nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2023‒06‒12
27 papers chosen by

  1. Loss Aversion, Neo-imperial Frames and Territorial Expansion: Using Prospect Theory to Examine the Annexation of Crimea By Marandici, Ion
  2. Breaking Boundaries: The Agile Journey of Migrant Russian Women Entrepreneurs By Yelena Muzykina; Nurlykhan Aljanova; Shumaila Yousafzai
  3. Monthly Report No. 11/2022 - FDI in Central, East and Southeast Europe By Olga Pindyuk; Roman Stöllinger; Zuzana Zavarská
  4. Republic of Moldova: Third Reviews Under the Extended Credit Facility and the Extended Fund Facility Arrangements, and Request for a Waiver for Nonobservance of Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Republic of Moldova By International Monetary Fund
  5. United Republic of Tanzania: 2023 Article IV Consultation and First Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for the United Republic of Tanzania By International Monetary Fund
  6. Impacts of the Russia-Ukraine War price shocks on the Bangladesh economy: A general equilibrium analysis By Chowdhury, Tahreen Tahrima; Dorosh, Paul A.; Islam, Rizwana; Pradesha, Angga
  7. Which defense union? Determining the causal impact of policy design on public preferences for European Defense Union alternatives through a randomized conjoint experiment in 5 western-European countries By Nicoli, Francesco; van der Duin, David; Burgoon, Brian
  9. L’impact de la guerre et des sanctions sur l’économie russe By Sergei Guriev
  10. Morocco: Request for an Arrangement Under the Flexible Credit Line-Press Release; Staff Report; and Statement by the Executive Director for Morocco By International Monetary Fund
  11. Влияние государственных расходов на текущий счет платежного баланса Казахстана через канал импорта товаров // The impact of the government expenditures on the current account of the balance of payments of Kazakhstan through the channel of import of goods By Тұрабай Бердібек // Turabai; Ускенбаев Азат // Uskenbayev Azat; Муратов Жасулан // Muratov Zhassulan; Алмагамбетова Меруерт // Almagambetova Meruyert; Оспанов Нурлан // Ospanov Nurlan
  12. Central African Republic: 2023 Article IV Consultation and request for a 38-month arrangement under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for the Central African Republic By International Monetary Fund
  13. Agricultural Policy in Ukraine By Oleg Nivievskyi; Pavlo Martyshev; Sergiy Kvasha
  14. Burkina Faso: Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Burkina Faso By International Monetary Fund
  15. Did the policy response to the energy crisis cause crime? Evidence from England By Fetzer, Thiemo
  16. On the Economic Mechanics of Warfare By Guillaume Vandenbroucke
  17. Redistribution and Child Poverty: A Cross-National Comparison Between Brazil, Colombia, Panama, Peru, Russia, and South Africa By Marcela F. Gonz lez
  18. Авторский капитал и реформирование российской публикационной системы By Polterovich, Victor
  19. Schumpeter meets goldilocks: the scarring effects of firm destruction By Beatriz González; Enrique Moral-Benito; Isabel Soler
  20. Prospects of BRICS currency dominance in international trade By C\'elestin Coquid\'e; Jos\'e Lages; Dima L. Shepelyansky
  21. The Economic Complexity of Kazakhstan: A Roadmap for Sustainable and Inclusive Growth By Clement Brenot; Douglas Barrios; Eric S. M. Protzer; Nikita Taniparti; Ricardo Hausmann; Sophia Henn
  22. A Growth Diagnostic of Kazakhstan By Douglas Barrios; Nikita Taniparti; Ricardo Hausmann; Clement Brenot; Can Soylu; Roukaya El Houda; Ekaterina Vashkinskaya; Felicia Belostecinic; Sophia Henn
  23. Stress testing with multi-faceted liquidity: the central bank collateral framework as a financial stability tool By Cuzzola, Angelo; Barbieri, Claudio; Bindseil, Ulrich
  24. Republic of Kazakhstan: Technical Assistance Report-Government Finance Statistics (October 10-21, 2022) By International Monetary Fund
  25. Non-refunding of VAT to soybean exporters or economic impact of Soybean amendments By Oleg Nivievskyi; Roman Neyter; Olha Halytsia; Pavlo Martyshev; Oleksandr Donchenko
  26. Note de conjoncture 2ème semestre 2021 By Julien Vercueil
  27. Une reprise en butte à des contraintes de capacités - Note de conjoncture 2022-1 By Julien Vercueil

  1. By: Marandici, Ion
    Abstract: Why did Russia’s authoritarian leader decide to annex Crimea? Why was Ukraine unable to resist the Russian aggression? This study relies on prospect theory to illuminate the decision-making in Moscow and Kyiv that led to the takeover of Crimea. First, I identify the turning points of the Euromaidan crisis preceding the annexation and trace how Putin’s assessment of the status quo shifted repeatedly between the domains of losses and gains. In the domain of losses, the Russian leader, influenced by a neo-imperial faction within the Presidential Administration, became more risk acceptant, annexed the peninsula, and escalated the hybrid warfare. Putin framed the intervention using nationalist themes, drawing on salient historical analogies from the past. Second, new documentary evidence such as the minutes of Ukraine’s National Defence and Security Council (NDSC) and participant testimonies reveals that the decision-makers in Kyiv could not mount an effective defence due to squabbles among coalition partners, the breakdown of the military chain of command in Crimea, the looming threat of a full-scale invasion from the East, and the inflated expectations regarding the West’s capacity to deter Russia’s aggression. Third, the article relies on prospect theory to explain why after Crimea’s annexation, Putin refrained from continuing the territorial expansion deeper into Ukraine, opting instead to back secessionism in Donbas. This account highlights the explanatory power of prospect theory compared to alternative frameworks, pointing out, at the same time, the need to incorporate causal mechanisms from competing theoretical traditions in studies of foreign policy decision-making.
    Keywords: Russia; Crimea annexation; Ukraine; hybrid warfare; prospect theory; groupthink; foreign policy analysis; decision-making under risk
    JEL: B4 B40 D72 D74 D81
    Date: 2022–01–31
  2. By: Yelena Muzykina; Nurlykhan Aljanova; Shumaila Yousafzai
    Date: 2023
  3. By: Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: ​This issue of the wiiw Monthly Report replaces our earlier series of the wiiw FDI Report. FDI in Central, East and Southeast Europe Chart of the month Growing role of China as investor in CESEE by Olga Pindyuk Russia’s war in Ukraine causes a reversal of FDI trends by Olga Pindyuk Russia’s war in Ukraine interrupted the recovery of FDI in CESEE and has prompted significant shifts in the FDI structure. Russia has witnessed the large-scale divestment of foreign capital, and FDI inflows into EU-CEE have also suffered; meanwhile, in the second quarter the Western Balkans and Turkey recorded higher inflows on an annual basis. Some parts of the CESEE region may be able to benefit from accelerated green transition and the relocation of companies away from the war zone. No sign of functional upgrading in EU-CEE countries so far by Roman Stöllinger and Zuzana Zavarská The types of greenfield FDI projects that the EU countries of Central and Eastern Europe (EU-CEE) have been able to attract over the past two decades are consistently different from those in the Western EU member states. Greenfield FDI coming into EU-CEE is heavily skewed toward routine production activities; meanwhile FDI in the remaining activities involved in the production process homes in on other EU countries. This pattern of functional specialisation by EU-CEE is sub-optimal and requires a rethinking of FDI policy to enable functional diversification. Monthly and quarterly statistics for Central, East and Southeast Europe
    Keywords: greenfield investments; FDI inflows; FDI stocks, functional specialisation, fabrication activities, headquarter activities
    Date: 2022–11
  4. By: International Monetary Fund
    Abstract: The Moldovan economy contracted sharply in 2022; a modest recovery is expected this year. Spillovers from Russia’s war in Ukraine, high inflation and depressed demand, and weaker agricultural production all contributed to contraction in 2022. Recovery this year is supported by a pick-up in domestic demand and better growth prospects of trading partners. Inflation has decelerated as the National Bank reacted proactively to contain second-round effects and anchor expectations. Fiscal indicators remained robust in 2022, reflecting higher revenues, grants, and continued budget under-execution. International reserves continue to provide adequate safeguards against shocks; well-capitalized and liquid banks have weathered the impact of the war. The outlook is subject to high uncertainty related to the war and energy security risks.
    Date: 2023–04–27
  5. By: International Monetary Fund
    Abstract: Spillovers from the war in Ukraine and shortfalls in rainfall stalled Tanzania’s recovery from the COVID-19 pandemic. Despite fuel and fertilizer subsidies, inflation has picked up in recent months, approaching the Bank of Tanzania’s target. External balances deteriorated significantly last year due in large part to spillovers from the war in Ukraine.
    Date: 2023–04–28
  6. By: Chowdhury, Tahreen Tahrima; Dorosh, Paul A.; Islam, Rizwana; Pradesha, Angga
    Abstract: The spike in global commodity prices caused by the Russia-Ukraine war has had major adverse impacts on many developing countries, including Bangladesh, that still depend heavily on energy and food imports. Although the Bangladesh economy has rebounded after the COVID-19 pandemic, the latest global trade shock has threated to increase food insecurity and poverty. This study utilizes the Bangladesh RIAPA economywide model to assess the impact of increases in global commodity prices and explores potential policy interventions to reduce negative impacts. Simulation results show that increases in international commodity prices create a GDP loss of 0.36 percent and an increase of three million in the number of poor (mainly rural poor). Energy price shocks account for most of this decline in real GDP (0.28 percent). The fertilizer subsidy helps spur agriculture production which leads to an increase in crop GDP by 0.78 percent and total agricultural GDP by 0.43 percent. Changes in policy could help mitigate the effects of these price shocks. In particular, petroleum subsidies would help increase production in both agriculture and services, leading to a 0.3 percent increase in household consumption, considerably more than the gain under a targeted cash transfer policy of equal cost. However, given that the petroleum subsidy does not specifically target the poor, it only reduces poverty by a fraction of what a targeted cash transfer would. Moreover, as illustrated by the experiences of other countries, increases in a fuel subsidy, once introduced, are likely to be very difficult to reverse. This suggests that if the major policy goal is to reduce poverty, a direct cash transfer would be more effective than the other policy options considered here. Combining these policies, however, would be even more effective than any single intervention, reducing poverty incidence by around 2.5 million people, and thereby preventing nearly all of the potential increase in poverty resulting from global price shocks.
    Keywords: BANGLADESH; SOUTH ASIA; ASIA; commodities; prices; developing countries; economics; shocks; food insecurity; poverty; policy intervention; gross domestic product; agricultural production; household consumption; subsidies; fuels; cash transfers; general equilibrium model; Russia-Ukraine War; global price
    Date: 2023
  7. By: Nicoli, Francesco; van der Duin, David; Burgoon, Brian
    Abstract: Prior to the 2022 Russian Invasion of Ukraine, the European Union was beginning to make initial steps in integrating the defense capabilities of its member states. The ambition was to incrementally achieve what French President Emmanuel Macron had labeled ‘strategic autonomy’. The Russian invasion of Ukraine exposed the lack of preparedness of western EU member states in front of a serious military threat. The war has so far emphasized the essential role still played by NATO as a guarantor of security in Europe, while undermining the credibility of incremental approaches to a Europeanization of defense achieved through the progressive expansion of pre-war initiatives. Yet, from production to capabilities to strategic thinking, the war has also identified the critical bottlenecks of European defense, and has created a new momentum for defense integration that qualitatively differs from previous initiatives in the field. However, the political feasibility of such programmes remain disputed, as any EU-wide approach to defense 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 and level, governance, source of financing among other dimensions. To determine public support for European security cooperation, we conduct the first conjoint experiment ever fielded on public support for alternative defense union designs. 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 defense 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 of military equipment through joint procurement, and progressive taxation increases as the preferred form of financing. All in all, our results not only show that there is considerable cross-border support for defense integration in western Europe, 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: 2023–05–04
  8. By: Polina Popova (National Research University Higher School of Economics); Maria Semenova (National Research University Higher School of Economics); Vladimir Sokolov (National Research University Higher School of Economics)
    Abstract: The COVID-19 pandemic caused a significant change in the consumption, savings, and employment patterns of individuals. This study investigates the reaction of individual bank depositors to the spread of COVID-19 from the perspective of the outflow of retail deposits and the shift in their maturity structure across Russian regions which were differently hit by the pandemic. Exploiting the cross-regional variation in COVID-19 cases in Russia from April 2020 to September 2021, we document higher deposit outflows and a shift to short-term deposits in banks that were operating in the regions with higher rates of COVID-19 relative to banks from the regions that were less affected by the pandemic. We demonstrate that these effects are driven by increased unemployment, the lack of state-financed beds in hospitals, and the lack of financial literacy. Stricter isolation measures and underdeveloped bank branch networks smoothed the withdrawals of banks deposits caused by increased number of new COVID-19 cases. The maturity shifts are additionally driven by lower regional income and increased household health expenditures. Our results do not support the alternative hypothesis that those changes were forced by market discipline mechanisms.
    Keywords: banks, retail deposits, COVID-19, Russian regions
    JEL: Z
    Date: 2023
  9. By: Sergei Guriev (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Sciences Po - Sciences Po)
    Abstract: En engageant son pays dans une guerre brutale et injuste contre l'Ukraine, Vladimir Poutine a sous-estimé la force et le courage de la résistance ukrainienne et surestimé sa propre armée. Il a aussi sous-estimé l'unité et la détermination de l'Occident et l'impact que les sanctions occidentales pourraient avoir sur l'économie russe.
    Keywords: guerre en Ukraine, Russie, sanctions occidentales, économie russe, marché du travail
    Date: 2023–02
  10. By: International Monetary Fund
    Abstract: After a robust post-pandemic recovery in 2021, another severe drought and spillovers from Russia’s invasion of Ukraine slowed growth and raised inflation in 2022. The authorities’ policy response has been very strong, with fiscal, monetary, and financial policies appropriately calibrated to preserve macroeconomic stability while protecting the most vulnerable from the impact of the shocks. In addition, the authorities have accelerated the implementation of the vast program of structural reforms needed to make growth stronger, more resilient, and more inclusive. and made progress in further strengthening their institutional policy frameworks.
    Keywords: CPI headline inflation; higher-than-expected inflation outturn; inflation expectation; FCL arrangement; nonfood inflation; Inflation; Credit; Loans; Global; Maghreb
    Date: 2023–04–24
  11. By: Тұрабай Бердібек // Turabai (National Bank of Kazakhstan); Ускенбаев Азат // Uskenbayev Azat (National Bank of Kazakhstan); Муратов Жасулан // Muratov Zhassulan (National Bank of Kazakhstan); Алмагамбетова Меруерт // Almagambetova Meruyert (National Bank of Kazakhstan); Оспанов Нурлан // Ospanov Nurlan (National Bank of Kazakhstan)
    Abstract: Национальный Банк Казахстана продолжает цикл исследований, посвященных анализу внешнеэкономической деятельности страны. Целью данного исследования является эмпирическая оценка масштаба финансирования импорта государственными расходами. В исследовании описаны структурные проблемы платежного баланса Казахстана, представлен обзор расходной части республиканского бюджета, проведена эмпирическая оценка взаимосвязи импорта товаров и государственных расходов для проверки гипотезы «двойного дефицита» (twin deficits hypothesis). // The NBK continues the series of studies devoted to the analysis of the country's foreign economic activity. The purpose of this study is an empirical assessment of the extent to which public spending finances imports. The study describes the structural problems of Kazakhstan's balance of payments, provides an overview of the expenditure side of the republican budget, and conducts an empirical assessment of the relationship between imports of goods and government spending to test the "twin deficits hypothesis".
    Keywords: текущий счет, реальный текущий счет, государственные расходы, двойной дефицит, ненефтяной текущий счет, импульсные отклики, current account, real current account, government spending, twin deficit, non-oil current account, impulse responses
    JEL: E21 E63 F14 F32
    Date: 2023
  12. By: International Monetary Fund
    Abstract: CAR is on the brink of a humanitarian crisis with acute food insecurity and access to health care drastically impaired. Social tensions have ratcheted up, including strikes in various sectors, on the back of a cost-of-living crisis triggered by the Russian invasion of Ukraine. Political tensions have also escalated from the President’s plans of a third mandate requiring revisions to the constitution. The 2021 suspension of budget support—which deprived the government of 5 percent of GDP in financing—is now constraining, following the erosion of buffers, including the 2021 SDR allocation. The protracted balance of payment need is preventing the authorities from delivering basic public services to an already afflicted population. Against this backdrop, the authorities have requested Fund financing assistance.
    Date: 2023–05–02
  13. By: Oleg Nivievskyi; Pavlo Martyshev; Sergiy Kvasha
    Abstract: Building upon the theory and methodology of agricultural policy developed in the previous chapter, in Chapter 2 we analyse and assess agricultural policy making in Ukraine since the breakup of Soviet Union till today. Going from top down to the bottom, we begin by describing the evolution of state policy in the agri-food sector. In the beginning, we describe the major milestones of agricultural policy making since independence, paving the way to the political economy of the modern agricultural policy in Ukraine. Then we describe the role of agri-food sector in the national economy as well as globally in ensuring food security in the world. After, we dig deeper and focus on a detailed performance of agricultural sector by looking at farm structures, their land use, overall and sector-wise untapped productivity potential. Modern agricultural policy and institutional set-up is contained and analyzed in details in the section 2.4. A review of the agricultural up- and downstream sectors wraps up this chapter
    Date: 2023–04
  14. By: International Monetary Fund
    Abstract: Following two military coups in 2022, Burkina Faso remains committed to return to constitutional order, via democratic elections, by July 2024. Deviations from this timeline could put at risk the relationships with financial partners and donors. Deteriorating security, unfavorable climate conditions, the disruption of international supply-chains caused by the COVID-19 pandemic, and Russia’s invasion of Ukraine are all factors that contributed to sharply rising food prices during 2021-2022. As a result, food access for poor households deteriorated significantly, and at present about 3.4 million Burkinabé (out of a population of 21.5 million) are in conditions of food crisis, while one province is in a situation of food emergency, as defined by the World Food Program. In addition, the adverse impact on the current account of price increases for key cereals and fertilizers is estimated to amount to 0.4 percent of GDP cumulatively during 2022 and 2023. The overall costs to fully address food insecurity over the next year are estimated to be up to 3.5 percent of GDP.
    Date: 2023–04–25
  15. By: Fetzer, Thiemo (University of Warwick, CAGE, NIESR and CEPR)
    Abstract: The invasion of Ukraine has led to an unprecedented increase in energy prices in much of Western Europe with policy makers actively intervening in energy markets to cushion the shock. The UK’s policy response stands out: the energy price guarantee (EPG) was entirely untargeted and is, in real terms, much less generous to those living in properties with low energy efficiency. Using granular data and following a documented research approach this paper documents that areas more exposed to the energy price shock saw a notable increase in burglaries and anti-social behaviour: the energy price shock is responsible for a 6 to 10 percent increase in burglaries and a 9 to 24 percent increase in police reported anti-social behaviour between October 2022 to March 2023 inclusive. A quantification of policy alternatives suggests that a more targeted energy support package and/or a more energy efficient housing stock could have resulted in a drastically less pronounced uptick in crime.
    Keywords: crime, welfare, instability, climate crisis, cost-of-living JEL Classification: Q40, Q48, K42
    Date: 2023
  16. By: Guillaume Vandenbroucke
    Abstract: A large literature is concerned with the consequences of war-related expenditures and how to finance them. Yet, there is little by way of understanding how expenditures affect the outcomes of wars, e.g., prevailing side, duration, or total destruction. I present a model of attrition in which I characterize the effects of resources on the outcomes of war for a military conclusion (when one side cannot fight anymore) and a political conclusion (when one side does not want to fight anymore). I discuss the role of GDP for both types of conclusions. I also analyze the mechanics of third-party support to a small country at war with a large one, e.g., Ukraine and Russia. Finally, I show that the model can fit actual battle data.
    Keywords: war; attrition; military spending
    JEL: E6 H56 N4
    Date: 2023–04
  17. By: Marcela F. Gonz lez
    Abstract: I propose a disaggregated analysis of the income that households receive to compare the redistributive capacity of the state taking child poverty as case of study. I use the LIS Database and cross-nationally compare six countries: Brazil, Colombia, Panama, Peru, Russia, and South Africa. I created an income package to include a variety of income definitions based on the different sources of income of households: market income, income from private transfers (MI plus PT), and income from government transfers or disposable income. I included these countries because the access to gross income allows to assess in each country to what extent taxes and government transfers reduce the child poverty generated by the market. I use the last three time series available at the LIS for the six countries, which coincide with the period post-crisis 2008: Wave VIII (2010), Wave XIX (2013) and Wave X (2016). I cross-nationally compare the relative child poverty at 40%, 50%, and 60% of the median income for each of the incomes included in the income package for the following ages: 0-17 years old, 0-5 years old, and 6-17 years old, and for the following types of family: biparental and monomarental. I also analyze the Gini coefficient and the relative rate of poverty for the total population.
    Date: 2022–04
  18. By: Polterovich, Victor
    Abstract: The article is devoted to the problem of improving the governance of publication systems, within which the actors that produce scientific publications, supply them to readers, as well as funding and coordinating the processes of their production and supply interact. It is emphasized that the ownership of a scientific text includes two components: the right to a monetary reward for the use of the article by the consumer and authorship. The first component can be passed to another, but the second cannot. Authorship is the basis for building up an individual intangible asset, which we call authorship capital. The desire to increase it determines the dual role of the author in the publication system: he is not only a producer of the knowledge embodied in the article, but also, along with the reader, its ultimate consumer. The dual role of the journal is also noted, which, organizing the review process, turns out to be not only a supplier of articles, but also a producer of knowledge. These two features give rise to a variety of possible financing schemes for publishing systems. The specific features of knowledge as a private and public good are analyzed. One of them is the high cost of knowledge consumption. Due to this and a number of other circumstances, the market model for financing publication systems is inefficient; the most important task is the transition to open access. Such a transition should be accompanied by improved methods for evaluating the performance of researchers and the quality of journals. The comparison of large groups of objects (e.g., journals or research institutions) is inevitably based on citation indicators, while expertise can play only a supporting role. On the contrary, when it comes to making decisions within a small group, e.g., when allocating given funds among laboratory members, expert evaluations must play a decisive role. The directions of the reform of the Russian publication system are discussed, ensuring the reduction of rent-seeking activity and increasing the adequacy of the indicators used.
    Keywords: knowledge, bibliometric indicators, expert assessments, rent-seeking behavior, open access
    JEL: D80 H41 H44 P14
    Date: 2023–05–14
  19. By: Beatriz González (Banco de España); Enrique Moral-Benito (Banco de España); Isabel Soler (Banco de España)
    Abstract: The COVID-19 shock impacted firms severely all over the world. Governments were swift to implement policy measures to aid these firms, but these are coming to an end in the midst of a highly uncertain macroeconomic environment as a result of the war in Ukraine and the surge in energy prices. In this context, policymakers are worried about the potential increase in firm destruction after support policies are lifted, and what its macroeconomic consequences could be. Using data for Spain, we uncover an inverted U-shaped relationship between firm destruction and total factor productivity (TFP) growth: at low levels of firm exit, Schumpeterian cleansing effects dominate and the effect of firm destruction on TFP is positive, but when exit rates are very high, this effect turns negative. In order to rationalize this finding, we build on Asturias et al. (2017) and develop a model of firm dynamics with exit spillovers calibrated to match the non-linearity found in the data. This reduced-form spillover captures amplification effects from very high destruction rates that might force viable firms to exit, for example, due to disruptions in the production network and a generalised contraction in credit supply. Armed with the calibrated model, we perform counterfactual scenarios depending on the severity of the shock to firm exit. We find that when the shock is mild and firm destruction rates upon impact are similar to those observed during the Global Financial Crisis (GFC), TFP growth increases, and the recovery is faster. However, when the shock is severe and firm exit is well above that of the GFC, TFP growth decreases, since high efficiency firms are forced out of the market, which makes the recovery much slower. Overall, our results point to the importance of keeping exit rates low to avoid long term scarring effects.
    Keywords: firm exit, productivity
    JEL: E22 G33 M21 O47
    Date: 2022–08
  20. By: C\'elestin Coquid\'e; Jos\'e Lages; Dima L. Shepelyansky
    Abstract: During his state visit to China in April 2023, Brazilian President Lula proposed the creation of a trade currency supported by the BRICS countries. Using the United Nations Comtrade database, providing the frame of the world trade network associated to 194 UN countries during the decade 2010 - 2020, we study a mathematical model of influence battle of three currencies, namely, the US dollar, the euro, and such a hypothetical BRICS currency. In this model, a country trade preference for one of the three currencies is determined by a multiplicative factor based on trade flows between countries and their relative weights in the global international trade. The three currency seed groups are formed by 9 eurozone countries for the euro, 5 Anglo-Saxon countries for the US dollar and the 5 BRICS countries for the new proposed currency. The countries belonging to these 3 currency seed groups trade only with their own associated currency whereas the other countries choose their preferred trade currency as a function of the trade relations with their commercial partners. The trade currency preferences of countries are determined on the basis of a Monte Carlo modeling of Ising type interactions in magnetic spin systems commonly used to model opinion formation in social networks. We adapt here these models to the world trade network analysis. The results obtained from our mathematical modeling of the structure of the global trade network show that as early as 2012 about 58 percent of countries would have preferred to trade with the BRICS currency, 23 percent with the euro and 19 percent with the US dollar. Our results announce favorable prospects for a dominance of the BRICS currency in international trade, if only trade relations are taken into account, whereas political and other aspects are neglected.
    Date: 2023–04
  21. By: Clement Brenot (Center for International Development at Harvard University); Douglas Barrios (Center for International Development at Harvard University); Eric S. M. Protzer (Center for Global Development); Nikita Taniparti (Center for International Development at Harvard University); Ricardo Hausmann (Center for International Development at Harvard University); Sophia Henn (Center for International Development at Harvard University)
    Abstract: Since the end of the 1990s, Kazakhstan has relied on oil and gas as the main drivers of economic growth. While this has led to rapid development of the country, especially during years of high oil prices, it has also subjected the economy to more severe downturns during oil shocks, bouts of currency overvaluation, and procyclicality in growth and public spending. Stronger economic diversification has the potential to drive a new era of sustainable growth by supporting new sources of value added and export revenue, creating new and better jobs, and making the economy more resistant to fluctuations in oil dynamics. However, repeated efforts to stimulate alternative, non-oil engines of growth have so far been inconclusive. This report introduces a new framework to identify opportunities for economic diversification in Kazakhstan. This framework attempts to improve upon previous methods, notably by building country and region-specific challenges to the development of the non-oil economy directly into the framework to identify feasible and attractive opportunities. These challenges are presented in detail in the Growth Diagnostic of Kazakhstan and are summarized along three high-level constraints: (i) an uneven economic playing field dominated by government-related public and private-entities; (ii) difficulties in acquiring productive capabilities, agglomerating them locally, and accessing export markets; and (iii) ongoing macroeconomic factors lowering external competitiveness lower and making the economy less stable. Our approach applies the economic complexity paradigm to identify what specific products and industries are most feasible for diversification, based on the existing productive capabilities demonstrated in the economy. We examine Kazakhstan's economic complexity at the national but also subnational levels, highlighting the heterogeneity of export baskets across regions that makes an analysis of opportunities at the subnational level essential.
    Keywords: Economic Complexity, Kazakhstan
    Date: 2023–02
  22. By: Douglas Barrios (Center for International Development at Harvard University); Nikita Taniparti (Center for International Development at Harvard University); Ricardo Hausmann (Center for International Development at Harvard University); Clement Brenot (Center for International Development at Harvard University); Can Soylu; Roukaya El Houda (Center for International Development at Harvard University); Ekaterina Vashkinskaya; Felicia Belostecinic (Center for International Development at Harvard University); Sophia Henn (Center for International Development at Harvard University)
    Abstract: This Growth Diagnostic Report was generated as part of a research engagement between the Growth Lab at Harvard University and the Astana International Financial Centre (AIFC) between June 2021 and December 2022. The purpose of the engagement was to formulate evidence-based policy options to address critical issues facing the economy of Kazakhstan through innovative frameworks such as growth diagnostics and economic complexity. This report is accompanied by the Economic Complexity Report that applies findings from this report on economy-wide challenges to growth and diversification in order to formulate attractive and feasible opportunities for diversification. Kazakhstan faces multifaceted challenges to sustainable and inclusive growth: macroeconomic uncertainty, an uneven economic playing field, and difficulties in acquiring productive capabilities, agglomerating them locally, and accessing export markets. Underlying Kazakhstan’s transformational growth in the last two decades—during which real GDP per capita multiplied by 2.5x—are two periods that underscore how Kazakhstan’s growth trajectory has been correlated with oil and gas dynamics. The early and mid-2000s characterized by the global commodity supercycle led to an expansion of the economy upwards of 8% annually, with a mild slowdown during the global financial crisis. In 2014, Kazakhstan’s growth slowed with the collapse of commodity prices, and alternative engines of growth have not been strong enough to fend against volatility since. These trends, along with growing uncertainty in the long-run demand of oil and gas, continue to highlight the limitations of relying on natural resources to drive development. As in the experience of other major oil producers, diversification of Kazakhstan’s non-oil economy is a critical pathway to drive a new era of sustainable and inclusive growth and mitigate the impacts of commodity price shocks on the country’s economy. Kazakhstan’s growth trajectory demonstrates that the country has enough oil to suffer symptoms of Dutch disease, but not enough to position it as a reliable engine of growth in the future. Development of non-oil activities has been a policy objective of the government of Kazakhstan for some time, but previous efforts for target sectors have failed to generate sufficient exports and investments to produce alternative engines of growth. This report characterizes the relationship between growth, industrial policy, and the constraints to diversification in Kazakhstan. It utilizes the growth diagnostics framework to understand why efforts to diversify into non-oil tradables has been challenging. The report proposes a growth syndrome to explain the constraints preventing Kazakhstan from achieving productive diversification and sustainable growth. This report is organized in six sections, including a brief introduction. Section 2 provides an overview of the methodological approach to the Growth Diagnostics analysis. Section 3 describes Kazakhstan’s growth trajectory and macroeconomic performance, as well as the motivations behind pursuing a diversification strategy to strengthen the non-oil economy. Section 4 summarizes three features of the country that manifest in a set of economy-wide constraints to growth and diversification. Section 5 analyzes each of the identified constraints in detail, describing their dynamics and breaking down the aspects that appear to be binding. Section 6 concludes by suggesting potential policy guidelines towards alleviation of the identified constraints.
    Keywords: Growth Diagnostics, Kazakhstan
    Date: 2023–02
  23. By: Cuzzola, Angelo; Barbieri, Claudio; Bindseil, Ulrich
    Abstract: The paper studies the central bank collateral framework and its impact on banks’ liquidity under an adverse stress test scenario. We construct a stress test model that accounts for a granular and multi-faceted representation of the liquidity of marketable and non-marketable assets. In particular, the model analyses banks’ strategic decisions to mobilise assets through four funding channels: unsecured loans, asset sales, private repurchase agreements, or Central Bank lending. We test three scenarios: the EBA regulatory stress test exercise, a shock to Russia and the Eastern European countries, and a shock to the Southern European countries. Results show that illiquidity can trigger insolvency and that liquidity adjustment can last significantly after the initial shock. We find evidence of a threshold in the benefits of expanding the collateral framework and highlight the heterogeneous effects across different jurisdictions and financial institutions. We find that bank equity losses are reduced in aggregate up to 17% at the tail of the loss distribution and on average by around 5% when financial institutions can rely on the collateral framework channel. JEL Classification: C63, E52, G01, G28
    Keywords: Asset liquidity, Central Bank Collateral Framework, Collateral, Lender-Of-Last Resort, Stress test
    Date: 2023–05
  24. By: International Monetary Fund
    Abstract: *Please note this report is only available in Russian* This technical assistance (TA) mission on Government Finance Statistics (GFS) was conducted during October 10-21, 2022. The main purpose of the mission was to review and finalize the annual GFS data submission for 2021. Provide training to new compilers and source data providers in the fundamentals of GFS, the accounting principles, and classifications aligned to the Government Finance Statistics Manual 2014 (GFSM 2014), bridge tables, and data quality control procedures. In addition, the mission provided recommendations on the delineation of the general government and the broader public sector.
    Keywords: Government Finance Statistics; General Government; Public Sector; Training.
    Date: 2023–04–25
  25. By: Oleg Nivievskyi; Roman Neyter; Olha Halytsia; Pavlo Martyshev; Oleksandr Donchenko
    Abstract: Exempting soybean and rapeseed exporters from VAT has a negative effect on the economy of $\$$44.5-60.5 million per year. The implemented policy aimed to increase the processing of soybeans and rapeseed by Ukrainian plants. As a result, the processors received $\$$26 million and the state budget gained $\$$2-18 million. However, soybean farmers, mostly small and medium-sized, received $ 88.5 million in losses, far outweighing the benefits of processors and the state budget.
    Date: 2023–04
  26. By: Julien Vercueil (CREE EA 4513 - Centre de recherches Europes-Eurasie - Inalco - Institut National des Langues et Civilisations Orientales)
    Keywords: économie de la Russie
    Date: 2021–07–07
  27. By: Julien Vercueil (CREE EA 4513 - Centre de recherches Europes-Eurasie - Inalco - Institut National des Langues et Civilisations Orientales)
    Abstract: Après une vive reprise durant le deuxième trimestre 2021 portée par un regain de l'activité mondiale, l'économie russe a buté sur la saturation de ses capacités de production, sur le niveau excessif de l'inflation et sur les conséquences de la pandémie, qui ont obligé les autorités à prendre des mesures restrictives (hausse des taux d'intérêt, limitations de déplacements), contrecarrant le rebond. La politique budgétaire est entrée dans une phase de consolidation : l'augmentation des recettes fiscales s'est combinée à l'arrêt de certains dispositifs de soutien à l'économie pour redresser les comptes publics et dégager un excédent budgétaire en fin de semestre. Si les mesures sanitaires de l'automne sont justifiées compte tenu du nombre particulièrement élevé de victimes de la pandémie, la politique monétaire a été l'objet de débats quant à son bien-fondé. L'inflation continue de peser sur la conjoncture et la banque centrale a donné le sentiment d'une perte progressive de contrôle sur les anticipations inflationnistes.
    Date: 2022–02–02

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.