How connected are Chinese farmers to retail markets? New evidence of price transmission

This paper examines the extent to which Chinese farmers are connected to regional agricultural markets by looking at the intensity of price transmission from retail markets to the farmgate. This intensity is indicative of the extent to which farmers might benefit from improved marketing opportunities and be exposed to price risks. We estimate the elasticity of farmgate prices to retail prices using price data for 170 markets, in 29 out of 33 provinces of China, at the detail of 12 main products and for the five-year period 1996 to 2000. In each province we find strong linkages between retail and farmgate prices with elasticities ranging between 0.6 and 1 and intensifying over time. This suggests that Chinese farmers are generally well connected to retail markets and that this connectivity has strengthened in the period considered, creating not only new opportunities but also new risks. It is also found that linkages are relatively weak in inland provinces, which is a point of concern in view of Chinese policies to create equal opportunities and equitable growth.     

How to Model a Child in School? A Dynamic Macrosimulation Study for Tanzania

Universal primary education is regarded as one of the key pillars of sustainable development. The positive influence of education on growth is supported by many empirical studies. However, the effects of education on labour supply, poverty reduction and welfare as well as subsistence agriculture are hardly traceable in an econometric set‐up, given the complex interactions and the long‐term nature of education. An economy‐wide dynamic simulation model provides a well‐suited toolkit to analyse the effects of increased school provision in these aspects and provides insights into the intertemporal aspects of the schooling decision of children. We develop a macroeconomic model that explicitly includes education and human capital allocation, and takes into account that the possibility of child labour increases the opportunity costs of human capital formation. In an application for Tanzania, we find that a large‐scale investment programme in education might have a negative effect on both gross domestic product (GDP) growth and high‐skilled labour supply in the short term but leads to higher GDP and welfare as well as significantly reduced child labour supply in the medium to long term.     

China: How to Fight the Antidumping War?

I. IntroductionSince the erection of WTO in 1995, "dumping" has become a major source of trade disputes among its member countries. The number of antidumping cases pending before various legal forums is climbing up rapidly. According to data on antidumping practice of 2002 released by the WTO Secretariat, 21 member countries initiated 330 antidumping investigations against exports from a total of 64 different countries or customs territories. Of the 330 investigations, there were 182 cases initiated by developed countries and therest of 148 were initiated by developing countries. China,     

A Global Shortage of Safe Assets: A New Triffin Dilemma?

A number of researchers have claimed that the international monetary and financial system faces a Triffin dilemma in a new fiscal form. In particular, there is said to be a dilemma between satisfying the world’s demand for safe assets and maintaining the solvency of the issuer of such safe assets. On one horn of the dilemma, global deflation threatens if highly creditworthy sovereigns like the U.S. Treasury do not satisfy emerging market demand. On the other horn, a loss of creditworthiness of the issuer threatens as its government debt to gross domestic product (GDP) ratio rises to satisfy fast-growing global demand. This article suggests that the analogy drawn with the original Triffin dilemma is not tight since the safe asset dilemma does not have a clear cross-over point into instability. This paper casts empirical doubt on the claim that such a dilemma exists. On the demand side, emerging market central banks have actually turned to selling safe assets in the last several years, as against forecasts for an ongoing precautionary accumulation. U.S. Treasury yields have actually risen above those on generic private instruments, the opposite of the predicted widening spread of risky over safe yields. On the supply side, a substantial fraction of U.S. dollar reserve assets is invested in instruments other than U.S. Treasury securities. Reserve managers find safe assets among obligations issued by supranationals, national agencies and even large banks, which enjoy varying degrees of governmental support. Thus, demand for safe assets looks less secular than cyclical and the supply of safe dollar assets does not depend solely on U.S. fiscal deficits.     

Cultural Operation： A New Way to Enterprise＇s Success

The enterprise operation system is large and complicated. The author, through years＇ research on corporate culture and practice in enterprise management, puts forward the idea of cultural operation that regards culture as an element of input and the theory of enterprise functional progression that investigates the internal coordinating degree of enterprise. The author also tries to analyze the cultural element by means of enterprise functional progression and discuss the layers and basic characters of enterprise operation system, and then, provides entrepreneurs with a completely new operation mode of enterprises.     

How should Central Banks Respond to Non-neutral Inflation Expectations?

This paper investigates the net real inflation effect on output in ten countries, comprising both advanced and developing countries. An indicator is introduced to compute the net inflation effect on output (NIEO) based on the difference between two concepts of core inflation, where both are computed using the decomposition of VAR residuals. We find that for all countries, when inflation is increasing the NIEO is significantly positive and is negative during periods of decreasing inflation. Typically, countries which follow anti-inflationary policies if the NIEO is of small magnitude suffer relatively minimal damage in output, whereas if the same policies are undertaken when the NIEO is large the damaging effects on output could be much greater. This suggests that the NIEO could be a useful indicator of the likely effects of policy, especially for countries which have frequent episodes of high inflation, and in those countries which employ inflation-targeting policy, as the timing of monetary policy actions could be optimized to take account of this real effect of inflation.     

How China's accession to the WTO affects global welfare?

Conventional wisdom suggests that, if a large nation reduces tariffs, the Rest of the World (RoW) as a whole should immediately experience gains from trade. However, little simulation evidence has been provided to evaluate the welfare effects of China's tariff reduction upon its WTO accession on each of its trade partners. This paper addresses the above issue under both the perfectly competitive model and the monopolistic competition framework à la Eaton and Kortum (2002) and Melitz (2003). Armed by the method of Dekle, Eaton, and Kortum (2007, 2008) to quantify the individual countries' responses to the “China (trade liberalization) shock” at equilibrium, we could check the extent to which global welfare benefit from the import tariff reduction after China's entry into the WTO. The quantitative results show that, both China and the RoW benefit from Chinese participation into the WTO, with estimated welfare gains falling in a range of [1.4697%, 3.8743%] and [0.0743%, 0.1015%], respectively. That is to say, about 58.24% of total benefits extracted from China's accession into the WTO worldwide flow to countries other than China under perfect competition; while under monopolistic competition, the whole world enjoys a 0.1571% welfare increases if firms' entry is restricted, of which 42.64% are injected into the RoW, an equivalent amount of 23.3903 billion US dollars. Since allowing for firms' entry and exit would lead to adjustments in both aggregate price indices and government tariff revenues, welfare gains of the world significantly increase (0.2474%), but these adjustments would slightly distort the welfare changes for other countries in the sense that only 36.50%, which is equivalent to 32.1008 billion US dollars, overflow to the RoW. As a result, some countries gain more, while some less.     

How responsive is Chinese export supply to market signals?

This paper studies the behavior of Chinese exporters from the mid-1980s through 2001. Extensive quarterly data on values and quantities of major export products have been taken from Chinese customs statistics to form a panel data set and aggregate export unit price and volume indices. The data are used to estimate export supply price elasticities, including by industry groups. The overall results indicate an increase in the responsiveness of export supply to market price signals in more recent periods following reforms.     

How Likely are Employers to Rehire Older Workers After Mandatory Retirement? A Vignette Study Among Managers

With a vignette experiment among Dutch managers we examine employers’ considerations in the decision to rehire employees after mandatory retirement. We specifically focus on the effects of the employee’s downward wage flexibility (i.e., the willingness to accept a lower wage) and contract flexibility (i.e., preference for a contract which allows flexible hours or employment). The results show that employers are strongly affected by employees who offer to work for a significantly lower wage, but not by the employees’ preference for a particular labor contract. Employers are overall quite disinclined to rehire employees after mandatory retirement, although large differences exist between employees. Part of these differences can be explained by employers having higher retirement age norms (i.e., the maximum age at which employers consider employees suited for work in their organization).     

When is the Price Cost Margin a Safe Way to Measure Changes in Competition?

The price cost margin (PCM) is a popular way to measure competition. Although we know that this measure is not without problems, we actually do not know how often and under which conditions a change in PCM points in the wrong direction. We use a new competition measure, the profit elasticity, which is more robust than PCM. Our empirical analysis based on Dutch data shows that when competition changes the probability that PCM points in the wrong direction increases with industry concentration.     

How Important is Improved Water Infrastructure to Microenterprises? Evidence from Uganda

Despite the proliferation of micro and small enterprises (MSEs) in sub-Saharan Africa (SSA), most have difficulty surviving, let alone expanding their operations. Using empirical evidence from two Ugandan towns we explore the impact of investments in water supply infrastructure on MSEs. Our findings suggest that, despite perceptions among firm owners that water supply is a binding constraint, economic benefits to MSEs of supply improvements may be limited. Current water infrastructure planning strategies may be based on erroneous assumptions about the relative demand for improved water supply by firms and households, as well as the feasibility of cross-subsidies between groups of users.     

How Quickly Do Firms Adjust to Optimal Levels of Tax Avoidance?

The trade‐off literature asserts that managers weigh the direct benefits of tax avoidance against the associated nontax costs. This literature implies each firm has a unique optimal level of tax avoidance that balances these costs and benefits. Our study is the first to document how quickly the average firm moves toward its optimal level of tax avoidance. We find that the typical firm converges toward its optimum at a rate that ranges from approximately 69 to 84 percent over a three‐year period, depending upon model specifications. Consistent with asymmetric levels of frictions across the tax avoidance distribution, we find the speed of adjustment is greater for firms below their optimal level of tax avoidance than for firms above. We perform additional cross‐sectional analyses to provide insight into some of the frictions that prevent firms from adjusting completely to their optimal level of tax avoidance. We generally find growth firms exhibit slower adjustment speeds and provide limited evidence that both multinational firms and income‐mobile firms exhibit faster adjustment speeds.     

How Sensitive are Individual Retirement Expectations to Raising the Retirement Age?

This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks.     

How does capital buffer affect bank risk-taking? New evidence from China using quantile regression

We present evidence of nonlinearity and heterogeneity relation between capital buffer and risk-taking for the Chinese banking system. We use quantile regression methods on a data set of 135 Chinese banks during 2004–2017. Our results suggest that bank capital buffer has a robust U-shaped association with bank risk-taking. This effect is more significant for banks that at the upper tail of risk-taking distribution. Moreover, we demonstrate for the first time that the turning point of capital buffer decreases throughout the risk-taking distribution. These findings offer important policy implications that continuously increasing bank capital requirement does not continuously lead to lower risk-taking, instead, requiring banks to build up too much capital buffer is more likely to result in greater risk-taking for high-risk banks.