|
on Transition Economics |
| By: | Münich, Daniel; Svejnar, Jan |
| Abstract: | In this paper, we use 1991-2005 panel data on the unemployed, vacancies, inflow into unemployment, and outflow from unemployment in five former communist economies and in the western part of Germany (a benchmark western economy) to examine the evolution of unemployment together with that of inflows into unemployment and vacancies. The comparison of the transition economies with an otherwise similar and spatially close market economy is useful because it enables us to identify the main differences and similarities in the evolution of the key variables, and thus draw conclusions as to whether different or similar factors cause high unemployment. |
| Keywords: | Communism; Labour; Transition; Unemployment |
| JEL: | C33 J4 J6 P2 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6315&r=tra |
| By: | Groh, Alexander P. (IESE Business School); Liechtenstein, Heinrich (IESE Business School); Canela, Miguel A. (University of Barcelona) |
| Abstract: | Growth expectations and institutional settings are favorable in CEE to establish a vibrant VC/PE market. However, there is lacking supply of risk capital. We address the obstacles for institutional investments in the region via a questionnaire addressed to (potential) Limited Partners worldwide. The respondents provide information about their criteria for international asset allocation. The protection of property rights is the dominant concern, followed by the need to find local quality General Partners and by the management quality and skills of local entrepreneurs. Further, the expected deal flow plays an important role for the allocation process, while the investors fear bribing and corruption. CEE is regarded as very attractive, especially the economic and entrepreneurial activity. However, the investors are not comfortable there with the protection of their claims. |
| Keywords: | Venture capital; Private equity; International asset allocation; Institutional investors; |
| JEL: | G23 G24 |
| Date: | 2007–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0691&r=tra |
| By: | Liesbet Vranken; Karen Macours; Nivelin Noev; Johan Swinnen |
| Abstract: | This paper analyzes how imperfections of property rights affect allocation of assets and welfare, using micro-survey data from Bulgaria. Co-ownership of assets is widespread in many countries due to inheritance. Central and Eastern Europe offers an interesting natural experiment to assess the effects of such rights imperfections because of the asset restitution process in the 1990s. Bulgaria is particularly interesting because of the prominence of the co-ownership problem (about half of all land plots are co-owned), because of the strong fragmentation of land, and because of legislation providing an instrument to separate out chosen (endogenous) versus forced (exogenous) forms of co-ownership. We find that land in co-ownership is much more likely to be used by less efficient farm organizations or to be left abandoned, and that it leads to significant welfare losses. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:18007&r=tra |
| By: | Haaparanta , Pertti (BOFIT); Juurikkala, Tuuli (BOFIT) |
| Abstract: | Russian industrial enterprises inherited from the Soviet era a tradition of producing welfare and infrastructure services within the firm, also for outside users. Despite the massive restructuring of the economy that took place since, many firms are still active in service provision. At the same time, opaque fiscal federalism is a problem for municipalities whereas rent extraction by public sector officials is a problem for firms. In this paper we examine whether there is a link between these phenomena. We propose a model on local fiscal incentives, service provision by firms and the municipality-firm relationship in the form of bribes. Using survey data from 404 medium and large industrial enterprises in 40 regions of Russia, we find that the higher the share of own revenues in the local budget, the more likely the firms are to report bribes. In the case of infrastructure services, the data also support the hypothesis that the channel is through service provision: the less fiscal autonomy, the more service provision and the less likely the firms are to report bribes. |
| Keywords: | local fiscal incentives; corruption; service provision; Russia; firm survey |
| JEL: | H77 M14 P31 |
| Date: | 2007–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2007_012&r=tra |
| By: | Jerome Hericourt; Sandra Poncet |
| Abstract: | In this paper, we assess the success of the ongoing financial system reforms in China through the investigation of the extent to which firms are financially constrained. We focus on the part played by Foreign Direct Investment (FDI) in funding Chinese corporate sector as we analyze whether incoming foreign investment in China plays an important role in alleviating domestic firms’ credit constraints. Using firm-level data on 2,200 domestic companies for the period 1999-2002 and splitting domestic firms into public and private firms, we find that public firms’ investment decisions are not sensitive to debt ratios or the cost of debt. Nor is there any evidence that public firms are affected by foreign firms presence. We interpret this as evidence in support of the notion of a soft budget constraint for public firms. In contrast, private domestic firms appear more credit constrained than state-owned firms but their financing constraints tend to ease in a context of abundant foreign investment. Our results confirm that the development of cross-border relationships with foreign firms helps private domestic firms to bypass both the financial and legal obstacles that they face at home(Huang, 2003). |
| Keywords: | Financial constraint; corporate finance; Foreign Direct Investment; China |
| JEL: | E22 E44 G31 O16 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2007-11&r=tra |
| By: | Morris Goldstein (Peterson Institute for International Economics) |
| Abstract: | This working paper assesses the progress made in improving China’s exchange rate policies over the past five years (that is, since 2002). I first discuss four indicators of progress on China’s external imbalance and its exchange rate policies—namely, the change in (and level of) China’s global current account position, movements in the real effective exchange rate of the renminbi (RMB), the role of market forces in the determination of the RMB, and China’s compliance with its obligations on exchange rate policy as a member of the International Monetary Fund (IMF). I then discuss why the lack of progress in improving China’s exchange rate policies matters for the economies of the China and the United States and for the international monetary and trading system. I also argue that several popular arguments and excuses for why more cannot be accomplished on removing the large undervaluation of the RMB are unpersuasive. Finally, I consider what can and should be done by China, the United States, and the IMF to accelerate progress over the next year or two. |
| Keywords: | exchange rate, current account adjustment, China, IMF |
| JEL: | F31 F32 F41 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp07-5&r=tra |
| By: | Alexander Libman; Lars P. Feld |
| Abstract: | In a centralized federation, where tax rates and taxation rules are set by the federal govern-ment, manipulating the thoroughness of tax auditing and the effectiveness of tax collection could be attractive for regional authorities because of a variety of reasons. These range from tax competition to principal-agent problems, state capture and benefits of fiscal equalisation. In this paper we discuss strategic tax auditing and collection from the perspective of fiscal federalism and test for strategic tax collection empirically using data of the Russian Federa-tion. Russia’s regional authorities in the 1990s have always been suspect of tax auditing ma-nipulations in their favour. However, in the 2000s increasing bargaining power of the centre seems to induce tax collection bodies in the regions to manipulate tax auditing in favour of the federation. We find partial evidence in favour of both of these hypotheses. |
| Keywords: | fiscal federalism; tax arrears; transition economies |
| JEL: | H26 H77 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2007-09&r=tra |
| By: | Paul Wachtel; Iftekhar Hasan; Mingming Zhou |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ste:nystbu:07-17&r=tra |
| By: | Nadezhda Ivanova (CEFIR) |
| Abstract: | The paper estimates the equilibrium real exchange rate (ERER) in Russia for 1995-20065 using the partial-equilibrium version of the trade-balance approach. The three-good framework is applied, allowing distinction between the RER for imports and RER for exports. The terms of trade are viewed as exogenous. Russia’s export demand is regarded as infinitely price elastic, implying the estimation of export supply function. Russian imports are assumed to be demand determined. The estimation of the trade-volume equations is based on the search of cointegrating relationships. The import elasticities are in line with estimates obtained in other studies. The estimations for the export supply equation confirm “supply elasticity pessimism”. The ERER simulations reveal the degree of rouble overvaluation of 25%-40%, depending on the measure of the RER used, before the August 1998 crisis. In recent years, given the surge in oil prices and pro-active exchange rate policy of the Bank of Russia, the rouble appears to be substantially undervalued. In 2004-2006, given the surge in oil prices and pro-active exchange rate policy of the Bank of Russia, the rouble appears to be substantially undervalued: by 40-70% on average, depending on the measure of the RER used. |
| Keywords: | Equilibrium Real Exchange Rate, Trade Elasticities, Russia |
| JEL: | C22 E52 F4 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0102&r=tra |
| By: | Boris Vujčić (Faculty of Economics and Business, University of Zagreb and Croatian National Bank); Vedran Šošić (Croatian National Bank) |
| Abstract: | Countries of Central and Eastern Europe experienced a rapid increase of return to education with the advent of the transition. This is well-documented for most of the countries but, until now, there were no empirical studies of the dynamics of wage premiums in post-transition Croatia. This paper, therefore, intends to fill in that gap. We look at the dynamics of wage premiums in Croatia and estimate how much the return to education has changed between 1996 and 2004 on the basis of labor force survey data. We compare these results with similar ones for selected transition countries and then we look at some possible explanations of our findings. Contrary to most transition countries, premiums for education in Croatia began to grow only at the end of the 1990's. In a way, wage adjustment in Croatia has been delayed. However, by 2004, it reached the level of premiums found in other transition countries and advanced market economies, thus creating market incentives for investment in education. We also look at additional features of the wage structure, such as non-linearities in the return to education associated with attainment of credentials and return to experience. |
| Keywords: | Croatia, human capital, returns to education |
| JEL: | J31 P23 P52 |
| Date: | 2007–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:zag:wpaper:0708&r=tra |
| By: | Kristjan-Olari Leping; Ott Toomet |
| Abstract: | We analyse the ethnic wage gap in Estonia, a former Soviet republic and current EU member, which hosts a substantial Russianspeaking minority. The analysis covers a lengthy period from the final years of the Soviet Union until the first years of EU membership. We document the rise of a substantial wage gap among males in favour of the Estonian-speaking population. This result is robust with respect to controls for language skills, education, industry and occupation. The main factors causing the unexplained wage gap include different ethnicity-specific returns to education and working in the capital city. The gap for young and established workers is of equal size.We argue that the most plausible explanations are establishmentlevel segregation, possibly related to sorting and screening discrimination. Unobserved human capital, related to the segregated school system, may also play a certain role. |
| Keywords: | wage decomposition, ethnicity, Estonia, former Soviet Union |
| JEL: | J15 J31 J71 P23 P36 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:53&r=tra |
| By: | Pierdzioch, Christian; Kizys, Renatas |
| Abstract: | We report results on the international linkages of the stock markets of three Central and Eastern European (CEE) countries (Czech Republic, Hungary, and Poland). Our results are based on monthly data for the sample period from 1995 to 2006. We show that it is important to account for international linkages between fundamentals and speculative bubbles. Our results suggest that, with regard to fundamentals, the international linkages of the stock markets of the three CEE countries have strengthened at the end of the sample period. By contrast, with regard to speculative bubbles, their international linkages have become weaker at the end of the sample period. |
| Keywords: | Stock markets; Fundamentals; Speculative bubbles; Cointegration; CEE countries; Kalman filter |
| JEL: | G15 C32 F37 |
| Date: | 2007–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3401&r=tra |
| By: | Chunbo Ma (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); David I. Stern (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA) |
| Abstract: | A number of previous studies on China's carbon emissions have mainly focused on two facts: 1) the continuous growth in emissions up till the middle of the 1990s; 2) the recent stability of emissions from 1996 to 2001. Decomposition analysis has been widely used to explore the driving forces behind these phenomena. However, since 2002, China's carbon emissions have resumed their growth at an even greater rate. This paper investigates China's carbon emissions during 1971-2003, with particular focus on the role of biomass, and, the fall and resurgence in emissions since the mid-1990s. We use an extended Kaya identity and the well-established logarithmic mean Divisia index (LMDI I) method. Carbon emissions are decomposed into effects of various driving forces. We find that: (1) A shift from biomass to commercial energy increases carbon emissions by a magnitude comparable to that of the increase in emissions due to population growth; (2) The technological effect and scale effect due to per capita GDP growth are different in the pre-reform period versus the post-reform period; (3) The positive effect of population growth has been decreasing over the entire period; (4) The fall in emissions in the late 1990s and resurgence in the early 2000s may be overstated due to inaccurate statistics. The rapid growth since the early 2000s, therefore, may not indicate a "new trend"; (5) Carbon emissions exhibit a correlation of 0.99 with coal consumption, which points to explicit policy suggestions. |
| JEL: | Q43 Q25 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:0706&r=tra |
| By: | Paul Wachtel; Rainer Haselmann |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ste:nystbu:07-18&r=tra |
| By: | Van Horen, Neeltje |
| Abstract: | Statistics show that the sale of goods on credit is widespread among firms even when they are capital constrained and thus face relatively high costs in providing trade credit. This study provides an explanation for this by arguing that customers that possess strong market power are able to increase their customer surplus by demanding to purchase the goods on credit. This gain in customer surplus increases with the degree of asymmetric information between buyer and seller with respect to product quality. Therefore, firms that are perceived as risky are especially subject to the market power of the customer and have to sell their goods on credit. Using detailed firm-level data from a large number of firms in Eastern Europe and Central Asia, this paper finds evidence consistent with this hypothesis. We find a strong positive correlation between customer market power and trade credit provision. Furthermore, this relationship is especially strong when the supplier is more risky and in countries with limited financial sector development or weak legal system. |
| JEL: | L14 L10 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3378&r=tra |
| By: | Mark Horridge; Glyn Wittwer |
| Abstract: | The paper outlines the theory and database preparation of SinoTERM, a "bottom-up" computable general equilibrium model of the Chinese economy. The methodology by which we construct the multi-regional model allows us to present the economy of China in an unprecedented amount of detail. SinoTERM covers all 31 provinces and municipalities. The database of the model extends the published national input-output table for 2002 to 137 sectors. The single crops sector in the published national input-output table is split into 11 and the single livestock sector into 3. The multi-regional CGE model provides a framework that we could modify to apply to many different policy applications. We can use SinoTERM to analyse the regional economic impacts of region-specific shocks. Such shocks could major construction projects or investments in health and education sectors, in an effort to accelerate economic growth in the lagging inland provinces. We use a 63 sector, 10 region aggregation of the SinoTERM master database to model the regional economic impacts of the proposed Chongqing-Lichuan rail link construction project. |
| Keywords: | CGE modelling, regional modelling, construction projects |
| JEL: | C68 R13 L74 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-164&r=tra |
| By: | Ivo Družić (Faculty of Economics and Business, University of Zagreb); Vladimir Čavrak (Faculty of Economics and Business, University of Zagreb); Josip Tica (Faculty of Economics and Business, University of Zagreb) |
| Abstract: | The paper investigates effects of the tourism boom on the real estate market in Croatia. According to the general equilibrium models of the tourism intensive small open economy, the most important benefit of the tourism is reflected in the fixed-factors rents, namely real estate market rents. This paper investigates results of the small open tourism intensive economy theoretical model in the case of the transition and EU accession of the Croatian economy. Analysis is focused on the real exchange rate changes in the tourism sector as the main source of welfare improvements and its effects on the fixed-factor prices in Croatia. |
| Keywords: | tourism, real estate, development, EU enlargement, Croatia |
| JEL: | R2 F2 F21 |
| Date: | 2007–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:zag:wpaper:0707&r=tra |
| By: | Cristobal, Adolfo |
| Abstract: | This paper proposes a 2-country 3-region economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the 1990s. In contrast to the existing literature, which has favored technological explanations, trade liberalization and factor mobility are the only driving forces. The model correctly predicts that in the first half of the decade trade liberalization led to divergence in GDP per capita, both between the West and the East and within the East. Consistent with the data, in the second half of the decade, internal labor mobility in the East reversed this process, and convergence became the dominant force. The model furthermore shows that the same U-shaped pattern applies to relative industrialization of West and East, although within the East the hinterland continued to lose industry throughout the decade. |
| Keywords: | Trade liberalization; migration; convergence; welfare. |
| JEL: | J30 F22 F12 F16 |
| Date: | 2007–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3446&r=tra |
| By: | Comaniciu, Carmen |
| Abstract: | The paper starts with the role of the Romanian fiscal and budgetary reform in the development and economical growth and has as purpose to emphasize the essential problems: the harmonization and fiscal coordination from the E.U. perspective; the Romanian fiscal and budgetary perspectives for period 2007-2009. |
| Keywords: | fiscal; budgetary; reform; period transition; harmonization; coordination |
| JEL: | H2 H6 E6 |
| Date: | 2006–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3430&r=tra |