The “Business Climate” and Economic Inequality

“Business climate indexes” characterize state economic policies, and are often used to try to influence economic policy debate. However, they are also useful in research as summaries of a large number of state policies that cannot be studied simultaneously. Prior research found that business climate indexes focused on productivity and quality of life do not predict economic growth, while indexes emphasizing taxes and costs of doing business indicate that low‐tax, low‐cost states have faster growth of employment, wages, and output. In this paper, we study the relationship between these two categories of business climate indexes and the promotion of equality or inequality. We do not find that the productivity/quality‐of‐life indexes predict more equitable outcomes, although some of the policies underlying them suggest they might. We do find, however, that the same tax‐and‐cost‐related indexes that are associated with higher economic growth are also associated with increases in inequality.     

Stock return, risk, and legal environment around the world

This paper investigates how the legal environment in a country influences performance and risk of stock across countries at different developmental stages and of various rules of jurisdiction. Using data of 4916 stocks from 37 countries, our empirical findings confirm that equities in countries with English common law origin have higher risk premiums than those in civil law countries, particularly for countries of the French/Spanish code. The indicators representing high efficiency in law system, low corruption, strong legal protection of investors' rights, and reliable political environment are associated with low risk and high performance. The various elements of legal procedural formalism, however, have differing effects on volatility and return.     

ON THE IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH: DOES COUNTRY RISK MATTER?

This study examines the nonlinear impacts of four country risk indices on the debt‐growth nexus for 61 countries in a panel data framework. Our results show evidence of the different debt‐growth nexus under the different degrees of country risk. Under a high‐risk environment, a country's economic growth is harmed by raising its public debt. The negative effects public debt has on economic growth become weak under low political and financial‐risk environments, while an increase in public debt could help to stimulate economic growth under low composite and economic risk environments. In addition, the differences of countries' income and debt levels also lead country risks to have different effects on the debt‐growth nexus, suggesting that a country should borrow appropriately based on its current risk environments while improving economic performance. (JEL C33, E02, H63, O43)     

中国现代法律文化建设之程序公正

法律文化现代化是中国法治建设的重要组成部分,现代法律文化建设受到诸方面因素的影响。程序公正以及与程序公正相关的法律制度在我国传统法律文化中不健全、不完善,是制约我国现代法律文化建设的主要因素之一。从而提出程序公正对建设现代法律文化的重要性,摒弃传统法律文化重实体轻程序的观念,不断完善程序公正理论,从而推动现代法律文化的建设和社会主义法治国家的全面实现。     

试论民营经济发展的刑事法制保障

目前,蓬勃发展的民营经济已成为社会主义市场经济的重要组成部分,但规范和保护民营经济发展的社会主义法制却比较滞后,其中刑事方面,立法和司法都存在着缺陷。为了保持民营经济持续、稳定、健康的发展,健全非公有制经济发展的法制环境,刑事法制的完善急需加强。     

关于低碳经济法律体系的研究

十八大报告中指出,中国应"着力推进绿色发展、循环发展、低碳发展"。在全球气候日益变暖、雾霾天气日益恶化的情况下,关于低碳经济法律体系的研究,有重要的现实意义。开发利用"低碳能源"、发展"低碳经济"、建设"低碳社会"是世界各国能源和经济的发展方向。我国建设低碳经济尚处在起步阶段,在促进低碳经济发展的政策法律体系方面仍处于薄弱的状态,在建设低碳经济过程中,我国应当构建一套完整的法律体系,以确保其健康发展。基于此,从低碳经济多角度对低碳经济法律体系的构建进行了论述。     

Institutional Economics as Theory of Policy Change: Impact of Past Policy Failures on Present Policy

Social scientists have developed several theories for understanding or evaluating policy change over time. Since all costs or benefits are not internalized owing to positive transaction costs, policymaking is always implemented under cost underestimation conditions and, therefore, is imperfect. I call this trait policy failure in this article. Furthermore, I show that a new framework combining the social costs approach and the legal/economic approach in institutional economics is suitable and can be applied to evaluating how past policy failures affect present policy, providing as an example the Fukushima nuclear disaster in Japan.     

EFFICIENCY EFFECTS OF CHANGES IN COMMONWEALTH GRANTS TO THE STATES: A CGE ANALYSIS*

This paper describes CSF, a general equilibrium model encompassing factors of relevance to economic efficiency in Federal/State funding including: interstate differences in tax bases and unit costs of State‐provided goods; factor mobility; congestion; State‐government behaviour incorporating the possibility that governments in subsidised States embark on expenditures with low benefit/cost ratios (flypaper effects); fiscal externalities; and non‐discretionary expenditures in each State associated with special national responsibilities. The model is applied to Australia where Federal/State funding is a major political and economic issue. Welfare effects of moving from the present Australian funding system based on fiscal equalisation to a system of equal‐per‐capita grants are calculated. CSF implies that the welfare gain from this move would be small. The most important source of potential welfare gain is a reduction in flypaper effects. The recognition of congestion externalities can eliminate the small welfare gain, but only under seemingly extreme assumptions. The results are not very sensitive to variations in assumptions concerning population mobility and fiscal externalities.     

Tax Havens,Growth, and Welfare

This paper develops an endogenous growth model featuring tax havens, and uses it to examine how the existence of tax havens affects the economic growth rate and social welfare in high‐tax countries. We show that the presence of tax havens generates two conflicting channels in determining the growth effect. First, the public investment effect states that tax havens may erode tax revenues and in turn decrease the government's infrastructure expenditure, thereby reducing growth. Second, the tax planning effect of tax havens reduces marginal cost of capital and hence encourages capital accumulation so as to spur economic growth. The overall growth effect is ambiguous and is determined by the extent of these two effects. The welfare analysis shows that tax havens are more likely to be welfare‐enhancing if the government expenditure share in production is low, or the initial income tax rate is high. Moreover, the welfare‐maximizing income tax rate is lower than the growth‐maximizing income tax rate if tax havens are present.     

X-efficiency and economies of scale in pension fund administration and investment

Pension funds’ operating costs impair pension benefits, so it is crucial for pension funds to operate at the lowest cost possible. In practice, we observe substantial differences in costs per member for Dutch pension funds, both across and within pension fund size classes. This article presents new estimates of scale economies of pension funds and is the first that also measures pension fund X-inefficiency. We use a unique supervisory data set which distinguishes between administrative and investment costs and apply various approaches and models. Our estimates show large economies of scale for pension fund administrations, but modest diseconomies of scale for investment activities. We also found that many pension funds have substantial X-inefficiencies for both administrative and investment activities. The two kinds of inefficiency differ across types of pension funds. Therefore, most pension funds should be able to improve their cost performance, and hence increase pension benefits.     

Costs of civil war and fragile states in Africa

This paper provides an analysis of the costs of conflict for the countries that are most affected by it, namely low‐income and fragile countries in Africa. It provides an analysis of the impact of conflict on economic growth using a panel of African countries and investigates the differences between those categorized as fragile and others. It finds that there are significant differences, with fragile countries most affected by conflict. It also considers the potential spillover effects of conflict and finds that fragile states also suffer more from conflicts within neighboring states. Finally, it considers whether the results are robust to endogeneity of the conflict variable. Using instrumental variable estimation confirms the negative effect of conflict and the larger effects on fragile states and gives even larger coefficient estimates.     

Engines of Growth in China: The Limits of Informal Institutions

Abstract:

Since the 1978 reforms, China has experienced rapid economic and social development. GDP growth has been in the double digits on average yearly, creating the fastest sustained economic growth recorded by a major economy in history. Not only did this transform the economy and society at large, China reached important milestones in terms of reducing poverty and creating prosperity in a short period of time. This article uses the conceptual framework of new institutional economics to examine China’s economic growth and how growth has been achieved largely by ‘informal institutions’ that are grounded in culture, customs, and private interactions that emerge spontaneously. The trajectory by which these informal institutions left their imprint on China’s complex economic landscape and how they can constrain future economic growth are also of central importance. After examining decentralization and risk management practices, property rights, and the legal system, we emphasize the importance of creating formal institutions necessary for long-term growth, most importantly innovation. Preliminary evidence shows total factor productivity is tapering off which may reflect the constraints of China’s institutional environment. This ought to be reversed if China is to enjoy long-term sustained growth.     

法制转型、不平等与中国的经济增长——1952-2003中国法院诉讼的实证研究

自1840年鸦片战争以来,法制现代化与经济现代化的转型,成了近代中国在寻求民族独立和国家富强过程中的主旋律.世界各国的发展经验表明,因政治、经济、文化、宗教、风俗惯例等因素的差异,法制转型与经济增长在世界各个地区之间的展开呈现出迥然不同的路径和特征.本文通过对1952-2003年间中国法院诉讼案与经济增长以及不平等诸变量之间实证关系的计量检验,认为:现代中国的法制转型,是一个生发于经济增长过程之中的由传统"人治"型模式向现代"法治"型模式转变的演化过程.经济的持续增长,以及伴随经济成长而致的个人素质的普遍提升,为外来移植的法律资源与本土自生的法律资源之间的融合提供了一个制度性的激励.同时,司法公正和收入不平等的变动,成了法制成功转型和经济持续成长的约束条件.文章的最后,笔者基于实证检验的结果给出了观察和预测法院诉讼案件数量变动的判断准则,并对政府政策的制定提出了有参考价值的意见.     

Adjustment Costs,Inventories and Output

This paper analyzes the optimal adjustment strategy of an inventory‐holding firm facing price‐ and quantity‐adjustment costs in an inflationary environment. The model nests both the original menu‐cost model that allows production to be costlessly adjusted, and the later model that includes price‐ and quantity‐adjustment costs, but rules out inventory holdings. It is shown that the firm's optimal adjustment strategy may involve stockouts. At low inflation rates, output is inversely related to the inflation rate, and the length of time demand is satisfied increases with the demand elasticity but decreases with the storage cost and the real interest rate.     

Recent developments in China's labor market: Labor shortage,rising wages and their implications

China's abundant supply of cheap labor has played an important role in its remarkable economic and social development. Recently, however, China has experienced a labor shortage and rising wages, implying that the country's long‐lasting competitive advantage based on its “unlimited” labor supply and low costs is vanishing. We find that structural demographic changes, regional economic growth disparities and the household registration system may have caused the labor shortage. Furthermore, China's continued low wages, relatively low labor share of gross national income, declining proportion of household consumption to GDP , and productivity improvements as well as increasing unit labor costs can be used to explain the recent wage increases. The dramatic development of its labor market signals that China is entering a new stage of economic development. The country's prior successful model of economic development needs to be adjusted to adapt to the new situation in its labor market to achieve sustainable economic development.     

International intellectual property rights protection and economic growth with costly transfer

This paper develops a product‐cycle model with costly technology transfer, which requires resources from both the North and the South. In the basic model, we show that strengthening intellectual property rights (IPR) protection induces a large technology transfer and narrows the North–South wage gap. However, we obtain an ambiguous result regarding the effect on economic growth, which depends crucially on the size of the transfer cost. Although strengthening IPR protection induces a high growth rate when the transfer cost is small, it can induce a low growth rate when the transfer cost is large. In the extended model, in order to examine what factors determine the transfer cost, we consider the situation where the Southern firms may misbehave and the Northern firms incur a cost to monitor them. We show that the degree of investor protection and the degree of morality in developing countries influence the size of the transfer cost, which affects economic growth.     

湖南“两型社会”建设中的法制问题与出路

法制是＂两型社会＂建设的制度安排和保障,是所有制度中最为重要、稳定且权威的制度。法制创新是实现可持续发展法制化的重要路径,也是＂两型社会＂建设过程中的应有之义。针对湖南当前所面临的立法供应不足、行政执法乏力、司法保护软弱以及法制文化落后等主要法制问题,文章明确了法制创新的基本路径,即：以现代法治理念为思想武装,发挥地方党委、人大和政府的主观能动性,强化和完善政府行政执法职能,加大司法改革力度,以期有效应对和解决这些问题,最终实现法制创新对＂两型社会＂的切实保障和积极促进。     

TIME, MONEY, AND OPTIMAL CRIMINAL PENALTIES

The economic approach to optimal criminal penalties measures the welfare effects of crime and punishment in dollar terms, ignoring differences in the marginal utility of money among people. This paper alternatively proposes using time as the unit of measure in determining optimal criminal penalties, measuring the costs and benefits of crime in hours or days instead of dollars. The policy implications differ substantially from those in the existing economic literature. Equal prison terms impose similar time costs on all individuals rather than being more costly for those with higher foregone earnings. Equal fines impose the same cost on all individuals in the dollar-based economic models but in a time-denominated system are costlier to those who require more time to earn the money to pay the fines. In principle, one can use either money or time in setting penalties. However, time-based penalties are more consistent with the fundamental and widely held principles of justice on which the U.S. legal system rests.     

China's Regional Trade and Domestic Market Integrations

The global economic crisis in 2007 forced China to move from export‐led growth to promoting domestic demand. The move is significant, but the success of this new growth strategy depends critically on the level of domestic market integrations. In this paper, we use the methodology proposed by Anderson and Wincoop to examine China's domestic market integrations. We find evidence of border effects at both national and regional levels with significant regional differences, but they are smaller than some earlier studies suggest. Income growth, lower transportation costs, and higher intra‐industry trade all have positive effects on China's regional trade. Among the factors affecting regional trade, a better business environment has the largest positive impact on lifting China's domestic trade between regions, especially in intermediate goods, suggesting that improving business environment should be the priority of government at all levels in China.     

Fiscal Competition and Growth When Capital Is Imperfectly Mobile*

Is tax competition good for economic growth? We address this question using a simple model of endogenous growth. Governments in a system of many small jurisdictions benevolently maximize the welfare of immobile residents. Quadratic (de‐)installation costs limit the mobility of capital. We look at optimal taxation and long‐run growth, and we analyse the effects of cost parameter variations on taxation and growth. A race to the bottom in capital tax rates is only one possibility; the relationship between capital mobility and capital tax rates is not monotonic. Growth and capital mobility are unambiguously positively related.