nep-tra New Economics Papers
on Transition Economics
Issue of 2008‒12‒14
twelve papers chosen by
J. David Brown
Heriot-Watt University

  2. The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors? By Shuang LI; Ming LU; Hiroshi Sato
  3. Interdependence Between Foreign Exchange Markets and Stock Markets in Selected European Countries By Mevlud Islami
  4. The Intergenerational Content of Social Spending: Health Care and Sustainable Growth in China By Jean-Paul Fitoussi; Francesco Saraceno
  5. Why are Saving Rates of Urban Households in China Rising? By Marcos Chamon; Eswar Prasad
  6. A Gendered Approach to Temporary Labour Migration and Cultural Norms. Evidence from Romania By Raluca Prelipceanu
  7. The pollution haven hypothesis : a geographic economy model in a comparative study By Sonia Ben Kheder; Natalia Zugravu
  8. Examining the Impact of the World Crude Oil Price on China's Agricultural Commodity Prices: The Case of Corn, Soybean, and Pork By Zhang, Qiang; Reed, Michael
  9. Implication of Cotton Price Behavior on Market Integration By Ge, Yuanlong; Wang, Holly H.; Ahn, Sung K.
  10. Responses to monetary policy shocks in the east and the west of Europe - a comparison. By Marek Jarociński
  11. Source of Information-Driven Trading on the Prague Stock Exchange By Frantisek Kopriva
  12. Offshore Outsourcing to Russian IT Providers: Opportunities, Risks and Best Practice Procedures By Dr. Stephan Weinert; Dr. Mathias Weber; Dr. David Vasak

  1. By: Ljungwall, Christer (China Economic Research Center); Gustavsson Tingvall, Patrik (China Economic Research Center)
    Abstract: Empirical evidence suggests that China has benefited from foreign direct investment (FDI). However, an important question that remains unanswered is whether China has benefited more from FDI than other countries in general and other transition and developing countries in particular. This paper investigates this issue by performing a Meta-analysis on a sample of 67 country-specific studies yielding 125 observations that have gauged the nexus between FDI and measures of income growth. The results show that studies on China report relatively high t-values and thus indicate that China may have benefited more than other countries from FDI.
    Keywords: Meta-analysis; Foreign direct investment; Economic growth; China
    JEL: F21 F23
    Date: 2008–11–01
  2. By: Shuang LI; Ming LU; Hiroshi Sato
    Abstract: Party membership and social networks, as two forms of nonmarket power, have significant effects on personal income. Do the effects vary across different ownership sectors (suoyouzhi xingzhi)? Using a nationally representative survey of urban households (China Household Income Project surveys in 1995 and 2002), we find that (1) party membership can significantly increase personal income, but this effect does not significantly differ between different ownership sectors or between the years 1995 and 2002 and (2) social networks are insignificant in State-Owned Enterprises (SOEs), while they contribute significantly to personal income in non-SOE sectors.
    Keywords: Income, Party membership, Social networks, Ownership, Maketization
    JEL: J40 O15 P26 Z13
    Date: 2008–11
  3. By: Mevlud Islami (University of Wuppertal/European Institute for International Economic Relations (EIIW))
    Abstract: In this analysis the interdependence between foreign exchange markets and stock markets for selected accession and cohesion countries is discussed. This includes basic theoretical approaches. Monthly data for the nominal stock market indices and nominal exchange rates are used, where Ireland, Portugal, Spain, Greece, Poland, Czech Republic, Slovenia, and Hungary are included in the analysis. From the cointegration analysis and VAR analysis both long-term links and short-term links for Poland are identified. Conversely, for Slovenia, Hungary, Ireland, and Spain merely short-term links resulted. Surprisingly, the direction of causation is unambiguously from the stock market index to the exchange rate for all five countries considered.
    Keywords: Exchange Rate; Stock Markets; Cointegration; VAR; European Integration
    JEL: G15 F31 E44
    Date: 2008–12
  4. By: Jean-Paul Fitoussi (Observatoire Français des Conjonctures Économiques); Francesco Saraceno (Observatoire Français des Conjonctures Économiques)
    Abstract: The paper endorses the thesis that current macro imbalances are partly due to an excess of household savings in China, whose origin is to be found among other things in household uncertainty about the provision of public services like health care, pensions and education. Focusing on health services, because of their priority in the concerns of the Chinese people, we describe the recent trends in the provision of health care. We then argue that social spending by the government may have important intergenerational content, in that it allows higher private spending, lower inequality, higher levels of human capital and the like. All these factors are related to the potential growth rate of the economy. We conclude that a more important role of the government in the sector of public services, and in particular of health care, may help reduce the possibility of future bottlenecks, and hence help keeping the Chinese economy on a sustainable growth path. We conclude the paper by an assessment of the current debate on how to reform the system, and we advocate universal publicly funded basic health coverage.
    Keywords: Social Spending, Health Care, Sustainable Growth, Chinese Economy, Savings Glut
    JEL: I11 I18 N35
    Date: 2008
  5. By: Marcos Chamon; Eswar Prasad
    Abstract: From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. Saving rates have increased across all demographic groups although the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high saving rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, as reflected in constraints on borrowing against future income and low returns on financial assets.
    JEL: D12 E21 O16
    Date: 2008–12
  6. By: Raluca Prelipceanu (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper analyses the determinants of the Romanian temporary labour migration during the transition period. First of all, we build a househould level model in order to explain the decision to migrate in a couple. Then, by using a 10% sample of the Romanian 2002 Census we try to assess the importance of the gender bias for the migration decision. The main questions raised are "Do migration determinants differ according to gender ?" and "Do local norms influence the propensity to migrate of women and that of men ?". Our results prove the existence of important differences between the migration decision of men and that of women as well as the influence of cultural norms on gender roles on the latter's decision to migrate.
    Keywords: Temporary labour migration ; gender inequality ; household production ; social norms
    Date: 2008–11
  7. By: Sonia Ben Kheder (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Natalia Zugravu (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: Although based on theoretical foundations, the pollution haven hypothesis stating that heterogenous environmental regulations between countries influence multinational firms' location decisions, has never been clearly proven empirically. In this study, we reexamine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the pollution haven hypothesis for a global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies.
    Keywords: FDI, environmental regulation, economic geography, pollution haven hypothesis.
    Date: 2008–04
  8. By: Zhang, Qiang; Reed, Michael
    Abstract: This study investigates effects of the world crude oil price on feed grain prices and pork prices in China. The results from time series techniques show the influences of crude oil price are not significant over the study period. The pork demand and supply result in the skyrocketing pork price.
    Keywords: Agribusiness, Demand and Price Analysis,
    Date: 2008
  9. By: Ge, Yuanlong; Wang, Holly H.; Ahn, Sung K.
    Abstract: The cotton market in China is highly interactive with international markets, especially, the US market. The prices in these two markets can reveal important market relations. Investigating the data of futures prices from the New York Board of Trade (NYBOT) and the Zhengzhou Commodity Exchange (CZCE) using several time series methods, we find a long-run cointegration relationship between these I(1) series. Furthermore, a bi-directional Granger Causality between these two futures markets is detected with Generalized Autoregressive Conditional Heteroskedasticity (GARCH) error specifications. We also find the relationship is impacted by the Chinese exchange rate policy change in the 2005.
    Keywords: cotton futures prices, cointegration, granger causality test, AR-GARCH., Agricultural Finance,
    Date: 2008
  10. By: Marek Jarociński (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: This paper compares impulse responses to monetary policy shocks in the euro area countries before the EMU and in the New Member States (NMS) from central-eastern Europe. We mitigate the small sample problem, which is especially acute for the NMS, by using a Bayesian estimation that combines information across countries. The impulse responses in the NMS are broadly similar to those in the euro area countries. There is some evidence that in the NMS, which have had higher and more volatile inflation, the Phillips curve is steeper than in the euro area countries. This finding is consistent with economic theory. JEL Classification: C11, C32, C33, E40, E52.
    Keywords: monetary policy transmission, Structural VAR, Bayesian estimation, exchangeable prior.
    Date: 2008–11
  11. By: Frantisek Kopriva
    Abstract: We focus on the extent of information-driven trading sourced from the behavior of market makers on an emerging market. We develop a methodology based on the Easley et al. (1996) model in order to estimate the extent of informed trading originating from the behavior of Czech market makers on the Prague Stock Exchange (PSE). Based on the high percentage of block trades in the years 2003-05, the market makers focusing on large customers may have a significant source of private information on the PSE. Significant differences in the behavior of market makers lead us to conclude that these differences remarkably affect the extent of information-driven trading. Under current regulation, market makers are able to protect their private information and not reveal it for a surprisingly long period of time. Our study contributes to the detection mechanisms of regulatory authorities on the emerging markets in identifying the suspicious behavior of particular market participants.
    Keywords: Trading systems, Informed trading, Emerging markets
    JEL: G14 G15 P34
    Date: 2008–09
  12. By: Dr. Stephan Weinert (MERCER Deutschland GmbH Frankfurt/M.); Dr. Mathias Weber (Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V. (BITKOM)); Dr. David Vasak (PA Consulting Group Frankfurt/M.)
    Abstract: Outsourcing IT to specialized providers 'off-shore' has become an important option for many western companies for maintaining or improving their competitiveness. The vast majority of those specialized IT providers are located in Asia, especially in India. Relatively little is known though about the Russian IT provider market. To provide IT decision makers with deeper insights, this article provides the necessary theoretical foundations as well as practical information about the Russian IT provider market based on extensive market research and project experiences.
    Date: 2008–12

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