nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2017‒08‒13
eight papers chosen by

  1. A Simple Theoretical Setup for the Evaluation of Sterilized Intervention Effectiveness in a Small Open Commodity Exporting Economy By Andrey G. Shulgin
  2. Indices of Regional Economic Activity for Russia By Sergey V. Smirnov; Nikolay V. Kondrashov
  3. Are Books Luxury Goods in Russia or not? By Nataliya Kochkina; Evgeniya Popova
  4. Structural Change, Expanding Informality and Labour Productivity Growth in Russia By Ilya B. Voskoboynikov
  5. Impact of agricultural export restrictions on prices in importing countries By Annelies Deuss
  6. The ABCs of Nonfinancial Defined Contribution (NDC) Schemes By Holzmann, Robert
  8. Republic of Armenia; Selected Issues By International Monetary Fund

  1. By: Andrey G. Shulgin (National Research University Higher School of Economics)
    Abstract: This paper constructs a theoretical general equilibrium model for exchange rate determination in a small open commodity exporting economy based on an imperfect capital market a la Gabaix-Maggiori and appropriate for estimation on high frequency data and could be used for the evaluation of sterilized intervention effectiveness. To find empirical confirmation of the theoretical setup validity I use Russian daily statistics to estimate the model and investigate the reaction of the Russian ruble-US dollar exchange rate to sterilized interventions in the form of foreign currency repo auctions conducted by the Bank of Russia in the period of 2014-2017. I also estimate a vector error correction model on the same dataset and use it as important empirical benchmark for the theoretical model. The empirical analysis revealed a temporary statistically significant effect of sterilized intervention on exchange rate level, which peaked eight working days after the auction day. The combination of theoretical and empirical approaches demonstrates the effectiveness of the portfolio and the ineffectiveness of signalling channels in the transmission mechanism of the sterilized intervention instrument in Russian case
    Keywords: sterilized interventions; intervention effectiveness; repo auctions; commodity export; imperfect capital market; Russia.
    JEL: E58 F32
    Date: 2017
  2. By: Sergey V. Smirnov (National Research University Higher School of Economics); Nikolay V. Kondrashov (National Research University Higher School of Economics)
    Abstract: Regional statistics published by the Russian Federal State Statistics Service (Rosstat) are reviewed in terms of quality, and radical disagreement between “month-on-month” and “year-on-year” monthly statistics is identified. In view of this, an original method is proposed for estimating the level of Regional Economic Activity (REA), based on monthly official regional statistics in five key sectors of the Russian economy: industry, construction, retail trade, wholesale trade, and paid services for the population. This method transforms current “year-on-year” growth rates into specially constructed dichotomous variables, which eliminate the excessive volatility and inaccuracy of the initial time series. On these grounds, REA indices are estimated for all Russian constituent entities for the period from January 2005 to May 2017. Composite REA indices for all five economic sectors, eight federal districts, and Russia as a whole are then calculated. Methods for visualising multidimensional regional data are also proposed. They allow us to track the regional peculiarities of the Russian economy and to discern the current phase of the business cycle more accurately and without any additional lag. Several illustrative examples for the possible application of these indices in real time monitoring and analyses are provided
    Keywords: business cycles, economic activity, regions, federal districts of Russia.
    JEL: E32 R11
    Date: 2017
  3. By: Nataliya Kochkina (Research Group for Applied Markets and Enterprises Studies, National Research University Higher School of Economics); Evgeniya Popova (Research Group for Applied Markets and Enterprises Studies, National Research University Higher School of Economics)
    Abstract: In the times of Soviet Union books were a luxury good. This paper examines whether books are still a luxury good in Russia. For this purpose data from one of the Russian book retail chains is used to empirically estimate a general book demand and separate demand models for genres. We focus on estimating income elasticity. For this reason we construct a covariate on the basis of monthly wages of working individuals that reveals consumer income. Moreover, this paper is one of the few which addresses in detail the influence of books content quality on book demand. The main result is that books on average are not luxury goods anymore in Russia. However two genres: foreign prose and poetry are exceptions and can be called luxury goods. We also conclude that quality control covariates (book rating and number of people who rated the book) are important determinants of book demand as they influence significantly the general book demand and the demand models for different genres as well.
    Keywords: Russian book market, demand function, income elasticity, luxury goods, price elasticity
    JEL: L21 L23
    Date: 2017–07
  4. By: Ilya B. Voskoboynikov (National Research University Higher School of Economics)
    Abstract: Recent decades have been years of intensive growth, structural change and expanding informality for many developing and emerging economies. However, in exploring the relationship between structural change and productivity growth, most empirical studies ignored informality. This paper explores how structural change in the Russian economy 1995–2012 affects aggregate labour productivity growth, taking into account the informal sector. Using a newly developed dataset for 34 industries and applying three alternative approaches aggregate labour productivity growth is decomposed into intra-industry and inter-industry contributions. All three approaches show that the overall contribution of structural change is growth enhancing, significant, and dumped in time. In turn, labour reallocation between the formal and informal sectors is growth reducing because of the extension of informal activities with low productivity levels. At the same time, sectoral labour reallocation effects are found to be highly sensitive to the methods.
    Keywords: labour productivity, structural change, informal economy, Russia
    JEL: O11 O17 C82 N14
    Date: 2017
  5. By: Annelies Deuss (OECD)
    Abstract: During the commodity price spikes in 2007-08 and 2010-11, several countries implemented temporary export restrictions on staple foods in an attempt to protect domestic consumers from rising and volatile prices. The impacts of these policies, however, are not limited to the countries that are instituting them; they can also influence consumer prices in their trading partners. This study analyses whether the impact of export restrictions was different in countries that were traditionally more dependent on imports from the restricting country than in countries that imported a smaller share. Four export bans are considered: the maize ban in Argentina, the rice bans in India and Viet Nam, and the wheat ban in the Russian Federation. Using an error correction model in a panel framework, the study identifies the long-run impacts of export bans by showing whether the introduction of these bans caused a structural break in the long-term relationship between prices in international markets and consumer prices in domestic markets. The analysis demonstrates that the effects of an export ban were more pronounced in the group of countries that traditionally imported a higher share from the restricting countries than in countries with a lower import dependency. The results show that, even though export bans are temporary in nature, they can have long lasting effects.
    Keywords: error correction model, export bans, Food prices, price transmission
    JEL: C23 F13 Q11 Q17 Q18
    Date: 2017–08–07
  6. By: Holzmann, Robert (University of New South Wales)
    Abstract: Nonfinancial defined contribution (NDC) pension schemes have been successfully implemented since the mid-1990s in a number of European countries such as Italy, Latvia, Norway, Poland, and Sweden. The NDC approach features the lifelong contribution-benefit link of a financial defined contribution (FDC) personal account scheme, but is based on the pay-as-you-go format. At its start-up, the pay-as-you go commitments of the preceding defined benefit (DB) system are converted into individual personal accounts, allowing for a smooth transition from the DB to the DC format, while avoiding the very high transition costs inherent in a move from a traditional pay-as-you-go DB scheme to a fully funded FDC scheme. The NDC approach implemented by the rule book is able to manage the economic and demographic risks inherent to a pension scheme and by design creates financial sustainability. As in any pension scheme, the linchpin between financial stability and adequacy is the retirement age; in the NDC approach the individual retirement age above the minimum age is by design self-selected and by incentives should increase the effective retirement age in line with population aging. As a systemic reform approach NDC has become a strong competitor to piecemeal parametric reforms of traditional nonfinancial DB (NDB) schemes. While frequent, these reforms are far from transparent and usually too timid and too late to create financial sustainability while providing adequate pensions for the average contributor. This paper offers a largely nontechnical introduction to NDC schemes, their basic elements and advantages over NDB schemes, the key technical frontiers of the approach, and the experiences of NDC countries.
    Keywords: systemic pension reform, unfunded, individual accounts, Sweden
    JEL: H55 J11 J26
    Date: 2017–08
  7. By: Nino Kokashvili, Irakli Barbakadze, Ketevani Kapanadze
    Abstract: This paper examines the relationship between the growth of Latvian firms and their involvement in the shadow economy in 2015. When up to 10% of the overall economic activity of firms is in the shadow economy, this had a growth-enhancing effect on firms that recorded non-positive growth during the last five years. Using the perceptions of corruption and interview languages as instruments of measuring the shadow economy participation rate, the authors conclude that there is a positive relationship between perceptions of corruption and the shadow economy participation rate.
    Keywords: Shadow Economy, Firm Growth, Company Managers, Latvia
    JEL: O17 E26 E24 J28 D22
    Date: 2017
  8. By: International Monetary Fund
    Abstract: Republic of Armenia: Selected Issues
    Keywords: Armenia;Middle East;
    Date: 2017–07–19

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