26th CCSEZR Academic Salon for Ph.D. Students in Theoretical Economics: Appointment Ceremony of Mr. Liu Wei As Visiting Professor and Academic Report
On October 26, 2016, the 6th (26th in total) Academic Salon for Ph.D. Students in Theoretical Economics was held by China Center for Special Economic Zone Research (CCSEZR) in Maoshuli Café located at the west gate of Shenzhen University. Prof. Liu Wei, director of China Center for Cliometrics Studies, was invited by CCSEZR to deliver a salon lecture in Shenzhen University and appointed as a visiting professor. This academic event witnessed the presence of Prof. Tao Yitao, vice secretary of CPC Committee of Shenzhen University, secretary of Discipline Inspection Commission of Shenzhen University and director of CCSEZR, Prof. Yuan Yiming, vice director of CCSEZR, Associate Prof. Zhang Ping, and some faculty, Ph.D. students and graduate students.
In her speech, Prof. Tao extended a warm welcome on behalf of Shenzhen University to Prof. Liu Wei to attend the salon and accept the appointment as a visiting professor and appreciated his consistent support for the cultivation of Ph.D. students of CCSEZR over the past years. Prof. Tao also expressed her wishes that the joining of Prof. Liu Wei would inject new vitality to the scientific research and education of CCSEZR and together, they will write a new chapter for the development of CCSEZR. She awarded the letter of appointment on behalf of Shenzhen University to Prof. Liu Wei as a visiting professor.
Prof. Liu Wei made a wonderful report themed “The Culmination of Cliometrics Studies: Perfect Economic Theory-Take Cobb–Douglas (CD) Production Function as an Example”. Firstly he put forward that why cliometrics should be extended to economics theory. He believed that all economics theories have historic limitations in their capacity and space when it comes to explain economic phenomena and derivative economic policies. It’s an important link of economic analysis to make clear whether the market conditions of specific time and space are consistent with the assumptions implied by theoretical framework by observing and studying economic history. For example, CD production function is widely applied in economic growth research. However, after digging into those research literatures, you will find that assumptions of CD function are not discussed in most of these literature as if the theoretical model will be effective in any overall demand-and-supply situation. The author believes that if the economy is supply-constrained, the national income per capita and social public savings will be low, and ex ante savings will be less than investments. Then rational manufacturers will be operating at full capacity, and capital stock is brought into full play. That is, capital stock becomes “effective capital”. In this case, it’s effective to study the economic growth under the supply-constrained economy situation with CD production function. One of the typical cases is that most of China’s factories were operated in “three shifts” mode during the Planned Economy Period. On the contrary, in the demand-constrained economy, whether capital idle ratio is taken into account will result in different capital-output elasticity and efficiency parameters in the CD quantity model. We use optionally given capital idle ratio fitted equation because if the capital stock is not 100% involved in production, the capital-output elasticity and labor–output elasticity concluded based on the statistics will not be accurate. In other words, CD production function in the demand-constrained economy is not effective as it’s assumed to be “supply-constrained economy” or “shortage economy” in the function theory. In conclusion, in the supply-constrained economy, the mathematical logic of CD function is consistent with the actual market while they are inconsistent in the demand-constrained economy.
After the speech, Prof. Liu Wei had a heated discussion with the faculty, Ph.D. students and graduate students of CCSEZR. The report comes to an end with the brilliant comments from Prof. Yuan Yiming.
(Correspondent: Zhang Chao)