We construct an agency model in which the planner (agent) makes project starting and termination decisions on behalf of the state (principal) to reflect the practice of socialist economies. The model shows that asymmetric information between the state and the planner regarding the quality of...

During transition, maintaining employment and providing a social safety net to the unemployed are important to social stability, which in turn is crucial for the productivity of the whole economy. Because independent institutions for social safety are lacking and firms with strong profit...

Consider an economy with a high risk and high return and a low risk and low return asset and risk-averse agents making intertemporal consumption and investment decisions. The agent will choose a savings rate to balance current and future consumptions, and an investment portfolio to balance...

Consider an economy with a high risk and high return and a low risk and low return asset and risk-averse agents making intertemporal consumption and investment decisions. The agent will choose a savings rate to balance current and future consumptions, and an investment portfolio to balance...

Based on the survey of the literature on China's recent reform experience, this paper proposes to see China as a four sector economy under a semifederalist government. The four sectors are the agriculture, the state industry, the semistate rural industry and the private industry. The four...

Consider an economy with a high risk and high return and a low risk and low return asset and risk-averse agents making intertemporal consumption and 'investment decisions. The agent will choose a savings rate to balance cur-rent and future consumption, and an investment portfolio to balance...

During transition, maintaining employment and providing a social safety net for the unemployed are important to social stability, which in turn is crucial for the productivity of the whole economy. Because independent institutions for social safety are lacking and firms with strong profit...

This paper studies the soft budget constraint problem in a principal-agent model. The agent screens projects of and makes initial investment in the projects that have passed the screening. He then finds the types of the funded projects and decides to close some of the ex post inefficient ones...

An equilibrium model of labor contracts under asymmetric information is developed. A profit-maximizing firm offers a wage but retains the right to lay off the worker based on its private observation of the worker's productivity ex post. The worker invests in specific human capital, unobservable...

China's economic performance of the past two decades presents a puzzle for the economics of transition and development: Enormous private business incentives were unleashed that have fueled rapid economic growth despite the fact that China has had very weak "conventional institutions" (such as...