nep-tra New Economics Papers
on Transition Economics
Issue of 2008‒08‒06
seventeen papers chosen by
J. David Brown
Heriot-Watt University

  1. The Factors Behind CO2 Emission Reduction in Transition Economies By Katrin Millock; Natalia Zugravu; Gérard Duchene
  2. Spatial effects of open borders on the Czech labour market By Moritz, Michael
  3. FINANCING OF LOCAL DEVELOPMENT IN ROMANIA By Mutascu, Mihai; Lobont, Oana; Crasneac, Alexandru Ocatavian; Nicolescu, Cristina
  4. Regional Price Differences in Urban China 1986-2001: Estimation and Implication By Gong, Cathy Honge; Meng, Xin
  5. Report on Informal Employment in Romania By Jante Parlevliet; Theodora Xenogiani
  6. Convergence in Emerging Europe: Sustainability and Vulnerabilities By Athanasios Vamvakidis
  7. A Study of Changing Income Distribution in Kazakhstan Using a New Social Accounting Matrix and Household Survey Data By Paul G. Hare; Alexander Naumov
  8. Extreme Coexceedances in New EU Member States' Stock Markets By Christiansen, Charlotte; Ranaldo, Angelo
  9. Bank Recycling of Petro Dollars to Emerging Market Economies During the Current Oil Price Boom By Johannes Wiegand
  10. Inflation Targeting and Communication: Should the Public Read Inflation Reports or Tea Leaves? By Ales Bulir; Katerina Smidkova; Viktor Kotlan; David Navratil
  11. Determinants of Foreign Currency Borrowing in the New Member States of the EU By Marcel Tirpák; Christoph B. Rosenberg
  12. Multi-Family Households in a Labour Supply Model: A Calibration Method with Application to Poland By Haan, Peter; Myck, Michal
  13. Resolving a Large Contingent Fiscal Liability: Eastern Europe Experience By Mark J Flanagan
  14. The transformation of the Afar commons in Ethiopia: State coercion, diversification and property rights change among pastoralists By Hundie Bekele; Padmanabhan, Martina
  15. Institutions and Diversification of the Economies in Transition: Policy Challenges By Paul G. Hare
  16. What hides behind extended periods of youth unemployment in Bosnia and Herzegovina? Evidence from individual level data By Leman Yonca Gurbuzer; Ozge Nihan Koseleci
  17. Escaping poverty traps?: Collective action and property rights in post-war rural Cambodia By Weingart, Anne; Kirk, Michael

  1. By: Katrin Millock (University Paris 1 Panthéon-Sorbonne); Natalia Zugravu (University Paris 1 Panthéon-Sorbonne); Gérard Duchene (ERUDITE, University Paris 12)
    Abstract: The Central and Eastern European countries significantly reduced their carbon dioxide (CO2) emissions between 1995 and 2003. Was this emission reduction just the fortuitous result of the major economic transformation undergone by countries in the transition? Or is it rather a result of more stringent environmental policy? The objective of the article is to answer this question through a simultaneous equation model of the demand (emissions) and supply (environmental stringency) of pollution. The supply equation takes into account the institutional quality of the country as well as consumer preferences for environmental quality. The results indicate that, all else equal, output growth would have increased industrial CO2 emissions in the Central and Eastern European countries in our sample by 31% between 1995 and 2003, and the composition effect corresponded to an increase of 8.4% of emissions. Nevertheless, the technique effect, induced by more stringent environmental policy, reduced industrial CO2 emissions by 58%, and allowed for a final beneficial result for the environment, i.e., -18% of industrial CO2 emissions in 2003 compared to 1995. Finally, our study confirms the importance of institutional factors in the explanation and further prediction of pollution reduction in transition economies.
    Keywords: Transition, CO2 Emissions, Environmental Policy, Scale, Composition and Technique Effects
    JEL: C33 D72 P5 P27 Q53 Q58
    Date: 2008–07
  2. By: Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Hardly noticed in Western Europe the fall of the Iron Curtain had also effects on the regional structures of the labour markets in the Central and Eastern European Countries (CEEC). I analyse whether during the undoubtedly increasing integration of markets the Czech border region close to the Western European high-wage countries benefited from its geographical position. Even without transnational free labour mobility, free trade and outsourcing of production activities can lead to shifts in the labour demand and wage structure with respect to different skill groups. These integration effects should be stronger in border regions. Using data from the Czech Microcensus and quarterly district level data, I investigate the impact of the fall of the Iron Curtain on the regional differences in unemployment, the skill structure of employment and wages in the Czech Republic. According to my results there are no indications of disproportionate shifts in the economic structure as well as in the skill structure in the Czech districts neighbouring Bavaria and Austria compared to non-border districts. However, regarding wage differentials between workers employed in the border region and workers in the rest of the country, I find evidence that between 1996 and 2002 the border region workers of the lowest skill category exhibit a positive wage differential of around 12% compared to their counterparts in non-border districts. For all other skill groups in the border region the spatial wage gap is negative and, in absolute value, increases with the skill level." (author's abstract, IAB-Doku) ((en))
    Date: 2008–07–31
  3. By: Mutascu, Mihai; Lobont, Oana; Crasneac, Alexandru Ocatavian; Nicolescu, Cristina
    Abstract: This paper is trying to establish, in Romania, at macroeconomic level, quantitative and qualitative, relations between gross domestic product and governmental and local revenues.
    Keywords: financing; local autonomy; evolution; econometric analysis
    JEL: H11 H71
    Date: 2008–04–30
  4. By: Gong, Cathy Honge (Australian National University); Meng, Xin (Australian National University)
    Abstract: Despite the intensive efforts made by economists to examine regional income inequality in China, limited attention has been paid to disentangle the contribution of regional price differentials. This paper examines regional price differential in urban China over the period 1986 to 2001. Spatial Price Index (SPI) is normally calculated using the Basket Cost Method, which defines a national basket and measures price variation of this common basket across different regions. The weakness of this method is that it arbitrarily assumes consumers’ preferences and has a strong reliance on good regional level price data, which are often not available. This paper adopts the Engel’s curve approach to estimate a Spatial Price Index for different provinces. The SPI obtained from the Engel’s curve approach indicates larger regional price variations than those obtained from the Basket Cost method. Further, regional price variations in urban China increased significantly during the late 1980s to early 1990s, stabilized at a relatively high level during the mid to end 1990s. Adjusting for the regional price variations our finding suggests that regional income inequality increased the most between the late 1980s and early 1990s, and stabilized in the mid 1990s, which contradicts previous findings using unadjusted income.
    Keywords: spatial price index, Engel’s curve, income inequality, China
    JEL: C43 E31 P36 D12
    Date: 2008–07
  5. By: Jante Parlevliet; Theodora Xenogiani
    Abstract: Informal employment is one of the key features of the Romanian labour market and the main concerns of the Romanian government. Informal employment is not new in Romania. This study attempts to shed light on the issue of informal work in Romania.
    Keywords: public policy, social protection, informal employment
    JEL: E26 J18 O17
    Date: 2008–07
  6. By: Athanasios Vamvakidis
    Abstract: The emerging European economies have been converging rapidly towards the more advanced European economies in recent years. However, large external imbalances in parts of the region have raised questions about sustainability and concerns about vulnerabilities. Empirical evidence in this paper suggest that the convergence trend of emerging Europe is based on strong fundamentals and is expected to continue, but at a slower pace. Moreover, the convergence path may be volatile as countries with large external imbalances adjust, with risks of a hard landing in some cases.
    Keywords: Europe , Emerging markets , Transition economies , Balance of payments , Economic growth , Current account balances , External debt ,
    Date: 2008–07–21
  7. By: Paul G. Hare; Alexander Naumov
    Abstract: Since the collapse of the Soviet Union in 1991, the successor states have all been moving - albeit at different speeds and in different ways - towards some form of market-type economy. The transition process has been accompanied by major disruption of much existing production, and by large changes in living standards and income distribution. After experiencing deep post-communist recessions, almost the whole region is now growing quite rapidly. But measuring these large and rapid changes is difficult and uncertain due to poor data quality, frequent changes in statistical methodology, and other problems. This paper develops a framework for building a Social Accounting Matrix (SAM) for Kazakhstan based on the UN 1993 System of National Accounts and Input-Output tables. A highly aggregated macro-SAM is constructed first, mostly using National Accounts data. At the second stage, a disaggregated micro-SAM is built using macro-SAM aggregates and Input-Output tables. To reconcile the Input-Output tables with the National Accounts, we use cross entropy and least squares methods of adjustment. This procedure also allows us to eliminate various inconsistencies in the final SAM. Third, using household survey data, we introduce several household types into the model (essentially, cohorts defined according to their income levels) to enable us to study income distribution and trends in it during Kazakhstan's transition. Finally, we integrate all these elements into a CGE model for Kazakhstan, enabling us to explore the probable impact of rising oil exports on Kazakhstan's income distribution and various inequality measures. All the data used in the paper are relatively easy to obtain from national statistical agencies and the methods developed herein could be applied to building detailed SAMs and associated CGE models for other developing and transition economies where the quality and availability of data is often a problem.
    Keywords: social accounting matrix, income distribution, Kazakhstan, transition economies, input-output tables, household surveys
    JEL: C67 C81 D31
    Date: 2008
  8. By: Christiansen, Charlotte (University of Aarhus); Ranaldo, Angelo (Swiss National Bank)
    Abstract: We analyze the financial integration of the new European Union (EU) member states' stock markets using the negative (positive) coexceedance variable that counts the number of large negative (large positive) returns on a given day across the countries. We use a multinomial logit model to investigate how persistence, asset classes, and volatility are related to the coexceedance variables. We find that the effects differ (a) between negative and positive coexceedance variables (b) between old and new EU member states, and (c) before and after the EU enlargement in 2004 suggesting a closer connection of new EU stock markets to those in Western Europe.
    Keywords: Financial market integration; Comovement; Emerging markets; EU enlargement: EU Member States; Extreme returns; L New EU Member States; Stock Markets
    JEL: C25 F36 G15
    Date: 2008–06–27
  9. By: Johannes Wiegand
    Abstract: High oil prices have once again led to large external surpluses of oil exporting countries, similar to the 1970s and 1980s. This paper analyzes the extent to which (i) oil exporters use bank deposits to invest these surpluses, and (ii) banks are lending on these funds to emerging market economies. Bank recycling of petro dollars to emerging market economies is found to be almost as important as in the 1970s and 1980s, even though during the current boom, petro dollar bank flows tend to originate in countries like Russia, Libya, or Nigeria rather than in the Middle East. As one consequence, a fall in oil prices could yet again disrupt financing flows to emerging economies. Especially at risk could be countries that rely heavily on bank loans to finance external deficits, many of them in Emerging Europe.
    Keywords: Recycling process , Oil producing countries , Oil exports , Capital flows , Emerging markets , Bank credit , International trade ,
    Date: 2008–07–18
  10. By: Ales Bulir; Katerina Smidkova; Viktor Kotlan; David Navratil
    Abstract: Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication tools—inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports—provided a consistent message in five out of six observations in our 2000–05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.
    Keywords: Emerging markets, forecasting, inflation targeting, monetary policy, transparency.
    JEL: E31 E43 E47 E58
    Date: 2007–12
  11. By: Marcel Tirpák; Christoph B. Rosenberg
    Abstract: The paper investigates the determinants of foreign currency borrowing by the private sector in the new member states of the European Union. We find that striking differences in patterns of foreign currency borrowing between countries are explained by the loan-to-deposit ratios, openness, and the interest rate differential. Joining the EU appears to have played an important role, by providing direct access to foreign funding, offering hedging opportunities through greater openness, lending credibility to exchange rate regimes, and raising expectations of imminent euro adoption. The empirical evidence suggests that regulatory policies to slow foreign currency borrowing have had only limited success.
    Keywords: Europe , European Union , External borrowing , Private sector , Foreign investment , Exchange rate regimes , Euro ,
    Date: 2008–07–18
  12. By: Haan, Peter (DIW Berlin); Myck, Michal (DIW Berlin)
    Abstract: The collective model of labour supply opened the household “black box” and allowed for individual treatment of partners in couples. However, the literature on labour supply has so far largely ignored a broader issue with special relevance to transition and developing countries – the distinction of single versus multi-family (“complex”) households. We propose a method to account for multi-family household structure by borrowing from recent applications of the collective model and combining estimation and calibration to identify the degree of resource sharing. We assume that each household is characterised by a between-family sharing parameter, which is calibrated on estimated preferences, the observed labour market status and other characteristics. The key identifying assumption is that preferences over income and leisure of specific family types living in single and multi-family households are the same conditional on observable characteristics. We apply the method to Polish labour market data.
    Keywords: labour supply, within-household sharing, work incentives, transition
    JEL: J22 I38 D13
    Date: 2008–07
  13. By: Mark J Flanagan
    Abstract: On occasion, a government may find itself confronted with a need to address a large contingent or off balance sheet fiscal liability. Implementing a settlement raises issues of fiscal sustainability and macroeconomic stability. This paper surveys the key design issues, and draws lessons from recent Eastern European experience. It then considers in more detail the particular case of Ukraine, and how it might approach its own large contingent liability-the so-called lost savings-which at end-2007 amounted to as much as 18 percent of GDP.
    Keywords: Eastern Europe , Balance of payments deficits , Budget deficits , Fiscal sustainability , Debt management , Fiscal stability , Ukraine ,
    Date: 2008–07–02
  14. By: Hundie Bekele; Padmanabhan, Martina
    Abstract: "The major economic activity for pastoralists is animal husbandry. The harsh environment in which herders raise their livestock requires constant mobility to regulate resource utilisation via a common property regime. In contrast to the mobile way of life characterizing pastoralism, agriculture as a sedentary activity is only marginally present in the lowlands of the Afar regional state in Ethiopia. Nevertheless, this study reveals a situation where the traditional land-use arrangements in Afar are being transformed due to the introduction of farming. In the past, the Imperial and the Socialist governments introduced large-scale agriculture in a coercive manner, thereby instigating massive resistance from the pastoralists. Currently, the recurrence of drought in the study areas has facilitated the subdivision of the communal land on a voluntary basis for the purpose of farming. Qualitative and quantitative analysis highlight the drivers, both coercive and non-coercive, of the transformation of traditional property rights of Afar pastoralists." authors' abstract
    Keywords: Pastoralism, livestock, Property rights, Rangeland management, Communal land, Environmental management,
    Date: 2008
  15. By: Paul G. Hare
    Abstract: Diversification, especially in the context of small, highly trade-dependent economies, has recently become quite a fashionable topic, and something that increasingly commonly forms part of the policy advice offered to low- and middle-income countries seeking to improve their economic conditions or strengthen their economies. However, diversification per se is not policy advice, it is merely a descriptive term. Moreover, as such, the more one thinks about it the more one realizes that its meaning is not terribly clear or precise. The principal purpose of this paper is to investigate the term with a view to clarifying its possible meanings, evaluating which if any make sense from the standpoint of practical economic policy-making, and assessing the circumstances under which economic diversification can indeed be a desirable goal for a country to pursue.
    Keywords: institutions, diversification, international trade, growth, integration, transition, economic policy
    JEL: F15 F43 P33
    Date: 2008
  16. By: Leman Yonca Gurbuzer (TEAM - Théories et Applications en Microéconomie et Macroéconomie - CNRS : UMR8059 - Université Panthéon-Sorbonne - Paris I); Ozge Nihan Koseleci (TEAM - Théories et Applications en Microéconomie et Macroéconomie - CNRS : UMR8059 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper provides the first empirical analysis on youth unemployment duration in Bosnia-Herzegovina. The study is based on micro data from the Household Survey Panel Series (2001-04). We formulate the problem within a duration model framework. Semi-parametric methods are used and compared to alternative approaches. The analyses are carried out separately for young men and women to take into account the traditional pattern of the domestic division of labour between genders. Our results indicate that the speed with which an unemployed young person finds employment is partly a function of his/her particular characteristics. We also find significant gender differences in factors affecting the prospects of access to employment. We further observe that for young men as well as young women there is strong evidence for non-monotonic duration dependence. These results turn out to remain robust to different specifications and to the introduction of unobserved heterogeneity.
    Date: 2008–06–30
  17. By: Weingart, Anne; Kirk, Michael
    Abstract: "This paper introduces and applies an analytical framework to study how formal and informal institutions influence socio-economic change and poverty reduction in rural Cambodia, giving specific reference to property rights and collective action. It focuses on emerging endogenous mechanisms of cooperation as well as on the role of external actors and instruments in forming or enhancing collective action institutions, and enforcing use and ownership rights among the rural poor. Within this framework key contextual factor, such as asset endowments, legal structures, and power relations, have an impact on poverty and rural livelihoods, but are also mediated and changed by property right regimes and local cooperation. Findings indicate that access to and use of natural capital still contributes significantly to rural incomes. Access to natural resources is, however, defined by multiple and overlapping rights, both private and common ones, which are, in turn, governed by formal and informal patterns of cooperation. Collective action also contributes to improve livelihoods. Nevertheless, depending on asset endowments, differences exist in the degree of participation. Owing to Cambodia's recent history of genocide, forced collectivization and resettlement, property rights regimes have been severely affected, remain contested, and are re-established only slowly. In this context, the mutual trust necessary for successful cooperation in common property issues is severely undermined." authors' abstract
    Keywords: Collective action, Property rights, Post-war, Rural development, Livelihoods,
    Date: 2008

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