nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2022‒05‒02
27 papers chosen by

  1. Russia. The Background of the Russian Invasion of Ukraine By Hanappi, Hardy
  2. Ukraine: Request for Purchase under the Rapid Financing Instrument and Cancellation of Stand-by Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Ukraine; By International Monetary Fund
  3. Political Shocks and Inflation Expectations: Evidence from the 2022 Russian Invasion of Ukraine By Lena Dräger; Klaus Gründler; Niklas Potrafke
  4. Long-run impacts of the conflict in Ukraine on food security in Africa By Balma, Lacina; Heidland, Tobias; Jävervall, Sebastian; Mahlkow, Hendrik; Mukasa, Adamon N.; Woldemichael, Andinet
  5. Data Science vs Putin: How much does each of us pay for Putin's war? By Fabian Braesemann; Max Schuler
  6. Stock Prices and the Russia-Ukraine War: Sanctions, Energy and ESG By Ming Deng; Markus Leippold; Alexander F. Wagner; Qian Wang
  7. Russia today: The Russian invasion of Ukraine and Russia's public finances By Weichenrieder, Alfons J.
  8. EU Sanctions on Belarus as an Effective Policy Tool By Anders Aslund; Jan Hagemejer
  9. Overshadowed by War and Sanctions By Vasily Astrov; Alexandra Bykova; Rumen Dobrinsky; Selena Duraković; Richard Grieveson; Doris Hanzl-Weiss; Gabor Hunya; Branimir Jovanović; Artem Kochnev; Niko Korpar; Sebastian Leitner; Isilda Mara; Bernhard Moshammer; Olga Pindyuk; Sandor Richter; Bernd Christoph Ströhm; Maryna Tverdostup; Nina Vujanović; Zuzana Zavarská; Adam Żurawski
  10. The impact of the Ukraine-Russia war on world stock market returns By Whelsy Boungou; Alhonita Yatié
  11. News and narratives: A cointegration analysis of Russian economic policy uncertainty. By Andrea Boitani; Catalin Dragomirescu Gaina
  12. Выживание простейшего: Европейский Союз как добровольно принятый Восточной Европой план Моргентау. Уроки и уникальная возможность для России. By Victor, Spirin
  13. The case for a cautiously optimistic outlook for US inflation By David Reifschneider; David Wilcox
  14. More than a Ban on Smoking? Behavioural Spillovers of Smoking Bans in the Workplace By Joan Costa-i-Font; Luca Salmasi; Sarah Zaccagni
  15. Greek Foreign Minister Dendias Concedes The Demilitarized Status Of The Eastern Agean Islands And The Dodecanesse By Tulun, Teoman Ertuğrul
  16. Machine learning model to project the impact of Ukraine crisis By Javad T. Firouzjaee; Pouriya Khaliliyan
  17. Les coûts de l’inflation By Kuikeu, Oscar
  18. What Determines the Adaptation of Enterprises to COVID-19 in CAREC Member Countries: Empirical Evidence from Azerbaijan, Georgia, Kazakhstan, and Mongolia By Aseinov, Dastan; Sulaimanova, Burulcha; Karymshakov, Kamalbek; Azhgaliyeva, Dina
  19. Impacts of COVID-19 on Households in CAREC Countries By Azhgaliyeva, Dina; Mishra, Ranjeeta; Long, Trinh; Morgan, Peter
  20. From Low to High Inflation: Implications for Emerging Market and Developing Economies By Ha, Jongrim; Kose, Ayhan M.; Ohnsorge, Franziska
  21. Unintended consequences of corruption indices: an experimental approach By Chapkovski, Philipp
  22. Enhancing Connectivity and Trade Between Central Asia Regional Economic Cooperation Countries and the World: Benefits, Risks and Policy Implication By Kalyuzhnova, Yelena; Holzhacker, Hans
  23. The Migration of Belarusians to Poland and The European Union: The Situation after August 2020 By Oskar Chmiel; Piotr KaŸmierkiewicz; Karalina Sauka; Agnieszka Kulesa
  24. Language and Persuasion: Human Dignity at the European Court of Human Rights By Fikfak, Veronika; Izvorova, Lora
  25. Spatial Pigmeat Price Transmission: The Case of Lithuania and Poland By Jurkėnaitė, Nelė; Syp, Alina
  26. EU's Unilateral Trade Liberalisation for Belarusian Services By Sierž Naurodski
  27. Stopp des Bezugs von russischem Gas birgt erhebliche Risiken By Frondel, Manuel; Schmidt, Christoph M.

  1. By: Hanappi, Hardy
    Abstract: This paper presents an interpretation of the underlying dynamics of global political economy, which has led to the invasion of Ukraine by Russia in February 2022. It thus is an alternative to interpretations that view the individual psychological traits of Vladimir Putin as the driving force behind this event. To enable a more sensible account, it turns out to be necessary to go back in the history of the conflict between Russia and NATO to the times of the Cold War. Briefly, two important fields of methodology – a theory of power and game theory – have to be touched upon. Finally, the justified emotional disgust concerning Putin’s aggressive war and the somewhat more detached scientific analysis are tried to be reconciled in the concluding paragraphs.
    Keywords: Russia, Ukraine, Political Economy, War, Game Theory
    JEL: C73 F5 F51 F52 F54
    Date: 2022–03–15
  2. By: International Monetary Fund
    Abstract: While geopolitical tensions with Russia had already curtailed Ukraine’s access to markets, the escalation to an invasion of Ukraine by Russia and full-blown war on February 24 has dramatically altered Ukraine’s outlook. A deep recession and large reconstruction costs are to be expected, on the backdrop of a humanitarian crisis. With the war ongoing, the situation remains extremely fluid, and any forecast is at this stage subject to massive uncertainty. The authorities are rightly focusing on ensuring the continuity of critical government operations, preserving financial stability and protecting priority spending.
    Keywords: financing gap; NBU supplies; emergency policy response; financing expenditure; near-term financing; Currencies; Credit; Loans; Global
    Date: 2022–03–10
  3. By: Lena Dräger; Klaus Gründler; Niklas Potrafke
    Abstract: How do global political shocks influence individuals’ expectations about economic outcomes? We run a unique survey on inflation expectations among 145 tenured economics professors in Germany and exploit the 2022 Russian invasion in Ukraine as a natural experiment to identify the effect of a global political shock on expectations about national inflation rates. We find that the Russian invasion increased short-run inflation expectations for 2022 by 0.75 percentage points. Treatment effects are smaller regarding mid-term expectations for 2023 (0.47 percentage points) and are close to zero for longer periods. Text analysis of open questions shows that experts increase their inflation expectations because they expect supply-side effects to become increasingly important after the invasion. Moreover, experts in the treatment group are less likely to favour an immediate reaction of monetary policy to the increased inflation, which gives further evidence of the shock being interpreted primarily as a supply-side shock.
    Keywords: inflation expectations, belief formation, natural experiment, 2022 Russian invasion of Ukraine, survey, economic experts
    JEL: E31 E71 D74 D84
    Date: 2022
  4. By: Balma, Lacina; Heidland, Tobias; Jävervall, Sebastian; Mahlkow, Hendrik; Mukasa, Adamon N.; Woldemichael, Andinet
    Abstract: Many African countries heavily rely on imports of agricultural commodities and agricultural inputs from Ukraine and Russia, for example wheat, other grains, and fertilizer. Russia's invasion of Ukraine has disrupted global access to grains due to reduced production, exports, and increased trade costs. This policy brief investigates the possible long-term consequences of the conflict on food security in Africa. We use a long-run general equilibrium trade model and study three scenarios that may evolve as a consequence of the conflict: 1) Ending exports of Ukrainian wheat and other cereals for food production, such as corn or sorghum. 2) Russia's potential ban on exports of grains and fertilizers, and 3) The impact of increased trade costs due to disrupted trade routes in the Black Sea. The model simulations show the conflict will severely compromise food security in Africa. We document important cross-country heterogeneity in the severity of impacts.
    Keywords: Food security,Grains,Fertilizers,Africa,Ukraine conflict,General equilibrium trade model,Ernährungssicherheit,Getreide,Dünger,Afrika,Ukraine-Konflikt,Allgemeines Gleichgewichtsmodell
    Date: 2022
  5. By: Fabian Braesemann; Max Schuler
    Abstract: Putin's Ukraine war has caused gas prices to skyrocket. Because of Europe's dependence on Russian gas supplies, we all pay significantly more for heating, involuntarily helping to fund Russia's war against Ukraine. Based on an analysis of real-time gas price data, we present a calculation that estimates every household's financial contribution for heating paid to Russian gas suppliers daily at current prices - six euros per household and day. We show ways everyone can save energy and help reduce the dependency on Russian gas supply.
    Date: 2022–03
  6. By: Ming Deng (University of Zurich - Department of Banking and Finance); Markus Leippold (University of Zurich; Swiss Finance Institute); Alexander F. Wagner (University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute); Qian Wang (University of Zurich - Department of Banking and Finance; Inovest Partners AG)
    Abstract: An extraordinary mix of factors affected firm values in early 2022. In the build-up to and in the weeks after the Russian invasion of Ukraine, stocks strongly exposed to the regulatory risks of the transition to a low-carbon economy did well. This was true especially of US stocks. However, in Europe, these stocks tended to underperform after the invasion, arguably because of stronger expected policy responses supporting renewable energy sources in the face of the pronounced dependence of Europe on Russian oil and gas. Investors thus expect the speed of transition to a low-carbon economy to be diverging between the US and Europe. Relating six different Environmental, Social, and Governance (ESG) ratings with stock price performance yields mixed results, suggesting that investors cannot blindly rely on such ratings in general to indicate corporate resilience against crises. Companies which more frequently refer to inflation in their conference calls with analysts performed worse than their peers. Internationally oriented firms did poorly, and investors were particularly concerned regarding companies' exposure to China. Overall, the results offer a preview of the future economic impact of the Russia-Ukraine war.
    Keywords: Climate transition risk, energy, ESG, event study, inflation, resilience, Russia-Ukraine war, stock returns
    JEL: E3 G14 G01 Q54
    Date: 2022–04
  7. By: Weichenrieder, Alfons J.
    Abstract: This policy letter collects elementary economic statistics and provides a very basic look on Russian public finances (i) to inform the reader's opinion on a possible planning process behind the war against Ukraine and (ii) to discuss prospects of an energy embargo and its capability to affect the stability of the Russian economy.
    Keywords: Energy Embargo,Invasion,Public Finance,Russia,Ukraine
    Date: 2022
  8. By: Anders Aslund; Jan Hagemejer
    Abstract: The situation of Belarus is currently quite clear. Lukashenka is hanging on to power because of his continued grasp on the security forces and Putin’s support. Russia controls as much as it wants to control. So far, no significant cracks have appeared in Lukashenka’s hold on the security forces. While the popular protests of 2020 were far stronger than any previous popular Belarusian protests, Lukashenka is a survivor. He has persisted during several political and financial crises. He hopes to also survive this time and he is playing for time. The Belarusian democratic movement understands, and it fears that its time is running out, so it calls for maximum pressure on Lukashenka. The EU should follow its lead. This runs contrary to the standard procedure of ratcheting sanctions up step by step. The aim of Western sanctions should be to maximize the cost to not only Belarus but also to Russia to ease Russian interest in controlling Belarus as early as possible. The targets of the sanctions should be multiple: Lukashenka, his family and cronies; culprits of human rights violations; Belarusian state financial institutions; the big Belarusian state companies; Russian state banks in Belarus; big Kremlin-related companies in Belarus; Russian businessmen assisting the Kremlin in Belarus; and the Belarusian arms trade. International financial institutions should not be allowed to assist the Belarusian state. Bona fide Belarusian private enterprises and their trade should not be sanctioned.
    Keywords: Belarus, EU, Russia, Economic Sanctions, Financial Sanctions, International Trade, Cronyism
    JEL: F15 F51
    Date: 2021
  9. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Selena Duraković; Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Artem Kochnev (The Vienna Institute for International Economic Studies, wiiw); Niko Korpar (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw); Bernhard Moshammer (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Bernd Christoph Ströhm; Maryna Tverdostup (The Vienna Institute for International Economic Studies, wiiw); Nina Vujanović (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw); Adam Żurawski
    Abstract: Our Spring 2022 Forecast comes at a time of pronounced global uncertainty, arising from Russia’s invasion of Ukraine and wide-ranging Western sanctions on Russia. To take account of this, we distinguish between two extreme scenarios. In the baseline scenario, which assumes no further major Western sanctions and some kind of a ceasefire by the middle of 2022, recessions this year will be confined to Ukraine and the bulk of the CIS; elsewhere in CESEE, growth forecasts have been revised downwards by 1-2 percentage points compared to Winter. However, in the adverse scenario, which assumes a further war escalation and an immediate EU embargo on Russian energy, half of the CESEE region will slide into recession, while inflation will soar into the double-digit range nearly everywhere.
    Keywords: CESEE, economic forecast, Central and Eastern Europe, Western Balkans, EU, euro area, CIS, Ukraine, Turkey, convergence, business cycle, coronavirus, labour markets, unemployment, Russia-Ukraine war, Russia sanctions, commodity prices, price controls, trade disruptions, Ukrainian refugees, energy embargo, monetary policy, fiscal policy, impact on Austria
    JEL: E20 E21 E22 E24 E32 E5 E62 F21 F31 H60 I18 J20 J30 O47 O52 O57 P24 P27 P33 P52
    Date: 2022–04
  10. By: Whelsy Boungou (PSB - Paris School of Business); Alhonita Yatié (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: As a topical topic, this paper studies the responses of world stock market indices to the ongoing war between Ukraine and Russia. The empirical analysis is based on daily stock market returns in a sample of 94 countries and covers the period from 22 January 2022 to 3 March 2022. We consistently document a negative relationship between the Ukraine-Russia war and world stock market returns. Furthermore, our results reveal that returns have been significantly lower since the invasion of Russian troops into Ukraine on 24 February 2022. Overall, we provide the first empirical evidence of the effect of the Ukraine-Russia war on international stock market returns.
    Keywords: H56,G11,G14,G15 War,Russia,Ukraine,Stock index
    Date: 2022–03–16
  11. By: Andrea Boitani (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Catalin Dragomirescu Gaina (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: Russia has become more integrated and therefore significantly dependent on global developments over the last decades, despite being ruled by an increasingly autocratic regime. How does Russian media cover the associated economic and policy challenges? To answer, we use the economic policy uncertainty indexes as proxies for media coverage, together with a limited set of variables reflecting both domestic and international developments. Our main findings come from a VEC model estimated with two cointegrating vectors, encompassing two long-term equilibria. A first cointegrating vector describes the domestic political context, highlighting the key role that media coverage can play in supporting autocratic regimes. While the second cointegrating vector is associated with international developments, portraying swings in global risk appetite, we find that deviations from it can, too, drive popular support for the incumbent president. To see more precisely how Russian media coverage can be used as a policy instrument, we employ several narrative proxies and find that (only in the short run) some of these might be used to exert control and influence, while others to justify policy errors or successes.
    Keywords: economic policy uncertainty; media coverage; cointegration analysis.
    JEL: C50 D80 F50 P50
    Date: 2022–04
  12. By: Victor, Spirin
    Abstract: According to the central dogma of international economics, isolation leads to inevitable stagnation, and the only way to development is through open markets and free trade. However, as the experience of the last thirty years has shown, premature opening of the markets of developing countries for free trade with developed countries leads to the destruction of the most advanced industries in developing countries and primitivization of their economies to the level of extraction of natural resources or the simplest production operations on imported equipment, performed by cheap labor. In this article, we will conduct some simple case studies demonstrating the primitivization of the economies of Eastern European countries, which, by joining the European Union, have entered an absolute free trade area with more developed countries. As a consequence, Russia's "isolation" from the developed countries presents a unique opportunity for the reindustrialization of the economy. With successful implementation of a prudent industrial policy, Russia has a chance to become a leader of the developing world in creating a new paradigm of economic development.
    Keywords: Free trade, Vanek-Reinert effect, Morgenthau plan, Eastern Europe.
    JEL: F60 F63
    Date: 2022–04–04
  13. By: David Reifschneider (former Federal Reserve); David Wilcox (Peterson Institute for International Economics)
    Abstract: The Federal Reserve and most other analysts failed to anticipate the surge in inflation in 2021. Considerable debate now surrounds the question of whether the Fed is too sanguine in anticipating that too-high inflation will mostly take care of itself over the next few years, even as the unemployment rate remains low and monetary policy remains accommodative. This Policy Brief concludes that although the Federal Open Market Committee (FOMC) was too optimistic in the projections it issued in December 2021, the broad contour of its baseline inflation outlook for 2022 and beyond remains sensible. The authors find the 2021 surge in inflation resulted mainly from COVID-19-related sectoral developments rather than the classic situation of aggregate demand outstripping the overall economy's long-run productive potential. The statistical analysis in this Policy Brief was conducted before Russia invaded Ukraine. As a result of the war, the inflation situation will probably get worse before it gets better, and could do so in dramatic manner if Russian energy exports are banned altogether. Nonetheless, if the key considerations identified in this Policy Brief remain in place, and if monetary policymakers respond to evolving circumstances in a sensible manner, the inflation picture should look considerably better in the next one to three years.
    Date: 2022–03
  14. By: Joan Costa-i-Font; Luca Salmasi; Sarah Zaccagni
    Abstract: Are workplace smoking bans (WSBs) more than a ban on smoking? We study whether WSBs influence smoking cessation and exert behavioural spillover effects on (i) a set of health behaviours, and (ii) on individuals not directly affected by the bans. Drawing upon quasi-experimental evidence from Russia, which introduced a WSB (in addition to a ban on smoking in public places), and adopting a difference-in-differences (DiD) strategy, which compares employed individuals (exposed to the work and public place ban) to unemployed individuals (exposed only to the ban in public places), we document three sets of findings. First, unlike previous studies that focus on smoking bans in public places, we find robust evidence that WSBs increase smoking cessation by 2.9 percentage points (pp) among men. Second, we find that quitters are less likely to use alcohol (6.7 pp reduction among men and 3.5 pp among women), and they reduce their alcohol consumption (10 percent among men). WSBs are found to influence the health behaviour of those not directly affected by the reform, such as never smokers. Our findings are consistent with a model of joint formation of health behaviours, and suggest the need to account for a wider set of spillover effects when estimating the welfare effect of WSBs.
    Keywords: joint formation of behaviours, workplace smoking bans, behavioural spillovers, smoking, drinking, physical activity, healthy identity, Russia
    JEL: I18 H75 L51
    Date: 2022
  15. By: Tulun, Teoman Ertuğrul
    Abstract: The Eastern Aegean Islands are demilitarized in the framework of the Lausanne Peace Treaty. There is a direct linkage between the possession of sovereignty over Eastern Aegean Islands and their demilitarized status. Greece’s militarization of Eastern Aegean Islands amounts to “material breach” of the Lausanne Peace Treaty since their demilitarized status are essential to the accomplishment of the object or purpose of the mentioned peace treaty. The “material breach” of one of the basic articles of the any peace treaty might end up with an outcome that makes sovereignty over the islands mentioned in the corresponding article of the treaties which their provisions materially breached, questionable. One the other hand, the Dodecanese, which cover large islands such as Rhodes and small islands such as Castellorizo (Meis), which are in close proximity to the south and southwest coasts of Turkey, are also under demilitarized status pursuant to Article 14 of the 1947 Paris Treaty. Greek Foreign Minister Nikos Dendias visited Moscow on February 18, 2022, on the eve of the recent military operation of the Russian Federation against Ukraine. During the joint press conference with Russian Foreign Minister Lavrov, Dendias, in response to an unrelated question by an unidentified journalist about Turkey's questioning of Greek sovereignty over the large Eastern Aegean Islands conceded that both the Eastern Aegean Islands and the Dodecanese are under demilitarized status. It will not be surprising that Greece's material breach of the provisions of international multilateral treaties will cause unexpected serious problems for her in the coming period.
    Date: 2022–03–12
  16. By: Javad T. Firouzjaee; Pouriya Khaliliyan
    Abstract: Russia's attack on Ukraine on Thursday 24 February 2022 hitched financial markets and the increased geopolitical crisis. In this paper, we select some main economic indexes, such as Gold, Oil (WTI), NDAQ, and known currency which are involved in this crisis and try to find the quantitative effect of this war on them. To quantify the war effect, we use the correlation feature and the relationships between these economic indices, create datasets, and compare the results of forecasts with real data. To study war effects, we use Machine Learning Linear Regression. We carry on empirical experiments and perform on these economic indices datasets to evaluate and predict this war tolls and its effects on main economics indexes.
    Date: 2022–03
  17. By: Kuikeu, Oscar
    Abstract: He seems that the literature about the costs ofr inflation remins weak with a lake of empirivcal assessment of this fact. Thus the interest of the following study. Thus in a first time with an convanable measure of Supply Shocks in otherterms of relative prices variability we assess on the cost of inflation. In the second time by taking into accunt the current context of regain in inflation even for countries caractherized with an strong dependency toward abroad we investigate thus the costs of inflation with this pattern that caractherized under developed as well as developed countries as revealing with the contemporaneous ukranian crisis with exhibit the increasing dependancey of Europe around energy furniture coming from Russia like the rest of the world toward food products of these two countries. For this purpose we rely om model of speculative attacks who assess well a relation between the country external assets and inflation.
    Keywords: Supply Shocks, inflation, external assets, speculative attacks
    JEL: C22 C33 F33
    Date: 2022–04–03
  18. By: Aseinov, Dastan (Asian Development Bank Institute); Sulaimanova, Burulcha (Asian Development Bank Institute); Karymshakov, Kamalbek (Asian Development Bank Institute); Azhgaliyeva, Dina (Asian Development Bank Institute)
    Abstract: We investigate the factors affecting firms’ ability to adjust production in response to the COVID-19 outbreak. We used firm-level survey data from the enterprise survey implemented by the World Bank Group, including a standard enterprise survey (baseline) and two waves of follow-up surveys conducted in 2020 and 2021, which included questions related to COVID-19 and firm behavior during the pandemic. We used data from four CAREC member countries: Azerbaijan, Georgia, Kazakhstan, and Mongolia. Using a probit model, we studied how different factors, including firm characteristics and government policy, affected the probability that a firm would be able to adjust its activities to the changed conditions. The results showed that firms which successfully adapted to the COVID-19 crisis were younger, foreign firms that had been innovative in the recent past, with female managers, a formal firm strategy with key performance indicators, and their own website.
    Keywords: COVID-19; micro; MSMEs; digitalization; adaptation; Central Asia; Caucasus
    JEL: D22 J63 L25 O53
    Date: 2022–01
  19. By: Azhgaliyeva, Dina (Asian Development Bank Institute); Mishra, Ranjeeta (Asian Development Bank Institute); Long, Trinh (Asian Development Bank Institute); Morgan, Peter (Asian Development Bank Institute)
    Abstract: The impacts of the COVID-19 outbreak have heavily affected CAREC member countries, which include Afghanistan, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, the People’s Republic of China (PRC), Tajikistan, Turkmenistan, and Uzbekistan. The COVID-19 crisis and the resulting falls in demand and supply due both to uncertainty and policy measures such as lockdowns, “social distancing,” and travel restrictions are having a severe impact on CAREC member countries. In order to better understand these impacts, computer-assisted telephone (CATI) interviews of households were conducted in 10 countries from the CAREC region (excluding the PRC). We estimate the impact of COVID-19 on income declines, expenditure changes, and financial difficulty in December 2020 compared with June 2020.
    Keywords: COVID-19; CAREC; Central Asia; household survey; household income; employment
    JEL: D14 G51 H12 H84 I10 I24 J60
    Date: 2022–01
  20. By: Ha, Jongrim; Kose, Ayhan M.; Ohnsorge, Franziska
    Abstract: Recent energy and food price surges, in the wake of Russia’s invasion of Ukraine, have exacerbated inflation pressures that are unusually high by the standards of the past two decades. High and rising inflation has prompted many emerging market and developing economy (EMDE) central banks and some advanced-economy central banks to increase interest rates. Inflation is expected to ease back towards targets over the medium-term as recent shocks unwind, but the 1970s experience is a reminder of the material risks to this outlook. As inflation remains elevated, the risk is growing that, to bring inflation back to target, advanced economies need to undertake a much more forceful monetary policy response than currently anticipated. If this risk materializes, it would imply additional increases in borrowing costs for EMDEs, which are already struggling to cope with elevated inflation at home before the recovery from the pandemic is complete. EMDEs need to focus on calibrating their policies with macroeconomic stability in mind, communicating their plans clearly, and preserving and building their credibility.
    Keywords: Global Inflation; Commodity Price; War in Ukraine; Global Recession; Great Inflation; Monetary Policy Tightening
    JEL: E31 E32 E37 Q43
    Date: 2022–03–29
  21. By: Chapkovski, Philipp
    Abstract: Using the results of a large-scale (N=900) online experiment, this paper investigates how the information about a group corruption level may harm intergroup relations. Corruption indices are widely used as a measure of quality of governance. But in addition to be a valuable tool for investors and policy makers for making informed decisions, they may also result in statistical discrimination: people from a more ‘corrupt’ region may be perceived as less trustworthy or more inclined to dishonest behavior. We manipulated the amount of information people have about three different Russian regions in two simple behavioral games (‘Cheating game’ and Trust game). In a Cheating game after the main stage where they report whether they observed a head or a tail on a flipped coin, they guessed how many participants in each of the three regions reported more personally profitable outcome (heads) as well as make trasfer decisions in a standard trust game. In the baseline treatment we provided them with a set of generic information about each region (such as population size), while in the main treatment they were additionally informed about the degree of perceived corruption in each region. The presence of corruption information made people substantially overestimate the degree of dishonesty in more ‘corrupt’ regions and decreased the trust towards a person from this region. The results demonstrate the potentially harmful unintended consequences of corruption indices that have to be taken into account by policy makers.
    Keywords: Corruption; experiments; online research; survey research
    JEL: C90 C92 D73 Z13
    Date: 2022–03–30
  22. By: Kalyuzhnova, Yelena (Asian Development Bank Institute); Holzhacker, Hans (Asian Development Bank Institute)
    Abstract: Transportation corridors and reduced trade costs are essential to develop Central Asia Regional Economic Cooperation (CAREC) countries’ foreign trade. However, to intensify intra-CAREC trade as well as the region’s global exports, the product portfolio of CAREC countries’ industry and agriculture has to be broadened. Otherwise CAREC countries will just face strong import competition or become pure transit territories. The need and opportunities of change brought about by global decarbonization efforts and green transition, widely discussed now in connection with efforts to revive the global economy after the slump caused by the COVID-19 pandemic, make this even more urgent, especially for hydro-carbon exporters. At the same time, the green transition and the general move to more science-intense production provides opportunities for new products and employment. Broadening and expansion of the export range of products and services require a robust set of measures in areas such as trade policy, coordination of sectoral policies, diversification, and business reforms. In particular, the countries that are in the center of the CAREC region’s trade flows such as Uzbekistan and Kazakhstan should step up their initiatives for industrial change and closer cooperation among the CAREC countries. We analyze the importance of such initiatives by CAREC countries and discuss the need for further steps in developing production that is based on countries’ natural or historically accumulated comparative advantages. We suggest that initiatives can be clustered into economic corridors that provide economies of scale and scope and good connectivity, and therefore the impact can be scaled up. However, corridor development must be well aligned with the overall economic policies and development plans of the countries involved. We conclude that progress will require redesigning schemes both for local and foreign investments, along with the development of capital markets. Trade facilitation remains an overarching objective. Better coordination of sectoral policies and priorities by measures for collaborative policy formulation and implementation, alignment of national and regional planning, and regulatory convergence in the region are required. Recommendations include suggestions to revise development plans in the light of accelerated technological change, not least due to COVID-19, and to facilitate the social change brought about by the technological change by active requalification and labor market policies.
    Keywords: transportation corridors; trade; CAREC countries; COVID-19; connectivity
    JEL: F13 O19 P25 P28 Q35
    Date: 2021–06
  23. By: Oskar Chmiel; Piotr KaŸmierkiewicz; Karalina Sauka; Agnieszka Kulesa
    Abstract: The paper consists of three parts. The first lists the most crucial solutions introduced at the European Union (EU) level and specific solutions implemented in Poland, as well as – in a nutshell – in Lithuania and Germany. The second part includes a description of pull and push factors as well as an overview of the migration dynamic from Belarus to Poland in the years 2016–2021. It also presents the results of a research survey conducted amongst migrants from Belarus concerning, amongst other aspects, reasons for leaving and the migrants’ situation in their countries of destination, especially in Poland. The document concludes with drafting possible scenarios of migration from Belarus to the EU and with description of Poland’s potential to attract Belarusian migrants.
    Keywords: Belarus, Poland, migration, migration policy, IT sector, EU
    JEL: J61 J68
    Date: 2021
  24. By: Fikfak, Veronika; Izvorova, Lora
    Abstract: Although the concept of human dignity is absent from the text of the European Convention on Human Rights, it is mentioned in more than 2100 judgments of the European Court of Human Rights. The judges at the Court have used dignity to develop the scope of Convention rights, but also to signal to respondent states just how serious a violation is and to nudge them towards better compliance. However, these strategies reach dead ends when the Court is faced with government submissions that are based on a conception of dignity that is different from the notion of human dignity relied on by the Court. Through empirical analysis and by focusing on Russia, the country against which the term dignity is used most frequently, the paper maps out situations of conceptual contestation and overlap. We reveal how the Court strategically uses mirroring, substitutes dignity for other Convention values, or altogether avoids confrontation. In such situations, the Court's use (and non-use) of dignity becomes less about persuading states to comply with the Convention and more about preserving its authority and managing its relationship with states.
    Date: 2022
  25. By: Jurkėnaitė, Nelė; Syp, Alina
    Abstract: The paper investigated the patterns of changes in spatial price transmission between pigmeat prices of two post-communist Member States, namely Lithuania and Poland, and five main producing countries in the EU-15, namely Germany, Denmark, France, Spain, and the Netherlands. This study employed vector autoregression modelling, as well as the Granger causality concept, and focused on changes in price behavior from May 2004 to May 2021. The findings suggest fundamental differences in the short-term price behavior of two post-communist countries. Over the investigated period, Poland strengthened the position in the EU pigmeat market and could be classified as a price leading country for the certain markets. The case of Lithuania demonstrated that countries with lower productivity and the dominant share of pig population on small-scale farms as well as high price level became vulnerable and evolved towards a viable national pig farming structures. Hence, a movement of new Member States towards greater market integration must be linked to the spread of innovations in pig farming or exit of uncompetitive farms. In the case of Lithuania, a promising direction of policy implications is support for the establishment of modern and competitive medium-sized farms, as well as the spread of relevant knowledge and innovations.
    Keywords: Agricultural and Food Policy, Demand and Price Analysis
    Date: 2022–03–28
  26. By: Sierž Naurodski
    Abstract: This policy paper aims at offering a complementary solution to the European Union (EU) EUR 24 million assistance package to support good faith small and medium enterprises in Belarus by suggesting the introduction of unilateral trade liberalisation measures for the country’s services sector for 12 months, with prolongation conditional on the political and economic situation in Belarus. In consideration of the identified drawbacks of direct monetary assistance to Belarus, the author builds this paper on the EU’s experience in the Western Balkans to suggest potential political and economic rationales for the EU to unilaterally liberalise trade in services with Belarus. The paper identifies construction, transport, maintenance and repair, and ICT services as sectors with the highest untapped export potential for Belarusian services in the EU. The author did not find any legal limitations or negative implications under the legal frameworks of the EU, the Eurasian Economic Union, or the World Trade Organization.
    Keywords: Exports, Imports, Export of services, Import of services, Free Trade, Trade in services, Belarus, EU, European Single Market, WTO, Eurasian Economic Union
    JEL: F15
    Date: 2021
  27. By: Frondel, Manuel; Schmidt, Christoph M.
    Abstract: Mit einem Importanteil von mehr als 50% beruht ein Großteil der deutschen Gasversorgung auf Lieferungen aus Russland. Es würde schwerfallen, diese kurzfristig zu ersetzen, da sowohl die Kapazitäten der LNG-Terminals als auch die Transportkapazitäten des bestehenden Pipelinenetzes begrenzt sind. Überdies wäre die europaweite Konkurrenz um die knappen noch freien Erdgasmengen massiv. Daher sollte nicht vorschnell auf den Import von russischem Gas oder gar auf einen vollständigen Bezug russischer Energieimporte verzichtet werden. Um sich unabhängig von Russland zu machen, sind zunächst erhebliche Anstrengungen auf allen Ebenen nötig, von der Politik bis zu den Unternehmen. Dabei ist es derzeit nahezu unmöglich, belastbare Aussagen über die Größenordnung der damit verbundenen wirtschaftlichen Konsequenzen zu treffen. Drohungen, auf russische Energieimporte zu verzichten, sollten jedenfalls nur unter Berücksichtigung der damit verbundenen erheblichen Risiken für die deutsche Volkswirtschaft ausgesprochen werden. Diese Abwägungen gehen weit über ökonomische Modellrechnungen hinaus.
    Date: 2022

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.