nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2023‒04‒10
nine papers chosen by

  1. International Firm Performance and Proximity to Rare Disaster Risk By Chongyu Wang; Rose Neng Lai; Martin Hoesli
  2. Inflation expectations in the wake of the war in Ukraine By Afunts, Geghetsik; Cato, Misina; Schmidt, Tobias
  3. Russia-Ukraine War: A Note on Short-Run Production and Labour Market Effects of the Energy Crisis By Hutter, Christian; Weber, Enzo
  4. Geopolitics in the Baltic Sea region: The "Zeitenwende" in the context of critical maritime infrastructure, escalation threats and the German willingness to lead By Swistek, Göran; Paul, Michael
  5. Reduced Impact and Implications of KRW Exchange Rates on Exports By Lee, Sora; Kang, Sungwoo
  6. Which Energy Solidarity Union? By Nicoli, Francesco; Burgoon, Brian; van der Duin, David
  7. Jamaica: Request for an Arrangement Under the Precautionary Liquidity Line and Request for an Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Jamaica By International Monetary Fund
  8. Belgium: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Belgium By International Monetary Fund
  9. Climate negotiations in times of multiple crises: Credibility and trust in international climate politics after COP 27 By Feist, Marian; Geden, Oliver

  1. By: Chongyu Wang (The University of Hong Kong); Rose Neng Lai (University of Macau); Martin Hoesli (University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Aberdeen - Business School)
    Abstract: Treating the Russian invasion of Ukraine as a rare disaster event and defining proximity as both physical distance and political closeness, we analyze investors’ response to disaster risk by examining the performance of commercial real estate investments in countries of proximity to the event. We find that proximity to the war matters, but the impact of the disaster is not uniform across different property types. Firms with green and less obsolete properties are less likely to experience negative abnormal returns. Our findings highlight the differences in equity risk premia even within the same industry facing the same disaster. We also find support for the eminence of reducing reliance on brown fuel.
    Keywords: Disaster Risk, International Firm Performance, Equity Risk Premia, Russia’s Invasion of Ukraine, Sanction, Real Estate, Green Building
    Date: 2023–02
  2. By: Afunts, Geghetsik; Cato, Misina; Schmidt, Tobias
    Abstract: Russia's invasion of Ukraine is posing a range of new challenges to the global economy, including affecting the inflation expectations of individuals. In this paper, we aim to quantify the effect of the invasion on short- and long-term inflation expectations of individuals in Germany. We use microdata from the Bundesbank Online Panel - Households (BOP-HH), for the period from February 15th to March 29th, 2022. Treating the unanticipated start of the war in Ukraine on the 24 th of February 2022 as a natural experiment, we find that both short- and long-term inflation expectations increased as an immediate result of the invasion. Long-term inflation expectations increased by around 0.4 percentage points, while the impact on short-term inflation expectations was more than twice as large - around one percentage point. Looking into the possible mechanisms of this increase, we suggest that it can be partially attributed to individuals' fears of soaring energy prices and increasing pessimism about economic trends in general. Our results indicate that large economic shocks can have a substantial impact on both short and long-term inflation expectations.
    Keywords: inflation expectations, Russian invasion of Ukraine, survey, natural experiment
    JEL: D84 D12 E3
    Date: 2023
  3. By: Hutter, Christian; Weber, Enzo
    Abstract: We provide first causal evidence of effects of the energy crisis on Germany, representing a major European economy. Combining cost structure data, national accounts and administrative labour market data, we identify effects in a sectoral panel setting using sector-specific energy intensity as “bite” variable. The results show that via the channel of energy intensity, monthly production and real turnover decreased by 4.1 and 2.6 percent, respectively, after the onset of the Russian war against Ukraine. Instead of layoffs, firms safeguarded employment via short-time work with 24.1 percent additional applications. Vacancy posting was reduced by 10.2 percent.
    Keywords: Russia-Ukraine war; energy; production; labour market; Germany
    JEL: E23 H56 J63 Q43
    Date: 2023
  4. By: Swistek, Göran; Paul, Michael
    Abstract: Due to its strategic immensity and opportunities for covert action, the maritime domain has become the most prominent arena of modern-day great power rivalry. In the shadow of this confrontation and the Russian war of aggression against Ukraine, the Baltic Sea is now the focus of geopolitical interest and conflict. An expression of this is the increase in hybrid activities, from acts of sabotage to the use of unidentified drones. For the Western states of the Baltic Sea region in particular, all of this highlights their dependence on fossil resources, critical maritime infrastructure, and secure trade routes. In response to the war against Ukraine and Russian naval activity in the Baltic Sea, littoral states have placed their militaries on heightened readiness. In the midst of this crisis situation, NATO allies and future allies remain locked in an unnecessary dispute over force dispositions, new structures and leadership roles. As a result, there is little sign of the German "Zeitenwende" in the Baltic Sea region.
    Keywords: Ostseeraum, Geopolitik, kritische maritime Infrastruktur, Großmachtrivalität, Russland, Nato, Seeverbindungen, power rivalry, Baltic Sea region, Russian war of aggression against Ukraine, critical maritime infrastructure, "Zeitenwende", NATO
    Date: 2023
  5. By: Lee, Sora (Korea Institute for Industrial Economics and Trade); Kang, Sungwoo (Korea Institute for Industrial Economics and Trade)
    Abstract: The value of the Korean won (KRW) to the US dollar (USD) recently fell to its weakest level since 2009, and its real effective exchange rate (REER) was even lower. The KRW to USD rate exceeded 1, 400 won per dollar due to the tight monetary policy of major economies, the Russian invasion of Ukraine, and fears of a recession. Companies highly vulnerable to FX risks should receive policy support and monitoring to prepare for price fluctuations. Long-term tasks include pursuing differentiation with comparative advantage based on key technologies, securing a leading position in supply chains, and upgrading Korea’s economic structure by increasing the contributions of domestic consumption to economic growth.
    Keywords: monetary policy; money supply; exchange rates; USD-KRW; Korea; tight money; FX; foreign exchange; foreign exchange rates; competitiveness; exports; export competitiveness
    JEL: F18 F21 O24
    Date: 2022–10–19
  6. By: Nicoli, Francesco; Burgoon, Brian; van der Duin, David
    Abstract: The Russian invasion of Ukraine caught the European Union (EU) off-balance. Many European member-states were, on the onset of the war, heavily reliant on energy supplies provided by Russia. Against this background, some have proposed a unified approach for the creation of EU-wide strategic energy reserves, which would ensure a buffer against future energy shocks, but also provide temporary relief to the participating countries should some of them experience temporary issues with their energy supply. However, the political feasibility of such programmes remain disputed, as any EU-wide approach to energy will entail both additional financial costs and a share of responsibilities and sovereignty on the matter. Furthermore, any such policy design is inherently multidimensional, differing over scope, governance, source of financing among other dimensions. To determine public support for energy security cooperation, we conduct the first conjoint experiment ever fielded on public support for alternative energy union design. We field a pre-registered, randomized conjoint experiment on a highly representative sample of the French, German, Italian, Dutch and Spanish population in November 2022. This multidimensional conjoint experiment allows us to determine the causal link between policy features of potential energy solidarity pacts, and public support or opposition to such policy. Our results show that policy packages meeting the most support require higher levels of ambition, joint EU-level governance, joint purchases and procurement, and progressive taxation as a form of financing. All in all, our results not only show that there is considerable cross-border support for energy solidarity, but also that citizens in different western European countries have generally converging preferences regarding the actual design of such policy, indicating that a compromise policy is feasible and publicly supported. Furthermore, our results support ongoing research on the nature of European solidarity at times of crisis, suggesting that European citizens are willing to support the creation of joint institutions and policies to face issues of common concern, and therefore indicating that major crises open important windows of opportunity to re-shape EU-level policies and institutions.
    Date: 2023–02–20
  7. By: International Monetary Fund
    Abstract: Jamaica has built a strong track record of investing in institutions and prioritizing macroeconomic stability. This aided the country to adapt to the difficult global environment of the past few years. The authorities provided targeted support to the economy during the pandemic but promptly scaled it back as conditions normalized. Similarly, in the wake of the war in Ukraine, domestic food and energy prices were left to adjust to shifts in international markets while targeted support was provided to the poor. The economy is expected to continue its post-COVID recovery, with inflation returning to the central bank’s target range by end-2023. The outlook is subject to downside risks from potential new COVID waves, higher commodity prices, a global slowdown, and tighter than expected global financial conditions.
    Date: 2023–03–07
  8. By: International Monetary Fund
    Abstract: Post-pandemic recovery slowed with spillovers from Russia’s war in Ukraine and high inflation, financial conditions tightening, and elevated uncertainty. In response to the spike of energy prices, the federal and regional authorities provided timely and substantial support to households and firms. Along with automatic indexation of wages and benefits, energy support helped cushion impacts, although at significant cost, increasing the fiscal deficit in 2022 and 2023. The labor market has remained tight, with record-high job creation and low unemployment. The external current account swung to a large deficit in 2022, due largely to higher energy imports and lower vaccine exports. Energy consumption is being cut, and gas imports reoriented. A resilient financial sector is facing challenges from the weaker macro-financial environment.
    Keywords: product market reform; indexation mechanism; money market rate; policy reform; consumer confidence; Policy discussion; State secretaries Bertrand; Energy prices; Inflation; Wage indexation; Wages; Anti-money laundering and combating the financing of terrorism (AML/CFT); Global
    Date: 2023–03–02
  9. By: Feist, Marian; Geden, Oliver
    Abstract: The 27th Conference of the Parties (COP 27) to the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm el-Sheikh, Egypt, was marked by multiple crises and the shaken confidence of developing countries in the multilateral process. Nonetheless, an agreement was reached on the critical issue of loss and damage, even though many key aspects still need to be fleshed out. With regard to emission reductions, there is a credibility crisis that threatens to worsen, not only because political priorities have shifted following Russia's attack on Ukraine. In order to strengthen international climate cooperation in the coming years, it will be crucial to honour existing commitments, adhere to agreed processes, and show diplomatic tact in dealing with partner countries.
    Keywords: Klimapolitik, Klimawandel, UN-Klimarahmenkonvention (UNFCCC), 27. Vertragsstaatenkonferenz (COP 27) in Scharm El-Scheich, Schäden und Verluste, Loss and Damage, Klimaschutz, Mitigation, Klimafolgenanpassung, Adaptation, Global Shield, climate policy, climate change, United Nations Framework Convention on Climate Change, UNFCCC, COP 27, Sharm el-Sheik, loss and damage, mitigation, climate change adaptation, Global Shield, Vulnerable 20, Nationally Determined Contributions, NDCs, Green Climate Fund, GCF
    Date: 2023

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