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on Transition Economics |
| By: | Zuzana Fungacova |
| Abstract: | In this paper we study the relationship between mass privatization and capital market development in the transition economies. The link is investigated empirically using a panel of data which includes most of the transition countries. Our results confirm the hypothesis that mass privatization exerted a negative influence on capital market functioning in the short and medium term. Results further indicate that in countries with mass privatization, the capital market was established and perceived only as a byproduct of the privatization process and did not serve as a source of capital for the corporate sector. This non-transparent market of thousands of securities caused negative investor sentiment and thus did not contribute to initiating economic growth. |
| Keywords: | Privatization, mass privatization, emerging capital markets, capital market. |
| JEL: | G15 G28 P34 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp256&r=tra |
| By: | Elena Kozakova |
| Abstract: | The robust Russian economic recovery after the 1998 financial crisis raised the economic standing of the population, especially for low-paid workers, most of whom are women. In this paper I use the Russian Longitudinal Monitoring Survey from 1996 through 2002 to ask whether this helped to reduce the gender wage gap. The wage measurement has been affected by the wage arrears, an integral feature of the Russian labor market in this period. The raw malefemale wage gap for those not affected by wage arrears exhibits a stable pattern save a 10 percentage point increase in 2000. However, this temporal widening of the gap is due to lowwage women becoming more likely to receive their wages in full than low-wage men in 2000. Furthermore, the wage gap is stable for those who consistently receive full wages. |
| Keywords: | Russia, wages, discrimination, gender. |
| JEL: | J3 J7 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp257&r=tra |
| By: | Jan Hanousek; Evzen Kocenda; Jan Svejnar |
| Abstract: | We analyze the effects of different types and concentration of ownership on performance using a population of firms in a model transition economy after mass privatization. Specifications based on first-differences and unusual instrumental variables show that contrary to conventional wisdom, the effects of privatization and different types of ownership are limited and many types of private owners do not generate performance that is different from that of firms with state ownership. Concentrated ownership has a positive effect but only in some instances and a positive effect of foreign ownership is detectable primarily for majority ownership and foreign industrial firms. The effects of concentrated ownership support the agency theory and go against theories stressing the positive effects of managerial autonomy. Our results are also consistent with managers or stockholders “looting” the firms. The state as a holder of the golden share has a positive effect on employment and in some specifications also on output and profitability. Overall, our results suggest that the expectations and earlier findings of positive effects of privatization on performance were premature, with the effects of many types of ownership being indistinguishable from that of state ownership. |
| Keywords: | Ownership, performance, privatization, corporate governance, panel data, endogeneity, industrial. |
| JEL: | C33 D20 G32 G34 L20 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp259&r=tra |
| By: | Ainura Uzagalieva |
| Abstract: | The ideal measure of inflation should reflect long-run price movements driven by actual demand in the economy and exclude short-term supply shocks. Considering that the CPI does not correspond to such a measure, the purpose of this research is to analyze alternative methods of core (or underlying) inflation and to choose a method suitable for measuring core inflation in the Kyrgyz Republic. The results can be useful for proper monetary policy reaction to inflationary shifts in the Kyrgyz Republic. |
| Keywords: | Kyrgyz Republic, inflation, core inflation, monetary policy, smoothing, optimality criteria. |
| JEL: | E31 E52 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp261&r=tra |
| By: | Brown, J David; Earle, John S |
| Abstract: | We analyse the impact of privatization on multifactor productivity (MFP) using long panel data for nearly the universe of initially state-owned manufacturing firms in four economies. Controlling for firm and industry-year fixed effects and employing a wide variety of measurement approaches, we estimate that majority privatization raises MFP about 28% in Romania, 22% in Hungary, and 3% in Ukraine, with some variation across specifications, while in Russia it lowers it about 4%. Privatization to foreign rather than domestic investors has a larger impact (about 44%) and is much more consistent across countries. The positive effects emerge within a year in Hungary, Romania, and Ukraine and continue to grow thereafter, but are still ambiguous even after 5 years in Russia. Pre-privatization MFP exceeds that of firms remaining state-owned in all countries, implying that cross-sectional estimates overstate privatization effects. The patterns of the estimated effects cast doubt on a number of explanations for ‘when privatization works’. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4791&r=tra |
| By: | Gillman, Max; Nakov, Anton |
| Abstract: | The Paper presents a model in which the exogenous money supply causes changes in the inflation rate and the output growth rate. While inflation and growth rate changes occur simultaneously, the inflation acts as a tax on the return to human capital and in this sense induces the growth rate decrease. Shifts in the model’s credit sector productivity cause shifts in the income velocity of money that can break the otherwise stable relation between money, inflation, and output growth. Applied to two accession countries, Hungary and Poland, a VAR system is estimated for each that incorporates endogenously determined multiple structural breaks. Results indicate Granger causality positively from money to inflation and negatively from inflation to growth for both Hungary and Poland, as suggested by the model, although there is some feedback to money for Poland. Three structural breaks are found for each country that are linked to changes in velocity trends, and to the breaks found in the other country. |
| Keywords: | Granger causality; growth; inflation; structural breaks; transition; VAR; velocity |
| JEL: | C22 E31 O42 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4845&r=tra |
| By: | Benczúr, Péter; Rátfai, Attila |
| Abstract: | We carry out a detailed analysis of quarterly frequency dynamics in macroeconomic aggregates in twelve countries of Central and Eastern Europe. The facts we document include the variability and persistence in and the co-movement among output, and other major real and nominal variables. We find that consumption is highly volatile and government spending is procyclical. Gross fixed capital formation is highly volatile. Net exports are countercyclical. Imports are procyclical, much more than exports. Exports are most procyclical and persistent in open countries. Labour market variables are all highly volatile. Employment is lagging, and often procyclical. Real wages are dominantly procyclical. Productivity is dominantly procyclical and coincidental. Private credit is procyclical and dominantly lagging the cycle. The CPI is countercyclical, and is weakly leading or coincidental. The cyclicality of inflation is unclear, but its relative volatility is low. Net capital flows are mostly leading and procyclical and exhibit low persistence. Nominal interest rates are in general smooth and persistent. The nominal exchange rate is more persistent than the real one. Overall, we find that fluctuations in CEE countries are larger than in industrial countries, and are of similar size than in other emerging economies. This is particularly true about private consumption. The co-movement of variables, however, shows a large degree of similarity. A notable exception is government spending: unlike in industrial economies, it is rather procyclical in transition economies. The findings also indicate that Croatia and the accession group show broadly similar cyclical behaviour to industrial countries. The most frequent country outliers are Bulgaria, Romania and Russia, especially in labour market, price and exchange rate variables. Excluding these countries from the sample makes many of the observed patterns in cyclical dynamics quite homogenous. |
| Keywords: | business cycle facts; Central and Eastern Europe |
| JEL: | E32 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4846&r=tra |
| By: | Demyanyk, Yuliya; Volosovych, Vadym |
| Abstract: | We study the degree of output and consumption asymmetry for the ten new and fifteen original European Union members during the period 1994–2001. We establish basic stylized facts about macroeconomic asymmetry from correlations of GDP and consumption growth rates with corresponding aggregates. In addition, we determine which countries would potentially gain the most from international risk sharing within the European Union employing a utility-based measure suggested by Kalemli-Ozcan, Sørensen and Yosha (2001). We find much higher potential gains for the new members compared to those for original EU-15 countries. In particular, economies with the most volatile and counter-cyclical output growth – Czech Republic, Slovak Republic, and the three Baltic states – might benefit the most. We show that EU enlargement would not reduce the welfare of EU-15 members. If these countries move towards full risk sharing their potential welfare gains after enlargement would be virtually unchanged. |
| Keywords: | asymmetry of GDP; consumption insurance; EU enlargement; risk sharing |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4847&r=tra |
| By: | Égert, Balázs; Halpern, László |
| Abstract: | This Paper sets out to analyse 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. We study the extent to which the estimated real misalignments reported in the literature depend on the underlying theoretical approach (Balassa-Samuelson effect, Behavioural Equilibrium Exchange Rate, Fundamental Equilibrium Exchange Rate) and on other characteristics of the individual studies. We also seek to explore whether we can gain more insight from the literature regarding what determines the size and, perhaps more importantly, the sign of the estimated coefficient of the productivity variable and of two other variables commonly included in real exchange rate determination equations, notably net foreign assets and openness. |
| Keywords: | Balassa-Samuelson effect; equilibrium exchange rate; meta-analysis |
| JEL: | C15 E31 F31 O11 P17 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4869&r=tra |
| By: | Caselli, Francesco; Tenreyro, Silvana |
| Abstract: | We revisit Western Europe’s record with labour-productivity convergence, and tentatively extrapolate its implications for the future path of Eastern Europe. The poorer Western European countries caught up with the richer ones through both higher rates of physical capital accumulation and greater total factor productivity gains. These (relatively) high rates of capital accumulation and TFP growth reflect convergence along two margins. One margin (between industry) is a massive reallocation of labour from agriculture to manufacturing and services, which have higher capital intensity and use resources more efficiently. The other margin (within industry) reflects capital deepening and technology catch-up at the industry level. In Eastern Europe the employment share of agriculture is typically quite large, and agriculture is particularly unproductive. Hence, there are potential gains from sectoral reallocation. However, quantitatively the between-industry component of the East’s income gap is quite small. Hence, the East seems to have only one real margin to exploit: the within-industry one. Coupled with the fact that within-industry productivity gaps are enormous, this suggests that convergence will take a long time. On the positive side, however, Eastern Europe already has levels of human capital similar to those of Western Europe. This is good news because human capital gaps have proved very persistent in Western Europe’s experience. Hence, Eastern Europe does start out without the handicap that is harder to overcome. |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4877&r=tra |
| By: | Brainerd, Elizabeth; Cutler, David M |
| Abstract: | Male life expectancy at birth fell by over six years in Russia between 1989 and 1994. Many other countries of the former Soviet Union saw similar declines, and female life expectancy fell as well. Using cross-country and Russian household survey data, we assess six possible explanations for this upsurge in mortality. Most find little support in the data: the deterioration of the health care system, changes in diet and obesity, and material deprivation fail to explain the increase in mortality rates. The two factors that do appear to be important are alcohol consumption, especially as it relates to external causes of death (homicide, suicide, and accidents) and stress associated with a poor outlook for the future. However, a large residual remains to be explained. |
| Keywords: | eastern europe; health; mortality; Russia |
| JEL: | I12 J10 P36 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4900&r=tra |
| By: | Estrin, Saul; Tian, Lihui |
| Abstract: | The role of government shareholding in corporate performance is central to an understanding of China’s newly privatized large firms and the stock market. In this paper, we analyse shareholders as agents that can both harm and benefit companies. We examine the ownership structure of 826 listed corporations and find that government shareholding is surprisingly large. Its effect on corporate value is found to be negative, but non-monotonic. Up to a certain threshold, corporate value decreases as government shareholding stakes increase, but beyond this corporate value begins to increase. We interpret this in terms of ownership concentration and the advantages of government partiality. |
| Keywords: | China; corporate governance; government shareholding |
| JEL: | G15 G32 G34 L33 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4919&r=tra |
| By: | Goh, Chor-Ching; Javorcik, Beata Smarzynska |
| Abstract: | This study examines the impact of Poland’s trade liberalization 1994-2001 on the industry wage structure. The liberalization was undertaken in preparation for Poland’s accession to the European Union and was more pronounced in industries with larger shares of unskilled labour. Our analysis indicates that a decrease in an industry tariff was associated with higher wages being earned by workers employed in the industry, controlling for worker characteristics and geographic variables. The result is robust to including year and industry fixed effects, controlling for industry-level exports, imports, concentration, stock of foreign direct investment and capital accumulation. The finding is consistent with liberalization increasing competitive pressures, forcing firms to restructure and improve their productivity, which in turn translates into higher profits being shared with workers. It could also be potentially attributed to trade liberalization lowering the costs of imported inputs, which enhances firm profitability. The result holds when skilled workers are excluded from the sample, thus suggesting that reductions in trade barriers benefited the unskilled in terms of an increase in wages. |
| Keywords: | globalization; trade liberalization; transition; wages |
| JEL: | F16 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4929&r=tra |
| By: | Bhaumik, Sumon Kumar; Estrin, Saul |
| Abstract: | We use enterprise data to analyse and contrast the determinants of enterprise performance in China and Russia. We find that in China, enterprise growth and efficiency is associated with rapid increases in factor inputs, but not correlated with ownership or institutional factors. However, in Russia, enterprise growth is not associated with increases in factor quantity (except for labour) or quality. The main determinants of company performance are instead demand and institutional factors at a regional level. We explore possible interpretations of these results, including the impact of institutional and managerial quality. |
| Keywords: | enterprise performance; privatization in Russia and China |
| JEL: | D23 L22 O12 P31 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4937&r=tra |
| By: | Scheibe, Jörg; Vines, David |
| Abstract: | This paper models Chinese inflation using an output gap Phillips curve. Inflation modelling for the world’s sixth largest economy is a still under-researched topic. We estimate a partially forward-looking Phillips curve as well as traditional backward-looking Phillips curves. Using quarterly data from 1988 to 2002, we estimate a vertical long-run Phillips curve for China and show that the output gap, the exchange rate, and inflation expectations play important roles in explaining inflation. We adjust for structural change in the economy where possible and estimate regressions for rolling sample windows in order to test for and uncover gradual structural change. We evaluate a number of alternative output gap estimates and find that output gaps which are derived from production function estimations for the Chinese economy are of more use in estimating a Phillips curve than output gaps derived from simple statistical trends. Partially forward-looking Phillips curves provide a better fit than backward-looking ones. The identification of a non-increasing exchange rate effect on inflation during a period of large import growth hints at increased pricing to market behaviour by importers. This result is relevant to policies regarding possible exchange rate liberalization in China. |
| Keywords: | China; monetary policy; output gap; Phillips curve; structural change |
| JEL: | E12 E31 E32 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4957&r=tra |
| By: | Amiti, Mary; Javorcik, Beata Smarzynska |
| Abstract: | This study examines the determinants of entry by foreign firms, using information on 515 Chinese industries at the provincial level during 1998-2001. The analysis, rooted in the new economic geography, focuses on market and supplier access within and outside the province of entry, as well as production and trade costs. The results indicate that market and supplier access are the most important factors affecting foreign entry. Access to markets and suppliers in the province of entry matters more than access to the rest of China, which is consistent with market fragmentation due to underdeveloped transport infrastructure and informal trade barriers. |
| Keywords: | foreign direct investment; market access; supply access; trade costs |
| JEL: | F10 F23 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4978&r=tra |
| By: | Fidrmuc, Jan |
| Abstract: | In this paper, I analyse the development of inter-regional mobility in the Czech Republic during the transition from central planning to a market economy. I show that while the intensity of migration is low and has even fallen during the transition, regional disparities in unemployment rates and earnings have increased. More importantly, labour mobility has little effect in facilitating labour market 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 factosr 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: | labour market adjustment; migration; mobility; regional shocks; survey data |
| JEL: | F22 J61 P23 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5069&r=tra |
| By: | Goriaev, Alexei; Sonin, Konstantin |
| Abstract: | The Yukos affair, a high-profile story of the state-led assault on a private Russian company, provides an excellent opportunity for an inquiry into the nature of company-specific political risks in emerging markets. News associated primarily with law enforcement agencies’ actions against company’s managers, not formally related to the company itself, caused significant negative abnormal returns for Yukos. The results are robust and not driven by a few major events, such as the arrests of Yukos’ top managers and shareholders. Stocks of less transparent private Russian companies have been more sensitive to Yukos-related events, especially employee-related charges by the law enforcement agencies. The situation was different for less transparent government-owned companies such as the world-largest natural gas producer Gazprom: they appear to be significantly less sensitive to these events. Actions of regulatory agencies have had predominantly industry-wide impact, whereas law-enforcement agencies’ actions affected shares of large private companies, especially those were privatized in the notorious loans-for-shares privatization auctions. |
| Keywords: | company specific political risk; event study; oil; privatization; Russian stock market |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5076&r=tra |
| By: | Peter C.B. Phillips (Cowles Foundation, Yale University); Donggyu Sul (Dept. of Economics, University of Auckland) |
| Abstract: | Some extensions of neoclassical growth models are discussed that allow for cross section heterogeneity among economies and evolution in rates of technological progress over time. The models offer a spectrum of transitional behavior among economies that includes convergence to a common steady state path as well as various forms of transitional divergence and convergence. Mechanisms for modeling such transitions and measuring them econometrically are developed in the paper. A new regression test of convergence is proposed, its asymptotic properties are derived and some simulations of its finite sample properties are reported. Transition curves for individual economies and subgroups of economies are estimated in a series of empirical applications of the methods to regional US data, OECD data and Penn World Table data. |
| Keywords: | Economic growth, Growth convergence, Heterogeneity, Neoclassical growth, Relative transition, Transition curve, Transitional divergence |
| JEL: | O30 O40 C33 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1514&r=tra |
| By: | Rosa Capolupo (Dipartimento di Scienze Economiche); Giuseppe Celi (Dipartimento di Scienze Economiche) |
| Abstract: | We present evidence of the relationship between trade-openness and growth in the sample of former communist countries before and after the transition from a central planned economy (CPE) to a market economy by applying standard OLS and panel estimation techniques. The main finding is that during the transition the importance of openness on growth per capita has increased sharply by changing the coefficient from a negative sign to a positive and significant one. The result seems to be robust to (i) estimation methods , (ii) different measures of openness adopted and (iii)consistent with the integration view, which states that a higher degree of trade openness spurred by market incentives and comparative advantages enhances the per capita growth rate of economies. |
| Keywords: | economic growth, transition economies, trade openness |
| JEL: | O47 O42 G30 |
| Date: | 2005–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpge:0506002&r=tra |
| By: | Sadek Boussena (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - http://www.upmf-grenoble.fr/lepii/ - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II); Catherine Locatelli (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - http://www.upmf-grenoble.fr/lepii/ - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | Les réformes des années quatre-vingt-dix, centrées sur de vastes programmes de privatisation, ont structuré l'industrie pétrolière russe autour de quelques grandes compagnies nationales et privées insérées dans un réseau de rapports de pouvoir complexes avec l'Etat fédéral et les Régions. Cette structure d'organisation incite à s'interroger sur les objectifs poursuivis par l'Etat concernant une industrie dite « stratégique ». |
| Keywords: | Russie, industrie pétrolière, accès aux ressources, droits de propriété, politique internationale |
| Date: | 2005–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00003940_v1&r=tra |