nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒03‒26
nineteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Financial performance of the Czech private pension scheme: Its current position and the comparison with other CEE countries By Jan Hlaváč
  2. Economic Transition and the Motherhood Wage Penalty in Urban China: Investigation using Panel Data By Nan Jia; Xiao-Yuan Dong
  3. Comparing China’s GDP Statistics with Coincident Indicators By Mehrotra, Aaron; Paakkonen, Jenni
  4. Bank efficiency in transition economies: recent evidence from South-Eastern Europe By Fang, Yiwei; Hasan, Iftekhar; Marton, Katherin
  5. Gender and Occupational Mobility in Urban China during the Economic Transition By Yueping Song; Xiao-Yuan Dong
  6. New Aspects of Intra-Industry trade: Evidence from EU-15 countries By Tadashi Ito; Toshihiro Okubo
  7. Does Money Help Predict Inflation? An Empirical Assessment for Central Europe By Roman Horvath; Lubos Komarek; Filip Rozsypal
  8. Gas market developments and their effect on relations between Russia and the EU By Sadek Boussena; Catherine Locatelli
  9. Migrations et discriminations professionnelles dans la province du Guangdong By Cécile Batisse; Nong Zhu
  10. Recovery - in Low Gear across Tough Terrain By Leon Podkaminer; Mario Holzner; Vasily Astrov; Anton Mihailov; Vladimir Gligorov; Gábor Hunya; Peter Havlik; Sebastian Leitner; Zdenek Lukas; Josef Pöschl; Olga Pindyuk; Waltraut Urban; Hermine Vidovic; Sándor Richter
  11. Escaping Political Extraction: Political Participation, Institutions, and Cash Holdings in China By Feng, Xunan; Johansson, Anders C.
  12. Factor Content of Intra-European Trade Flows By Götz Zeddies
  13. Rent Deregulation, Tenure Choice, and Real Estate Price Expectations By Ashot Tsharakyan; Petr Zemcik
  14. The Entrepreneurial Facets as Precursor to Vietnam’s Economic Renovation in 1986 By Quan Hoang Vuong; Van Nhue Dam; Daniel van Houtte; Tri Dung Tran
  15. Modern Retailers in Transition Economies: The Case of Vietnam By Masayoshi Maruyama; Le Viet Trung
  16. Why had the Money Market Approach been irrelevant in explaining inflation in Azerbaijan during the rapid economic growth period? By Fakhri , Hasanov; Khudayar , Hasanli
  17. Housing Policies in China: Issues and Options By Zenou, Yves
  18. Central Banks' Voting Records and Future Policy By Roman Horvath; Katerina Smidkova; Jan Zapal
  19. Inequality Perceptions, Distributional Norms, and Redistributive Preferences in East and West Germany By Kuhn, Andreas

  1. By: Jan Hlaváč (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This paper focuses on the comparison of financial performance of the Czech voluntary private pension scheme with five other reformed private pension schemes in the region of Central Eastern Europe (Bulgaria, Croatia, Hungary, Poland and Slovak Republic). The current state and the recent development of the Czech private pension scheme are analyzed in the first part of the paper. In the main part of this work we construct the dataset of periodic scheme returns covering the last decade, and estimate the schemes Sharpe ratios (SR) for four reference benchmarks. The findings suggest that except for Poland none of the schemes managed to beat its long-term domestic benchmark (10-year government bonds) as the SRs estimates turn out to be negative. The highest underperformance was found in the case of the Czech Republic. Such poor results were assigned to the presence of restrictive annual minimum return guarantees and ineffective legislation arranging the PF costs allocation.
    Keywords: Private pension schemes, Czech voluntary pension scheme, financial performance, Sharpe ratio
    JEL: G23 G28 O57 H55
    Date: 2011–03
  2. By: Nan Jia; Xiao-Yuan Dong
    Abstract: China’s economic transition has fundamentally changed the mechanisms for allocating and compensating labor. This paper investigates how the economic transition has affected the wage gap between mothers and childless women in urban China using panel data for the period 1990-2005. The results show that overall, mothers earned considerably less than childless women; additionally, the wage penalties for motherhood went up substantially from the gradualist reform period (1990-1996) to the radical reform period (1999-2005). The results also show that that although motherhood does not appear to have a significant wage effect for the state sector, it imposes substantial wage losses for mothers in the non-state sector. These findings suggest that the economic transition has shifted part of the cost of child-bearing and -rearing from the state and employers back to women in the form of lower earnings for working mothers.
    JEL: J13 J31 O10 R20
    Date: 2011–01
  3. By: Mehrotra, Aaron (BOFIT); Paakkonen, Jenni (BOFIT)
    Abstract: We use factor analysis to summarize information from various macroeconomic indicators, effectively producing coincident indicators for the Chinese economy. We compare the dynamics of the estimated factors with GDP, and compare our factors with other published indicators for the Chinese economy. The indicator data match the GDP dynamics well and discrepancies are very short. The periods of discrepancies seem to correspond to shocks affecting the growth process as neither autoregressive models for GDP itself nor various coincident indicators are able to forecast them satisfactorily.
    Keywords: factor models; principal component; GDP; China
    JEL: C30 O40 P20
    Date: 2011–02–18
  4. By: Fang, Yiwei (Lally School of Management and Technology, New York); Hasan, Iftekhar (Lally School of Management and Technology, New York, and Bank of Finland Research); Marton, Katherin (Fordham University, New York)
    Abstract: This study examines the cost and profit efficiency of banking sectors in six transition countries of South-Eastern Europe over the period 1998–2008. Using the stochastic frontier approach, our analysis reveals that the average cost efficiency of SEE banks is 68.59% and the average profit efficiency is 53.87%. The second-stage regressions on the determinants of bank efficiency further show that foreign banks are associated with higher profit efficiency but moderately lower cost efficiency. Government banks are associated with lower profit efficiency. The efficiency gap between foreign banks, domestic private banks and government banks, however, has narrowed over time. We also find that the degree of individual banks’ competitiveness has a positive association with both cost and profit efficiency. Finally, institutional development, proxied by progress in banking reforms, privatization and corporate governance restructuring, also has a positive impact on bank efficiency.
    Keywords: transition banking; bank efficiency; foreign ownership; institutional development
    JEL: G21 P30 P34 P52
    Date: 2011–03–14
  5. By: Yueping Song; Xiao-Yuan Dong
    Abstract: This paper examines the gender patterns of occupational mobility in post-reform Urban China using a national representative dataset. The results reveal marked differences between married men and women: women are more likely than men to undergo lateral or downward occupational changes, but are less likely to experience upward mobility. The results also show that the public-sector restructuring has increased the incidence of downward occupational mobility, more for women than men. The analysis suggests that women are disadvantaged in the occupational mobility process by a variety of social and institutional factors.
    Keywords: Occupational mobility, Gender, Economic transition, Social networks
    JEL: J16 J63 C25 R20
    Date: 2011–01
  6. By: Tadashi Ito (Okinawa University); Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: This paper argues about some missing aspects of intra-industry trade (IIT) and proposes some alternative measures to better capture the nature of IIT. We show the over-time evolution of the number of IIT products, and propose an index which captures the share of the number of IIT products over the number of all traded goods. We also show how arbitrary the conventional classification into Horizontal and Vertical IIT indices are, and then propose a new measure using the unit value difference of IIT products. To discuss these issues we use trade data at HS 8 digit product level of EU 15 countries for the period 1988 – 2007, mainly within EU countries as well as with Eastern European countries, and with China as major EU trading partners. Our findings include the Eastern European countries' rise up the quality ladder, and the substantially lower prices of China's exports to EU 15 countries vis-à-vis China's imports from them, whose gap is not narrowing even in very recent years.
    Keywords: Intra-industry trade, Horizontal and Vertical Product Differentiation, Quality, unit price gap
    JEL: H32 P16
    Date: 2011–01
  7. By: Roman Horvath; Lubos Komarek; Filip Rozsypal
    Abstract: This paper investigates the predictive ability of money for future inflation in the Czech Republic, Hungary, Poland, and Slovakia. We construct monetary indicators similar to those the ECB regularly uses for monetary analysis. We find some in-sample evidence that money matters for future inflation at the policy horizons that central banks typically focus on, but our pseudo out-of-sample forecasting exercise shows that money does not in general improve the inflation forecasts vis-à-vis some benchmark models, such as the autoregressive process. Since at least some models containing money improve the inflation forecasts in certain periods, we argue that money still serves as a useful cross-check for monetary policy analysis.
    Keywords: Central Europe, forecasting, inflation, money.
    JEL: E41 E47 E52
    Date: 2010–12
  8. By: Sadek Boussena (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II); Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: The changes on the EU gas market are likely to affect Europe's relations with its natural gas suppliers who are facing increasing competition. Heading this list of producing countries is Russia. Gas relations between Russia and the EU are characterized by strong interdependence. But these relations are currently being hampered by serious lack of understanding, making it difficult for the two parties to reach agreement on a new energy partnership. The aim of this article is to analyse the effects of this new European gas context on Gazprom's strategy and how the issues of energy security and cooperation between Russia and the EU will be affected by this new order.
    Date: 2011–03
  9. By: Cécile Batisse (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Nong Zhu (INRS-UCS - INRS-UCS - Université du Québec à Montréal)
    Abstract: Cet article étudie l'insertion de ces migrants ruraux sur le marché du travail de la province du Guangdong à partir d'une base de données originales issues d'une enquête sur les paysans-ouvriers (ming gong), réalisée en 2006. A partir de modèles de durée, nous portons une attention particulière aux caractéristiques individuelles, temporelles (évolution de la mobilité dans l'emploi au cours du temps) et spatiales (rôle du lieu d'origine). Nos résultats montrent que les migrants forment un groupe hétérogène du point de vue de leurs caractéristiques individuelles et de leur employabilité dans le delta de la rivière des Perles. L'insertion sur le marché du travail des femmes, des jeunes et des peu qualifiés est facilitée. La proximité géographique du lieu de départ de la migration est également favorable. Nous examinons enfin les déterminants du salaire urbain des paysans-ouvriers qui s'insèrent sur un marché du travail de plus en plus segmenté et fragmenté. / The integration of rural migrants into the urban labor market has become an essential economic issue in today's China. In the context of economic reforms, policies affecting migration in continental China have been redefined, which therefore greatly intensified the internal migration flows. Since the 1980s, the rural depopulation has been essentially linked to the migration of "peasant-workers" (ming gong) who continue to play a key role in the country's transition into a market economy. In this article, we study the integration of these rural migrants into the labor market in the Guangdong province using the original data from a 2006 survey of peasant-workers. Based on duration models estimation, the analysis focuses on the role of different characteristics: personal, temporal (i.e. the course of employment mobility through time) and spatial (i.e. the role of place of origin). Results show that migrants form a heterogeneous group in terms of personal characteristics and employability in the Pearl River delta. Women, the youth and the less qualified are among the advantaged. Geographical proximity also plays a favorable role. Finally, we examine the determinants of the wage in urban areas for peasant-workers who integrated the increasingly segmented and fragmented labor market.
    Keywords: paysans-ouvriers;migration;emploi;villes;Chine / peasant workers;urban employment;wages;China
    Date: 2011–03–18
  10. By: Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Anton Mihailov; Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Gábor Hunya (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Zdenek Lukas (The Vienna Institute for International Economic Studies, wiiw); Josef Pöschl (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Waltraut Urban (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw); Sándor Richter (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The outlook for the world economy has improved in the course of 2010 and the recovery has gained strength in the EU as well. The Central, East and Southeast European countries (CESEE) have also recovered from the crisis; the majority of them recorded positive GDP growth. On average, the recent revival of exports has been even stronger than their growth before the crisis. By way of contrast, the trends in industrial output have so far remained more or less flat. The persistent decline in construction and fixed investments – both related to the still hesitant credit markets – represents one of the key downward internal risks to our moderately optimistic regional economic forecast. The general outlook for the CESEE region in the baseline scenario reckons with a gradual strengthening of economic growth over the period 2011-2013, in most cases rarely exceeding 4% per annum. GDP growth will become more broadly based. The formerly predominant role of external demand will weaken somewhat, while both household consumption and gross fixed investments will ultimately contribute positively to GDP growth. With exports, industrial output levels and eventually also GDP growth having already recovered, the economy is seen as having largely returned ‘back to normal’ – yet with at least two important differences: (1) post-crisis growth will be slower. That slower growth, however, also implies that (2) the labour market situation will be ‘very far from normal’ as unemployment will remain high, with young and low-skilled workers being especially adversely affected, and any improvement only gradual and delayed. Inflation rose throughout 2010 as food and commodity prices soared; in general, however, it will pose no (or little immediate) threat. The moderate economic upturn and a revival of capital inflows have resulted in renewed appreciation pressures. The forecasts point to a gradual deterioration of current account positions in all CESEE countries, yet the return (or persistence) of extreme imbal-ances are only expected for Montenegro, Albania and Serbia. The financing constraint with respect to both domestic and external loans will constitute one of the key brakes on future economic growth. Given the sorry state of public finances and the ensuing budget consolidation efforts, we cannot expect any new additional growth-stimulating measures from the public sector – on the contrary, owing to the limited fiscal space government deficits and public debts will be scaled back. The sharp drop in GDP in most CESEE countries during the crisis resulted in both absolute and relative declines in their per capita GDP. The catching-up process of the previous decade was thus interrupted and income gaps vis-à-vis Western Europe widened. In the baseline GDP growth sce-nario wiiw reckons with a renewed catching-up process starting as early as 2011 (after losing 5 to 7 years in terms of income convergence).
    Keywords: Central and East European new EU member states, Southeast Europe, future EU member states, Balkans, former Soviet Union, Turkey, economic forecasts, employment, foreign trade, competitiveness, exchange rates, inflation, monetary policy
    JEL: G18 O52 O57 P24 P27 P33 P52
    Date: 2011–03
  11. By: Feng, Xunan (Shanghai Jiaotong University); Johansson, Anders C. (China Economic Research Center)
    Abstract: We study the effects of political participation on holdings of liquid assets in a transition economy. Previous research has shown that the risk of political extraction by politicians and bureaucrats in countries with weak institutions has an adverse effect on holdings of liquid assets. We propose that political participation by private entrepreneurs can function as a means to alleviate some of that risk. Our empirical results indicate that political participation is positively related to cash holdings in China, especially in regions with weak institutions proxied by lower GDP per capita, lower marketization levels, and weaker property protection. Cash holdings have a negative effect on firm value as measured by the market-to-book ratio. However, political participation, the combined effect of cash holdings and political participation, as well as the combined effect of cash holdings, political participation, and institutions are all positively associated with firm value. Political participation thus results in an improved ability for firms that function in an environment fraught with the risk of political extraction to increase their holdings of liquid assets as well as a related positive effect on firm value.
    Keywords: Political participation; Private entrepreneurs; Cash holdings; Political extraction; China
    JEL: G31 G32 G34 P48
    Date: 2011–03–15
  12. By: Götz Zeddies
    Abstract: In recent decades, the international division of labor expanded rapidly in course of globalization. In this context, highly developed countries specialized on (human) capital intensively manufactured goods and increasingly sourced parts and components from lowwage countries. Since this should be beneficial for the high-skilled and harmful for the lower qualified workforce, especially the opening up of Eastern Europe and the international integration of newly industrializing Asian economies are considered as main reasons for increasing unemployment of the lower qualified in high-wage countries. The present paper addresses this issue for selected Western European countries by analyzing factor content of trade, which allows inferring on factor demand patterns resulting from international trade. This is not only done for countries’ total external trade, but also for bilateral trade flows, using input-output analyses. Thereby, differences in factor inputs and production technologies are considered, allowing for product differentiation. According to the results, factor content of bilateral trade flows between Western European high-wage countries does hardly differ. However, the results are different for East-West trade, since exports from Western to Eastern Europe are distinctly more human capital intensively manufactured than imports of Western European high-wage countries from Eastern Europe.
    Keywords: European integration, international trade, labor markets, input-output analysis
    JEL: C67 F11 F15 F16
    Date: 2011–03
  13. By: Ashot Tsharakyan; Petr Zemcik
    Abstract: We study a natural experiment in the Czech Republic where the maximum regulated rent appreciation has depended explicitly on the price of real estate since 2007. We track the tenure choice of households from consumption surveys for subsequent years. Rent deregulation makes households in regulated apartments more likely to own real estate while the opposite is true for other renters and owners. The net present value of buying property vs renting is an increasing function of the real estate price appreciation for renters in regulated apartments. We use their tenure choice to generate the distribution of property price expectations.
    Keywords: Czech Republic; expectations; rent regulation and deregulation; real estate prices; tenure choice
    JEL: C25 R21 R31
    Date: 2011–01
  14. By: Quan Hoang Vuong; Van Nhue Dam; Daniel van Houtte; Tri Dung Tran
    Abstract: In this research, we aim to develop a conceptual framework to assess the entrepreneurial properties of the Vietnamese reform, known as Doi Moi, even before the kickoff of Doi Moi policy itself. We argued that unlike many other scholars’ assertion, economic crisis and harsh realities were neither necessary nor sufficient conditions for the reform to take place, but the entrepreurial elements and undertaking were, at least for case of Vietnam’s reform. Entrepreneurial process on the one hand sought for structural changes, kicked off innovation, and on the other its induced outcome further invited changes and associated opportunities. The paper also concludes that an assessment of possibility for the next stage of Doi Moi in should take into account the entrepreneurial factors of the economy, and by predicting the emergence of new entrepreneurial facets in the next phase of economic development.
    Keywords: Economic Reform; Transition Economies; Vietnam’s Doi Moi; Entrepreneurship; Economic Crisis; Government Policy; Communist Countries
    JEL: G18 E22 L14 L26 P20 P31
    Date: 2011–03
  15. By: Masayoshi Maruyama (Graduate School of Business Administration, Kobe University); Le Viet Trung (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: This paper reports the findings of a study on modern domestic retailers in Vietnam. We based this study on (1) a survey of 56 firms that control almost all the modern retail format stores in Vietnam, (2) in-depth interviews with CEOs and government officials, and (3) store visits and observations which were carried out by the authors. We discuss the operation and retail renovations of local modern retailers, the structure and the background of competitors, the problems retailers face, and their prospects for future development. Our findings provide a comprehensive picture of modern retailers in Vietnam and have significant implications for policy makers, as well as for local and foreign retailers.
    JEL: D12 L81 M31
    Date: 2011–03
  16. By: Fakhri , Hasanov; Khudayar , Hasanli
    Abstract: The study examines whether inflation process can be explained within the framework of the Money Market Approach in the third stage of economic development of Azerbaijan economy covering 2004-2008. By employing dynamic modeling study concludes that the Money Market Approach has not been relevant for explaining Azerbaijani inflation. Because Azerbaijan, a resource rich small open economy in transition processes, has some stylized facts which are important to take into account in the analysis of the inflation. Since the Money Market Approach seems irrelevant one, the paper puts forward application of other alternative explanations for Azerbaijani inflation in the future. In this regard analyzing inflation in the context of resource dependence seems one of the relevant approaches due to high price increases mainly sourced from oil revenues.
    Keywords: Inflation rate; Money Market Approach; Transition economy; Resource Abundance; Oil and Non-oil Sectors; Econometric modeling; Azerbaijan
    JEL: P24 Q33 C22
    Date: 2011–02
  17. By: Zenou, Yves (Stockholm University)
    Abstract: This article consists in three parts. The first part deals with theory. We evaluate the pros and cons of government involvement in urban housing and of renting versus ownership. In the second part, we summarize the different housing policies that have been implemented in the United States, Europe, and Asia. We draw some conclusions. In particular, we show that there is a tradeoff between encouraging home ownership and social housing since countries that have favor the former have neglected the latter (like Japan, Spain, etc.). In the third part, we use the theory and the international policy parts to address housing policy issues in China. One of the main concerns in Chinese cities is the raise of poverty mainly by "illegal" migrants (who are Chinese rural residents) living in "urban villages". We propose two steps to fight against poverty in Chinese cities. The first one is to require that the Chinese government recognizes these "illegal" migrants by helping them becoming "legal". The second step is to encourage social housing that directly or indirectly subsidizes housing for the poor. In that case, to fight against poverty, one can either implement place-targeted policies (like the enterprise zone programs in the US and Europe and/or housing projects in the US, UK, or France) or people-targeted policies (like the MTO programs in the US). We also discuss other issues related to poverty. In particular, we suggest that the government could also try to keep migrants in rural areas by attracting firms there and/or introduce a microfinance system that helps them become entrepreneurs.
    Keywords: urban villages, social housing, poverty, place-targeted policies, people-targeted policies, China
    JEL: H5 O53
    Date: 2011–02
  18. By: Roman Horvath; Katerina Smidkova; Jan Zapal
    Abstract: We assess whether the voting records of central bank boards are informative about future monetary policy. First, we specify a theoretical model of central bank board decision-making and simulate the voting outcomes. Three different versions of model are estimated with simulated data: 1) democratic, 2) consensual and 3) opportunistic. These versions differ in the extent to which the chairman and other board members exchange information prior to the voting. The model shows that the voting pattern is informative about future monetary policy provided that the signals about the optimal policy rate are noisy and that there is sufficient independence in voting across the board members, which is in line with the democratic version. Next, the model predictions are tested on real data on six countries (the Czech Republic, Hungary, Poland, Sweden, the United Kingdom and the United States). Subject to various sensitivity tests, it is found that the democratic version of the model corresponds best to the real data and that in all countries the voting records are informative about future monetary policy, making a case for publishing the records.
    Keywords: Collective decision-making, monetary policy, transparency, voting record.
    JEL: C78 D78 E52 E58
    Date: 2010–12
  19. By: Kuhn, Andreas (University of Zurich)
    Abstract: This paper studies differences in inequality perceptions, distributional norms, and redistributive preferences between East and West Germany. As expected, there are substantial differences with respect to all three of these measures. Surprisingly, however, differences in distributional norms are much smaller than differences with respect to inequality perceptions or redistributive preferences. Nonetheless, individuals from East Germany tend to be more supportive of state redistribution and progressive taxation, and less likely to have a conservative political orientation, even conditional on having the same inequality perceptions and distributional norms.
    Keywords: subjective inequality indices, redistributive preferences, political preferences
    JEL: D31 D63 H50 J31
    Date: 2011–03

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