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Professor Kjetil Storesletten Held Lectures in SEPKU

As one of the important academic activities during the celebration of the 105th anniversary of SEPKU, Mr. Kjetil Storesletten, Professor of the Department of Economics of the University of Oslo and Vice President of the European Economic Association, visited SEPKU and conducted academic exchange and lectures from Oct. 18 to 21. During the visit, Prof. Storesletten gave four lectures on hot issues such as China`s economic growth and regional convergence, the reform of China`s pension system, the business cycle of emerging economies, China`s R & D investment and performance. Associate Professor Qin Xuezheng, Assistant Dean of SEPKU, delivered a welcoming speech on behalf of Dean Sun Qixiang. Professor Ping Xinqiao and Chen Yi presided over the lectures. After the talk, Prof. Storesletten accepted an interview with a reporter from China Economic Weekly. On the morning of October 21, Professor Lin Yifu, alumnus of SEPKU and honorary president of National Institute of Development of Peking University, met with Professor Storesletten.

The theme of the first seminar was "Barriers to Entry and Regional Economic Growth in China". The development and expansion of non-state-owned enterprises are one of the main reasons for the economic growth in the process of China`s reform and opening up. The data shows that there are big differences in labor productivity, wages and firm size among regions in China`s non-state-owned enterprises. In the period of 1978-1995, the gap between regions in the performance of non-state-owned enterprises in China`s prefecture-level cities showed a widening trend. After 1995, the above-mentioned gap gradually narrowed and showed a tendency of convergence. The study further found that non-state-owned enterprises in different regions showed significant differences: state-owned enterprises accounted for more prefecture-level cities and non-state-owned prefecture-level cities with smaller scales, and the less non-state-owned enterprises entering the region would be new entrants. Non-state-owned enterprises also have lower wages, total factor productivity, labor productivity and per capital capital. The distortion of output and capital can not explain the above phenomenon successfully. Based on the Hopenhayn’s model, Prof. Storesletten built a new model which entry wedge was calibrated and used data from industrial surveys and found that: the regional differences in entry barriers and the rapid decline in entry barriers after 1995 can explain the changing trends in the regional disparity between non-SOEs` wages and TFP in 1995-2004 and 2004-2008.

The theme for the afternoon of Oct. 19th was "Sharing High Growth Across Generations: Pensions and Demographic Transition in China”. In recent years, the issue of inequality among generations has become a research hotspot. On the one hand, the issue of intergenerational inequality in emerging economies is even more prominent. On the other hand, the social security system including pensions can effectively improve this situation. However, with the acceleration of the aging process, the pension insurance system faces the risk of being unable to make ends meet, and whether the existing pension system in China needs reform and the direction of reform has caused heated and extensive discussions. The author used a multi-generational overlapping model model calibrated with China’s data to assess the welfare effects of different pension systems in emerging economies such as China. The conclusion of the model shows that the existing pension system in China needs to make adjustments, but the cost of postponing reform and adjustment by 2050 is the least. PAYGO is more effective in regulating intergenerational redistribution with 50% of the theoretical optimality given the higher expected wage increases and lower interest rates. Although it has the lowest tax burden under Fully Funded, it does not consider intergenerational redistribution. In the absence of effective savings and in the absence of a good investment path for pension funds, fully-paid and non-pensionable Gold is no different.

The theme for the morning of the 20th was "Fluctuating like China: Business Cycles during Structural Change”. By comparing the business cycle and the structural transformation between China and the United States, we can see that the two countries show different characteristic in four aspects. The first is that China does not have periodic characteristics in the aggregate employment fluctuations, while the United States has the procyclical characteristics. The second is that China and the United States both have a highly pro-cyclical nature of non-farm employment fluctuations. The third is that China has a counter-cyclical character in agricultural employment volatility and the United States does not have periodic characteristics. The fourth is that China showed a strong negative correlation, while the United States is zero correlation. Based on this empirical fact, the paper integrates the two theories of business cycle and structural transformation and calibrates with China`s structural transition data. It finds that the model can well fit the characteristics of China`s business cycle. The paper further predicts that with the growth of productivity, the characteristics of China`s business cycle will converge with that of the United States.

The theme for the afternoon of the 20th is "From Imitation to Innovation: Where is All that Chinese R & D Going”? This paper focuses on the issue of whether the allocation of R & D investment in China is valid and the extent to which efficiency loss will be caused by the mismatch in R & D investment. Based on the empirical findings of R & D investment in China and Taiwan of China, this paper combines the theories of technology convergence, resource mismatch, dynamic changes in firm productivity, R & D investment and policy analysis to construct a uniform resource mismatch theory with dynamic mechanism of endogenous productivity growth.

During the lecture, Professor Kjetil Storesletten conducted a lot of exchanges and interaction with the audience. The teachers and students participating in the lectures conducted in-depth and extensive exchanges and discussions on the model setting of Professor Storesletten`s lectures, data selection, and the explanatory power of the model to realistic problems. The series of lectures have achieved good results and effectively promoted Peking University`s international academic exchange and cooperation in the field of economics.

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