nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2010‒09‒18
four papers chosen by
Koen Schoors
Ghent University

  1. Export Restraints on Russian Natural Gas and Raw Timber: What are the Economic Impacts? By David G. Tarr
  2. Stock market reaction to debt financing arrangements in Russia By Christophe J. Godlewski; Zuzana Fungacova; Laurent Weill
  3. Modernizing Russia: Round III. Russia and the other BRIC countries: forging ahead, catching up or falling behind? By Rainer Kattel; Erik S. Reinert
  4. A Note on Happiness in Eastern Europe By Humpert, Stephan

  1. By: David G. Tarr (New Economic School, Moscow)
    Abstract: The paper explains that the Russian gas giant, Gazprom, has failed to invest adequately, resulting in very little development of new gas supplies in Russia. The result has been progressively increasing use by Gazprom of central Asian gas supplies, at progressively higher prices for Russia. The increased prices of gas for Russian consumers have shown that it is crucial for Russian welfare to allow new entrants, and to introduce competition in the Russian domestic market. Competition among multiple gas suppliers from Russia, however, would erode or eliminate the monopoly profits of the Russian Federation on gas exports. Thus, with a more competitive domestic market, the Russian government would be expected to grant exclusive exporting rights to a single entity (as it presently does with Gazprom) or impose export taxes. Thus, Europe should not expect to achieve cheaper Russian gas as a result of structural reforms within the Russian gas market. More promising avenues for European energy diversification are new pipeline construction to open up new sources of supply independent of Russia (especially the Nabucco pipeline) and liquefied natural gas purchases. *
    Date: 2010–03
  2. By: Christophe J. Godlewski (LaRGE Research Center, Université de Strasbourg); Zuzana Fungacova (BOFIT, Bank of Finland); Laurent Weill (LaRGE Research Center, Université de Strasbourg)
    Abstract: This paper investigates stock market reaction to debt arrangements in Russia. The analysis of the valuation of debt arrangements by stock markets provides information about the use of debt by Russian companies. We apply the event study methodology to check whether debt announcements lead to abnormal returns using a sample of Russian listed companies that issued syndicated loans or bonds between June 2004 and December 2008. We find a negative reaction of stock markets to debt arrangements that can be explained by moral hazard behavior of shareholders at the expense of debtholders. Further, we observe no significant difference between announcements of syndicated loans and bonds. Thus, our findings support the view that Russian companies could have incentives to limit their reliance on external debt.
    Keywords: Corporate bonds, event study, Russia, stock returns, syndicated loans.
    JEL: G14 G20 P30
    Date: 2010
  3. By: Rainer Kattel; Erik S. Reinert
    Abstract: The term 'BRIC countries' - Brazil, Russia, India, and China - traces its roots to investment banking, Goldman Sachs coined the term in 2001. The idea of large emerging economies catching up with, and challenging, the West has captured social scientists and policy-makers alike. However, the sheer size and different historical legacies dictate that there are enormous differences between the BRIC economies. Russiaÿs situation is in three ways unique among the BRIC countries. First, Russia was an industrialized nation long before the others, secondly, it experienced unprecedented economic decline in the 1990s and by 2008 Russia barely reached the GDP level of 1989; thirdly, unlike Brazil, China, India and in fact most of the developing world, Russia is not a member of the World Trade Organization (WTO). These unique features beg the following questions that this document seeks to (at least tentatively) answer: first, what is the structural legacy of the decline in the 1990s in terms of technological and industrial capabilities in Russia; and second, what can and should Russia learn from the WTO experience of the rest of the BRIC economies until today. We argue, in brief, that while the decline of the 1990s is relatively well-known and documented on the macro-level (GDP) and more controversially in some of its micro-level and sociological impacts, there seems to be little awareness of the magnitude of devastation that took place during this period within Russiaÿs industry. Along with a massive increase in income from natural resources, a partial disintegration of the R&D system, and a greatly diminished policy capacity, the structural changes of the 1990s continue to pose grave challenges to Russiaÿs economic policy making. In fact, in many areas Russiaÿs technological and industrial capabilities have simply been lost.
    Date: 2010–09
  4. By: Humpert, Stephan
    Abstract: Recent studies in economics of happiness focusing on the influence of different aspects of subjective well-being in transition countries. Here these countries are located in Eastern Europe. After aggregating a dataset which combines the World Values Survey and the European Values Survey, I use an OLS and ordered probit and ordered logit estimation with marginal effects to perform regressions. The main findings are that individuals in transition countries behave like individuals in western industrialisted countries. This shows the international reliability of approach the happiness research approach.
    Keywords: subjective well-being; eastern europe
    JEL: I31 D60 O52
    Date: 2010–08

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