nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒12‒01
eighteen papers chosen by
Tono Sanchez
Universitat de Valencia

  1. China’s Banking Reform: Problems and Potential Solutions By Xiaosong Zeng; Charles Goodhart
  2. Collective Bargaining Practices in Eastern Europe: Case Study Evidence from Romania By Trif, Aurora
  3. Reconciling the Chinese Financial Development with its Economic By Jean-Claude Maswana
  4. Health Determinants in Urban China By Zhong Zhao
  5. Lending booms in the new EU Member States - will euro adoption matter? By Micha? Brzoza-Brzezina
  7. Dynamiques de pauvreté et transferts publics : le cas de la Russie By Matthieu Clément
  8. China and the Geopolitics of Oil in the Asian Pacific Region By Pablo Bustelo
  9. Intergovernmental Fiscal Reform, Financial Deepening, and Regional Disparity in China: A Missing Link* By Zhang Jun; Yu Jin
  10. Privatization, Unemployment and Subsidy By K. Balla; G. Kertesi
  11. Structural reforms, macroeconomic policies and the future of Kazakhstan By Alain Sand
  12. Trade integration of Central and Eastern European countries - lessons from a gravity model By Matthieu Bussière; Jarko Fidrmuc; Bernd Schnatz
  13. Job Search Monitoring and Unemployment Duration in Hungary: Evidence from a Randomised Control Trial By John Micklewright; Gyula Nagy
  14. Is Poland the Next Spain? By Francesco Caselli; Silvana Tenreyro
  15. Is Human Capital Losing from Outsourcing? Evidence for Austria and Poland By Lorentowicz, Andzelika; Marin, Dalia; Raubold, Alexander
  17. A New Method for Combining Detrending Techniques with Application to Business Cycle Synchronization of the New EU Members By Zsolt Darvas; Gabor Vadas
  18. The Costs of Remoteness: Evidence from German Division and Reunification By Stephen Redding; Daniel M. Sturm

  1. By: Xiaosong Zeng; Charles Goodhart
    Date: 2005–11
  2. By: Trif, Aurora
    Keywords: trade unions; transition processes; East-Central Europe; Romania; post-Communism; industrial relations
    Date: 2005–11–05
  3. By: Jean-Claude Maswana (Kyoto University)
    Abstract: Focused on the case of China’s financial development, the present discursive essay sets out to argue that if the Chinese financial system distorted the allocation of funds then economic growth could not be sustained and financial depth would remain deficient. The essay puts forward selected financial facts and policies, discusses their relevance in the particular context of China’s economic development goals and concludes that although the Chinese financial system is not developed according to the standards of industrialized countries, financial intermediation has nevertheless been efficient in terms of promoting savings and credit to the extent that might have been good enough to facilitate economic growth. Furthermore, in order to reconcile China’s financial efficiency-growth apparent paradox, the essay supports the view that analyzing China’s financial system using market-based standards may not be valid.
    Keywords: China, financial development, growth-finance nexus
    JEL: O P
    Date: 2005–11–22
  4. By: Zhong Zhao (IZA Bonn and CCER, Peking University)
    Abstract: This paper identifies health determinants in urban China applying Grossman model. Using wave of China Health and Nutrition Survey in 2000, we find that education has important positive effect on health, and cost of health care services has significantly negative impact. However, effects of wage rate and household income are insignificant. We also find that region is an important determinant of health. The body weight is also important, but unlike finding in developed countries, under-weight instead of over-weight is a better predictor for poor health. Our results suggest that male has better health than female does, and married couple has better health in urban China.
    Keywords: self-reported health status, Grossman model, ordered probit, China
    JEL: I12 J24 D12
    Date: 2005–11
  5. By: Micha? Brzoza-Brzezina (National Bank of Poland and Warsaw School of Economics, Warsaw, Poland.)
    Abstract: The paper analyses the potential for lending booms in the three biggest new EU Member States (the Czech Republic, Hungary and Poland) during the process of euro adoption. Experiences of some old members (Greece, Ireland and Portugal) and the econometric evidence speak in favour of strong loan increases in Hungary and Poland even though their magnitude may be smaller than in the case of those recently recorded in Ireland and Portugal. Due to estimation problems, the situation in the Czech Republic was more difficult to foresee, but given almost complete interest rate convergence with the euro area only modest increases in lending should be expected there. In conclusion, it may be stated that, given the currently available information, no substantial risk to the banking sectors of the new Member States should be expected.
    Keywords: lending booms, euro area, banking sector stability, new Member States.
    JEL: E51 E58 G21
    Date: 2005–11
  6. By: Flávio Vilela Vieira; Michele Polline Veríssimo
    Abstract: The main goal os this paper is to understand on theoretical and empirical grounds the main determinants of China´s long-run economic growth. The historical data analysis suggests a crucial role played by FDI and the exchange rate. The econometric analysis provides empirical support for the primary role played by the exchange rate in explaining China´s economic growth (1970 to 2003) followed by FDI, investment rate and trade opennesss. Exchange rate policy and regime seems to be a direct road to explain (past and future) economic growth in China and the conditions for increasing exchange rate flexibility, an almost sure path for the near future.
    JEL: O40 O53 C32
    Date: 2005
  7. By: Matthieu Clément (CED, IFReDE/GRES, Université Montesquieu-Bordeaux IV)
    Abstract: La forte dégradation des conditions de vie subie par la population russe au moment de la transition économique pose la question de l’efficacité de la politique sociale accompagnant les réformes économiques. La Russie a hérité du système de protection sociale soviétique. Celui-ci, conçu dans le cadre d’une société où l’emploi était garanti, les inégalités limitées et la pauvreté officiellement éradiquée, permettait à chaque citoyen d’atteindre un niveau de vie socialement acceptable. Inapproprié pour face aux conséquences sociales de la thérapie de choc, il a connu un certain nombre de modifications institutionnelles tout au long de la période de transition. Cet article vise, à partir des données des enquêtes ménages Russian Longitudinal Monitoring Survey (RLMS) pour la période 1994-2000, à évaluer les performances des transferts publics en termes de réduction de la pauvreté. Dans un premier temps, cette évaluation, qui s’appuie sur la comparaison du bien-être pré-intervention et du bien-être post-intervention, se veut statique, en déterminant la capacité du système à cibler les ménages pauvres et à résorber les écarts de pauvreté. Dans un second temps, nous proposons une analyse dynamique qui évalue la capacité du système à réduire la pauvreté chronique et transitoire, mais également son aptitude à tirer les ménages hors de la pauvreté et à protéger les ménages non pauvres face à un risque d’entrée dans la pauvreté. The strong deterioration of the standard of living of Russian people during economic transition raises the question of the effectiveness of social policy. Russia inherited the Soviet system of social protection. This one, introduced in a society where employment was guaranteed, inequality limited and poverty non-officially recognized, made it possible each citizen to reach a socially acceptable standard of living. Inadequate to deal with social consequences of the shock therapy, he knew several institutional modifications, throughout the transitional period. Based on the Russia Longitudinal Monitoring Survey data over the period 1994-2000, this article aims at evaluating the performances of public transfers in terms of poverty reduction. In the first time, this evaluation, which rest on the comparison of pre-intervention and post-intervention welfare, is static, by determining the capacity of transfers to target poor households and to resorb poverty gaps. In the second time, we propose a dynamic analysis which evaluates the capacity of the system to reduce chronic and transient poverty, but also its aptitude to draw poor households out of poverty and to protect non-poor households against a risk of poverty entry. (Full text in french)
    JEL: I32 I38 P20
    Date: 2005–11
  8. By: Pablo Bustelo (Elcano Royal Institute for International & Strategic Studies & Complutense University of Madrid)
    Abstract: China’s growing demand for oil is significantly changing the international geopolitics of energy, especially in the Asian Pacific region. The recent growth in oil consumption, combined with forecasts of increased oil imports (especially from the Middle East), have led to deep concern among Chinese leaders regarding their country’s energy security. They are responding in a number of different ways. In particular, they are determined to increase the security and reliability of oil imports by searching for new sources of supply, and to control purchases and transport lanes, while boosting national production at any cost. This is already causing tension and could lead to further disputes with the US and other big oil consumers, such as Japan and India, as well as with other Asian Pacific countries. However, enhanced cooperation among the big East Asian economies (China, Japan and South Korea) is also a possibility. This document first of all presents an overview of China’s energy sector, emphasising the strong growth in its energy demand to date and its potential for future growth. Secondly, we look at the oil sector, highlighting China’s growing dependence on imports. The third part deals with the Chinese perception of energy security in the oil sector. Finally, the fourth part focuses on the geopolitical implications for the Asian Pacific region of China’s search for oil.
    Keywords: China, energy consumption, energy production, oil consumption, oil production, oil imports, East Asia
    JEL: O13 Q41 Q43
    Date: 2005–11–20
  9. By: Zhang Jun (China Center for Economic Studies, Fudan University); Yu Jin (Department of Economics, Nanyang Technological University)
    Abstract: It becomes apparent that growing disparity in China is highly associated with regional variation of productivity, and that productivity is significantly impacted by financial deepening process. After identifying and estimating the share of bank lending to non-state sector, this paper finds a significant variation in the level of financial deepening between regions. Then this paper examines why financial development process turns out to be divergent between coastal and inland regions. Such analysis places the issue of enlarging regional imbalance in China in a context specific to the weakness of re-centralization process of intergovernmental fiscal relations in 1994.
    JEL: O
    Date: 2005–11–21
  10. By: K. Balla; G. Kertesi
    Keywords: transition, privatization, unemployment
    JEL: E62 H23 P30
    Date: 2005
  11. By: Alain Sand (GATE CNRS)
    Abstract: This paper presents a small macroeconomic model of Kazakhstan to study the impact of various economic policies. The simulations provide insight into the role of a tight monetary policy, higher foreign direct investment, rises in nominal wages and in crude oil prices. The results obtained are in line with the economic observations and give some support to the policies chosen as priority targets by the Kazakh authorities for the forthcoming years.
    Keywords: Central Asian CIS countries, Kazakhstan, Macroeconomic stabilization, Transition economies
    JEL: E17 F43 P47
    Date: 2005–11
  12. By: Matthieu Bussière (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany); Jarko Fidrmuc (Oesterreichische Nationalbank, University of Munich and Comenius University Bratislava); Bernd Schnatz (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany)
    Abstract: This paper analyses the rapid trade integration of the Central and Eastern European countries (CEECs) with the euro area in the past ten years and draws implications for further integration. We use as benchmark an enhanced gravity model estimated for a large sample of bilateral trade flows across 61 countries since 1980. We show that a careful examination of the model's fixed effects is crucial for the proper interpretation of the results - simply extracting the predicted values of the regression (“in-sample”) – as commonly done in the literature – leads to distorted results as it fails to properly account for the transition process. We therefore propose a two-stage “out-ofsample” approach. The results suggest that trade integration between most of the largest CEECs and the euro area is already relatively well advanced, while some Baltic and South Eastern European countries still have significant scope for trade integration.
    Keywords: Gravity Model, Panel Data, Central and Eastern European Countries, Free Trade Agreement, Transition Economies.
    JEL: C23 F15 F14
    Date: 2005–11
  13. By: John Micklewright (S3RI, University of Southampton and IZA Bonn); Gyula Nagy (Corvinus University of Budapest)
    Abstract: The impact of the administration of unemployment benefits on time spent unemployed is a neglected issue in discussion of incentive effects in Central and Eastern Europe. We use Labour Force Survey data, administrative registers and inspection of benefit office practices to show that there is good reason to investigate this issue in Hungary. We then report on results from a field experiment of the impact of tightening the administration of benefits in which benefit claimants were randomly assigned to treatment and control groups. Treatment has quite a large effect on durations on benefit of women aged 30 and over while we find no effect for younger women or for men.
    Keywords: experiment, job search, unemployment insurance, Hungary
    JEL: J64 J65 P23
    Date: 2005–11
  14. By: Francesco Caselli; Silvana Tenreyro
    Abstract: We revisit Western Europe's record with labor-productivity convergence, and tentatively extrapolateits implications for the future path of Eastern Europe. The poorer Western European countries caughtup with the richer ones through both higher rates of physical capital accumulation and greater totalfactor productivity gains. These (relatively) high rates of capital accumulation and TFP growth reflectconvergence along two margins. One margin (between industry) is a massive reallocation of laborfrom agriculture to manufacturing and services, which have higher capital intensity and use resourcesmore efficiently. The other margin (within industry) reflects capital deepening and technology catchupat the industry level. In Eastern Europe the employment share of agriculture is typically quitelarge, and agriculture is particularly unproductive. Hence, there are potential gains from sectoralreallocation. However, quantitatively the between-industry component of the East's income gap isquite 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 thatconvergence will take a long time. On the positive side, however, Eastern Europe already has levels ofhuman capital similar to those of Western Europe. This is good news because human capital gapshave proved very persistent in Western Europe's experience. Hence, Eastern Europe does start outwithout the handicap that is harder to overcome.
    Keywords: Economic integration, economic growth, labor, technology, productivity gaps, Europe
    JEL: F15 F43 N10 O11 O14 O47
    Date: 2005–01
  15. By: Lorentowicz, Andzelika; Marin, Dalia; Raubold, Alexander
    Abstract: Feenstra and Hanson (1997) have argued in the context of the North American Free Trade Agreement that US outsourcing to Mexico leads to an increase in the skill premium in both the US and Mexico. In this paper we show on the example of Austria and Poland that with the new international division of labor emerging in Europe Austria, the high income country, is specializing in the low skill intensive part of the value chain and Poland, the low income country, is specializing in the high skill part. As a result, skilled workers in Austria are losing from outsourcing, while gaining in Poland. In Austria, relative wages for human capital declined by 2 percent during 1995-2002 and increased by 41 percent during 1994-2002 in Poland. In both countries outsourcing contributes roughly 35 percent to these changes in the relative wages for skilled workers. Furthermore, we show that Austria?s R&D policy has contributed to an increase in the skill premium there.
    JEL: P45 J31 F23 F21
    Date: 2005–10
  16. By: Mardi Dungey; Charles Goodhart; Demosthenes Tambakis
    Abstract: The second half of AUgust 1998 was dominated by two events. From 14 to 28 August the Hong Kong Monetary Authority (HKMA) intervened in the Hong Kong equity markets to prevent a speculative double play against their currency board. On 17 August Russia announced its default on sovereign bonds. This paper demonstrates that the HKMA interventions had a substantial impact on the outcomes for US Treasury markets during this period. Using a careful analysis of high frequency bond market data both events are shown to intersect in the US Treasury market, despite having originated from seemingly unrelated shocks. On this evidence the shocks emanating from Hong Kong were important for the US Treasury market. The lesson for policy makers is that major markets play an important role in transmitting and absorbing the effects of unrelated shocks.
    JEL: F42
    Date: 2005–09
  17. By: Zsolt Darvas (Corvinus University, Budapest); Gabor Vadas (Magyar Nemzeti Bank)
    Abstract: Decomposing output into trend and cyclical components is an uncertain exercise and depends on the method applied. It is an especially dubious task for countries undergoing large structural changes, such as transition countries. Despite their deficiencies, however, univariate detrending methods are frequently adopted for both policy oriented and academic research. This paper proposes a new procedure for combining univariate detrending techniques which is based on revisions of the estimated output gaps adjusted by the variance of and the correlation among output gaps. The procedure is applied to the study of the similarity of business cycles between the euro area and new EU Member States.
    Keywords: combination, detrending, new EU members, OCA, output gap, revision
    JEL: C22 E32
    Date: 2005
  18. By: Stephen Redding; Daniel M. Sturm
    Abstract: This paper exploits the division of Germany after the Second World War and thereunification of East and West Germany in 1990 as a natural experiment to provide evidenceof the importance of market access for economic development. In line with a standard neweconomic geography model, we find that following division cities in West Germany that wereclose to the new border between East and West Germany experienced a substantial decline inpopulation growth relative to other West German cities. We provide several pieces ofevidence that the decline of the border cities can be entirely accounted for by their loss inmarket access and is neither driven by differences in industrial structure nor differences in thedegree of warrelated destruction. Finally, we also find some first evidence of a recovery ofthe border cities after the re-unification of East and West Germany.
    Keywords: Market Access, Economic Geography, German Division, German Reunification
    JEL: F15 N94 O18
    Date: 2005–05

This nep-tra issue is ©2005 by Tono Sanchez. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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