Based on the data of the inflation gap and output gap, interest rate and money supply in January 1996-June 2016, this paper mainly analyzes the reaction characteristics and control mode of the monetary authority by using LT-TVP-VAR model. The conclusion is that the dependency relation of China's monetary policy and inflation gap and output has a threshold effect, the central bank has asymmetric preference, “price” monetary policy to avoid the output contraction preference, “quantity” monetary policy has weak preference to avoid deflation. As far as the effect is concerned, the “price” policy is better than the deflation effect, and the “quantity type” policy is better to control inflation, stimulate output growth and restrain economy overheating. Finally the paper puts forward three policy suggestions in the period of “new normal”.

We built a new Keynesian DSGE model with the short-term capital flows and tested China’s monetary policy reaction functions from 1994Q1-2015Q4 empirically and found that: with the liberalization of RMB capital account, the impact of short-term capital flows on the stability of China’s macroeconomic and financial systems will be fiercer. Monetary policy rule should consider the effect of short-term capital flows to stabilize the domestic economic fluctuations. We also found the modified monetary policy rule with short-term capital flows can better fit the trace of our interest rate operation in history. Then we established the MS-VAR model, the results showed that: the liquidity of short-term capital flows have obviously changed and can be divided into two regimes. In the high liquidity regime, short-term capital outflows will bring more intense and sustained contraction effect on the ecomomy. Therefore, our monetary policy should pay close attention to the capital flows to improve the macro-prudential regulation framework and stabilize the financial systems.

From the firm heterogeneity perspective, this paper studies the mechanism of RMB exchange rate pass-through in export market. Considering two heterogeneous firm characteristic—imported input share and productivity, and using firm-level micro data and highly disaggregated customs data from 2000 to 2006, this paper simultaneously analyzes how this two characteristics would affect RMB exchange rate pass-through. We find the pass-through is very high, and confirm that firms with higher import shares and higher productivity have lower exchange rate pass-through, the mechanism is that imported input share affect firm’s ability to hedge foreign exchange risk, and productivity is a key determinants of adjusting markup in export market.

This paper introduces the neighboring countries effects into the theoretical model of the relationship between exchange rate and trade, and applies the spatial panel data model to explore the influences on bilateral trades of the exchange rate fluctuations and neighboring countries effects. We get the following conclusions: Firstly, the lagged one period bilateral exchange rate appreciation promotes the imports for China from “One Belt and One Road” countries.The current and lagged one period exchange rate depreciations have some positive influences on China’s exports to the “One Belt and One Road” countries. Neighboring effects of most “One Belt and One Road” countries exceed exchange rate fluctuation effects on bilateral trades. Secondly, for individual “One Belt and One Road” country, researches show that neighboring countries effects tend to be competitive inhibition for both China’s imports from “One Belt and One Road” countries and China’s exports to “One Belt and One Road” countries. Furthermore,we apply sensitivity analysis to know that 10% depreciation of RMB exchange rate leads to o.4% net export effects between china and all “One Belt and One Road” countries in general. Finally, we get the following suggestions:China should balance the relationships between China and each individual “One Belt and One Road” country, and speed up international trade structure adjustment.

To be a more flexible exchange rate regime is an important goal of the third plenary session of 18th central committee of CPC. Would this change increase the economic welfare? Based on the frame of gravity model, this paper estimates the effects of the different exchange rate regime to trade, and with the instrument variable method, we also re-evaluate the effects of openness to income. Finally, we estimate the effects of the changing exchange rate regime to income by the way of trade. We find that, comparing with floating exchange rate regime, the fixed exchange rate regime and the intermediate exchange rate regime have the higher trade and income effects. The welfare gains or losses are changed depending on the openness in different countries. Specifically, China has changed the exchange rate regime from fixed exchange rate to the intermediate exchange rate in 2005, and this decision has improved our welfare which is equal to 1.09% of the GDP.

The United Nations and the World Bank set up the International Comparison Program (ICP) to measure the currency purchasing power parity (PPP) of an economy. The PPPs are not only recommended in the comparison of international economic size and structure, but also widely applied in the social and economic management. This paper intends to investigate the change characters of the PPPs and the main influence factors with a sample of 77 economies ranging from 2001 to 2013. The results find that the average change amplitude of the PPPs in the high income economies is relatively small while that in the low income economies especially the lower middle income economies is bigger. Along with the income rising, the change amplitude of the PPPs will increase at first and then fall. The econometric analysis also shows the PPP change can be explained by the factors including the income per capita, exchange rate, money supply, foreign direct investment, foreign trade, urbanization and employment level. The economic growth and money supply will drive up the PPPs of an economy, while the appreciation of exchange rate and the rise of foreign trade dependence are usually followed by the decline of PPPs. In addition, the PPPs always change in the same direction with the urbanization of an economy but in the opposite direction with the employment level.

This paper introduces government productive expenditure and government welfare expenditure in a model of structure transformation. We assume that government finances its expenditures by levying taxation, and we explore the impact of government productive expenditure on structure transformation. We find that there exists an inverted-U relationship between government productive expenditure and structural transformation. It indicates that there exists an optimal government productive expenditure, which could maximize structural transformation. In addition, we explore the effect of government productive expenditure on structure transformation with China’s provincial data through empirical analysis. It is found that government productive expenditure has positive effect on structure transformation, and it is mainly through infrastructure expenditure, whereas the welfare expenditure has negative effect on structural transformation. Through regional analysis, we find that productive expenditure has no significant effect on structural transformation in the coastal region. The effects of sub-expenditure are quite different. In the coastal region, science & technology expenditure has positive effect, while infrastructure expenditure has no significant effect; both education expenditure and agriculture expenditure have negative effect. Productive expenditure has positive effect on structural transformation in the inner region. For the effect of sub-expenditure, both infrastructure expenditure and education expenditure have positive effect, while science & technology expenditure and agriculture expenditure have no significant effect.

This paper selects seven key indicators by using the stepwise regression and establishes a logit model on panel data of the influencing factors of Rural Credit Cooperatives regional risk including Z province’s 81 Rural Credit Cooperatives from 2006 to 2012. The results show that GDP growth, capital adequacy ratio, the proportion of non-interest income, provision coverage, ROE and industrial regulations help alleviate Rural Credit Cooperatives’ regional risk, and an increase of ratio of loan assets deteriorates the regional risk. This paper suggest that Rural Credit Cooperatives’ regional risk should be further concerned; increasing the capital, promoting diversified development, increasing the level of asset returns, and exerting industrial regulation’s function should be necessary in the future.

This paper investigates the key principles of internet finance that improves SME finance credit availability. We proposes “flow dilutes risk” as a new measure of risk management for internet-based microfinance, which help SME finance by better using “Law of Large Numbers”. Internet-based microfinance should improve their risk management methods to do more small loans in a simple,basic and correct way. Loans with collateral and with higher levels of borrower leverage are likely to result in larger NPL ratio. Business entity borrowers have higher credit risk than enterprise owner and individual borrowers. Cross jurisdiction risks are significantly positively associated with loan default risk.

Current literature treats all the firms as a whole and identifies the extent of government intervention over firms through comparing the firms’ cross-sectional differences of government intervention proxies. However, the ultimate controller (e.g. local government) usually controls multiple firms in China. Under this circumstances, we should treat the firms controlled by the same ultimate controller as a portfolio and measure the extent of government intervention through comparing the firms’ differences within the portfolio. Hence, we select the ultimate controllers’ voting rights to their controlled firms and firm size as the weight indexes, and construct an index on the importance of firms in their ultimate controller’s portfolio. The larger the index of a firm in the portfolio, the more resources the ultimate controller can obtain from the firm. Then, the firm will be more likely intervened by the government. Using the local state-owned enterprises as a sample, subsequent empirical tests demonstrate that our measure of government intervention is full of explanatory power. We find that the firm has more tax burden, more excess employment, more over-investment, and less market value when the firm is more important in its ultimate controller’s portfolio. In addition, a firm can receive more government subsidy when the firm has a higher importance in its ultimate controller’s portfolio. We also find that the government intervention proxy we construct is more informative than other relevant proxies.

Employing the convening of 18^th CPC National Congress and business entertainment expenses, we can detect the corruption level based on the changes due to anti-corruption after controlling related factors. Considering the endogeneity, we utilize market reaction model and difference-in-differences model in order to systematically explore the effects of anti-corruption on microeconomic units. We find that Anti-corruption can win more positive market reaction for corruption firms; Then, Anti-corruption can promote firm performance, especially for firms located in region with severe government intervention; finally, we find some channels through which anti-corruption imposes influences on microeconomic firms: accelerate asset turnover, curtail business cycle, optimize investment efficiency and stimulate productivity. Our work provides micro-level evidence for the implementation effects of anti-corruption and systematically confirms the negative economic effects of corruption, which will provide solid theoretical basis for anti-corruption campaign.

Industrial policy has been widely used in most countries, but its effect on the performance of enterprises has not yet formed a consistent conclusion. From the perspective of government’s “resource-control needs” motivation, this paper analyzes the effect of industrial policy on nationalization of private enterprises. With a large sample of firm-level data from 1998-2007, we find that those enterprises who are encouraged by industrial policies has significantly greater possibility to be nationalized. Further tests find those enterprises that have experienced nationalization won more government subsidies and paid less tax significantly after nationalization, and also employ more staff, confirmed more overheads and paid higher level of wages significantly. We still find that nationalization has significantly negative impact on the firm performance. These findings also provide some empirical evidence for the government’s “resource-control needs” motivation to promote the nationalization of private enterprises from the perspective of nationalization’s economicconsequences.

Evidence shows that the gender of the executives will affect their decision-making behavior and effect. In recent years, female secretaries in China's listing corporation executives continued to increase, which is called “the rise of female secretaries” phenomenon. In this paper, based on psychology, management and other related research, we investigate the influence of the gender of the secretaries on the quality of information disclosure, and discovered that the increase in female secretaries did not lead to improvement of the quality of information disclosure, rather significantly reduce the quality of the information disclosure, this effect is more significant in the big corporations. The conclusion remains unchanged after we control the impact of CEO gender, CFO gender, and the proportion of females in board of directors, as well as endogeneity. This study has significance to the listing corporation to hire secretaries.