nep-tra New Economics Papers
on Transition Economics
Issue of 2009‒11‒07
27 papers chosen by
J. David Brown
Heriot-Watt University

  1. Employment Protection Legislation in Russia: Regional Enforcement and Labour Market Outcomes By Gimpelson, Vladimir; Kapeliushnikov, Rostislav; Lukiyanova, Anna
  2. Foreign Ownership and Corporate Performance: The Czech Republic at EU Entry By Stepan Jurajda; Juraj Stancik
  3. Why the West Became Rich before China and Why China Has Been Catching Up with the West since 1949: nother Explanation of the “Great Divergence” and “Great Convergence” Stories By Vladimir Popov
  4. Paying for Banking Services: What Determines the Fees? By Pavel Dvorak; Jan Hanousek
  5. Housing Markets in Central and Eastern Europe: Is There a Bubble in the Czech Republic? By Petr Zemcik
  6. Interest Rate Transmission Mechanism of Monetary Policy in the Selected EMU Candidate Countries By Rajmund Mirdala
  7. Prospective NATO or EU Membership and Institutional Change in Transition Countries By Belke, Ansgar; Bordon, Ingo; Melnykovska, Inna; Schweickert, Rainer
  8. Is the Stability of Leverage Ratios Determined by the Stability of the Economy? By Anastasiya Shamshur
  9. The Regulation of Migration in a Transition Economy: China’s Hukou System By Bao, Shuming; Bodvarsson, Örn B.; Hou, Jack W.; Zhao, Yaohui
  10. Are Chinese Stock Investors Watching Tokyo? An Analysis of Intraday High-Frequency Data from Two Chinese Stock Markets and the Tokyo Stock By Kenjiro Hirayama; Yoshiro Tsutsui
  11. Barriers to competition in Croatia : the role of government regulation By De Rosa, Donato; Madzarevic-Sujster, Sanja; Boromisa, Ana-Maria; Sonje, Velimir
  12. Size and Value Efects in the Visegrad Countries By Magdalena Morgese Borys; Petr Zemcik
  13. Interaction between foreign financial services and foreign direct investment in Transition Economies: An empirical analysis with focus on the manufacturing sector By Guido Cazzavillan; Krzysztof Olszewski
  14. The impact of ias/ifrs on the romanian accounting rules By Bunget, Ovidiu-Constantin; Dumitrescu, Alin-Constantin; Farcane, Nicoleta; Caciuc, Leonora; Popa, Adina
  15. Land rights insecurity and temporary migration in rural China By Maëlys de la Rupelle; Quheng Deng; Shi Li; Thomas Vendryes
  16. Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment By Hongbin Cai; Yuyu Chen; Hanming Fang; Li-An Zhou
  17. Considerations on Transactions of Foreign Trade By Paliu-Popa Lucia
  18. Romanian accounting between tradition and international influences in the xxth By Bunget, Ovidiu-Constantin; Farcane, Nicoleta; Popa, Adina
  19. Left behind to farm ? women's labor re-allocation in rural China By Mu, Ren; van de Walle, Dominique
  20. The Structural Funds and the Economic and Social Cohesion Process By Pociovalisteanu Diana-Mihaela; Thalassinos Eleftherios
  21. Social capital and economic growth in Polish regions By Dzialek, Jaroslaw
  22. Implementing the New Structural Model of the Czech National Bank By Michal Andrle; Tibor Hledik; Ondra Kamenik; Jan Vlcek
  23. Economic Growth and Convergence in the European Union By Halmai Peter; Vasary Viktoria
  24. Land Reform and Farm-Household Income Inequality: The Case of Georgia By Kimhi, Ayal
  25. The Impact of Population Ageing on the Czech Economy By Jan Babecky; Kamil Dybczak
  26. Using Cluster Analysis for Studying the Proximity of Registered Unemployment at the Level of Counties in Romania at the Beginning of the Economic Crisis By Babucea Ana-Gabriela; Danacica Emanuela-Daniela
  27. Asymmetry of the exchange rate pass-through: An exercise on the Polish data. By Przystupa, Jan; Wróbel, Ewa

  1. By: Gimpelson, Vladimir (CLMS, Moscow Higher School of Economics); Kapeliushnikov, Rostislav (CLMS, Moscow Higher School of Economics); Lukiyanova, Anna (CLMS, Moscow Higher School of Economics)
    Abstract: Since formal laws can be observed or ignored to varying degrees, the actual enforcement regime shapes incentives and constraints. Most of the studies exploring EPL effects on labour market performance implicitly assume that EPL compliance is near to complete and therefore all firms bear full adjustment costs incurred by the regulations. This seems to be a very strong assumption for any country but it sounds especially strong and hardly plausible for developing and transition economies. But if compliance and enforcement varies widely across regions/cities or segments of firms, then this variation is likely to cause variation in performance. This paper looks at Russia in particular. The main idea of this paper is to analize cross-regional and inter-temporal variation in EPL enforcement and to explore empirically whether it is translated into regional labour market outcomes. The paper employs unique data set based on the State Labour Inspectorate data and the Supreme Court statistics on labour disputes.
    Keywords: employment protection regulations, enforcement, employment, unemployment, regional labor markets, Russia
    JEL: J21 J23 J52 K31 R23
    Date: 2009–10
  2. By: Stepan Jurajda; Juraj Stancik
    Abstract: Does foreign ownership improve corporate performance or do foreign firms merely select more productive targets for takeover? Do workers benefit from foreign acquisitions? We answer these questions based on comparing the be- fore/after change in several performance indicators of Czech firms subject to foreign takeover after 1997, i.e., after the initial waves of privatization were completed, with the corresponding performance change of matched compa- nies that remain domestically owned until 2005. We find that the impact of foreign investors on domestic acquisitions is significantly positive only in non-exporting manufacturing industries, while it is small in both services and manufacturing industries competing on international markets.
    Keywords: Productivity, foreign ownership, FDI
    JEL: C23 D24 F2
    Date: 2009–09
  3. By: Vladimir Popov (New Economic School, Moscow)
    Abstract: The goal of this paper is to offer a non-technical interpretation of the “Great Divergence” and “Great Convergence” stories. After reviewing existing explanations in the literature, I offer a different interpretation. Western countries exited the Malthusian trap by destroying traditional institutions, which was associated with an increase in income inequality and even a decrease in life expectancy, but allowed the redistribution of income in favor of savings and investment at the expense of consumption. When the same pattern was imposed on some developing countries (colonialism ?Sub-Saharan Africa (SSA), Latin America (LA), and the Former Soviet Union (FSU)), it resulted in the destruction of traditional institutions, increase in income inequality, and worsening of starting positions for catch-up development. Other developing countries (East Asia (EA), South Asia (SA), and the Middle East and North Africa (MENA countries)) that were less affected by colonialism and managed to retain traditional institutions by the end of the twentieth century found themselves in a better starting position for modern economic growth. The slow-going technical progress finally allowed them to find another exit from the Malthusian trap—increased income that permitted the share of investment in GDP to rise without a major increase in income inequality or decrease in life expectancy. The roots of the impressive long-term performance of China lie in the exceptional continuity of the Chinese civilization—the oldest in the world—that managed to preserve its uniqueness and traditions without major interruptions. It is argued that institutional continuity (East Asia, India, and MENA) is more conducive to growth than attempts to replace existing institutions by allegedly more advanced institutions imported from abroad (Latin America, FSU, and SSA). Like Russia in 1917, China re-established collectivist institutions in 1949 as a response to the failure of Westernization. Unlike Russia after 1991, China in 1979-2009 managed to preserve “Asian values” institutions—priority of community interests over the interests of the individual. However, the rapid increase in income inequality since 1985 could be a sign of weakening of collectivist institutions, which is the single most important threat to the continuation of fast economic growth.
    Date: 2009–10
  4. By: Pavel Dvorak; Jan Hanousek
    Abstract: We analyze a unique dataset to test an empirical model of retail bank fee determinants in five Central European countries. Due to the data structure we can cope with heterogeneity and cross-subsidization by employing a representative fee index instead of using variables associated with individual fees. We find support for the Structure-Conduct-Performance hypothesis about the effect of industry concentration, the importance of differences in reliance on cashless payments, and differences in the labor intensity and technology level of bank operations. We also show that cross-country differences in retail bank fees can be explained by fundamental economic factors.
    Keywords: Banking, bank fees, Central and Eastern Europe, international comparison, Structure-Conduct-Performance hypothesis.
    JEL: G21 L11 G28 D41 C81
    Date: 2009–08
  5. By: Petr Zemcik
    Abstract: Real estate prices more than doubled in many countries of Central and Eastern Europe from 2003 to 2008. In this paper, I provide the first assessment of whether housing prices in this region correspond to rents, i.e. to cash-flows related to an apartment purchase. State-of-theart panel data stationarity and Granger causality techniques are employed to test the implications of the standard present-value model using regional data from the Czech Republic. Apartment prices both in this country overall and in its capital are only slightly overvalued. In addition, changes in prices are helpful in predicting changes in rents and vice versa.
    Keywords: Central and Eastern Europe, Czech Republic, panel data, unit root, bubble, house prices, rents.
    JEL: G12 R21 R31 C33
    Date: 2009–09
  6. By: Rajmund Mirdala (Faculty of Economics, Technical University of Košice, Slovakia)
    Abstract: The stable macroeconomic environment, as one of the primary objectives of the Visegrad countries in the 1990s, was partially supported by the exchange rate policy. Fixed exchange rate systems within gradually widen bands (Czech Republic, Slovak Republic) and crawling peg system (Hungary, Poland) were replaced by the managed floating in the Czech Republic (May 1997), Poland (April 2000), Slovak Republic (October 1998) and fixed exchange rate to euro in Hungary (January 2000) with broad band (October 2001). Higher macroeconomic and banking sector stability allowed countries from the Visegrad group to implement the monetary policy strategy based on the interest rate transmission mechanism. Continuous harmonization of the monetary policy framework (with the monetary policy of the ECB) and the increasing sensitivity of the economy agents to the interest rates changes allowed the central banks from the Visegrad countries to implement monetary policy strategy based on the key interest rates determination. In the paper we analyze the impact of the central banks’ monetary policy in the Visegrad countries on the selected macroeconomic variables in the period 1999-2008 implementing SVAR (structural vector autoregression) approach. We expect that higher sensitivity of domestic variables to interest rates shocks can be interpreted as a convergence of monetary policies in candidate countries towards the ECB’s monetary policy.
    Keywords: Monetary policy, Short-term interest rates, Structural vector autoregression, Variance decomposition, Impulse-response function
    JEL: C32 E52
    Date: 2009–03
  7. By: Belke, Ansgar (University of Duisburg-Essen); Bordon, Ingo (University of Duisburg-Essen); Melnykovska, Inna (University of Kiel); Schweickert, Rainer (Kiel Institute for the World Economy)
    Abstract: This paper quantifies the impact of incentives related to potential membership on institutional change as measured by the World Bank Governance Indicators (WBGI). Based on a panel of 25 transition countries for the period from 1996 to 2008 we show that pre-accession incentives provided by EU and NATO clearly matter for institutional development. In addition, path-dependency determined by cultural norms may be overcome by economic liberalization while foreign aid seems to hamper institutional development.
    Keywords: EU, NATO, transition economies, institutional change, governance
    JEL: F15 F20 F50 P20 P30 O19
    Date: 2009–10
  8. By: Anastasiya Shamshur
    Abstract: The choice of capital structure by firms is a fundamental issue in financial literature. According to a recent finding, the capital structure of firms remains almost unchanged during their lives meaning that leverage ratios are significantly stable over time. The stability of leverage ratios is mainly generated by an unobserved firm-specific effect that is liable for the majority of variation in capital structure (Lemmon, Roberts, and Zender 2008). However, the study focuses on the US economy, which is relatively stable. I study how substantial changes in the economy affect the stability of firms' capital structure in transition countries. Specifically, I concentrate on Central and Eastern European economies that passed through transition from central planning to a market economy and privatization, the Russian financial crisis, and EU membership. In addition, I investigate whether the ownership structure of firms is responsible for the part of the unexplained variation in leverage.
    Keywords: Capital Structure, Financing Decisions, Eastern Europe
    JEL: G32 C23
    Date: 2009–09
  9. By: Bao, Shuming (University of Michigan); Bodvarsson, Örn B. (St. Cloud State University); Hou, Jack W. (California State University, Long Beach); Zhao, Yaohui (Beijing Normal University)
    Abstract: Unlike most countries, China regulates internal migration. Public benefits, access to good quality housing, schools, health care, and attractive employment opportunities are available only to those who have local registration (Hukou). Coincident with the deepening of economic reforms, Hukou has gradually been relaxed since the 1980s, helping to explain an extraordinary surge of migration within China. In this study of interprovincial Chinese migration, we address two questions. First, what is a sensible way of incorporating Hukou into theoretical and empirical models of internal migration? Second, to what extent has Hukou influenced the scale and structure of migration? We incorporate two alternative measures of Hukou into a modified gravity model – the unregistered migrant's: (i) perceived probability of securing Hukou; and (ii) perceived probability of securing employment opportunities available only to those with Hukou. In contrast to previous studies, our model includes a much wider variety of control especially important for the Chinese case. Analyzing the relationship between Hukou and migration using census data for 1985-90, 1995-2000 and 2000-05, we find that migration is very sensitive to Hukou, with the greatest sensitivity occurring during the middle period.
    Keywords: internal migration, Hukou, migrant networks, reforms
    JEL: J61
    Date: 2009–10
  10. By: Kenjiro Hirayama (Kwansei Gakuin University); Yoshiro Tsutsui (Graduate School of Economics, Osaka University)
    Abstract: Intraday minute-by-minute data from the Tokyo, Shanghai, and Shenzhen stock exchanges from January 7, 2008, to January 23, 2009, are analyzed to investigate the interaction between the Japanese and Chinese stock markets. We focus on two windows of time during which all three stock exchanges trade shares simultaneously, and specify appropriate lags in vector autoregression (VAR) estimations. Granger causality tests, variance decompositions, and impulse response functions show that, while Tokyo is impacted by Chinese stock price movements, China is relatively isolated. This implies that investors in Japan are more internationally oriented and alert to foreign markets than those in China.
    Keywords: international linkage of stock prices, high frequency data, inefficiency, overreaction, China
    JEL: G14 G15 F36
    Date: 2009–10
  11. By: De Rosa, Donato; Madzarevic-Sujster, Sanja; Boromisa, Ana-Maria; Sonje, Velimir
    Abstract: This paper examines product market policies in Croatia by benchmarking them to OECD countries and highlighting how policies that are more conducive to competition would stimulate a more efficient allocation of resources and, in consequence, facilitate convergence to higher income levels. OECD indicators of overall regulation in product markets indicate that Croatia’s policies in 2007 were generally more restrictive of competition than were the policies in OECD countries. This is especially true for policies concerned with the degree of state control of the economy and with barriers to entrepreneurship. Regulatory obstacles to trade and foreign direct investment, by contrast, are in line with those of pre-accession EuropeanUnion countries (Czech Republic, Hungary, Slovak Republic, and Poland in 2003, as well as Bulgaria and Romania in 2006), albeit well above the OECD average. Regulation of post, electricity, gas, telecoms, air, rail, and road transport, as estimated by the OECD energy transport and communication sectors indicator, is also less liberal than in the OECD, highlighting the positive knock-on effects for the rest of the economy that could derive from further liberalization of network industries.
    Keywords: Transport Economics Policy&Planning,Public Sector Regulation,Markets and Market Access,Regulatory Regimes,Emerging Markets
    Date: 2009–10–01
  12. By: Magdalena Morgese Borys; Petr Zemcik
    Abstract: The paper has two main objectives. The first is to test for the presence of the size and bookto- market value effects in the Visegrad countries. Such effects have been found in the United States and many other developed stock markets. The Visegrad countries consist of the Czech Republic, Hungary, Poland, and Slovakia. We demonstrate that size and value do in fact explain the expected return/cost of capital in Eastern Europe. Based on this result, we proceed by constructing regional size and book-to-market portfolios for a combined Visegrad market. Returns on these port-folios serve as factors in addition to the market portfolio. The regional three-factor model performs as well as country-specific versions of the model. However, it can be estimated for a more current sample in Prague, Warsaw, Budapest, and Bratislava. Therefore it is a plausible model for the cost of capital in this region and we use it to calculate the cost of capital for the following industries: banks; capital goods; food, beverage and tobacco; materials; and utilities.
    Keywords: CAPM; Fama and French factors; Regional Asset Pricing Model; size; book-to-market; Visegrad countries; emerging markets.
    JEL: G10 G11 G12
    Date: 2009–09
  13. By: Guido Cazzavillan (Department of Economics, University Of Venice Cà Foscari); Krzysztof Olszewski (Department of Economics, University Of Venice Cà Foscari)
    Abstract: This paper studies the nexus between financial and non-financial foreign direct investment and its effect on manufacturing value added in Transition Economies, which are members of the EU. Three questions, which are pointed out in the theoretical literature, are discussed in the paper. We investigate whether financial services foreign direct investment has an effect on non-financial foreign direct investment; whether banks follow their clients; and whether there is any effect of foreign direct investment on economic growth. Those questions are tackled with empirical analysis using a dataset for 9 Transition Economies over the period 1996-2007. For most regressions we apply GMM and for one regression 2SLS, to tackle the endogeneity problem. The empirical results lead to three important statements: non-financial FDI is positively affected by financial services FDI and by market potential. Foreign banks in the EU Transition Economies are mainly driven by non-financial FDI and the capital intensity of a country. FDI crowds out domestic investment in the manufacturing sector.
    Keywords: Foreign direct investment, financial services, manufacturing sector, bilateral stocks, Transition Economies
    JEL: F21 F3 O11 O16
    Date: 2009
  14. By: Bunget, Ovidiu-Constantin; Dumitrescu, Alin-Constantin; Farcane, Nicoleta; Caciuc, Leonora; Popa, Adina
    Abstract: The accounting standardization process is in progress at international regional level, more and more countries have reached the same conclusion of enforcing high quality accounting standards like IAS/IFRS. At international level, on one hand it is thought to implement IASB's international standards and on the other hand, to converge American standards with IASB standards. There are various reasons for Romania adopting the IASB reference system, but most of them are subordinated to the central aim, respectively EU accession. There are also some secondary reasons required by the IAS/IFRS transition, which in our country is less present than in more economic developed countries. In our country accountancy is subordinated to the taxation system, financing still comes prevalent from banks and very few Romanian companies are listed on foreign capital markets. According to this, starting with 2006 the International Financial Reporting Standards (IFRS), as presented and published by the International Accounting Standards Board, shall be applied in Romania by the following categories of companies: trade companies applying OMF no. 94/2001, loan institutions, assurance and reassurance companies, institutions supervised by the National Commission for Movable Assets, independent public companies and other state owned companies, companies to be consolidated by a company applying IFRS standards, companies, which at the end of the previous year fulfilled two of the following three criteria: turnover exceeding EUR 7.3 Million, total assets over EUR 3.65 Million, average number of employees over 50, as well as other companies subject to the Finance Ministry’s approval.
    Keywords: romanian accounting rules; IAS/IFRS; romanian accounting normalization body; capital market
    JEL: M40
    Date: 2009–11–01
  15. By: Maëlys de la Rupelle; Quheng Deng; Shi Li; Thomas Vendryes
    Abstract: Like most other developing countries, China experiences huge migration outflows from rural areas. Their most striking characteristic is a high geographical and temporal mobility. Rural migrants keep going back and forth between origin villages and destination areas. In this paper, we show that this temporary feature of migration can be linked to land rights insecurity. As village land ownership remains collective and as land use rights can be periodically reallocated, individual out-migration can result in deprivation of those rights. Moreover, the intensity of this insecurity varies according to the village-level management of land and the contractual status of land plots. We use these variations to identify the effect of land rights insecurity on migration behavior. Empirical results based on representative 2002 rural data demonstrate substantial impact.
    Date: 2009
  16. By: Hongbin Cai (Department of Applied Economics, Guanghua School of Management, Peking University); Yuyu Chen (Department of Applied Economics, Guanghua School of Management, Peking University); Hanming Fang (Department of Economics, University of Pennsylvania); Li-An Zhou (Department of Applied Economics, Guanghua School of Management, Peking University)
    Abstract: We report results from a large randomized natural field experiment conducted in southwestern China in the context of insurance for sows. Our study sheds light on two important questions about microinsurance. First, how does access to formal insurance affect farmers' production decisions? Second, what explains the low takeup rate of formal insurance, despite substantial premium subsidy from the government? We find that providing access to formal insurance significantly increases farmers' tendency to raise sows. We argue that this finding also suggests that farmers are not previously insured efficiently through informal mechanisms. We also provide several pieces of evidence suggesting that trust, or lack thereof, for government-sponsored insurance products is a significant barrier for farmers' willingness to participate in the insurance program.
    Keywords: Microinsurance; Trust, Natural Field Experiment
    JEL: C93 O12 O16
    Date: 2009–09–24
  17. By: Paliu-Popa Lucia (Constantin Brancusi University of Targu Jiu, Faculty of Economics, Romania)
    Abstract: In the complex connection process of national economies to global economy flows, an important role has the foreign trade, which in recent decades has become, in the market economy conditions, one of the factors determining for economic growth. Foreign trade, as a separate branch of the national economy is an important factor of economic growth, caused by the internationalization of business and determining for the process of globalization. For Romania, a country still in transition and recent member of the European Union is particularly important to enhance the participation to international trade in goods and services, but also attracting foreign investments in the economy as the main possibilities for the re-industry and restructuring the national economy in order to creation and maintenance of sustainable competitive advantages. Starting from these considerations, in this article I addressed/aproached the theoretical aspects of foreign trade, without omitting intracomunity purchases and deliveries of goods.
    Keywords: domestic economy, global economy, foreign trade, market economy, economic growth, globalisation, goods
    JEL: E0 E6 R11
    Date: 2009–05
  18. By: Bunget, Ovidiu-Constantin; Farcane, Nicoleta; Popa, Adina
    Abstract: What we proposed ourselves through this work is to appreciate the impact of the foreign influences on the Romanian accounting system throughout the 20th century. In this sense we will further present an evolution of the accounting system during this period. Along the 20th century there are three major periods, characterized through a different evolution of the accounting system: the period between 1900-1950 is characterized through a maturity of the Romanian accounting thinking, when the first steps in Romanian accounting are defined, between 1950-1990, the accounting system is passing through a stagnation period caused by the soviet – socialism domination, after the 90’s Romanian accounting evolves, and not only new coordinates for an accounting system specific for a transition economy are defined, but also new coordinates ensuring the adjustment of the accounting system to the needs of the market economy in the context of Romania becoming member of the European Union. Based on the study of accounting literature and former studies related to the accounting evolution in Romania, we identified, during each of the mentioned periods the foreign influences on the Romanian accounting system and also the specific features of the Romanian Accounting School.
    Keywords: accounting history; accounting system
    JEL: M41
    Date: 2009–11–01
  19. By: Mu, Ren; van de Walle, Dominique
    Abstract: The transformation of work during China’s rapid economic development is associated with a substantial but little noticed re-allocation of traditional farm labor among women, with some doing much less and some much more. This paper studies how the work, time allocation, and health of non-migrant women are affected by the out-migration of others in their household. The analysis finds that the women left behind are doing more farm work than would have otherwise been the case. There is also evidence that this is a persistent effect, and not just temporary re-allocation. For some types of women (notably older women), the labor re-allocation response comes out of their leisure.
    Keywords: Population Policies,Health Monitoring&Evaluation,Gender and Development,Anthropology,Population&Development
    Date: 2009–10–01
  20. By: Pociovalisteanu Diana-Mihaela (Constantin Brancusi University of Targu Jiu, Faculty of Economics, Romania); Thalassinos Eleftherios (Chair Jean Monnet, University of Piraeus, Grecia)
    Abstract: The cohesion policy adopted by European Union can not materialize without the existence of structural funds. The economic and social disparities between the member countries of European Union and between the regions of EU, too, is reduce through these instruments. The integration of Romania in European Union in 2007, and the use of structural funds in present and in the future, is an opportunity which contribute at the economic development of our country.
    Keywords: structural funds, cohesion policy, economic development
    JEL: O11 R11 H83
    Date: 2009–05
  21. By: Dzialek, Jaroslaw
    Abstract: There is an ongoing debate on social capital resources in Poland, where the density of associational activities and the level of social trust is low when compared to West European countries. Moreover, some researchers claim that Polish economy is developing despite low resources of social capital. This paper examines spatial patterns of various forms of social capital (networks and trust; bonding and bridging social capital; family, friendship, neighbourhood and associational ties) in Poland and determinants of their distribution. It analyses relations between resources of social capital and regional growth.
    Keywords: social capital; regional growth; Poland
    JEL: O18 O43 Z13
    Date: 2009
  22. By: Michal Andrle; Tibor Hledik; Ondra Kamenik; Jan Vlcek
    Abstract: The purpose of the paper is to introduce the new “g3†structural model of the Czech National Bank and illustrate how it is used for forecasting and policy analysis. As from January 2007 the model was regularly used for shadowing official forecasts, and in July 2008 it became the core model of the CNB. In the paper we highlight the most important and unusual features of the model and discuss tools and procedures that help us in forecasting and assessing the economy with the model. The paper is not meant to provide a full derivation of the model or the complete characteristics of its behavior and should not be regarded as model documentation. Rather, the paper demonstrates how the model is used and how it contributes to policy analysis.
    Keywords: DSGE, filtering, forecasting, general equilibrium, monetary policy.
    JEL: D58 E32 E58 E47 C53
    Date: 2009–10
  23. By: Halmai Peter; Vasary Viktoria (Szent Istvan University, Institute of European Studies Godollo, Hungary)
    Abstract: In the convergence programme approved by the Hungarian government in September 2006, the "overriding objective" was to promote real convergence. This paper analyses the problems surrounding real convergence, in light of the broader correlations of economic growth relying heavily on the results of econometric reviews designed to explore medium and long-term potential growth and the factors that influence it.
    Keywords: economic growth, real convergence, econometric review
    JEL: C1 R11 O11
    Date: 2009–05
  24. By: Kimhi, Ayal
    Abstract: The income inequality implications of land reform are examined for the case of Georgia using regression-based inequality decomposition techniques. An egalitarian land redistribution is likely to equalize per-capita income among farm households, implying that continuing the land reform process in Georgia is likely to benefit poorer households, relatively speaking. However, land fragmentation was found to be disequalizing, and therefore land market developments that enable plot consolidation are not less important for inequality than the land redistribution itself. Both landholdings and farm assets have favorable inequality implications not only through farm income but also through non-farm income, implying that these productive assets increase the economic opportunities of rural households in the non-farm sector as well, perhaps by easing borrowing constraints.
    Keywords: income inequality, land reform, inequality decomposition, Agricultural Finance, Consumer/Household Economics, Farm Management, Land Economics/Use,
    Date: 2009–10
  25. By: Jan Babecky; Kamil Dybczak
    Abstract: The Czech Republic is facing a population ageing phenomenon. In addition, its demographic structure is expected to change dramatically over the next 50 years. We apply a stylised overlapping generation model in order to analyse the potential effects of the expected demographic changes on aggregate economic performance taking into account alternative fiscal policy set-ups. We provide a rough estimate of the amendments necessary on the revenue and expenditure sides in order to keep the current system financially balanced. We also discuss the implications for the development of other economic variables. In particular, we separately simulate future developments in the cases of adjustment in either the contribution rate or the value of public benefit. In addition, we demonstrate that parametric changes, such as an increase in the statutory retirement age, cannot eliminate the impact of the deterioration in the demographic structure on the course of the economy.
    Keywords: Population ageing, public pension systems, social security.
    JEL: E27 J11 H55
    Date: 2009–09
  26. By: Babucea Ana-Gabriela; Danacica Emanuela-Daniela (Constantin Brancusi University of Targu Jiu, Faculty of Economics, Romania)
    Abstract: Cluster analysis classifies a set of observations into two or more mutually exclusive unknown groups based on combination of interval variables and it has proven to be very useful. The classification aim is grouping the objects between their similarities or dissimilarities and so providing a synthetic description or a cut of data. In this paper we analyze the disparities into the counties of Romania looking the number of registered unemployed according to the latest official statistical data using one technique of clusters analysis.
    Keywords: cluster analysis, economic crisis, statistics, unemployment
    JEL: J6 C6
    Date: 2009–05
  27. By: Przystupa, Jan; Wróbel, Ewa
    Abstract: We propose a complex analysis of the exchange rate pass-through in an open economy. We assess the level, linearity and symmetry of exchange rate pass-through to import and consumer prices in Poland and discuss its implications for the monetary policy. We show that the pass-through is incomplete even in the long run. There is pricing to market behavior both in the long and short run. We do not find a strong evidence of non-linearity in import prices reaction to the exchange rate and reject the hypothesis of an asymmetric response to appreciations and depreciations. On the other hand, we find an asymmetry of CPI responses to the output gap, direction and size of the exchange rate changes and to the magnitude of the exchange rate volatility. The asymmetry is mostly visible after exogenous shocks. We reject the hypothesis of an asymmetric reaction of prices in a high and low inflation environment.
    Keywords: Exchange Rate Pass-through; Non-linear Model.
    JEL: E52 C22 F31
    Date: 2009–04–30

This nep-tra issue is ©2009 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.