Abstract:Based on some“Chinese characteristics”such as capital account liberalization，reform of exchange settlement system，sterilized intervention and so on，this paper introduces international risk premium and builds a small open economy DSGE model to analyze the impact of capital account liberalization on economic fluctuations and welfare when interest rate parity does not hold. Theoretical analysis and numerical simulation show that: 1) The increase in deviation of Interest Rate Parity increases the inflation volatility，exacerbates the economic fluctuations，and decreases welfare. If the central bank ignores the impact of deviation of interest rate parity，the influence of foreign monetary policy shock on domestic inflation，economic fluctuations and welfare will be underestimated. 2) Capital account liberalization reduces the inflation volatility and economic fluctuations，and enhances social welfare. Therefore，China should insist on capital account liberalization，and interest rate and exchange rate marketization，which can reduce the international risk premium and further improve the payoff of capital account liberalization.

Abstract:Based on the pure exchange economic model of Lucas and the partial information assumptions，this paper investigates the effects of over-extrapolation belief biases that the representative agent exhibits in the learning process on the market equilibrium and asset prices. The conclusions show that even with a low coefficient of relative risk aversion，the over-extrapolation belief biases can not only reduce the risk-free rate，but also enhance the risk premium and return volatility of the risky asset. Therefore，this paper provides a unified theoretical framework that can simultaneously explain the equity premium puzzle，interest rate puzzle，and volatility puzzle.

Abstract:Against the background of hold huge foreign exchange reserves in China，based on the theory of the Agarwal model，an optimal scale analysis framework of foreign exchange reserve based on multi-level dynamic substitution is constructed to investigate the functional evolution of China’s foreign exchange reserve. The paper empirically investigates the correlation of factors affecting demand for foreign exchange reserves in emerging markets with the optimal scale of reserves，and measures the optimal scale and appropriate range of China’s foreign exchange reserves. The study shows that the theoretical size of foreign exchange reserves is determined by different levels of demand，and the optimal scale is based on the dynamic substitution effect. With the evolution of the function of foreign exchange reserves，foreign exchange reserves gradually change from meeting basic trading needs to meeting security and stability needs，which shows that foreign exchange reserves play an increasingly important role in maintaining financial security and stability. Imports，FDI，foreign debt，crossborder capital flows，interest rates and exchange rates have significant impacts on the scale of foreign exchange reserves，and there is significant heterogeneity in the demand for foreign exchange reserves among different types of countries，including BRICS，N-11 and Holders of high foreign exchange reserves. According to the simulation results，the optimal scale of China’s foreign exchange reserves is about USD 1 666. 9 billion，with a moderate range from USD 1 666. 9 billion to USD 2 358 billion. At present，China should give full play to the special role of foreign exchange reserves in maintaining financial security，preventing financial risks and ensuring national financial security.

Abstract:As the international economic environment becomes increasingly connected，to prevent the rapid cross-market spreading of tail financial risks has become an important issue for governments and academia. In this context，this paper uses the CAViaR model to accurately measure the tail risks of the stock market and exchange market in 45 major countries and regions around the world. At the same time，this paper discusses the reliability of nonlinear framework research from the perspective of institutional interval effect，and further investigates the cross-market contagion of tail risks. In addition，the paper takes the transnational contagion between United States and China as an example，to examine the gradual evolution of tail financial risk transmission between the stock market and the exchange market from the perspective of dynamic analysis. Finally，this paper quantifies the intensity of tail risk contagion in economies based on MVMQ-CAViaR models，and conducts cross-country and cross-market comparisons and research. On this basis，this paper puts forward some suggestions for strengthening the prevention system and supervision direction of China’s systemic financial risks. It will help us to improve the measurement of systemic risk，to resolve the spillover impact of tail risks in the international stock market and exchange market，and to provide a reference for theoretical analysis and empirical testing for preventing cross-market financial risks and maintaining financial stability.

Abstract:Recently the rapid accumulating of local government debt，among which municipal bonds are an important component，has attracted the authorities’great attention. This paper investigates the“local oligopolies”phenomenon in Chinese municipal bonds’underwriting markets and its economic consequences. The paper finds that，first，local relationship underwriting bonds demonstrate significant lower interest rates，and that there is no significant quality advantage in local relationship underwriting bonds when using post-issuance credit rating changes to capture bond quality. This indicates that local relationship underwriting in municipal bond markets has eroded the interests of investors. Second，using territorial jurisdiction and ownership to measure the local relationship intensity，these effects of local relational underwriting are found to increase with the relationship intensity. Third，local political uncertainty (capturing regional institutional environment change) effectively alleviates the conflicts of interest by curbing the local government’s intervention motivation and capability，while the 2015 regional government debt reform (reflecting period institutional environment change) exerts limited influence on these effects of local relational underwriting. Besides，local relationship underwriting is driven by local factors. This paper provides theoretical basis and empirical evidence for the authorities to evaluate the potential risk of local government debt and to accelerate the market-oriented reform in local government debt markets.

Abstract:The production decision-making of a Make-to-Order enterprise in which the demand is uncertainty is studied. Such enterprises frequently face a scenario that the customer’s product order demands varies unpredictably over time，while the set-up cost for producing a single batch of products is high，but enterprises can delay the delivery by paying some delay penalty. An appropriate production strategy to reduce the cost loss，i. e. ，the decision-making of when to produce which product under uncertain future order demand to optimize the total set-up production cost and delay penalty cost should be of crucial importance. Previous studies have generally assumed that demand information，including order arrival time and order size，fluctuates randomly. However，in reality，such information is often unpredictable and cannot be characterized by probability distribution. Therefore，this paper considers the optimal production decision-making in the case of unknown future order demand from the perspective of online theory. A corresponding mathematical model is constructed，and a competition strategy is designed. It is proved that there is a superior constant competition ratio. Numerical analysis further validates the effectiveness of the strategy.

Abstract:In order to reduce the marketing cost，some pharmaceutical firms outsource their marketing services to CSO (contract sales organization) . The pharmaceutical firm pays CSO based on sales volume to incentivize its non-contractible marketing effort. However，the sales volume is affected by the pricing decision of the pharmaceutical firm，which makes CSO face the moral hazard of increasing price by the pharmaceutical firm. In addition，the pharmaceutical marketing difficulty may be the private information of the CSO，which will lead to adverse selection. When the pharmaceutical firm outsources marketing business to multiple CSOs，the pricing decision of the pharmaceutical firm has a common impact on the sales volume of the CSOs as the sales price is the same in different markets. The incentive contract based on relative performance can filter out the common shock effect on the output of agents，thereby effectively motivating the agents. The different effectiveness between incentive contracts based on relative and absolute performance is compared. It is shown that the incentive contract based on relative performance dominates the contract based on absolute performance when the pharmaceutical marketing difficulty is symmetrical information. Moreover，the incentive contract based on relative performance can achieve the first-best marketing effort and profit. Further，neither incentive contract can obtain the first-best marketing effort and profit when the pharmaceutical marketing difficulty is asymmetrical information. The numerical analysis further shows that a higher market price sensitivity or a lower difference between the high-type and low-type pharmaceutical marketing difficulty is more beneficial to the incentive contract based on relative performance.