During transition, maintaining employment and providing a social safety net to the unemployed are important to social stability, which in turn is crucial for the productivity of the whole economy. Because independent institutions for social safety are lacking and firms with strong profit...

Consider an economy with a high risk and high return and a low risk and low return asset and risk-averse agents making intertemporal consumption and 'investment decisions. The agent will choose a savings rate to balance cur-rent and future consumption, and an investment portfolio to balance...

Local governments (LGs) are seen as producers of the local public good ('the good'). An authoritarian country is one in which the government decides if the good should be produced and how much to tax to finance it, as versus a democracy in which voters decide. This paper identifies conditions...

We construct an agency model in which the planner (agent) makes project starting and termination decisions on behalf of the state (principal) to reflect the practice of socialist economies. The model shows that asymmetric information between the state and the planner regarding the quality of...

China's economic performance of the past two decades presents a puzzle for the economics of transition and development: Enormous private business incentives were unleashed that have fueled rapid economic growth despite the fact that China has had very weak "conventional institutions" (such as...

Based on the survey of the literature on China's recent reform experience, this paper proposes to see China as a four sector economy under a semifederalist government. The four sectors are the agriculture, the state industry, the semistate rural industry and the private industry. The four...

We use a unique data set to study the implications of introducing managerial incentives and, in addition to incentives, better defined ownership for a firm's financial performance. The data set traces the ten-year history of 80 Chinese rural enterprises, known as township and village...

This paper uses a dynamic panel estimation method to investigate the determinants of regional specialization in China’s industries, paying particular attention to local protectionism. Less geographic concentration is found in industries where the past tax-plus-profit margins and the shares of...

This paper presents a model of the joint venture that is grounded in the stylized facts we found from a sample of 200 joint venture contracts. The model incorporates the revenue-sharing contract into the incomplete contract frameworks of Grossman-Hart-Moore Property Rights Theory and the...