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on Transition Economics |
| By: | Zhu, Z.; Krug, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | (Last revised version December 2005) To address the problem why China, as a communist country, moves in the opposite direction when the public sector has undergoing a continuous growth in most Western economies since the World War II, we offer a new approach that the de facto fiscal decentralization curtails government size in transition China in addition to conventional explanations. Meanwhile, by analyzing panel data and various variables used by previous empirical studies, this paper tests the Leviathan hypothesis for vertical decentralization, horizontal fragmentation and intergovernmental collusion at central-provincial and provincial-local level. Our empirical results not only explain Chinese shrinking government size, but also lend support to Leviathan hypothesis, especially, under the condition of the absence of traditional democratic electoral constraint. |
| Keywords: | Leviathan;Fiscal Decentralization;China;Transition Economy; |
| Date: | 2005–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30007859&r=tra |
| By: | Péter Benczúr (Magyar Nemzeti Bank); Attila Rátfai (Central European University, Budapest) |
| 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. Labor 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 behavior to industrial countries. The most frequent country outliers are Bulgaria, Romania and Russia, especially in labor 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 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:wpaper:2005/02&r=tra |
| By: | Aristeidis Samitas (University of Aegean); Dimitris Kenourgios (University of Athens) |
| Abstract: | This paper investigates whether current and future domestic and international macroeconomic variables can explain long and short run stock returns in four “new” European countries (Poland, Czech Republic, Slovakia and Hungary). “Old” western European countries (U.K., France, Italy and Germany) are included in the empirical analysis, whilst USA is considered as a “foreign global influence”. Using the present value model of stock prices and a complete range of cointegration and causality tests, it is found that “new” European stock markets are not perfectly integrated with foreign financial markets, while domestic economic activity and the German factor are more influential on these stock markets than the American global factor. |
| Keywords: | Stock returns; macroeconomic factors; present value model; Central-Eastern (“New”) stock markets; “Old” European stock markets; USA. |
| JEL: | G15 |
| Date: | 2005–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0512022&r=tra |
| By: | Ilker Domac; Kyle Peters; Yevgeny Yuzefovichî |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:0304&r=tra |
| By: | Kraay, Aart; Dollar, David |
| Abstract: | China in the past few years has emerged as a net foreign creditor on the international scene with net foreign assets slightly greater than zero percent of wealth. This is surprising given that China is a relatively poor country with a capital-labor ratio about one-fifth the world average and one-tenth the U.S. level. The main questions that the authors address are whether it makes economic sense for China to be a net creditor and how they see China ' s net foreign asset position evolving over the next 20 years. They calibrate a theoretical model of international capital flows featuring diminishing returns, production risk, and sovereign risk. The calibrations for China yield a predicted net foreign asset position of -17 percent of China ' s wealth. The authors also estimate nonstructural cross-country regressions of determinants of net foreign assets in which China is always a significant outlier with 5 to 7 percentage points more of net foreign assets relative to wealth than is predicted by its characteristics. China ' s extensive capital controls can explain why its current net foreign asset position is far away from what is predicted by open-economy models and cross-country empirics. It seems reasonable to assume that China ' s international financial integration will increase over time. The authors calibrate and predict different scenarios out to 2025. These scenarios are necessarily speculative, but it is interesting that they typically imply negative net foreign asset positions between 3 and 9 percent of wealth. What may be counter-intuitive for many policymakers is that successful institutional ref orm and productivity growth are likely to lead to more negative net foreign asset positions than occurs with stagnation. Starting from China ' s zero net foreign assets position, it would take current account deficits in the range of 2-5 percent of GDP to reach any of these net foreign assets positions. These are not unreasonable deficits, but they require a large adjustment from the present 6 percent of GDP current account surplus. |
| Keywords: | Economic Theory & Research,Investment and Investment Climate,Capital Flows,Economic Growth,Banking Law |
| Date: | 2005–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3801&r=tra |
| By: | Balázs Égert (Oesterreichische Nationalbank; MODEM, University of Paris X-Nanterre and William Davidson Institute); László Halpern (Institute of Economics, Hungarian Academy of Sciences; CEPR, Central European University and William Davidson Institute); Ronald MacDonald (University of Glasgow and CESifo) |
| Abstract: | In this paper we present an overview of a number of issues relating to the equilibrium exchange rates of transition economies of the former soviet bloc. In particular, we present a critical overview of the various methods available for calculating equilibrium exchange rates and discuss how useful they are likely to be for the transition economies. Amongst our findings is the result that the trend appreciation usually observed for the exchange rates of these economies is affected by factors other than the usual Balassa-Samuelson effect, such as the behaviour of the real exchange rate of the open sector and regulated prices. We then consider three main sources of uncertainty relating to the implementation of an equilibrium exchange rate model, namely: differences in the theoretical underpinnings; differences in the econometric estimation techniques; and differences relating to the time series and cross-sectional dimensions of the data. The ensuing three-dimensional space of real misalignments is probably a useful tool in determining the direction of a possible misalignment rather than its precise size. |
| Date: | 2005–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:106&r=tra |
| By: | Gunther Schnabl (Tübingen University) |
| Abstract: | In 2005, the Bank of Russia has made three announcements that indicate an increasing role for the euro in the Russian exchange rate strategy. On February 4 2005 the Bank of Russia announced that it has started to stabilize the daily volatilities of the Russian ruble against a dollar- euro currency basket. While the announced weight of the euro was 10% (90% dollar) by then, the Bank of Russia increased this weight to currently 40% within ten months. Bank of Russia representatives have stressed the intention to increase the weight of the euro the Russian currency basket further up to 50% but without indicating a specific time horizon. Other statements of Bank of Russia representatives have stressed the rising role of euro as intervention and reserve currency. This paper reviews the recent trends in Russian exchange rate strategy with a focus on the role of the euro. |
| Keywords: | Words: Russia, Currency Basket, International Role of the Euro. |
| JEL: | F31 |
| Date: | 2005–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpif:0512005&r=tra |
| By: | Lee, Kihoon; Anderson, William P.; Subramanian, Uma |
| Abstract: | This study measures the impact of investment climate factors on total factor productivity (TFP) of firms in Brazil and China. The analysis is conducted in two steps: first an econometric production function is estimated to produce a measure of TFP at the firm level. In the second step, variation in TFP across firms is statistically related to a indicators of the investment climate as well as firm characteristics. The results yield a number of insights about the factors underlying productivity. In both countries, and in a variety of industry groups, indicators of poor investment climate, especially delays in customs clearance and interruptions in utility services, have significant negative effects on TFP. Reducing customs clearance time by one day in China could increase TFP by 2-6 percent. Indicators such as email usage have positive effects on TFP. In the case of China, state-owned firms and firms located in t he interior are shown to be much less productive than privately owned firms and firms located in the east. In Brazil, the results present an interesting contrast between the apparel industry and the electronics industry. In the apparel industry, older firms in competitive markets are more productive, while in the case of electronics, newer firms with higher market shares are more productive. |
| Keywords: | Economic Theory & Research,Technology Industry,Water and Industry,ICT Policy and Strategies,Economic Growth |
| Date: | 2005–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3792&r=tra |
| By: | Matthieu Bussière (European Central Bank); Jarko Fidrmuc (Ludwig-Maximilians-Universität München); Bernd Schnatz (European Central Bank) |
| Abstract: | The aim of the paper is to analyse the factors behind the rapid trade integration of the Central and Eastern European countries with the euro area in the past ten years and to gauge the potential for further integration. We use as benchmark an enhanced gravity model estimated with a large sample of bilateral trade flows across 61 countries since 1980. We show that a careful examination of the fixed effects of the model 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 take the transition process properly into account. As an alternative, we propose a two-stage “out-of-sample” approach. The results suggest that trade integration between most of the largest Central and Eastern European countries and the euro area is already relatively advanced, while the Baltic countries as well as the South Eastern European countries still have significant scope for integration. |
| Date: | 2005–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:105&r=tra |
| By: | Andrea Zaghini (Banca d'Italia) |
| Abstract: | The paper analyses the most recent evolution of the trade specialisation pattern in the 10 new EU Member States. Relying on the empirical approach of the Markov transition matrices it analyses both the changes in the external shape of the distribution of comparative advantages and the intra-distribution dynamics. The new Members show an indeed dynamic trade pattern; they were able to gain comparative advantages relatively fast in sectors in which they were lagging behind at the beginning of the transition process, notably in some “high tech” products. In addition, many specialisation improvements occurred in those items for which the world demand expands at the fastest rate, hinting to the possibility of an increase in their trade shares on world markets. Both findings can be explained by the initial need to rebuild and modernise the entire capital stock, the significant skilled-labour force endowment, and the large FDI inflows that allowed them to skip intermediate states of technological development. |
| Keywords: | Revealed comparative advantages, international specialization model, distribution dynamics |
| JEL: | F14 F15 E23 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_568_05&r=tra |
| By: | Mehdi Abbas (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: | Cette chronique fait le point sur la position des principaux acteurs de la négociation commerciale multilatérale dans le cadre de la préparation de la sixième Conférence ministérielle de l'OMC à HongKong. Après avoir fait le point sur l'évolution de l'Agenda pour le développement, c'est-à-dire sa transformation en une négociation commerciale standard d'accès aux marchés, l'article met en avant les contraintes systémiques auxquelles font face l'OMC et le système commercial multilatéral. |
| Keywords: | négociation commerciale multilatérale;Organisation mondiale du commerce;système commercial multilatéral |
| Date: | 2005–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00007103_v1&r=tra |
| By: | Gabor Vadas (Magyar Nemzeti Bank) |
| Abstract: | One of the most important aspects of consumer surveys is the computation of the consumer confidence index, which aims to provide accurate figures on the financial position and outlook of households as well as their intention concerning future consumption and savings. . Although the motion of the consumer confidence index is of interest to both policymakers and economic forecasters, it is not obvious whether the sub-questions included in the surveys and the published composite index derived from such questions can measure exactly what survey makers are curious to know. In this study we examine the properties and forecasting capability of the Hungarian consumer confidence index published by GKI Economic Research Plc. We argue that some questions are unable to measure what they theoretically should. However, others are useful in forecasting the consumption expenditure of Hungarian households. Our results suggest that, in addition to macro variables, the consumer confidence index contains information over and above macro variables. |
| Keywords: | consumer confidence index, consumption, forecast |
| JEL: | D1 E21 E27 |
| Date: | 2005–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmi:0512006&r=tra |
| By: | Hutton, Craig; Hornby, Duncan; Falkingham, Jane; Baschieri, Angela |
| Abstract: | " Poverty maps " -that is, graphic representations of spatially disaggregated estimates of welfare-are being increasingly used to geographically target scarce resources. But the development of detailed poverty maps in many low resource settings is hampered because of data constraints. Data on income or consumption are often unavailable and, where they are, direct survey estimates for small areas are likely to yield unacceptably large standard errors due to limited sample sizes. Census data offer the required level of coverage but do not generally contain the appropriate information. This has led to the development of a range of alternative methods aimed either at combining survey data with unit record data from the census to produce estimates of income or expenditure for small areas or at developing alternative welfare rankings, such as asset indices, using existing census data. This paper develops a set of poverty maps for Azerbaijan that can be used by different users. Two alternative approaches to the measurement and mapping of welfare are adopted. First, a map is derived using imputed household consumption. This involves combining information from the 2002 Household Budget Survey (HBS) with 1999 census data. Second, an alternative map is constructed using an asset index based on data from the 1999 census to produce estimates of welfare at the rayon level. This provides a unique opportunity to compare the welfare rankings obtained at the regional level under the two alternative approaches. I n order to visually present the spatially disgaggregated estimates of welfare in Azerbaijan, this paper has also produced a digital census map of Azerbaijan. This involved matching the census enumeration areas to a digital settlement map of Azerbaijan. Therefore, it is now possible for the State Statistical Committee of Azerbaijan to display graphically the results of the 1999 census of Azerbaijan along with other data. |
| Keywords: | Rural Poverty Reduction,Economic Theory & Research,Poverty Lines,Poverty Diagnostics,Technology Industry |
| Date: | 2005–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3793&r=tra |