nep-tra New Economics Papers
on Transition Economics
Issue of 2009‒01‒03
23 papers chosen by
J. David Brown
Heriot-Watt University

  1. Financial constraints in China: firm-level evidence By Sandra Poncet; Walter Steingress; Hylke Vandenbussche
  2. Convergence in institutions and market outcomes: Cross-country and time-series evidence from the BEEPS surveys in transition economies By Pradeep Mitra; Alexander Muravyev; Mark E. Schaffer
  3. Shocks and rigidities as determinants of CEE labor markets' performance. A panel SVECM approach By Bukowski, Maciej; Koloch, Grzegorz; Lewandowski, Piotr
  4. Russian economic report No.16 (June 2008), The World Bank By Bogetic, Zeljko; Ulatov, Sergey; Emelyanova, Olga; Smits, Karlis
  5. Economic Developments in the Wider Black Sea Region By Peter Havlik; Vasily Astrov
  6. Russian and Caspian hydrocarbons: energy supply stakes for the European Union By Catherine Locatelli
  7. Skill Diffusion by Temporary Migration? Returns to Western European Work Experience in Central and East European Countries By Anna Iara
  8. The relationship between housing investment and economic growth in ChinaFA panel analysis using quarterly provincial data By Chen, Jie; Zhu, Aiyong
  9. Hong Kong SAR Economic Integration with the Pearl River Delta By Hongyi Chen; Olaf Unteroberdoerster
  10. Russian economic report No. 17 (November 2008), The World Bank By Zeljko, Bogetic; Karlis , Smits; Sergey , Ulatov; Olga, Emelyanova; Marco , Hernandez
  11. Main Features of the Public Employment Service in the Czech Republic By Daniela Kalužná
  12. Sectoral Productivity, Density and Agglomeration in the Wider Europe By Robert Stehrer; Neil Foster
  13. Structural Reform, Intra-Regional Trade, and Medium-Term Growth Prospects of East Asia and the Pacific --- Perspectives from a new multi-region model By Papa N'Diaye; Ping Zhang; Wenlang Zhang
  14. The Determinants of Economic Growth in European Regions By Jesus Crespo Cuaresma; Gernot Doppelhofer; Martin Feldkircher
  15. The Price Effects of an Emerging Retail Market By Jiri Podpiera; Marie Rakova
  16. The Macroeconomic Impact of Healthcare Financing Alternatives: Reform Options forHong Kong SAR By Nathaniel John Porter; Dennis P. J. Botman
  17. So Many Rocket Scientists, So Few Marketing Clerks: Estimating the Effects of Economic Reform on Occupational Mobility in Estonia By Campos, Nauro F.; Dabušinskas, Aurelijus
  18. Young People’s Voices on Child Trafficking: Experiences from South Eastern Europe By Mike Dottridge
  19. Labour Market Institutions and Labour Market Performance in the European Union By Michal, Tvrdon
  20. Institutionalizing Northeast Asia: Challenges and Opportunities By Timmermann, Martina
  21. The Effects of Monetary Policy in the Czech Republic: An Empirical Study By Magdalena Morgese Borys; Roman Horvath
  22. Macroeconomics of Migration in New Member States By Rudolfs Bems; Philip Schellekens
  23. Is it (Still) Mostly Fiscal? Determinants of Sovereign Spreads in Emerging Markets By Amine Mati; Emanuele Baldacci; Sanjeev Gupta

  1. By: Sandra Poncet; Walter Steingress; Hylke Vandenbussche
    Abstract: This paper uses a unique micro-level data-set on Chinese firms to test for the existence of a "political-pecking order" in the allocation of credit. Our findings are threefold. Firstly, private Chinese firms are credit constrained while State-owned firms and foreign-owned firms in China are not; Secondly, the geographical and sectoral presence of foreign capital alleviates credit constraints faced by private Chinese firms. Thirdly, geographical and sectoral presence of state firms aggravates financial constraints for private Chinese firms (“crowding out”). Therefore it seems that ongoing restructuring of the state-owned sector and further liberalization of foreign capital inflows in China can help to circumvent financial constraints and can boost the investment of private firms.
    Keywords: Investment-cashflow sensitivity, China, firm level data, foreign direct investment
    JEL: E22 G32
    Date: 2008
  2. By: Pradeep Mitra; Alexander Muravyev; Mark E. Schaffer (Heriot-Watt University)
    Abstract: This paper uses firm-level data from the Business Environment and Enterprise Performance Surveys (BEEPS) to study the process of convergence of transition countries with developed market economies. The primary focus of the study is on competition and market structure, finance and the structure of lending to firms, and how firms respond to the economic environment by restructuring; we are able to do this because the BEEPS cover thousands of firms from virtually all transition countries over a long time period (1996-99 through 2002-05), as well firms from developed market economies, thus providing a set of natural benchmarks. We find substantial evidence of convergence of transition countries with developed market economies in a number of dimensions. The pattern of growth at the country, sectoral and firm level shows rapid growth of the new private sector and of the micro- and small-firm sectors, with the size distribution of firms moving towards the pattern observed in the BEEPS surveys of developed market economies. Our interpretation of the evidence on competition is that there is an initial move by firms into niches to exploit local market power, and later in transition entry and domestic competitive pressure increases. In finance, the increasing reliance on retained earnings in transition countries reflects a maturation of the sector as new firms come to rely less on informal and family sources of finance. The scale of restructuring and innovation activity is as high or higher in transition economies as in developed market economies. Interestingly, we find evidence of an inverse-U shape pattern, with the peak of restructuring activity taking place in 2002, the middle of the period analyzed. Throughout, the regional patterns suggest greater convergence in the transition countries that joined the European Union in 2004 than in the other, lower-income transition economies.
    Keywords: transition, convergence, market structure, competition, enterprise finance, enterprise restructuring
    JEL: G32 L11 O12 P31
    Date: 2008
  3. By: Bukowski, Maciej; Koloch, Grzegorz; Lewandowski, Piotr
    Abstract: In this paper the dynamic responses of labor markets to macroeconomic shocks in eight CEE countries are empirically analyzed in panel SVECM. Identification of shocks, interpreted as real wage, productivity, labor demand and supply shocks, is based on DSGE model with labor market explicitly modeled after Mortensen and Pissarides (1994). Fluctuations in foreign demand are controlled for and the model is estimated with panel procedure, which improves estimation's precision. We show that propagation of shocks on NMS labor markets fairly resembles that characterizing OECD countries. Productivity improving shocks temporarily increase unemployment. Positive labor demand shocks increase employment, depress unemployment, rise real average wages, and were found to be the main determinant of variability of employment and unemployment in the short-run. In the medium term, in Czech Republic, Latvia, Lithuania and Poland innovations in wages seem to be prevalent drivers of employment and unemployment. The retrospective simulations of the model show that Baltic states and Poland were significantly affected by the collapse of Russian exports in late 1990s, and in 2000 an adverse labor demand shock hit all NMS, except for Hungary and Slovenia. However, the flexibility of wages is found to be crucial factor behind the diverse labor market performance in the region. Slovenia and Estonia fared best when it comes to flexibility of wages on macro level, on the other hand in Czech Republic, Lithuania and Poland downward wage rigidities were especially binding after employment-contracting shocks.
    Keywords: Unemployment; Rigidities; Transition economies; Cointegration;;Structural VECM; Panel econometrics; DSGE models
    JEL: C32 E32 E24 J60
    Date: 2008–12–01
  4. By: Bogetic, Zeljko; Ulatov, Sergey; Emelyanova, Olga; Smits, Karlis
    Abstract: Russia’s short-term economic growth has accelerated above its long term trend, defying weak global conditions. In 2007, the economy grew by 8.1 percent on the heels of very high (and perhaps unsustainable) oil prices, robust domestic demand and strong macroeconomic fundamentals. Preliminary data indicate an even faster real growth in GDP and industrial production of 8.7 and 6.2 percent in the first quarter of 2008. Rising inflation and capacity and labor utilization, tightening infrastructure constraints, and real wage increases outpacing productivity gains, however, suggest that the economy is overheating, i.e., aggregate demand is outpacing long-term productive capacity of the economy. Reducing inflation and reinvigorating the remaining structural reforms will be key policy challenges for the new Russian government going forward.
    Keywords: Russia; Russian economy; Russia economic developments; Russian health
    JEL: E0 F3 P2 E6 I1 H6
    Date: 2008–06–02
  5. By: Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The Black Sea region comprises a heterogeneous group of countries: Bulgaria, Romania, Ukraine, Russia, Georgia, Armenia, Azerbaijan, and Turkey. Their economies differ in their size, institutional characteristics and integration perspectives, are facing vastly different problems, and find themselves at different levels of development. The economic performance of the region during the 1990s was highly unstable, and even the countries which were spared from internal conflicts did not fare much better than the rest. However, more recently, the region has enjoyed a fairly rapid economic recovery accompanied by welcome structural changes, although the labour market situation and social conditions in general are still very difficult. Both the economic heterogeneity of the Black Sea countries and political issues are crucial factors behind the presently rather low level of their regional integration: the latter generally proceeds only to the extent to which it is compatible with the (very unequal) format of these countries' relations with the EU. At the same time, multilateral integration under the auspices of Russia, which, given its economic size, could potentially serve as an alternative 'gravity centre', appears to be for a number of reasons equally problematic. In fact, the geographic trade patterns of the countries involved do not give an impression of the Black Sea region being a distinct trading block per se, and in those cases where important regional trade links do exist (Russia, Ukraine and Turkey), this seems to be explained first of all by these countries' size rather than by the fact that they are part of the Black Sea region. The outlook for the Black Sea countries is largely positive, with annual GDP growth in excess of 5% in the medium and long run being feasible. Apart from sound economic policies, it is especially the fostering of institutional reforms and the related improvements of the investment climate which will be indispensable for a lasting and sustainable economic development. More decisive steps towards regional and EU economic integration would undoubtedly be beneficial; however, such integration would require significant changes in the stance of regional (and EU) policymakers, a higher level of mutual trust, a solution of 'frozen conflicts', and - last but not least - ultimately hinges on cooperation prospects between Russia and the EU.
    Keywords: comparative study, economic development, foreign trade, integration, macroeconomic analysis
    JEL: O57 O1 F1 F15 E
    Date: 2008–09
  6. By: Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: The crisis between Russia and Georgia in August 2008 highlights the fragility and instability of transporting gas from the Caspian and Central Asia to Europe via the "Caucasus transit corridor". The feasibility of one of the EU's possible strategies for diversifying its energy supplies might now be called into question. The aim of this article is to examine the new strategies that could emerge in the producing countries as well as those of international oil companies, and then look at what the consequences might be as far as the EU's diversification strategy is concerned.
    Date: 2008–12
  7. By: Anna Iara (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper contributes to the debate on the effects of migration by providing evidence on the returns to working experience from western Europe in eastern European labour markets. In particular, using the 2003 Youth Central and Eastern Eurobarometer dataset, we test the hypothesis that there are differential returns to foreign as opposed to domestic work experience. Our analysis combines the Mincer wage equation framework and the Roy model of migration. The latter suggests that migration responds to net expected benefits. Hence, return migration is endogenous with respect to differential returns to foreign working experience. To allow for selectivity on observable or unobservable characteristics, we estimate an endogenous switching model in two steps. This procedure combines probit estimates of propensities to work and to acquire foreign work expericence respectively, and OLS estimates of earnings equations for stayers and movers, with the inclusion of nonselection hazards obtained in the first step. The expected wage increase is the difference between post-return migrants' wages and wages under similar conditions in the absence of migration. For any individual, only one of these measures can be observed. We impute the respective counterfactuals from the separate wage regressions. Our analysis shows that movers and stayers are rewarded for different human capital characteristics. We find an average earnings premium for foreign work experience of around 30%. This can be seen as partial evidence for international skill diffusion: temporary migrants may upgrade their skills by learning on the job in countries with higher technological development, and subsequently bring human capital to their source country, thus adding to know-how diffusion and the catching-up of their economy. We perform additional empirical analyses to support this interpretation: we show that the premium found for return migration does not primarily reward the language proficiencies of returning migrants, and we further provide indicative evidence that no earnings premium is obtained for work-related stays abroad in other central and eastern European transition countries.
    Keywords: Central and Eastern Europe, return migration, wage premium, skill diffusion
    JEL: J31 J61 O15
    Date: 2008–07
  8. By: Chen, Jie (nstitute for Housing and Urban Research, Uppsala University); Zhu, Aiyong (Department of Word Economy)
    Abstract: In this paper we investigate the long-run and short-run relationship between housing investment and economic growth in China using the quarterly province-level panel data for the period 1999 q1 to 2007 q4. Recently developed econometric techniques for panel unit root testing and heterogeneous panel cointegration analysis are employed. The empirical results provide clear support of a stable long-run relationship between housing investment, non-housing investment and GDP in China. We then estimate the long-run elasticity of GDP with respect to housing investment for the whole country as well as three sub regions. The variations across regions are detected and reasons for this fact are discussed. Based on the panel ECM, we show that there is bidirectional Granger causality between housing investment and GDP in both short run and long run for the whole country, while the impacts of housing investment on GDP behave strikingly differently in the three sub-regions of China.
    Keywords: Housing investment; Economic growth; Panel cointegration; Granger causality
    JEL: E22 L74 R31
    Date: 2008–12–02
  9. By: Hongyi Chen; Olaf Unteroberdoerster
    Abstract: Hong Kong SAR's economic integration with the Mainland has primarily taken place in the Pearl River Delta (PRD). Taking stock of integration trends, this paper discusses key implications for ensuring economic benefits of further integration are sustained and associated costs minimized. Besides further investments in infrastructure, Hong Kong SAR's role as a producers services and finance hub will depend on frictionless movements of goods, services, people and know-how, requiring policy coordination to further promote trade and investment and developing a common human skills base with the PRD. Regional cooperation will also be needed to minimize the costs of rising levels of cross-border pollution.
    Keywords: Economic integration , Hong Kong Special Administrative Region of China , China, People's Republic of , Financial sector , Trade integration , Investment policy , Infrastructure , Services sector , Human capital ,
    Date: 2008–12–08
  10. By: Zeljko, Bogetic; Karlis , Smits; Sergey , Ulatov; Olga, Emelyanova; Marco , Hernandez
    Abstract: After a decade of high growth, the Russian econoomy is experiencing a slowdown in the wake of the global financial crisis. While Russia's strong short-term macroeconomic fundamentals make it better than many emerging economies to deal with the crisis, its underlying structural weaknesses and high dependence on the price of a single commodity make its impact more pronounced than otherwise. But the crisis also presents an opportunity to address the medium- to longer term challenges of competitiveness, economic diversification, and financial sector modernization which are necessary to boost growth and living standards.
    Keywords: Russia; Russian economy; Russian financial crisis; energy efficiency
    JEL: P2 B22 A10 Q4 E2 F3 E5 F41 G21
    Date: 2008–11–18
  11. By: Daniela Kalužná
    Abstract: in 1991 when the Czech and Slovak Federal Republic commenced transition to a market economy. Labour offices, in addition to providing placement and related services, manage jobseeker retraining and subsidies for job creation, administer unemployment insurance benefits, and provide guidance for the employment of foreign labour in the Czech Republic and for Czech nationals working abroad. They monitor and enforce compliance of employers with employment legislation: in 2005 some responsibilities were transferred to the newly-created National Labour Inspectorate but labour offices remain responsible in the areas of undeclared work and the conclusion of employment contracts. In 2004 the administration of state social support benefits (i.e. mainly child allowances, parental allowances and housing benefits, some but not all of them being means-tested) was, except in Prague, transferred from municipalities to the local labour offices. The Employment Service Administration at national level is part of the organisational structure of the Ministry of Labour and Social Affairs. At local level, it manages the 77 district labour offices: 14 of these, so-called “authorized” labour offices, act as an intermediary between the Ministry and the other district labour offices in their region. The 77 labour offices operate 167 detached workplaces (some of which only serve as first contact points for state social support benefits) and 8 branch offices in Prague. <BR>Le Service public tchèque de l’emploi (SPE) a été créé en 1991, plus ou moins sous sa forme actuelle, lorsque les Républiques fédérales slovaque et tchèque ont entamé leur transition vers l’économie de marché. Les bureaux de l’emploi, outre qu’ils assurent des services de placement et les services apparentés, gèrent la reconversion des demandeurs d’emploi et les subventions à la création d’emplois, administrent les prestations d’assurance chômage, et dispensent des conseils concernant l’emploi de main-d’oeuvre étrangère dans la République tchèque et conseillent les ressortissants tchèques partant travailler à l’étranger. Ces bureaux suivent la législation du travail et s’assurent que les employeurs la respectent : en 2005, certaines de leurs attributions ont été transférées au nouveau Service national d’inspection du travail mais le travail clandestin et l’établissement des contrats de travail demeurent de leur responsabilité. En 2004, l’administration du soutien social de l’État (c’est-à-dire principalement les allocations pour enfant à charge, les allocations parentales et les allocations logement, dont certaines sont soumises à des conditions de ressources) a été transférée des municipalités aux bureaux de l’emploi locaux, sauf à Prague.
    JEL: H53 H83 I38 J08 J63 J65
    Date: 2008–12–09
  12. By: Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Neil Foster (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: In this paper we extend the agglomeration model of Ciccone (2002) to the level of industry. We then test this model using panel data for six sectors on regional level data for 27 EU member states. Our results for the aggregate economy confirm the estimates of Ciccone (2002). For our full sample of countries the sectoral level results also indicate significant agglomeration effects, with the exception of agriculture. Considering differences in the extent of agglomeration effects between new and old EU member states, however, leads to the conclusion that agglomeration effects tend to be stronger at both the aggregate and the sectoral level for new member states.
    Keywords: agglomeration, employment density, productivity, European regions
    JEL: R10
    Date: 2008–09
  13. By: Papa N'Diaye (International Monetary Fund); Ping Zhang (External Department, Hong Kong Monetary Authority); Wenlang Zhang (Research Department, Hong Kong Monetary Authority)
    Abstract: This paper analyses the potential benefits from reforms aimed at promoting domestic demand in the region, as well as the effects of slower growth in the United States and the G3 on EMEAP economies.The analysis is based on simulation scenarios using an expanded version of the IMF Global Integrated Monetary and Fiscal (GIMF) model. The GIMF model is particularly useful for conducting medium-term policy analysis, because it incorporates rich layers of intra-regional trade, production, and demand that allow the transmission mechanism of structural reforms and external shocks to be fully articulated. The simulation results show that reforms to rebalance the pattern of demand in regional economies (such as Mainland China) more towards domestic demand could entail non-negligible benefits for the EMEAP. These benefits could be even larger for those economies that more flexibly adjust to the shift in China's trade pattern. The simulation results also illustrate structural reforms in EMEAP economies will allow them to reduce vulnerabilities to economic downturns in the major advanced economies.
    Keywords: GIMF model, Slowdown; Demand rebalancing; Confidence effects
    JEL: E2 E6 F4 O4
    Date: 2008–12
  14. By: Jesus Crespo Cuaresma; Gernot Doppelhofer; Martin Feldkircher
    Abstract: We use Bayesian Model Averaging (BMA) to evaluate the robustness of determinants of economic growth in a new dataset of 255 European regions in the 1995-2005 period. We use three different specifications based on (1) the cross-section of regions, (2) the cross-section of regions with country fixed effects and (3) the cross-section of regions with a spatial autoregressive (SAR) structure. We investigate the existence of parameter heterogeneity by allowing for interactions of potential explanatory variables with geographical dummies as extra regressors. We find remarkable differences between the determinants of economic growth implied by differences between regions and those within regions of a given country. In the cross-section of regions, we find evidence for conditional convergence with speed around two percent. The convergence process between countries is dominated by the catching up process of regions in Central and Eastern Europe (CEE), whereas convergence within countries is mostly a characteristic of regions in old EU member states. We also find robust evidence of positive growth of capital cities, a highly educated workforce and a negative effect of population density.
    Keywords: Model uncertainty, spatial autoregressive model, ddterminants of economic growth, European regions.
    JEL: C11 C15 C21 R11 O52
    Date: 2008–12
  15. By: Jiri Podpiera; Marie Rakova
    Abstract: In this paper we analyze the effects of changing market structure on price dynamics of final goods in the emerging Czech retail market. We estimate the extent of upstream and downstream market power and find that changing market structure was responsible for an average yearly decrease in the prices of retailed products of 0.8 p.p. during 2000–2005. At the same time, however, we anticipate that the already started period of mergers and acquisitions could cause yearly increases in the prices of retailed products of 1.2 p.p. (approximately 0.5 p.p. in the CPI) over the next ten years.
    Keywords: Market structure, retail market, transition economy.
    JEL: L1 L81
    Date: 2008–11
  16. By: Nathaniel John Porter; Dennis P. J. Botman
    Abstract: With much healthcare publicly funded, Hong Kong's rapidly aging population will significant raise fiscal pressure over coming decades. We ask what the implications are of meeting these costs by public funding, or private funding voluntarily or through mandates. Our simulations suggest that without early reform, these costs quickly become unsustainable. Prefunding is key. Whether this is done through the public system or through mandatory private provision is less important. Voluntary schemes are likely to result in insufficient savings without tax incentives. Even then, voluntary accounts are unlikely to yield better macroeconomic outcomes, while mandates tend to produce more equitable consumption.
    Keywords: Health care , Hong Kong Special Administrative Region of China , Public finance , Aging , Fiscal reforms , Tax incentives ,
    Date: 2008–12–08
  17. By: Campos, Nauro F. (Brunel University); Dabušinskas, Aurelijus (Bank of Estonia)
    Abstract: Why do workers change occupations? This paper investigates occupational mobility and its determinants following a large unexpected shock (communism's collapse in 1989.) Our calculations show that from 1989 to 1995 between 35 and 50 percent of Estonian workers changed occupations (classified at one- and four-digits, respectively). Among the main determinants of occupational mobility we find firm tenure, labour market experience and returns to alternative occupations. We investigate the role of gender and ethnicity and find strong results for the former, with mobility mainly driven by push factors for males (returns to current occupations) and by pull factors for females (returns to alternative occupations).
    Keywords: occupational mobility, human capital, transition economies
    JEL: J62 J63 J64 J23 C41 H53
    Date: 2008–12
  18. By: Mike Dottridge
    Abstract: Mindful of the important contribution that young people can make to our understanding of the issues that concern them, in 2005 and 2006 UNICEF arranged for children and young people who had been trafficked while under 18 years of age, to be interviewed in their home countries. Interviews were conducted in Albania, Kosovo, Moldova and Romania. Each of the children and young people described their lives before recruitment, their experiences during exploitation, and how they got away from the traffickers. They also spoke of rebuilding their lives once they were free. The interviews formed part of a broader assessment of strategies to counter child trafficking in the region.
    Keywords: child abuse and neglect; child trafficking; children's opinion; sexual exploitation;
    JEL: I39
    Date: 2008
  19. By: Michal, Tvrdon
    Abstract: The presented article deals with labour market institutions and labour market performance in the European Union. The first chapter is devoted to theoretical and methodological background of labour market performance. Theoretical literature has created a set of institutional aspects such as employment protection legislation, structure of wage bargaining, taxation of labour, active labour market policy, the system of unemployment and social benefits. All these aspects determine the institutional framework of labour market. Theoretical literature also has defined labour market flexibility as an instrument for adjustment process in case of asymmetric shock. Attention is also paid to influence of these institutional aspects on employment or unemployment. The second chapter is composed of the comparative analysis of selected criteria and corresponding economic indicators of the EU member states. The author has chosen the method of comparative analysis as the basic method for accomplishing the goal of the paper - to analyse the labour market institutions and their contribution to labour market performance in the EU member states. The evidence shows that the labour market flexibility in the Visegrad group countries is better than average of old EU-15 member states. However, this level of flexibility is much behind the level of USA or Anglo-Saxon countries. The main problem of Visegrad group is long-term unemployment and its composition and a lower level of employment. The author assumes that improving these indicators is one of the most important tasks for political-economic authorities.
    Keywords: Labour market; tax wedge; wage bargaing; EMU; integration; labour market flexibility
    JEL: E24 J60 J01
    Date: 2008–05–22
  20. By: Timmermann, Martina
    Abstract: With North Korea going nuclear, tensions ever present in the Taiwan Strait, and growing posturing over territories thought to be rich in resources, the question of how lasting peace, order, stability and prosperity can be achieved in Northeast Asia has become increasingly important. Globalisation and China’s galloping economy have caused radically different economic growth rates in Northeast Asia, resulting in constant fluctuations in the balance of power among the nations in the region. With new emerging threats to security as well as threats posed by environmental degradation and disasters, the old concept of sovereign independence no longer offers satisfactory solutions for Northeast Asia. Instead, alternatives are needed that provide more plausible answers to Northeast Asia’s emerging challenges. In so doing, Institutionalizing Northeast Asia advances the notion of regional institutionalism as a counterweight to the principle of sovereignty, arguing that regional cooperation via regional institution-building is the right “recipe” for dealing with the growing intertwinement of global issues and developments with needs and interest at the regional and national levels, as well as the demand for supra-territorial policy responses to such issues as trade, finance, the environment, human rights and human security. The copyright of this article which is the introductory chapter of the book: Institutionalizing Northeast Asia: Regional Steps towards Global Governance, Tokyo: UNUP 2008, rests with United Nations University Press; for further information on the book and its 19 chapters on political economy, security, norms and identity, environment, human rights, migration and human security in Northeast Asia, go to: ionalizingNEAsia.html
    Keywords: institutionalism; regionalism; norms; identity; security: economy; trade; investment; finance; multilateralism; balance of power; sovereignty; energy; environment; human rights; human migration; human security; Northeast Asia; Korea; China; Japan; ASEAN+3; Russia; Shanghai Cooperation Organization; Six-Party Talks; ASEAN Charter
    JEL: F15 F5 O53 Y2
    Date: 2008–10–31
  21. By: Magdalena Morgese Borys; Roman Horvath
    Abstract: In this paper, we examine the effects of Czech monetary policy on the economy within the VAR, structural VAR, and factor-augmented VAR frameworks. We document a wellfunctioning transmission mechanism similar to the euro area countries, especially in terms of persistence of monetary policy shocks. Subject to various sensitivity tests, we find that a contractionary monetary policy shock has a negative effect on the degree of economic activity and the price level, both with a peak response after one year or so.Regarding prices at the sectoral level, tradables adjust faster than non-tradables, which is in line with microeconomic evidence on price stickiness. There is no price puzzle, as our data come from a single monetary policy regime. There is a rationale in using the realtime output gap instead of current GDP growth, as using the former results in much more precise estimates. The results indicate a rather persistent appreciation of the domestic currency after a monetary tightening, with a gradual depreciation afterwards.
    Keywords: Monetary policy transmission, real-time data, sectoral prices, VAR.
    JEL: E31 E52 E58
    Date: 2008–10
  22. By: Rudolfs Bems; Philip Schellekens
    Abstract: This paper examines the macroeconomic impact of migration on income convergence in the EU's New Member States (NMS). The paper focuses on cross-border mobility of labor and examines the implications for policymakers with the help of a general equilibrium model. It finds that cross-border labor mobility provides ample benefits in terms of faster and smoother convergence. Challenges, however, include containing wage pressures and better mobilizing and utilizing resident labor that does not cross borders.
    Keywords: Migration , Labor mobility , European Economic and Monetary Union , Wages , Capital flows , Economic growth , Income ,
    Date: 2008–12–04
  23. By: Amine Mati; Emanuele Baldacci; Sanjeev Gupta
    Abstract: Using a panel of 30 emerging market economies from 1997 to 2007, this paper investigates the determinants of country risk premiums as measured by sovereign bond spreads. Unlike previous studies, the results indicate that both fiscal and political factors matter for credit risk in emerging markets. Lower levels of political risk are associated with tighter spreads, while efforts at fiscal consolidation narrow credit spreads, especially in countries that experienced prior defaults. The composition of fiscal policy matters: spending on public investment contributes to lower spreads as long as the fiscal position remains sustainable and the fiscal deficit does not worsen.
    Keywords: Emerging markets , Sovereign debt , Credit risk , Fiscal consolidation , Political economy , Fiscal policy , Public investment ,
    Date: 2008–11–20

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