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Institutional Preferences, Social Preferences and Cooperation. Evidence from a Lab-in-the Field Experiment in Rural China

In this study, we examine institutional preferences, social preferences, and contribution in public goods games by conducting a lab-in-the-field experiment in rural China. Specifically, we examine whether people contribute differently depending on whether they are facing their preferred enforcement institution – punishment versus reward – and what factors are behind their institutional preferences.


Does Urbanization Increase Residential Energy Use? Evidence from the Chinese Residential Energy Consumption Survey 2012

China’s rapid urbanization and increasing energy use are accompanied by deteriorating environmental quality. Understanding the structure of energy use is necessary to address these environmental effects. We investigate how urbanization affects residential energy use, using data from the Chinese Residential Energy Consumption Survey 2012 (CRECS 2012) to compare the energy consumption of urban and rural households and identify the factors influencing the differences.


The Effects of Urban Rail Transit on Air Quality: New Evidence from Multiple Chinese Cities

Automobiles are a major contributor to pervasive urban air quality problems. Partly to reduce these air quality problems, China has invested heavily in urban subway systems. This paper provides the first comprehensive estimates of the effects of these investments on urban air quality. The analysis uses a unique data set that combines hourly air quality data, daily meteorological data, and characteristics of cities for all major subway projects between 2013 and 2014 in China.


How Costly are License Plate-Based Driving Restrictions? Contingent Valuation Evidence from Beijing

A common policy response to severe air pollution and traffic congestion in developing country megacities is to ban the driving of vehicles with license plates ending in certain numbers on certain days. We use the contingent valuation method to estimate the costs to drivers of Beijing’s driving restrictions program, one of the world’s largest. Our study generates three main findings.


The Shale Gas Boom in the US: Productivity Shocks and Price Responsiveness

The shale gas boom in the United States has been reforming the world energy market. The supply response of shale gas to productivity shocks and relative price changes, however, has not been adequately studied. We analyze the change in price responsiveness of shale gas drilling using well-level data covering all major producing reservoirs in the United States. Shale gas drilling becomes more responsive to energy prices after the major productivity shock in 2009.


Gender Differences in Willingness to Compete: The Role of Culture and Institutions

Our Beijing‐based laboratory experiment investigated gender differences in competitive choices across different birth‐cohorts experiencing – during their crucial developmental‐age – different institutions and social norms. To control for general time trends, we use Taipei counterpart subjects with identical original Confucian traditions. Our findings confirm that exposure to different institutions/norms during crucial developmental‐ages significantly changes individuals’ behaviour.


China's Sex Ratio and Crime: Behavioural Change or Financial Necessity

This paper uses survey and experimental data from prison inmates and comparable non-inmates to examine the drivers of rising criminality in China. We find that China’s high sex ratios are associated with greater risk-taking, greater impatience and greater neuroticism amongst males. These underlying behavioural impacts explain some part of the increase in criminality. The primary avenue through which the sex ratio increases crime, however, is the direct pressure on men to appear financially attractive in order


Livelihood mushroomed: Examining household level impacts of non-timber forest products (NTFPs) under new management regime in China's state forests

Finding alternative livelihood possibility for state worker households is crucial for the successful implementation of Natural Forest Protection Program (NFPP) in China's key state forest regions. One local innovation to implement NFPP while allowing worker households alternative use of forestland is the “Contract Management Responsibility System (CMRS)”. Under CMRS, participating households have exclusive rights to harvest and grow non-timber forest products (NTFP) while fulfilling forest protection responsibility.


Carbon Trading Scheme in the People’s Republic of China: Evaluating the Performance of Seven Pilot Projects

The People’s Republic of China (PRC) launched seven emissions trading scheme (ETS) pilot projects in 2013–2014 to explore a cost-effective approach for low-carbon development. The central government subsequently announced its plans for the full-fledged implementation of ETS in the entire PRC in late 2017. To ensure the success of ETS in the PRC, it is necessary to gain a better understanding of the experiences and lessons learned in the pilot projects.


Prospect Theory and Tenure Reform: Impacts on Forest Management

We examine the role of risk and time preferences in how forest owners respond to forest certification. We test hypotheses from a two-period harvest model derived from prospect theory in the context of Fujian, China, where new forest certification started in 2003. Using survey and field experiment data, we find that certification resulted in reduced harvesting, and the effect was larger for households who are more risk averse and exhibited distorted probability weighting.


Recency and projection biases in air quality valuation by Chinese residents

We combine survey responses to subjective well-being (SWB) questions with air pollution data to recover Chinese residents' valuation of air quality improvements. Motivated by theoretical models of ‘projection bias’ and ‘recency bias’, we posit that one's SWB (and valuation) is affected disproportionately by more recent experiences with air pollution, even though long-term air pollution is more detrimental to one's actual well-being.


The Spillover of Macroeconomic Uncertainty between the U.S. and China

We investigate the spillover of macroeconomic uncertainty between the U.S. and China since 2002. Following Jurado et al. (2015), we construct a monthly aggregate macroeconomic uncertainty index for China from 224 economic variables. The structural vector autoregression model suggests a unidirectional spillover of macroeconomic uncertainty from the U.S. to China. Both U.S. and Chinese uncertainty have negative effects on China’s real economy, but the impact of U.S. uncertainty is greater.


Stock Liquidity and Firm Value: Evidence from China

Empirical evidence for the effect of stock liquidity on firm value is limited and mixed due to a severe endogeneity problem. This article adds to the literature on this topic by providing new empirical evidence using the nontradable share reform in China as a quasi-natural experiment. Our results show that higher stock liquidity can lead to significant firm value improvement.


EfD China Annual Report 2017

The EfD China Report 2017 gives you an excellent overview of the centres´ achievements during 2017 ranging from interesting policy stories on how economic research is put to use around the world to collaborative research programs, a wide range of publications, and our academic capacity efforts. 


Temperature and Economic Performance of Chinese Manufacturing Firms

This paper uses year-to-year fluctuations in temperature within counties to identify its effects on economic outcomes of Chinese manufacturing firms. We find four primary results. First, profit exhibits nonlinear responses to temperature. Profit decreases with higher summer temperatures and increases with higher winter temperatures. With temperature bins as temperature variables, profit increases with temperature up to 12-15°C, and then declines at higher temperatures.


Are renewable energy policies climate friendly? The role of capacity constraints and market power

This paper studies the impacts of renewable energy support policies on energy prices, fossil fuel supply and thus carbon emissions from fossil fuels. Such supports are climate friendly if the renewables are already competitive against fossil fuels. But if the renewables are not yet competitive, the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure. If the renewables


China's second round of forest reforms: Observations for China and implications globally

This paper provides an overview of recent forest tenure reform in rural China and a summary of findings from a series of surveys and research papers. The research papers cover several broad themes, including the impacts of enhanced policy stability, expanded farmer household forestland holding, and longer contract periods as well as a richer bundle of tenure rights, on farmers willingness to invest in money terms and labor inputs in forestry activities.


Conservation Payments, Off-Farm Labor, and Ethnic Minorities: Participation and Impact of the Grain for Green Program in China

The Grain for Green program in China, a nationwide cropland set-aside program aimed at soil erosion prevention and poverty alleviation, was begun in 1999 and quickly expanded to 25 provinces, covering 32 million households. Its effects on participating households are well studied, but the role of ethnic characteristics is less well investigated. Given the overlap of areas covered by Grain for Green and areas inhabited by ethnic minorities, where development is a long-unresolved problem, it is important to determine how ethnic minorities react to, and benefit from, the Grain for Green program. This study investigates participation in the program by ethnic minorities and


Oil import tariff game for energy security: The case of China and India

This paper investigates the optimal quota/tariff polices for China and India, two of the biggest developing countries who are facing the threat of possible oil supply disruptions, with taking into their possible interactions in the common world oil market. Our results indicate that the smaller (oil-importing) country may have higher incentive to free ride on the quota/tariff policy of the larger country. Besides, the optimal tariffs for the two countries would be larger in the cooperative case than those in the non-cooperative case.


Meta-analysis of livelihood impacts of payments for environmental services programmes in developing countries

Payments for environmental services (PES) programmes have been widely promoted over the last few decades in many developing countries. Improving the livelihoods of environmental services (ES) suppliers is not only seen as a side benefit but is often considered a prerequisite for the viability of PES. Yet, the ability to draw ‘overview lessons’ over the impacts of PES on livelihoods from literature review studies remains limited.


The approximation bias of Gram-Charlier Expansion in dynamic higher moments modelling

The Gram-Charlier Expansion (GCE) of the Gaussian density under GARCH framework has been widely used to model the conditional dynamic higher moments. Compared with other generalized distributions, GARCH-GCE models describe the dynamic equations of conditional skewness and kurtosis in a more direct way. While GCE function is not always positive, it is often squared and normalized in empirical studies. However, little attention has been paid to the fact that the higher moments of squared-GCE function are different from the original GCE function.


Pricing the CBOE VIX Futures with the Heston–Nandi GARCH Model

We propose a closed-form pricing formula for the Chicago Board Options Exchange Volatility Index (CBOE VIX) futures based on the classic discrete-time Heston–Nandi GARCH model. The parameters are estimated using several sets of data, including the S&P 500 returns, the CBOE VIX, VIX futures prices and combinations of these data sources. Based on the resulting empirical pricing performances, we recommend the use of both VIX and VIX futures prices for a joint estimation of model parameters.


Collective forest tenure reform and household energy consumption: A case study in Yunnan Province, China

The recent Collective Forest Tenure Reform in China has started the process of devolving forest management rights from village collectives to households since 2003. In this paper, we study the impact of the reform on rural energy consumption. Devolving forest tenure improves farmers' access to forest products on their newly acquired forestland, and is therefore expected to increase farmers' fuelwood consumption. The reform also allows farmers to adopt some revenue-enhancing forest technologies which may lead to energy switching in farmer households.


The effect of subway expansions on vehicle congestion: Evidence from Beijing

Does public transportation reduce vehicle congestion? Using a regression-discontinuity framework, we examine the effect of six subway openings on short-run congestion in Beijing between 2009 and 2015. We find that vehicle congestion drops sharply immediately after new subway openings. In our central specification, each of the subway openings decreased delay times by an average of 15% in the short run over the city of Beijing.


Chinese Local Residents’ Attitudes toward Shale Gas Exploitation: The Role of Energy Poverty, Environmental Awareness, and Benefit and Risk Perceptions

This study investigates Chinese local residents’ attitudes toward shale gas exploitation through an interview of 730 local residents in two counties of Sichuan Province (Weiyuan County and Gong County) and explores the determinants of their support or opposition. It is the first study in China to explore local residents’ attitudes, and we comprehensively identify underlying factors accounting for such attitudes, including energy poverty, environmental awareness, and risk and benefit perceptions.


Households’ Risk Perceptions in Response to Shale Gas Exploitation: Evidence from China

In 2014, China became the world’s third country to realize shale gas commercial development, following the United States and Canada. So far, there has been a lack of comprehensive discussion on risk perception related to shale gas in China. This paper aims to understand Chinese residents’ risk perceptions toward shale gas exploitation. A survey was conducted with 730 interviewed participants in two counties of Sichuan province (Weiyuan County and Gong County).


Self-Enforcing International Environmental Agreements: The Role of Climate Tipping

International environmental agreements (IEAs) are considered an important way to increase the efficiency of emission abatement and climate change mitigation. This paper uses a game-theoretic model to investigate the effect of possible tipping events, which would bring catastrophic and irreversible damage to ecological systems and human societies, on individual countries’ emission decisions and on the scale of participation in IEAs that would maintain stability of the IEA.


Measurement of inequality using household energy consumption data in rural China

Measuring inequality can be challenging due to the limitations of using household income or expenditure data. Because actual energy consumption can be measured more easily and accurately and is relatively more stable, it may be a better measure of inequality. Here we use data on energy consumption for specific devices from a large nation-wide household survey (n = 3,404 rural households from 12 provinces) to assess inequality in rural China.


A Study of Forestry Policy Evolution and Development Tendency in China After the Reform and Opening-up

This study reviewed the forestry policy evolution in China as of the reform and opening-up, and concluded the three basic evolution tendencies in the forestry policies, i.e., 1) The Pareto improvement has become the core principle of policy adjustments; 2) The forest tenure owned by peasants has been expanded and strengthened in practices; 3) The forest protection is an essential part included in the forestry development strategy. Based on the review and analysis, the authors came up with the new thoughts on the future


Distance to Work in Beijing: Institutional Reform and Bargaining Power

In this study, we use a large sample from the Beijing Household Travel Survey to build husband-wife dyads, construct variables to measure bargaining power between spouses and place intra-household travel arrangements within a broader institutional framework to analyse relationships between institutions, bargaining power and travel patterns of married men and women. The empirical results reveal that bargaining power does matter in determining intra-household commute arrangements.


Building a Set of Internationally Comparable Value of Statistical Life Studies: Estimates of Chinese Willingness to Pay to Reduce Mortality Risk

This study is the eighth in a series of stated-preference studies designed to enhance the basis for international benefits transfer of value of statistical life (VSL) estimates. The series has fielded essentially similar stated-preference surveys in Canada, China, France, Italy, Japan, Mongolia, the United Kingdom, and the United States. This Chinese study estimates the willingness to pay for contemporaneous and future mortality risk reductions of residents of Shanghai, Jiujiang, and Nanning, China using a stated-preference payment-card survey.


Village democracy and household welfare: evidence from rural China

Village democratization in rural China is found to have profound impacts on many socio-economic aspects, but little is understood as to how welfare impacts may occur through farmers' principal production activities. This study helps to fill this gap by investigating how village democracy affects rural household welfare through these channels, using a unique household survey. The authors first establish a theoretical framework that links democracy to household welfare through changes in production efficiency.


Option Pricing with the Realized GARCH Model: An Analytical Approximation Approach

We derive a pricing formula for European options for the Realized GARCH framework based on an analytical approximation using an Edgeworth expansion for the density of cumulative return. Existing approximations in this context are based on a Gram–Charlier expansion while the proper Edgeworth expansion is more accurate. In relation to existing discrete-time option pricing models with realized volatility, our model is log-linear, non-affine, with a flexible leverage effect.


The impact of privatization on TFP: A quasi-experiment in China

Using the data of SOEs and Non-SOEs in industrial sector of China from 1998 to 2007, we investigate the impact of privatization on TFP. We construct a difference in difference model and use propensity score method to avoid the selection bias. We use the type of enterprises registration to identify the SOEs and define the privatization. The regress results show, privatization of SOEs can improve the efficiency of enterprises significantly. Some characteristics of firms will affect the effect of privatization.


Stock liquidity and firm value: evidence from China

Empirical evidence for the effect of stock liquidity on firm value is limited and mixed due to a severe endogeneity problem. This article adds to the literature on this topic by providing new empirical evidence using the nontradable share reform in China as a quasi-natural experiment. Our results show that higher stock liquidity can lead to significant firm value improvement.


Temperature and industrial output: Firm-level evidence from China

We pair a firm-level panel of annual industrial output with a fine-scale daily weather data set, to estimate the responses of industrial output to temperature changes in China. We have four primary findings. First, industrial output is nonlinear in temperature changes. With seasonal average temperatures as temperature variables, output responds positively to higher spring temperatures and negatively to elevated summer temperatures.


Risk perceptions in environmental social governance: A review of fifty years of studies

The essence of environmental social governance is the simultaneous involvement of individuals and organizations in multiple ways to manage environmental common affairs. Good governance requires the government to create an enabling context in its first place through institutional building and policy making. To create an enabling context requires a fundamental understanding on what people think about the environmental problems and what shapes such perception.


Job opportunities, institutions, and the jobs-housing spatial relationship: Case study of Beijing

In this paper, we use household travel survey data and employment establishment survey data collected in Beijing to empirically investigate the extent to which institutional arrangements influence the jobs-housing spatial relationship, and whether such arrangements interact with local job opportunities in shaping the jobs-housing relationship. Dynamic buffering is used to derive the number of job opportunities within specific distances of each home.


How do Payments for Environmental Services Affect Land Tenure? Theory and Evidence From China

Recent academic endeavours have questioned whether the rapidly unfolding Payments for Environmental Services (PES) may have profound influence on land tenure which would in turn impact the conservation efficacy of PES. This paper developed a game-theory model in the context of rural China, which describes the endogenous formation of land rights as a bargaining process between ordinary villagers and village leaders.


High Daytime and Nighttime Temperatures Exert Large and Opposing Impacts on Winter Wheat Yield in China

We analyzed a provincial-scale data set of observed winter wheat yield, together with fine-scale daily weather outcomes from 1979 to 2011, to assess the responses of winter wheat yield in China to changes in the daytime temperature (Tmax) and the nighttime temperature (Tmin). Contrasting with the literature’s emphasis on a negative correlation between Tmin and wheat yield, we showed that winter wheat yield in China responded positively to higher Tmin, with the positive yield responses varying across wheat growing seasons.


Impact of information feedback on residential electricity demand in China

This paper examines the relationship between information feedback and residential electricity consumption, based on a household survey dataset collected in 2012 that covered 26 provinces in China. The results show that information feedback is strongly associated with residential electricity consumption. Electricity consumption is statistically lower in households who obtain consumption information through interactions with meter readers, receive ex ante feedback (use a prepaid metering system), and receive explicit feedback by directly paying meter readers.


Strategic carbon taxation and energy pricing under the threat of climate tipping events

An appropriate design of climate mitigation policies such as carbon taxes may face a lot of challenges in reality, e.g., the strategic behavior of fossil fuel producers, and huge uncertainty surrounding the climate system. This paper investigated the effect of possible climate tipping events on optimal carbon taxation and energy pricing, taking into account the strategic behavior of energy consumers/producers and the uncertainty of tipping points through a stochastic dynamic game.