|
on Transition Economics |
| By: | John W. Schindler; Dustin H. Beckett |
| Abstract: | Hong Kong plays a prominent role as a re-exporter of a large percentage of trade bound for or coming from China. Current reporting practices in China and its trading partners do not fully reflect this role and therefore provide a misleading picture of the origin or ultimate destination of Chinese exports and imports. We adjust bilateral trade data for both China and its trading partners to correct for this problem. We also correct for differences due to markups in Hong Kong and different standards for reporting trade (c.i.f. versus f.o.b.). For 2003, we estimate that China's overall trade surplus was between $53 billion and $126 billion, larger than that reported in official Chinese data, but smaller than that reported by China's trading partners. We also provide evidence that, in general, the actual origin of a good that is transshipped through Hong Kong is correctly reported by the importing country, but the final destination of such goods is not correctly reported by the exporting country. |
| Keywords: | Balance of trade - China |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:831&r=tra |
| By: | Chad Bown; Meredith Crowley |
| Abstract: | This paper examines how US special import restrictions affect the growth of China's exports to countries other than the US. We estimate an empirical model of trade deflection and trade depression of roughly 5100 commodities exported by China to 37 countries between 1992 and 2001. Our estimation yields evidence that US trade restrictions deflect Chinese exports to third, non-US markets. Imposition of a US antidumping duty against China leads the growth rate of targeted commodities to increase approximately 25 percentage points. Our results on the deflection of Chinese exports vary across commodity, with the strongest evidence of trade deflection appearing in the steel, pharmaceuticals and manufactured goods industries. |
| Keywords: | Exports ; Trade |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-04-28&r=tra |
| By: | William T. Gavin; David M. Kemme |
| Abstract: | Empirical work in macroeconomics is plagued by small sample size and large idiosyncratic variation. This problem is especially severe in the case of transition economies. We use a mixed estimation method incorporating information from OECD country data to estimate the parameters of a reduced-form transition economy model. An exactly identified structural VAR model is then constructed to analyze monetary policy. The OECD information increases the precision of the impulse response functions in the transition economies. The method provides a systematic way to use extraneous information to analyze monetary policy in the transition economies where data availability is limited. |
| Keywords: | Monetary policy ; Macroeconomics |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2004-034&r=tra |
| By: | Barry Eichengreen; Hui Tong |
| Abstract: | We analyze how China's emergence as a destination for foreign direct investment is affecting the ability of other countries to attract FDI. We do so using an approach that accounts for the endogeneity of China's FDI. The impact turns out to vary by region. China's rapid growth and attractions as a destination for FDI also encourages FDI flows to other Asian countries, as if producers in these economies belong to a common supply chain. There is also evidence of FDI diversion from OECD recipients. We interpret this in terms of FDI motivated by the desire to produce close to the market where the final sale takes place. For whatever reason -- limits on their ability to raise finance for investment in multiple markets or limits on their ability to control operations in diverse locations -- firms more inclined to invest in China for this reason are corresponding less inclined to invest in the OECD. A detailed analysis of Japanese foreign direct investment outflows disaggregated by sector further supports these conclusions. |
| JEL: | F0 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11335&r=tra |
| By: | Marcelo de Paiva Abreu (Department of Economics PUC-Rio) |
| Abstract: | This paper focuses on the impact of China’s emergence on Brazil trade and investment flows and also on the policies and initiatives taken by the Brazilian public and private sectors seeking to meet the challenge raised by it. Based on this evidence alternative scenarios of future developments concerning China and its impact on Brazil will be outlined and Brazilian policies considered. The paper is divided into four sections. The first section describes the effects of China’s expanded role in the world economy on trade and investment flows from a Brazilian perspective. Section 2 examines the complementarity between trade and outward investment flows for Brazil and China. Diversion of foreign direct investment from Brazil to China is briefly considered. The third section focuses on Brazilian policies and China.The conclusive section centers on future developments concerning the Chinese economy and how they may effect Brazil and considers policy suggestions to complement what has already been done to face the challenges and exploit opportunities raised by China’s increasing role in the world economy. |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:rio:texdis:491&r=tra |
| By: | Balázs Égert; Maroje Lang |
| Abstract: | This paper studies the impact of daily official foreign exchange interventions on the exchange rates of two EU candidate countries, namely Croatia and Turkey for the periods from 1996 to 2004 and from 2001 to 2004, respectively. Using the event study methodology and a variety of GARCH models reveals that both the Croatian and the Turkish central banks were in a position to influence, to some extent, the level of the exchange rate during the period studied. This lends support to the view that foreign exchange intervention may be effective to a limited extent in emerging market economies. |
| Keywords: | central bank intervention, foreign exchange intervention, official interventions, foreign exchange market, effectiveness, exchange rate volatility, emerging economies, transition economies |
| JEL: | F31 |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-755&r=tra |
| By: | José Noguera; Susan J. Linz; |
| Abstract: | This paper develops a model to investigate the welfare implications of barter in Russia and other transition economies during the 1990s. We argue that barter is a welfare-improving phenomenon that acts as a defense mechanism against monetary instability. When firms react to tighter credit markets by switching to barter, the risk they face diminishes, allowing for a higher level of production. |
| Keywords: | Barter, welfare, Russia, money, credit, payment system, interest rate |
| JEL: | E0 E6 P20 P21 P23 P26 |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-757&r=tra |
| By: | Susan J. Linz; Anastasia Semykina; |
| Abstract: | This paper investigates the relationship between locus of control and performance among Russian employees, using survey data collected at 28 workplaces in 2002 in Taganrog and at 47 workplaces in 2003 in Ekaterinburg. We develop a measure that allows us to categorize the Russian employees participating in our survey as exhibiting an internal or external locus of control. We then assess the extent to which there are significant differences between “internals” and “externals” in work-related attitudes that may affect performance. In particular, we focus on (1) attitudes about outcomes associated with hard work, (2) level of job satisfaction, (3) expectation of receiving a desired reward, and (4) loyalty to and involvement with one’s organization. In each case we identify where gender and generational differences emerge. Our main objective is to determine whether Russian employees who exhibit an internal locus of control perform better than employees with an external locus of control. Our performance measures include earnings, expected promotions, and assessments of the quantity and quality of work in comparison to others at the same organization doing a similar job. Controlling for a variety of worker characteristics, we find that (1) individuals who exhibit an internal locus of control perform better, but this result is not always statistically significant; (2) even among “internals,” women earn significantly less than men and have a much lower expectation of promotion; (3) even among “internals,” experience with unemployment has a negative influence on performance. |
| Keywords: | locus of control, Russia, motivation, performance, gender |
| JEL: | P23 J24 |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-758&r=tra |
| By: | William Pyle; ; |
| Abstract: | What determines the mechanism chosen to resolve a commercial dispute? To what degree does the aggrieved recover damages? And does the relationship survive in the aftermath? The answers to these questions affect expectations as to the costs of transacting and, thereby, the development of markets. But they have received almost no attention in the economic literature on the post-socialist transition. This article exploits a rich survey of small and medium-sized manufacturing enterprises in three post-socialist countries to explain behavioral responses to an inter-firm payment dispute. Particular attention is given to how the evolution of disputes is sensitive to both the geographic distance between trade partners and membership in a business association. |
| Keywords: | commercial dispute, business association, transition |
| JEL: | D23 D74 K40 K41 P37 |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-761&r=tra |
| By: | Maxim Bouev; ; |
| Abstract: | This paper analyses the emergence of the informal economy in the environment characterised by non-competitive labour markets with wage bargaining. We develop a simple extension of the standard search model à la Pissarides (2000) with formal and informal sectors to show how a government’s auditing of informal firms and barriers to firms’ entry erected in the formal sector by corrupt bureaucracy can make for stable coexistence of formal and informal jobs in the long term. In equilibrium, wage differentials for homogeneous and risk-neutral workers emerge because different types of jobs have different lifetimes and/or have different creation costs. The former are explained by the auditing activities of the government that in the simple set-up destroy informal matches, while keeping formal jobs intact; the latter are due to varying capital costs, or costs associated with red tape and bureaucratic extortion (bribing). Search frictions introduce rent sharing between firms and workers in both formal and informal sectors. This has an important implication for policy making. In particular, we show that if ceteris paribus a firms’ bargaining position vis-à-vis workers is stronger in the formal rather than in the informal sector, governments can afford to appropriate a larger part of a productive match surplus (e.g. by levying higher taxes), without endangering the qualitative outcome in the long run. Rent sharing also implies that both formal and informal sector employees may receive wages above marginal product. We investigate efficiency properties of an equilibrium with formal and informal jobs and discuss the role of the government in creating and eliminating such inefficiencies partially arising from a version of the hold-up problem (Grout, 1984). Some lessons are drawn for normative analyses of policies aimed at reduction of informality in set-ups with non-competitive labour markets. In particular, the conditions are given under which a reduction in size of the informal sector is likely to be detrimental for economic welfare. |
| Keywords: | informal economy, regulations, wage bargaining, labour markets, search models |
| JEL: | E24 H26 J31 J41 J42 J64 O17 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-764&r=tra |
| By: | Jan Fidrmuc; Klarita Gërxhani; |
| Abstract: | Recent Eurobarometer survey data are used to document and explain the stock of social capital in 27 European countries. Social capital in Central and Eastern Europe – measured by civic participation and access to social networks – lags behind that in Western European countries. Using regression analysis of determinants of individual stock of social capital, we find that this gap persists when we account for individual characteristics and endowments of respondents but disappears completely after we control for aggregate measures of economic development and quality of institutions. Informal institutions such as prevalence of corruption appear particularly important. |
| Keywords: | social capital, institutions, capitalism, transition |
| JEL: | Z13 P37 O57 O17 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-766&r=tra |
| By: | Jan Fidrmuc; ; |
| Abstract: | In this paper, I analyze the development of inter-regional mobility in the Czech Republic during the transition from central planning to a market economy. I show that the intensity of migration is low and even has fallen during the transition regional disparities in unemployment rates and earnings have increased. More importantly, labor mobility is little effective in facilitating labormarket adjustment to employment shocks. Using aggregate inter-regional migration data and survey data on past and prospective migration and the willingness to move. I find that economic factor play little role in explaining migration patterns. There is, nonetheless, some tentative evidence of the greater importance of economic considerations in explaining future migration intentions and the willingness to move. Thus, while at present migration appears more of a social or demographic rather than economic phenomenon, its economic role may strengthen in the future. |
| Keywords: | Migration, Mobility, Labor-market Adjustment, Regional Shocks, Survey data. |
| JEL: | F22 J61 P23 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-767&r=tra |
| By: | Balázs Égert; László Halpern; |
| Abstract: | This paper analyses the ever-growing literature on equilibrium exchange rates in the new EU member states of Central and Eastern Europe in a quantitative manner using meta-regression analysis. The results indicate that the real misalignments reported in the literature are systematically influenced, inter alia, by the underlying theoretical concepts (Balassa-Samuelson effect, Behavioural Equilibrium Exchange Rate, Fundamental Equilibrium Exchange Rate) and by the econometric estimation methods. The important implication of these findings is that a systematic analysis is needed in terms of both alternative economic and econometric specifications to assess equilibrium exchange rates. |
| Keywords: | equilibrium exchange rate, Balassa-Samuelson effect, meta-analysis |
| JEL: | C15 E31 F31 O11 P17 |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-769&r=tra |
| By: | Balázs Égert; ; |
| Abstract: | This paper investigates the equilibrium exchange rates of three Southeastern European countries (Bulgaria, Croatia and Romania), of two CIS economies (Russia and Ukraine) and of Turkey. A systematic approach in terms of different time horizons at which the equilibrium exchange rate is assessed is conducted, combined with a careful analysis of country-specific factors. For Russia, a first look is taken at the Dutch Disease phenomenon as a possible driving force behind equilibrium exchange rates. A unified framework including productivity and net foreign assets completed with a set control variables such as openness, public debt and public expenditures is used to compute total real misalignment bands. |
| Keywords: | Balassa-Samuelson, Dutch Disease, Bulgaria, Croatia, Romania, Russia, Ukraine, Turkey |
| JEL: | E31 O11 P17 |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-770&r=tra |
| By: | Jesús Crespo-Cuaresma; Balázs Égert; Ronald MacDonald |
| Abstract: | This study investigates exchange rate movements in the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS) and in the Exchange Rate Mechanism II (ERM-II). On the basis of Bessec (2003), we set up a three-regime self-exciting threshold autoregressive model (SETAR) with a non-stationary central band and explicit modelling of the conditional variance. This modelling framework is employed to model daily DM-based and median currency-based bilateral exchange rates of countries participating in the original ERM and also for exchange rates of the Czech Republic, Hungary, Poland and Slovakia from 1999 to 2004. Our results confirm the presence of strong non-linearities and asymmetries in the ERM period, which, however, seem to differ across countries and diminish during the last stage of the run-up to the euro. Important non-linear adjustments are also detected for Denmark in ERM-2 and for our group of four CEE economies. |
| Keywords: | target zone, ERM, non-linearity, SETAR. |
| JEL: | F31 G15 O10 |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-771&r=tra |
| By: | Jan Bruha; Delia Ionascu; Byeongju Jeong |
| Abstract: | We examine the role of organized labor in the restructuring experience of two coal mining regions in the 1990’s: Ostrava in the Czech Republic and the Jiu Valley region in Romania. Under similar external circumstances, the Ostrava region undertook gradual restructuring from early on whereas in Jiu Valley there was no restructuring until 1997, followed by massive layoffs over two years. We conduct a quantitative exercise that accounts for the mine productivity, the labor market conditions, and the constraints in compensating the laid-off miners. We show that the delay in restructuring in Jiu Valley was inefficient: gradual restructuring with compensation would have benefited both the miners and the government. The proximate reason for the delay was the Jiu Valley miners’ action against restructuring. We interpret their action in part as a behavioral pattern under a perceived threat to their livelihood. This accords with their history of militancy in contrast to Ostravian miners. |
| Keywords: | organized labor; restructuring; coal; transition; welfare |
| JEL: | O17 J50 P31 R11 |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-773&r=tra |