nep-tra New Economics Papers
on Transition Economics
Issue of 2007‒09‒02
five papers chosen by
J. David Brown
Heriot-Watt University

  1. Organized business, political regimes and property rights across the Russian Federation By Pyle, William
  2. Is the Chinese Growth Miracle Built to Last? By Eswar S. Prasad
  3. Modelling inflation in China – a regional perspective By Mehrotra, Aaron; Peltonen, Tuomas; Santos Rivera, Alvaro
  4. As SIMPL As That: Introducing a Tax-Benefit Microsimulation Model for Poland By Olivier Bargain; Leszek Morawski; Michal Myck; Mieczyslaw Socha
  5. The Matching Approach on Expenditure Patterns of Migrant Households: Evidence from Moldova By Robert Poppe

  1. By: Pyle, William (BOFIT)
    Abstract: Abstract: This article explores the inter-relationship of collective action within the business community, the nature of the political regime and the security of firms’ property rights. Drawing on a pair of surveys recently administered in Russia, we present evidence that post-communist business associations have begun to coordinate business influence over state actors in a manner that is sensitive to regional politics. A firm’s ability to defend itself from government predation and to shape its institutional environment as well as its propensity to invest in physical capital are strongly related to both its membership in a business association and the level of democratization in its region. Of particular note, the positive effect of association membership on securing property rights increases in less democratic regions. The evidence, that is, suggests that collective action in the business community substitutes for democratic pressure in constraining public officials.
    Keywords: collective action; property rights; political institutions; business associations
    JEL: D70 K40 P48
    Date: 2007–08–29
  2. By: Eswar S. Prasad (Cornell University and IZA)
    Abstract: Is the Chinese growth miracle - a remarkably high growth rate sustained for over two decades - likely to persist or are the seeds of its eventual demise contained in the policies that have boosted growth? For all its presumed flaws, the particular approach to macroeconomic and structural policies that has been adopted by the Chinese government has helped to deliver high productivity and output growth, along with a reasonable degree of macroeconomic stability. In tandem with a benign international environment, this approach makes it unlikely that the economy will face a collapse in growth. But there comes a point when the policy distortions needed to maintain this approach could generate imbalances, impose potentially large welfare costs, and themselves become a source of instability. The traditional risks faced by emerging market economies, especially those related to having an open capital account, do not loom large in the case of China. In the process of securing protection against external risks, however, Chinese policymakers may have increased the risks of internal instability. There are a number of factors that could trigger unfavorable economic dynamics that, even if they don’t rise to the level of a crisis, could have serious adverse repercussions on growth and welfare. The flexibility and potency of macroeconomic tools to deal with such negative shocks is constrained by the panoply of policies that has supported growth so far.
    Keywords: macroeconomic policies, exchange rate flexibility, capital account liberalization, financial sector reforms
    JEL: F3 E5 O1
    Date: 2007–08
  3. By: Mehrotra, Aaron (BOFIT); Peltonen, Tuomas (BOFIT); Santos Rivera, Alvaro (BOFIT)
    Abstract: We model provincial inflation in China during the reform period. In particular, we are interested in the ability of the hybrid New Keynesian Phillips Curve (NKPC) to capture the inflation process at the provincial level. The study highlights differences in inflation formation and shows that the NKPC provides a reasonable description of the inflation process only for the coastal provinces. A probit analysis suggests that the forward-looking inflation component and the output gap are important inflation drivers in provinces that have advanced most in marketisation of the economy and have most likely experienced excess demand pressures. These results have implications for the relative effectiveness of monetary policy across the Chinese provinces.
    Keywords: China; inflation; regional; New Keynesian Philips Curve; GMM
    JEL: C22 E31
    Date: 2007–08–29
  4. By: Olivier Bargain (University College Dublin, CHILD and IZA); Leszek Morawski (University of Warsaw); Michal Myck (DIW Berlin, IFS and IZA); Mieczyslaw Socha (University of Warsaw)
    Abstract: The Polish tax and benefit system is presented in the context of a recently developed microsimulation model, SIMPL. The model allows simulating direct taxes, social contributions and public benefits in Poland for the years 2003 and 2005. It is based on the Household Budgets Survey data (Badania Budzetów Gospodarstw Domowych) from 2003 and 2005. The document describes details of the Polish tax and benefit system and the simulation assumptions which were necessary in modelling it in SIMPL. We provide information on the quality of the data used in the model and some details of the validation process through various robustness checks. Finally we provide examples of application of the model for analysis of effects of policy reforms.
    Keywords: microsimulation, tax and benefit systems, income distribution, Poland
    JEL: H24 H31 I32 I38
    Date: 2007–08
  5. By: Robert Poppe
    Abstract: This paper examines the effect of temporary and permanent migration on household expenditures and on asset/durables ownership. Using household survey data from Moldova, this paper relies on the matching approach for identification. It is shown that temporary migrant households have additional expenditures for food compared to non-migrant households. Further, non-migrant and temporary migrant households have higher expenditures for the repayment of loans than permanent migrant households. Concerning the ownership of goods or assets in 2006 compared to the regional crisis in 1998, temporary migrant households are more likely to own more assets or goods than non-migrant households. Overall, the findings indicate that temporary migration has a stronger effect on household expenditures than permanent migration.
    Keywords: Expenditures, Remittances, Migration, Matching
    JEL: O16 G15 G21
    Date: 2007–07

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