mechanisms have different levels of contributions. (3) Smart city construction has a positive impact on local energy conservation and emission reduction, but the magnitude of this impact diminishes with increasing spatial distance. (4) The energy conservation and emission reduction effects of smart city construction on neighboring areas increase over time, and the marginal effect of energy conservation is significantly greater than the marginal effect of emission reduction on neighboring areas. (5) Smart city pilot policies have greater energy conservation and emission reduction effects in areas with strong information infrastructure and high levels of human capital than in areas with weak information infrastructure and low levels of human capital.
The key contributions of this paper are as follows. (1) Smart city, energy consumption, and environmental pollution are incorporated into a single analytical framework, and the important role of energy consumption in the emission reduction effect of smart city construction is examined. (2) The spatial spillover effect of smart city construction on energy conservation and emission reduction is considered, as are the marginal effects and spatial boundaries of smart city pilot policies. This yields empirical evidence to support the spatial management of smart city construction. (3) The channels whereby smart city construction impact energy conservation and emission reduction are analyzed and verified. Clarifying the relevant impact mechanism is an important basis for further improving the smart city pilot policy. (4) The heterogeneous effects of information technology infrastructure and human capital levels on the energy conservation and emission reduction effects of smart city construction are investigated to provide empirical evidence to support the implementation of differentiated policies. (5) Empirical data at the district and county levels are used, thereby filling a major gap in the literature that results from the use of data of prefecture-level cities and provinces without examining intra-regional heterogeneity.
The findings of this study have important policy implications. First, the findings show that the scope of smart city pilot projects should continue to be expanded, and a mechanism for synergy and cross-regional collaboration between smart city construction and energy and environmental governance should be formed. Priority should be given to the neighboring cities of pilot cities to promote the pilots from near to far. In the process of smart city construction, it is necessary to strengthen the constraints of energy conservation and emission reduction targets, coordinate the smart network space of urban agglomerations, formulate medium-and long-term smart city development plans for urban agglomerations, and strengthen the synergy between smart city planning and energy and environmental planning.
Second, a channel should be opened to allow smart cities to promote energy conservation and emission reduction, and to promote the connection between smart city construction pilot policies and regional innovation policies, industrial policies, consumption policies, and transportation policies. Smart technologies should be integrated into the entire process of energy and environmental governance to promote the green upgrading of regional industrial structure, guide and expand green digital consumption, and facilitate the transformation of regional consumption. Moreover, intelligent transportation technology should be actively developed, and digital and intelligent support for traffic management should be strengthened.
Third, differentiated smart-city construction strategies should be implemented, and the role of information infrastructure and human capital in smart city construction should be strengthened. In addition, investment in urban information infrastructure and education should be increased, with a focus on selecting cities with a good information and human capital base to carry out smart city pilot projects. Moreover, digital information industrialization should be comprehensively catalyzed, and energy and ecological support for informatization and digital transformation should be improved.

Human capital is an indispensable source of national economic growth and wealth accumulation and an important factor of production for supply-side structural reform to improve quality and efficiency. China is currently in a state of economic transition, which highlights the contradiction between people's need for a better life and unbalanced and insufficient development. Moreover, technological progress has raised the requirements for coordination between physical and human capital. Therefore, upgrading the human capital structure of firms is important to promote high-quality development of China's economy and meet the material and cultural needs of its people.
Since China embarked on the process of reform and opening up, its economy has grown rapidly, but this growth has come at a high environmental price. Air pollution is known to adversely affect human health by reducing life expectancy and public awareness. Scholars have increasingly focused on the impact of air pollution on enterprises; researchers believe that air pollution reduces labor supply and firm productivity and increases labor costs. Theoretical discussions on the factors affecting firm human capital have helped to expand and deepen the knowledge in this area; scholars have argued that air pollution profoundly affects human capital. However, there are some shortcomings in the research on the impact of air pollution on the human capital structure of firms. This study investigates this issue using data from Chinese listed firms.
This study investigates the effect of air pollution on the upgrading of firm human capital structure using panel data from listed firms and air pollution levels in prefecture-level cities in China from 2011 to 2020. It uses the number of days when temperature inversions occur as an instrumental variable for air pollution to mitigate possible endogeneity. The results show that, on average, a one standard deviation increase in the PM_2.5 concentration reduces the share of skilled labor in public firms by 2.7 percentage points, significantly inhibiting the upgrading of firms' human capital structure. Mechanism analysis shows that air pollution increases the likelihood of employee mobility to less polluted areas and increases turnover among skilled employees, which inhibit the upgrading of firms' human capital structure. The results of heterogeneity analysis find that the inhibitory effect of air pollution on human capital structure is more pronounced in private firms, high-tech industries, and listed firms located in areas with severe air pollution than in public firms, industries other than high-tech industries, and listed firms located in areas with less air pollution. The study also finds that firms' compensation incentives do not effectively reduce the inhibitory effect of air pollution on the upgrading of firms' human capital structure; however, firms' capital-intensive characteristics have a positive moderating effect on this inhibitory effect.
This study makes the following contributions. First, it deepens understanding of the mechanism through which air pollution affects firms' human capital structure. This study uses data from the National Survey on Health and Family Planning Dynamics of the Mobile Population and explores the mechanism of the effect of air pollution on firms' human capital structure from the perspective of employee mobility by matching air pollution data at the county level and conducting a heterogeneity analysis based on the education level of the individuals interviewed. This provides a new explanation for the differences in the exit behavior of employees in firms with different levels of human capital. Second, it provides a reference for enterprises to cope with the adverse effects of air pollution. This study demonstrates that firms' pay incentives cannot effectively reduce the inhibitory effect of air pollution on the upgrading of firms' human capital structure. It is more beneficial for firms to increase the importance of highly skilled employees than to increase pay incentives to address the challenges posed by air pollution.

High-quality information disclosure plays a crucial role in safeguarding the stable and effective operation of the capital market in the context of China's IPO registration-based system. The IPO inquiry process is an important channel in this system for IPO firms' information disclosure, as their comment letter responses (CLRs) disclose a large amount of unstructured textual information. Therefore, determining the information disclosure effect of IPO inquiry will improve the effectiveness of IPO information disclosure, enhance asset-pricing efficiency and maintain the stability of China's capital market.
We investigate the impact of the information characteristics of CLRs on IPO pricing from the perspective of readability using IPO inquiry data from the ChiNext and STAR markets. First, we find that the readability of CLRs is negatively correlated with IPO underpricing, and these findings remain robust to endogeneity concerns. Second, we discuss the mechanism whereby text readability impacts IPO underpricing and conclude that highly readable CLRs can smooth the sentiment of investors in the secondary market, but that the readability of CLRs does not affect IPO price revision in the primary market. These results indicate that the readability of CLRs mainly affects investors' sentiment in the secondary market, which ultimately influences IPO underpricing. Third, we find that the impact of CLRs' readability on IPO underpricing is much greater in subsamples in which executives do not participate in strategic placements than in subsamples in which they do, and where the separation of two rights and the readability of a prospectus is low. Fourth, to examine the heterogeneity of investors' beliefs in the primary market, we test the effect of CLRs' readability on IPO underpricing and conclude that firms with high CLR readability have lower investor belief heterogeneity than those with low CLR readability. Finally, we discuss the long-term impact of CLRs' readability on information disclosure effectiveness from the perspectives of stock price informativeness and negative drift of stock returns after listing. We find that companies with high CLR readability have higher stock-price informativeness and lower negative drift of stock returns in the 90 days and 180 days after listing than those with low CLR readability. Overall, we find that CLR readability significantly affects the information disclosure efficiency of the IPO process.
This paper makes two main contributions to the literature. First, it highlights the important influence of textual readability on the effectiveness of information disclosure in the IPO inquiry process. Pre-IPO firms provide little public information for investors. Therefore, information disclosure in the IPO process has an important impact on IPO pricing. Prospectuses and CLRs are two channels whereby IPO firms disclose information under the registration-based system. Improving the readability of CLRs can improve information disclosure efficiency of companies in the IPO process. Second, this paper expands research on the effect of information disclosure of CLRs on the IPO process. CLRs are a unique information disclosure channel in China's stock market, and thus their impact (and the mechanism of their impact) on IPO pricing and investor behavior require further exploration. This paper extends research on the information disclosure effect of CLRs from the perspective of readability and thereby fills a gap in current literature.
This paper concludes that there are two ways to improve the information disclosure efficiency of IPO inquiry. First, textual readability should be improved and IPO inquiry strategies and processes should be optimized. Regulators can adopt the strategy of repeated review to identify obscure and plausible information in the IPO inquiry process. This will encourage firms to change their mode of information expression and improve the readability of their information disclosure in IPO inquiry processes. Second, the exchanges can formulate normative documents for information disclosure language and expression of CLRs, which will improve the information disclosure behavior of issuing firms.

The period from the monetization of silver to the establishment of the silver standard in China involved a long process of development. After the middle and late Ming dynasty, silver became the main currency in circulation, and did not withdraw from the stage of history until the Republic of China's legal tender reform (1935), which remained in force for approximately 400 years. However, during this time, China's silver output was small and thus the silver in circulation was mainly imported from abroad. Consequently, the cross-border flow of silver had a substantial impact on China's silver monetization process, money supply and economic development.
After the discovery of geography, China gradually joined the international division of labor and trade system, and several large-scale cross-border flows of silver occurred. Thus, from the mid-Ming dynasty to the mid-Qing dynasty (from the mid-16th century to the early 19th century), China had a long-term surplus in foreign trade and a large-scale inflow of silver. Initially, silver was initially mainly imported through the Spanish Philippines and Japan, and then mainly from Europe, and latterly mainly from the Americas. The two representative estimates of the inflow of silver during this period are approximately 1.6 billion liang (1 liang=37.301 g) and 600 million liang. In contrast, from the 1930s to the middle of the 1830s, due to the import of opium and the worldwide decline in silver mining, there was a silver outflow of an estimated at 100-300 million liang. From the mid-19th century to the 1920s, major countries worldwide successively reformed their monetary systems and implemented the gold standard, which led to a sharp drop in the international silver price and a large amount of silver flowing into China. Much of this inflow was direct investment from Western countries or foreign debts or loans acquired by the Chinese government to build infrastructure and mining. As a result, China's key industries and its economic system were reliant on other countries. In modern times, due to China's war reparations, there was a net outflow of more than 1.3 billion liang of silver, including over 1 billion liang from 1895 to 1914. In the 1930s, Western countries successively abandoned the gold standard and the United States implemented the silver purchase program. Thus, the international silver price rose sharply and there was large-scale outflow from China that reached 1.03 billion liang from 1934 to 1938, leading directly to the collapse of the silver standard.
The large-scale cross-border flow of silver in China has been influenced by changes in domestic and foreign monetary systems, the development of China's international trade and investment, war reparations, policy adjustments of other countries and other factors. In addition, the cross-border flow of silver has had a direct and significant impact on domestic silver stock. Domestic and foreign scholars have estimated that the stock of silver in the Ming dynasty, Qing dynasty and the Republic of China (1912-1949) was equivalent to the total mining output of silver in China from the Tang dynasty to the Qing dynasty, i.e., less than 560 million liang, which is less than most scholars' estimates of the inflow of silver from the middle of the Ming dynasty to the middle of the Qing dynasty. From the 16th to 17th centuries, China's stock of silver increased from 150 million liang to 250 million liang. In the 1640s (the late Ming dynasty, 1911 (the late Qing dynasty), and 1933 (when the Chinese government abandoned the weight of silver liang in favor of a standard weight of silver yuan, a process known as “fei liang gai yuan”), China's silver stock was 760 million liang, 1.33 billion liang and 2.21 billion liang, respectively. Scholars' estimates of how much silver was used as money vary widely, depending on the proportion of silver stock that was circulated.
There has been much research by domestic and foreign scholars on the cross-border flow of silver in different periods of Chinese history. This paper reviews the literature to provide a summary of the cross-border flow of silver in China over the past 2,000 years, analyzes the main reasons for the cross-border flow of silver in different periods, and lists representative estimates of the flow and stock of silver in different periods. The results of this analysis show that the cross-border flow of silver in China has made it difficult to control the country's monetary aggregate, and has profoundly affected the stable development of China's economy and society. This highlights the vital importance of countries' maintaining the right to regulate their currency issuance and circulation. Under the current credit monetary system, various countries' issuance and circulation of currencies are not limited by the amount of precious metals in their possession. However, cross-border capital flows also significantly affect countries' economic and financial operations. As such, it remains important to perform a detailed study of cross-border flows of silver in China and other countries.