Price distortions and municipal bonds premiums:evidence from Switzerland

This study examines the pricing of municipal bonds before and after a currency shock in Switzerland.Two approaches are used to decompose the municipal to treasuries bond spreads into liquidity,maturity,and default risk premiums.The first approach is the model of the cross-sectional instrumental variables,and the second approach is the model of the instrumental variables with panel data.This study examines the composition of spreads for both approaches,in three scenarios:before,throughout,and after the currency shock.The study performed Durbin-Wu-Hausman tests for each decisive model to verify endogeneity issues,including the Lagrangian Multiplier test,the Cragg-Donald Wald F statistic to confirm the relationship of instrumental and endogenous variables,and the structural break test(Bai-Perron test)to determine the existence of structural breaks in bond distortions.This study finds that the currency price distortions of the Swiss franc in January 2015 made long-run changes in the composition of the municipal bond spreads.This research contributes to the understanding of municipal bond pricing by showing that default risk accounts for a large portion of the municipal bond spread,while maturity risk plays a lesser role.According to our empirical findings,unexpected large currency price shocks may have long-term implications on the municipal bond spreads.

Factor Price Distortion,Technological Innovation,and High-Quality Economic Development

The entropy method is used to measure the high-quality economic development levels of 30 provinces(autonomous regions,municipalities)in China from 2011 to 2020,and the impacts of factor price distortion,technological innovation,and their interaction terms on high-quality economic development are analyzed based on Tobit regression.The results show that highquality economic development of 30 provinces(autonomous regions,municipalities)in China is on the rise;factor price distortion has an inhibitory effect on high-quality economic development,while technological innovation has a promoting effect on high-quality economic development,and both of them have a lag effect;technological innovation level can help alleviate the negative impact of factor price distortion on high-quality economic development;and sub-regional research shows that the inhibitory effect of factor price distortion on highquality economic development in the east is significantly higher than that in the central and western regions,but the positive effect of technological innovation and the interaction terms between the two on high-quality economic development is significantly lower than that in the central and western regions.Accordingly,it is proposed to optimize top-level design for the two-wheel drive for high-quality economic development,strengthen the primary role of enterprises in innovation to promote high-quality economic development,and optimize the market-oriented allocation of factors to improve the efficiency of resource allocation.

The Threshold Effect of Factor Price Distortion on Technological Content of Exports:Evidence from China

Using panel data from 31 provinces in China,covering the period from 2003 to 2017,this article analyzes the threshold effect of factor price distortion on the technological content of exports.The results show that factor price distortion does not necessarily impede improvement in the quality of the technological content of exports.Instead,the adverse ejfect can be weakened when the value of per capita GDP is higher than RMB13,154 or the value of FDI goes beyond RMB480.9 billion.This is because a high regional economic development level alleviates the adverse effect of factor price distortion on the technological content of exports.Our results are robust when the dependent variable and sample years are changed.This article also addresses the endogeneity issue.We also consider the underlying mechanism through which factor price distortion affects the technological content of exports.

Technological anxiety:Analysis of the impact of industrial intelligence on employment in China

Employment is the greatest livelihood.Whether the impact of industrial robotics technology materialized in machines on employment in the digital age is an“icing on the cake”or“adding fuel to the fire”needs further study.This study aims to analyze the impact of the installation and application of industrial robots on labor demand in the context of the Chinese economy.First,from the theoretical logic and the economic development law,this study gives the prior judgment and research hypothesis that industrial intelligence will increase jobs.Then,based on the panel data of 269 cities in China from 2006 to 2021,we use the two-way fixed effect model,dynamic threshold model,and two-stage intermediary effect model.The objective is to investigate the impact of industrial intelligence on enterprise labor demand and its path mechanism.Results show that the overall effect of industrial intelligence on the labor force with the installation density index of industrial robots as the proxy variable is the“creation effect”.In other words,advanced digital technology has created additional jobs,and the overall supply of employment in the labor market has increased.The conclusion is still valid after the endogeneity identification and robustness test.In addition,the positive effect has a nonlinear effect on the network scale.When the installation density of industrial robots exceeds a particular threshold value,the division of labor continues to deepen under the combined action of the production efficiency and compensation effects,which will cause enterprises to increase labor demand further.Further research showed that industrial intelligence can increase employment by promoting synergistic agglomeration and improving labor price distortions.This study concludes that in the digital China era,the introduction and installation of industrial robots by enterprises can affect the optimal allocation of the labor market.This phenomenon has essential experience and reference significance for guiding industrial digitalization and intelligent transformation and promoting the high-quality development of people’s livelihood.

Signaling Product Quality by Price

This paper analyzes the role of price as a signal of the quality of a monopoly firm＇s new product. The quality of the goods is drawn from a continuum and is unknown to consumers. We establish a unique separating equilibrium using equilibrium characterization results for signaling games. The equilibrium price monotonically increases with quality levels and exceeds the complete-information monopoly price for all quality levels but the lowest one. However, the upward distortion decreases as the proportion of pre-informed consumers increases. These results extend both the signaling role of price and characteristics of the separating equilibrium as established in Bagwell and Riordan （1991）.

Rise and Fall of the First Financial Futures Market in China: The Case of Chinese Government Bond Futures

This paper studies the rise and fall of the first financial futures market in China. We compare the characteristics in the Chinese Government bond futures market with those in the US T-bond futures market. They differ in market design and structure, market governance, margin requirements, position limits, delivery process, and the way in which the settlement price is calculated. Furthermore, with a unique dataset, we show that prior to maturities of government bond futures, traders began to accumulate significant amounts of long positions for several selected contracts without the intention to offset, forcing short position holders to either purchase deliverable bonds or offset futures at highly inflated prices, causing higher market volatility and price disequilibrium in both spot and futures markets. Arbitrage opportunity arises and the market eventually collapses. The lessons learned from the suspension of the Chinese Government bond futures market offer an invaluable learning experience.