nep-tra New Economics Papers
on Transition Economics
Issue of 2006‒08‒26
twelve papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Poverty and Inequality in Eastern Europe and the CIS Transition Economies By Mihaly Simai
  2. Modernizing China’s Growth Paradigm By Eswar S. Prasad; Raghuram G. Rajan
  3. Woman’s employment and union disruption in a changing socio-economic context: the case of Russia By Magdalena Muszynska
  4. Understanding the Long-Term Growth Performance of the East European and CIS Economies By Rumen Dobrinsky; Dieter Hesse; Rolf Traeger
  5. Report on the external validation of the "Education and Employment Survey" on Russia By Eugeny Soroko; Dirk Konietzka
  6. Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter? By Sumon Kumar Bhaumik; Ralitza Dimova; Jeffrey B. Nugent
  7. Central Asia: Mapping Future Prospects By John Malcolm Dowling; Ganeshan Wignaraja
  8. Central Asia’s Transition After Fifteen Years: Growth and Policy Choices By John Malcolm Dowling; Ganeshan Wignaraja
  9. Stochastic forecast of the population of Poland, 2005 – 2050 By Anna Matysiak; Beata Nowok
  11. The expected effect of the euro on the Hungarian monetary transmission By Gábor Orbán; Zoltán Szalai
  12. The Direct Substitution Between Government and Private Consumption in East Asia By Yum K. Kwan

  1. By: Mihaly Simai
    Abstract: This paper deals with the causes and consequences of inequality and poverty in the countries east of the new frontiers of the European Union, mainly with the CIS countries. Poverty and inequalities in the former socialist countries were partly mitigated by the social policies of the state. The transition processes, however, have resulted in new distributions of income and wealth. The new structural sources of poverty and inequalities have often been more extreme. Some CIS countries have moderated poverty, which nonetheless persists in most CIS countries, in spite of some economic improvements.
    Keywords: transition, Central and Eastern Europe, CIS countries, transformation, poverty, inequality, social policy, health, education
    JEL: I3 I32 I38
    Date: 2006–02
  2. By: Eswar S. Prasad (International Monetary Fund and IZA Bonn); Raghuram G. Rajan (International Monetary Fund)
    Abstract: China has achieved tremendous economic progress in the last three decades, but there is much work to be done to make the economy resilient to large shocks, ensure the sustainability of its growth, and translate this growth into corresponding improvements in the economic welfare of its citizens. We discuss the complex challenges that Chinese policymakers face in striking the right balance in terms of speed and coordination of reforms. We argue that China’s current stage of development, along with its rising market orientation and increasing integration with the world economy, may make the incremental and piecemeal approaches to reforms increasingly untenable and, in some cases, could even generate risks of their own. The present favorable domestic and external circumstances provide an excellent window of opportunity for bolder reforms and for tackling some deep-rooted problems without causing much economic disruption.
    Keywords: policy reforms, market-oriented economy, trade and financial integration, policy complementarities
    JEL: P2 F3
    Date: 2006–08
  3. By: Magdalena Muszynska (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Drawing on data from new Russian retrospective surveys, this study examines the relationship between women’s employment and the risk of union disruption within both the centrally planned economy and transition period. Our results show that within the two periods, the risk of union dissolution was similar among women who worked and women who did not work. In the transition period, however, differences in the dissolution risk among women existed and were related to the characteristics of the job conducted: occupational status, hours worked and income from side employment activities. Since the collapse of communism, the most discriminating factor between women is the type of ownership of a company, with those who worked for newly established private companies having elevated risk of union dissolution. The results obtained in this study are interpreted in light of the independence effect of women’s employment.
    Keywords: Russia, employment, women
    JEL: J1 Z0
    Date: 2006–08
  4. By: Rumen Dobrinsky (United Nations Economic Commission for Europe); Dieter Hesse (United Nations Economic Commission for Europe); Rolf Traeger (United Nations Economic Commission for Europe)
    Abstract: The paper analyses the determinants of long-term economic performance of east European and CIS economies in two periods: 1960-1989 (the era of central planning) and 1990-2005 (the transition to the market economy system). Throughout the 1960s and 1970s economic growth in eastern Europe progressively weakened and during the 1980s most of these economies plunged into a prolonged stagnation or recession, which contributed to the collapse of communism and central planning. The transition from plan to market began with the transformational recession, which persisted until the mid-1990s in eastern Europe, but was longer and deeper in the CIS. Since then, the east European and CIS economies have embarked on a path of strong economic growth. The recovery has been accompanied by a surge in fixed investment, often complemented by large inflows of FDI. Despite robust output growth, however, there has not been - at least so far - a noteworthy recovery in employment. The main feature of the recent strong economic growth in the region has been a remarkable upturn in both labour productivity and total factor productivity. The considerable gains in productive efficiency and rapid technological change were triggered by wide-ranging market reforms and the modernization of the capital stock. Gains in aggregate output per person employed have outpaced by a large margin increases in real GDP per capita. In terms of average productivity and real per capita income levels relative to those of the more developed, industrialized countries, the east European and CIS economies still face a long catching up process.
    Keywords: economic growth, East Europe, CIS, transition economies
    JEL: O11 O47 O52 E22 E24 J24 N14
  5. By: Eugeny Soroko (Max Planck Institute for Demographic Research, Rostock, Germany); Dirk Konietzka (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: -
    Keywords: Russia, census data, data evaluation, demographic indicators, demographic surveys, economic sectors, fertility rate
    JEL: J1 Z0
    Date: 2006–08
  6. By: Sumon Kumar Bhaumik (Brunel University and IZA Bonn); Ralitza Dimova (Brunel University); Jeffrey B. Nugent (University of Southern California)
    Abstract: This study adapts a relatively novel model of off-farm labor supply to the changing conditions of Bulgaria during the 1990s. The model’s parameters are estimated separately for each of the three different waves of the Bulgarian Integrated Household Survey, each reflecting remarkably different environmental conditions. Both the parameter values and the changes therein from one survey year to another are explained and used to characterize the way different types of households allocate their labor between farm and off-farm activities. The results demonstrate that Bulgarian households display many of the same labor supply patterns, including entitlement failures, as have previously been observed only in very poor developing countries. As such, they have potentially important policy making implications.
    Keywords: off-farm labor supply, diversification, entitlement failures, transition economies, Bulgaria, institutional change
    JEL: J2 P23 P36 O13 Q12
    Date: 2006–08
  7. By: John Malcolm Dowling (School of Economics and Social Sciences, Singapore Management University); Ganeshan Wignaraja (Asian Development Bank)
    Abstract: Central Asia has emerged as one of the world’s fastest growing regions since the late 1990s and has shown notable development potential. This is significant for a region comprising largely of small landlocked economies with no access to the sea for trade. Among the advantages, of the region are its high- priced commodities (oil, gas, cotton and gold), reasonable infrastructure and human capital as legacies of Soviet rule; and a strategic location between Asia and Europe. Furthermore, many Central Asian Republics (CARs) have embarked on market-oriented economic reforms to boost economic performance and private sector competitiveness. Central Asia: Mapping Future Prospects considers the region’s economic prospects to 2015. It charts recent economic performance, highlighting the economic revival. It also synthesizes recent forecasts and constructs scenarios for future economic variables against a constant global background. Projections include, among others, gross domestic product (GDP), manufactured exports per head, GDP per capita and poverty. A special theme chapter develops a manufacturing competitiveness index to compare the CARs with other transition economies and explores the impact of economic reform and supply-side factors (e.g. foreign investment and human capital) on industrial performance
    Date: 2005–10
  8. By: John Malcolm Dowling (School of Economics and Social Sciences, Singapore Management University); Ganeshan Wignaraja (Asian Development Bank)
    Abstract: This paper presents a coherent and systematic analysis of the collapse and subsequent revival of the Central Asian Republics (CARs) since 1990. The focus is on the pattern of growth and structural change during the cycle of decline and subsequent revival in the CARs which have been inadequately analyzed in the literature on transition. The paper relates economic performance to initial conditions, country characteristics and policies. Within this framework, it proposes a simple typology of policies (including a new Type III set of policies on regional cooperation and industrial competitiveness) and relates them to the cycle of decline and revival in the CARs. It goes on to examine medium-term prospects and policy needs for the CARs.
    Keywords: growth, economic reform, regional cooperation, industrial competitiveness, Central Asia, transitional economies
    Date: 2006–01
  9. By: Anna Matysiak (Max Planck Institute for Demographic Research, Rostock, Germany); Beata Nowok (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Forecasting the population of Poland is very challenging. Firstly, the country has been undergoing rapid demographic changes. In the 1990s, Poland experienced a fundamental shift from a communist regime to a democratic regime and entered the European Union in 2004. The political, economic, and social changes that accompanied the transformation had a profound influence on the demographic patterns in this country. International migration has been one of the first consequences of Poland’s entry into the EU, and it is expected to increase in the future. Secondly, the availability of statistics for Poland on past trends is strongly limited. The resulting high uncertainty of future trends should be dealt with systematically, which is an essential part of the stochastic forecast. In this article, we present to the best of our knowledge a first stochastic forecast of the population of Poland. The forecast constitutes a valuable alternative to considering various scenarios that have been applied so far. The forecast results show that the Polish population will constantly decline during the next decades. There is a probability of 50 % that in 2050 the population will number between 27 and 35 millions compared to 38.2 in 2004. Besides, Poland will face significant ageing as indicated by a rising old-age dependency-ratio. In 45 years, there will be at least 63 persons aged 65+ per 100 persons aged 19-64, and this with a probability of 50 %. A description of the most important limitations to the official Polish demographic statistics and an analysis of past trends in fertility, mortality, and international migration are important by-products of this study.
    Keywords: Poland, population forecasts
    JEL: J1 Z0
    Date: 2006–08
  10. By: Franque Grimard,; Daniel Parent
    Abstract: We use the Vietnam War draft avoidance behavior documented by Card and Lemieux (2001) as a quasi-natural experiment to infer causation from education to smoking and find strong evidence that education, whether measured in years of completed schooling or in educational attainment categories, reduces the probability of smoking at the time of the interview, more particularly the probability of smoking regularly. However, while we find that more education substantially increases the probability of never smoking, there is little evidence that it helps people stop smoking, although the estimates are fairly imprecise. Potential mechanisms linking education and smoking are also explored.
    JEL: I2 I12
    Date: 2006–08
  11. By: Gábor Orbán (Magyar Nemzeti Bank); Zoltán Szalai (Magyar Nemzeti Bank)
    Abstract: The most important mechanism through which monetary policy affects the real economy in Hungary is the exchange rate channel. With euro adoption, this mechanism will largely disappear and the impact of monetary policy will be transmitted via the interest rate channel, presently seen as rather weak. This has raised concerns that the influence of monetary policy on the real economy in Hungary could be very limited after euro adoption. On top of this, other concerns have been voiced as regards potential asymmetries in the wage-setting behaviour, the exchange rate and credit channels. Based on the experience of today’s euro area participating countries and the structural characteristics of the Hungarian economy, this paper argues that after euro adoption 1) we may expect a broadening of the scope of the interest rate channel of monetary policy after euro adoption, 2) there are no institutional obstacles in the way of the effective functioning of the expectations channel in Hungary 3) substantially different monetary conditions from that in the euro area as a result of a different trade orientation are unlikely, and, finally 4) some asymmetries in the balance sheet channel may continue to exist for some time between Hungary and the core euro area countries but its effect will be significantly smaller after euro zone entry.
    Keywords: monetary transmission mechanism, transmission channels, EMU participation.
    JEL: E52 E58
    Date: 2005
  12. By: Yum K. Kwan
    Abstract: We investigate empirically the extent to which government consumption substitutes for private consumption in nine East Asia countries. Panel cointegrating regression uncovers a significantly positive elasticity of substitution between government and private consumption, implying on average government and private consumption are substitutes in East Asia. Country-by-country analysis, however, reveals diversity in the substitutability estimates. The four North East countries – China, Hong Kong, Japan, and Korea – tend to share similar and moderate values of the substitution elasticity. For the five ASEAN countries studied in this paper, the relationship between private and government consumption vary substantially, both in the sign and magnitude of the elasticity of substitution. Private and government consumption in Malaysia and Thailand are strong substitutes, but they are found to be complements in Indonesia and Singapore. In between is the Philippines which has a near zero elasticity of substitution.
    JEL: E6 H5
    Date: 2006–08

This nep-tra issue is ©2006 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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