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Abstracts of Papers Published by the Faculty of Tsinghua Institute of Economics

The First Issue

[1]Cai Jiming. The Amalgamation of Marxian and New-classical Economics with the Formation of Mixed Economy [J]. Academic Monthly, 2015, 01: 62-75.
Abstract: Socialist and capitalist economic systems are seen as antagonistic, whether in Western capitalist countries or in China in the primary stage of socialism, such as public ownership economy vs. private ownership economy, planned economy vs. market economy and labor-based distribution vs. capital-based distribution, but tend to be integrated with each other and form “a mixed economy” with characteristics in common. The two economic ideological systems constituting the basis of traditional socialist and capitalist economic systems respectively, that is, Marxist economics and Neo-classical economics, were both influenced by Adam Smith’s theory of value, but separated due to different understandings. However, the two seem to lead to the same destination in view of their ultimate goals and common effects on economic transition in both socialist and capitalist countries, and the formation of a mixed economy. An amalgamation of the two economic ideological systems will need to evaluate Adam Smith’s theory of value, re-identify the essence and pertinence of classical theories of value, provide critical reference and absorption of reasonable elements of different theories of value and establish a general theory of value that contains traditional labor theory of value and overcomes the logical contradiction of neo-classical theory of value.

[2]Liu Taoxiong and Xu Xiaofei. Summary of Research on Big Data and Macro-economic Analysis [J]. Foreign Theoretical Trends, 2015, 01: 57-64.
Abstract: Big data is revolutionary to macro-economic analysis. In the big data era, as complex and complicated as it is, data is available in real time, resulting in fundamental social and economic changes. Big data is most actively and significantly applied in the following four areas of macro-economic analysis: macro-economic data mining, macro-economic forecast, macro-economic analysis techniques and macro-economic policy-making. The paper reviews sources of macro-economic data mining and methodology of macro-economic forecast in the context of big data and delves into how to use machine learning algorithms in macro-economic analysis with big data analysis techniques and solve the “curse of dimensionality” with the LASSO algorithm. The paper also studies the effects of big data on macro-economic policy-making and, based on this, provides policy suggestions on macro-economic analysis can use big data. The paper suggests that government should offer more support, establish a platform, build a macro-economic analysis model based on big data as early as possible and enhance professional education.

[3]Kuang Mei. The Development Pattern of East Asian FTA and China’s Strategic Choices [J]. Northeast Asia Forum, 2015, 01: 21-29+127.
Abstract: In the process of regional economic integration, East Asia FTA has been lagging behind Europe and North America. In recent years, unbalanced and multi-level patterns of FTA in East Asia further strengthened. China-Japan-Korea FTA negotiations progress slowly. RCEP competes with TPP. Bilateral FTAs are constantly emerging. Factors influencing the pattern of East Asia FTA include FTA economic benefits and the new geopolitics. To counter “re-globalization” and the accelerating multi-polarization trend in the post-financial crisis and post-Cold War era, China should strengthen coordination of FTA and security strategy; promote the integration of East Asia FTA on the basis of positive interaction of economic cooperation and regional security.

[4]Liu T, Zhou B. Defense Strategy Transition and Economic Growth Under External Predation [J]. Defence and Peace Economics, 2015, 26(3): 289-309.
Abstract: This paper develops a growth model for a country in a Hobbesian environment with international conflicts where national defense is the only way to prevent external predation. Different defense strategies result in different growth paths. The long-run growth path is determined by the equilibrium of a dynamic game with three players: the external predator, the government, and the family. The equilibrium growth path can have different phases: submissive equilibrium, tolerant equilibrium, and complete protection equilibrium. Sustainable growth will endogenously induce an adjustment of the defense strategies. As the economy keeps growing, complete protection will eventually be preferred. The optimal growth path prefers to compress the length of the transitional period between incomplete protection and complete protection. Some interesting features of the transitional dynamics are exhibited by a control model with discontinuity.

[5]Cai Jiming. Debate on the Current Land System Reform [J]. Journal of Hebei University of Economic and Business, 2015, 02:1-5.
Abstract: The market must play a decisive role in the allocation of land resources, and the government should respect the market rules and interests of owners’ land property rights and play a supporting role by making scientific and reasonable planning and equal use control policies. The Constitution stipulates the antinomy of state-owned urban land system and land expropriation for public welfare. In land systems, the fundamental principle is that any unit must apply to use state-owned land for construction purposes and collective land can only be transferred after it becomes state-owned construction land upon expropriation. With respect to rural collective profitable land, China should adjust the structure of rural collective construction land timely and carry out dynamic management of profitable construction land, so that land resources can be reasonably and effectively allocated. China should also establish a mechanism of paid homestead withdrawal for farmers settled in cities and should not force migrant workers eligible for public rental housing to waive their right to use rural homestead without compensation. The paper suggests changing the policy of linking the increase in land used for urban construction with the decrease in land used for rural construction in the past and allowing transfer of rural collective construction land indexes between farmers (in the collective) based on the idea of market integration of urban and rural construction land. Additionally, the current land management law clearly shows discrimination against rural collective land ownership, so relevant provisions should be revised.

[6]Liu T, Huang M. Land Supply and Money Growth in China [J]. 10,March 2015. Online at http://mpra.ub.uni-muenchen.de/62781/ MPRA Paper No. 62781, posted UNSPECIFIED
Abstract: China has experienced several episodes of inflation in recent years. Popular arguments attribute these episodes to relatively high growth rates of money, which were then primarily explained by China’s accumulation of foreign exchange reserves and the undervaluation of RMB. We attempt to explain China’s high monetary growth rates through the supply of land. Under China’s land system, the supply of land is controlled by the government and can be viewed as exogenous to the monetary system. An increase in the money supply stimulates bank loans and thereby monetary growth. Both an error correction model and a simultaneous equations model are developed to explore the effect of the land supply on monetary growth. The empirical results show that the effect of the land supply on the money supply is significantly positive and even exceeds that of foreign exchange reserves. The significance for monetary policy is that, under China’s existing political economy, both the central bank and local governments should be responsible for monetary policy and price levels.
 [7]Cai Jiming. Non-agricultural Land Rent Is Not Determined or Adjusted by Agricultural Rent: Evaluation of a Doctrine of Classical Land Rent Theory [J]. Contemporary Economic Research, 2015, 06: 42-47.
Abstract: That “non-agricultural land rent is adjusted by agricultural land rent” has been a popular viewpoint among Marxist economists ever since Adam Smith. However, a comprehensive analysis and presentation of theories of land rent in industry, agriculture, commerce, mining, banking industry and building industry shows that it is difficult to tell which one plays a determining and adjusting role as non-agricultural and agricultural land rents have their own features in respect of the source of value, regulation of quantity and realization mechanisms. That “non-agricultural land rent is adjusted by agricultural rent” is actually a doctrine of classical land rent theory, which has no theoretical or factual basis.

[8]Dempster M A H, Medova E, Tang K. Latent Jump Diffusion Factor Estimation for Commodity Futures [J]. Available at SSRN 2637567, 2015.
Abstract: We introduce a new methodology to estimate the latent factors of a multivariate jump diffusion process illustrated with an application to the commodity futures term structure. Specifically, we propose a new state space form and then use a modified Kalman filter to estimate models with latent jump-diffusion factors. The method is applied to prices of oil and copper futures to pin down long and short term jumps in their futures term structure. Estimates of jump arrival times indicate that both important information surprises and market activities generate jumps of different intensities.

[9]Wang Shengsheng. The Structural Shake of World System Is the Realistic Routine for the Developed Capitalism to Overcome Crisis. China Review of Political Economy, 2014, 10
Abstract: The current crisis is the result of capitalist contradictions, which have accumulated since the 1970s. The overaccumulation of capital has two successive consequences: the global overproduction and Ponzi virtual accumulation of financial capital. The overaccumulation problem is the core content of the crisis and how to solve it is the key to overcome the crisis. However, main capitalist countries have done nothing to solve the problem and the two consequences remain major obstacles to economic recovery. Given this background, the practical solution to the crisis relies on structural change and turbulence, namely, transferring the crisis from the core to periphery countries. To eliminate excess capital, core countries achieve transfers in three ways: launching a financial war to cause wild fluctuations in monetary capital value in peripheral countries, launching an oil war to interrupt the circulation of industrial capital in peripheral countries and launching political and military attacks to destroy external conditions for total social capital movements in peripheral countries.

[10] Wang Shengsheng. Breaking the Myth of Neo-classical Economic Efficiency—Methodological Criticism of “Economic Surplus” Paradigm. Teaching and Research, 2013, 10
Abstract: Measuring the efficiency of a market economy with combined consumer and producer surplus is the basic paradigm of neo-classical economics. According to this paradigm, the spontaneous market equilibrium is a combination of optimal efficiency and interest harmony. The aim of economic theories and policies is to promote the real economy towards the ideal state. However, the “economic surplus” paradigm relies on four methodology principles with historical limitations: methodological individualism, formal logic reasoning, harmony and equilibrium analysis and absolute immunity of theory testing. The “economic surplus” paradigm does not help evaluation of the real efficiency of the capitalist market economy. Its real function is to provide justification for the rationality of capitalism and it is apparently capitalist.

[11] Wang Shengsheng. The Theory of Wage in Marxist Economics. China Review of Political Economy, 2007, 9
Abstract: In Western mainstream economics, wage determination is analyzed through creating labor supply and demand functions and followed by analysis of game behaviors of the buyer and the seller. As the analysis is limited to exchange behaviors irrespective of capitalist characteristics of such exchange behaviors, historical essential rules regarding wage changes are disregarded. The wage theory in Marxist economics emphasizes understanding wage changes in capitalist modes of production. In this case, the wage is in essence a distorted form of labor value though it is seemingly the transaction price in the labor market. The truth underlying such a seemingly equal form is exploitation of labor by capital and the contradiction between labor value and surplus value. From the dynamic perspective of technical progress, the long-term equilibrium on labor market is not achieved through price adjustment, nor does employment vary with wages; on the contrary, the trend of an increase in technology composition of capital causes endogenous unemployment, which in turn imposes significant pressure on wage levels and leads to increases in the rate of surplus value. The realistic trend of wage growth falling behind profit growth causes antagonistic contradictions between accumulation and consumption, and attempts of the capitalist macro economy breaking the equilibrium. From the longer-term historical perspective, the realistic form of progress in productivity promoting adjustments to the capitalist mode of production, which combines physical capital with living labor, is “revolutionary”, indicating an optimistic prospect of relative wage changes.