no arbitrage bounds for financial scenarios abstract we derive no arbitrage bounds for expected excess returns to generate scenarios used in financial applications the bounds allow to distinguish three regions one where arbitrage opportunities will never exist a second where arbitrage may be present and a third where arbitrage opportunities will always exist no arbitrage bounds are derived in closed form for a given covariance matrix using the least possible number of scenarios empirical examples illustrate the practical potential of knowing these bounds

nash equilibria in models of fiscal competition abstract this paper analyzes nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition small number nash equilibria in which tax rates are the strategic variables are shown not to coincide with nash equilibria in which public expenditure levels are the strategic variables

insecure property rights and government ownership of firms we develop a theory of the ownership of firms in an environment without secure property rights against state encroachment private ownership leads to excessive revenue hiding and state ownership i e national government ownership fails to provide incentives for managers and local governments in a credible way because local government ownership integrates local government activities and business activities local government may better serve the interests of the national government and thus local government ownership may credibly limit state predation increase local public goods provision and reduce costly revenue hiding we use our theory to interpret the relative success of local government owned firms during china s transition to a market economy

dilemmas of local governance under the development zone fever in china a case study of the suzhou region this article aims to explore the mechanisms of the development zone fever in the suzhou region located in the fast growing yangtze river delta and investigates from an institutional perspective the practice of relevant intragovernmental governance in the context of rapid industrialisation since the 1990s a specific mode of governance the evaluative economic indicators scheme inherited from the earlier socialist planning system combined with the party state s promotion evaluation system plays an essential role in this transformation of farmland property rights however this model of development is not necessarily helpful for local financial conditions and it results in the disclacement of peasants and the loss of land resources based on the resulting dilemmas of governance it is argued that in addition to the economic paradigm which focuses on consequences of fiscal reforms and devolution scholars should pay more attention to factors such as the party state s promotion evaluation system and

a model based on stochastic dynamic programming for determining china s optimal strategic petroleum reserve policy china s strategic petroleum reserve spr is currently being prepared but how large the optimal stockpile size for china should be what the best acquisition strategies are how to release the reserve if a disruption occurs and other related issues still need to be studied in detail in this paper we develop a stochastic dynamic programming model based on a total potential cost function of establishing sprs to evaluate the optimal spr policy for china using this model empirical results are presented for the optimal size of china s spr and the best acquisition and drawdown strategies for a few specific cases the results show that with comprehensive consideration the optimal spr size for china is around 320 million barrels this size is equivalent to about 90 days of net oil import amount in 2006 and should be reached in the year 2017 three years earlier than the national goal which implies that the need for china to fill the spr is probably more pressing the best stockpile release action in a disruption is related to the disruption levels and expected continuation probabilities the information provided by the results will be useful for decision makers

redefining rural collectives in china land conversion and the emergence of rural shareholding co operatives as land conversion has led inevitably to socioeconomic dislocations in china a variety of bottom up reforms have been designed to mitigate and contain the resultant conflicts this evolves the cre

eco city development in china addressing the policy implementation challenge over the last few decades china has seen a steep rise in diverse eco city and low carbon city policies recently attention has begun to focus on the perceived shortcomings in the practical delivery of related initiatives with several publications suggesting a gap between ambitious policy goals and the emerging realities of the newly built environment to probe this further in this article we examine based on the policy network approach how the gap between high level national policies and local practice implementation can be explained in the current chinese context we develop a four pronged typology of eco city projects based on differential involvement of key policy actor groups followed by a mapping of what are salient policy network relations among these actors in each type our analysis suggests that within the overall framework of national policy a core axis in the network relations is that between local government and land developers in some cases central government agencies often with buy in from international architecture engineering and consulting firms seek to influence local government planning through various incentives aimed at rendering sustainability a serious consideration however this is mostly done in a top down manner which overemphasizes a rational technocratic planning mode while underemphasizing interrelationships among actors this makes the emergence of a substantial implementation gap in eco city practice an almost predictable outcome consequently we argue that special attention be paid in particular to the close interdependency between the interests of local government actors and those of land and real estate developers factoring in this aspect of the policy network is essential if eco city implementation is to gain proper traction on the ground

when fiscal recentralisation meets urban reforms prefectural land finance and its association with access to housing in urban china by retrieving household level information from 127 938 household heads and fiscal data from 177 prefectures located in eastern and central china this research quantifies the net association between land finance and urban housing tenure while the results demonstrate that in 2005 china s urban housing market remained stratified and simultaneously favoured individuals possessing economic political and human capital the key finding is that net of other household and prefecture level effects land finance is significantly and negatively associated with local homeownership moreover both the demand and supply sides of the urban housing market contribute to such net association by demonstrating the internal links between urban housing and local finance this research not only provides a more holistic view of housing stratification during institutional changes but also lends empirical support to conceptual frameworks that explain a territory based coalition between local governments and selective enterprises

land use change and economic growth in urban china a structural equation analysis land use change is not only the consequence of economic growth but also its direct and indirect driver based on official land use change data from 2004 to 2008 this study found substantial land use changes in china with considerable cultivated land conversion into urban industrial and transportation purposes correlation analysis shows a strong association between land use change and absolute gdp expansion structural equation analysis indicates that economic growth drives land use change industrial land expansion directly stimulates economic growth land has been successfully used as a tool to attract foreign investments and to sustain infrastructure investments indirectly triggering economic growth the findings suggest that land is not a simple factor of production but a strategic tool for economic development in urban china

regional decentralization and fiscal incentives federalism chinese style abstract aligning the interests of local governments with market development is an important issue for developing and transition economies using a panel data set from china we investigate the relationship between provincial government s fiscal incentives and provincial market development we report three empirical findings first we find that during the period of fiscal contracting system the discrepancy between ex ante contracts and ex post implementation was relatively small suggesting that the fiscal contracts were credible second we find a much higher correlation about four times between the provincial government s budgetary revenue and its expenditure during 1980s and 1990s as compared to 1970s demonstrating that provincial governments faced much stronger ex post fiscal incentives after reform third we find that stronger ex ante fiscal incentives measured by the contractual marginal retention rate of the provincial government in its budgetary revenue are associated with faster development of the non state sector as well as more reforms in the state sector in the provincial economy this holds even when we control for the conventional measure of fiscal decentralization finally we compare federalism chinese style to federalism russian style

industrial capitalisation and spatial transformation in chinese cities strategic repositioning state owned enterprise capitalisation and the reproduction of urban space in beijing this study examines the urbanisation of capital in the context of a socialist economy undergoing profound market transition it identifies the dynamics of state capital as a missing link in understanding the variegated forces shaping chinese cities through a case study of beijing china s capital city contrary to the popular perception of the rolling back of state owned enterprises soes as a natural outcome of capital switching from a declining primary circuit to a booming secondary circuit this empirical study of urban transformation in the beijing metropolis identifies an intriguing trajectory of capitalisation without privatisation whereby the commodification of the land and housing market has been accompanied by a growing share of capital assets under the ownership control of soes and a spatial concentration of state capital toward the city centre since the turn of the new century the development experience centred on the capitalisation of soes is shown to be reflective of the new strategic

federalism as a commitment to reserving market incentives the authors advance a new perspective in the study of federalism their approach views federalism as a governance solution of the state to credibly preserving market incentives market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures the salient features of federalism decentralization of information and authority and interjurisdictional competition help provide credible commitment or these purposes in addition the authors suggest that some federalism are self sustaining

land leasing and local public finance in china s regional development evidence from prefecture level cities by analysing the evolution of local governments roles in different periods of china s growth in transition this paper explores local fiscal incentives to use subsidised land and infrastructure as key instruments in regional competition for manufacturing investment since the mid 1990s local land development behaviour is related to china s current land use institutions and intergovernmental arrangements on the basis of panel data covering prefectural level cities from 1999 to 2003 the paper empirically identifies and compares the fiscal impacts of different forms of land leasing by negotiation versus by auction tender policy implications are drawn from this analysis for the further reform of china s urban land system and fiscal institutions

joint liability lending and the rise and fall of china s township and village enterprises abstract we present a new explanation for the rise and fall of collectively owned enterprises based on the changing lending preferences of banks until the mid 1990s bank loans to collective firms exhibited the key features of joint liability lending supported by the sanctioning ability of local government leaders however subsequent changes in collateral firm performance interest rates and financial competition led banks to prefer individual lending to private firms this explanation is supported by empirical analysis of the determinants of bank lending preferences the involvement of township leaders in lending and the ability of firms to obtain loans

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

politicians decision making with re election concerns abstract we study the impact of elected officials re election concerns on their decisions on whether to undertake new projects the value of a project to a jurisdiction depends in part on its elected official s uncertain ability at providing some public goods our main result is that the elected official s willingness to pay for the project differs from voters willingness to pay if the incumbent official expects to lose win the election then she is willing to pay more less than the project s total value to voters we show how our analysis can be applied to bidding wars among jurisdictions for firms

did government decentralization cause china s economic miracle many scholars attribute china s market reforms and the remarkable economic performance they have fostered in part to the country s political and fiscal decentralization political decentralization is said to have stimulated local policy experiments and restrained predatory central interventions fiscal decentralization is thought to have motivated local officials to promote development and harden enterprises budget constraints the locally diversified structure of the prereform economy is said to have facilitated liberalization reexamining these arguments the authors find that none establishes a convincing link between political or fiscal decentralization and china s successes they suggest an alternative view of the reform process in which growth enhancing policies emerged from competition between promarket and conservative factions in beijing

from hong kong s capitalist fundamentals to singapore s authoritarian governance the policy mobility of neo liberalising shenzhen china shenzhen special economic zone sez has been the flagship labouratory of deng xiaoping s reform and open door policy and the forerunner of china s capitalist transformation the initiation of the shenzhen sez was driven by the imperative of political and economic survival along the state hierarchy and was informed by the international practices of export processing zones epzs shenzhen s capitalist fundamentals such as the commodification of land and labour were largely established through imitating its big master hong kong across the border however shenzhen s policy learning style has gradually shifted from laissez faire hong kong to authoritarian singapore propelled by the aspiration shared among policy making party elites across china s administrative hierarchy of perpetuating the single party rule theoretically this paper demonstrates how policy mobility is shaped path dependently by the pre structured institutional ideological regime in what ways the idiosyncratic geographical historic

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

strategic interaction in local governments industrial land supply evidence from china land is an important tool for local governments to attract investments and promote local economic growth in china based on panel data of chinese prefecture level cities from 2003 to 2012 this paper employs spatial panel data models to examine the strategic interaction among local governments in industrial land supply and to indentify its possible sources the empirical results show that there exists strategic interaction among local governments in industrial land leasing price local governments industrial land leasing price is significantly impacted by the action of neighbouring cities they mimic each other in terms of industrial land leasing price to attract outside investments empirical evidence reveals that the strategic interaction comes from both yardstick competition and resource flow effects local governments react more to their neighbours industrial land leasing price during political cycle periods

developing by borrowing inter jurisdictional competition land finance and local debt accumulation in china although the investment oriented development model for economic growth adopted by chinese governments has generated spectacular results the risks of debt financed urbanisation and economic development have recently become evident in mounting local debts that are undermining the financial system triggering concerns with respect to local governments indebtedness financial stability and sovereign risk in china in this paper we portray the uneven spatial and temporal dynamics of local government debt in china and examine the ways in which it is intertwined with institutional political and economic factors our analysis shows that while global and national economic conditions have resulted in a dramatic increase in local government debt particularly in the late 2000s and the early 2010s the spatial variation of local debt accumulation in china could be partly explained by two institutional factors land finance and inter jurisdictional competition we argue that the behaviour of local governments may

emerging spaces of neoliberal urbanism in china land commodification municipal finance and local economic growth in prefecture level cities this study examines the popular practices of chinese urbanism in which commodification of urban land has been actively pursued by municipal governments as a means of revenue generation in the era of neoliberalisation the research identifies a complex diverse and self conflicting internal dynamics that characterised the chinese state reveals the political and financial motives of local governments to engage in urbanism and maps out the emerging geography of neoliberal urbanism land commodification has become a main source of municipal finance accounting for over 30 of total municipal budgetary revenue and nearly 40 of the fund for urban maintenance and construction an inverse u shaped relationship is found between the importance of land commodification to municipal finance and the level of urban economic growth a similar relationship is identified for land based municipal finance and degree of openness

housing price fluctuations and financial risk transmission a spatial economic model financial risk derived from housing price fluctuations in china garnered much public concern recently based on the theoretical analyses of the transmission of financial risk from housing price flu

federalism chinese style the political basis for economic success in china china s remarkable economic success rests on a foundation of political reform providing a considerable degree of credible commitment to markets this reform reflects a special type of institutionalized decentralization that the authors call federalism chinese style this form of decentralization has three consequences first it fosters competition not only in product markets but also among local governments for labor and foreign capital this competition in turn encourages local government experimentation and learning with new forms of enterprises regulation and economic relationships second it provides incentives for local governments to promote local economic prosperity finally it provides a significant amount of protection to local governments and their enterprises from political intrusion by the central government

comment on generating scenario trees for multistage decision problems in models of decision making under uncertainty one typically has to approximate the uncertainties by a limited number of discrete outcomes ha yland and wallace 2001 formulate a nonlinear programming problem to generate sucha limited number of discrete outcomes while satisfying specified statistical properties they have developed and employed this method for a stochastic multistage asset allocation problem when the method is applied to such financial optimization problems under uncertainty we argue here that it does not suffice to match statistical properties to obtain realistic outcomes the limited description of the uncertainty in such models should also exclude arbitrage opportunities and thereby be consistent with financial asset pricing theory we illustrate that the method proposed by ha yland and wallace can result in arbitrage opportunities in the scenario tree if only statistical properties are imposed we show how one can check ex post for the presence of arbitrage opportunities in a scenario tree by checking for the existence of solutions to sets of linear equations arbitrage opportunities can also be precluded ex ante in the scenario tree by adding constraints to the nonlinear programming problem of ha yland and wallace

fiscal competition and the pattern of public spending much attention has been given to the impact of fiscal competition on the level of public expenditure but relatively little to the impact on its composition using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital this paper establishes a systematic bias in public spending patterns starting from the non cooperative equilibrium and holding tax rates constant welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers c 1997 elsevier science s a