nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒06‒04
fourteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Democracy, Market Liberalization and Political Preferences By Claudia Senik; Pauline Grosjean
  2. Paying a Visit: The Dalai Lama Effect on International Trade By Fuchs, A.; Klann, N.
  3. Where to Work? Gender Differences in Labor Market Outcomes during Economic Crisis By Ralitza Dimova; Ira N. Gang; John Landon-Lane
  4. Strategic Eurasian Natural Gas Model for Energy Security (Revised 6 April 2011) By Chyong, C-K.; Hobbs, B. F.
  5. Capital formation in new cooperatives in China: policy and practice By Li Zhao
  6. Employment diversification of farm households and structural change in the rural economy of the New Member States By Fritzsch, Jana; Möllers, Judith; Buchenrieder, Gertrud
  7. Law and Economy in Traditional China: A "Legal Origin" Perspective on the Great Divergence By Ma, Debin
  8. A fiscal outlook for Poland using Generational Accounts By Janusz Jablonowski; Christoph Müller; Bernd Raffelhüschen
  9. Can economic crises be good for your diet? By Ralitza Dimova; Ira N. Gang; Monnet Gbakou; Daniel Hoffman
  10. Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries By Zsolt Darvas; Valentina Kostyleva
  11. Ten years of cultural development in Sibiu: The European cultural capital and beyond By Richards, Greg; Rotariu, Ilie
  12. Business Cycles in South-East Europe from Independence to the end of the Cold War By Matthias Morys; Martin Ivanov
  13. Reforming the Power Sector in Transition: Do Institutions Matter? By Nepal, R.; Jamasb, T.
  14. Survey evidence on wage and price setting in Estonia By Aurelijus Dabušinskas; Tairi Rõõm

  1. By: Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, Université Paris-Sorbonne - Ministère de l'Education nationale, de l'Enseignement supérieur et de la Recherche); Pauline Grosjean (UC BERKELEY - Berkeley University of California - UC Berkeley)
    Abstract: This paper questions the conventional wisdom concerning the sequencing of political and economic reforms in developing countries. We exploit the specific situation of frontier-zones as well as the considerable regional variations in culture and economic development in the countries of Central and Eastern Europe and the former Soviet Union. We estimate the impact of market development and democratization on subjective political preferences. Taking advantage of a new survey conducted in 2006 by the European Bank for Reconstruction and Development and the World Bank in 28 post-transition countries, we find a positive and significant effect of democracy on support for a market economy, but no effect of market liberalization on support for democracy. Our results are robust to the use of various indices of market liberalization and democracy and alternative measures of political preferences.
    Keywords: market and democracy ; political preferences ; spatial regression discontinuity ; transition economies
    Date: 2011–02
  2. By: Fuchs, A.; Klann, N.
    Abstract: The Chinese government frequently threatens that meetings between its trading partners’ officials and the Dalai Lama will be met with animosity and ultimately harm trade ties with China. We run a gravity model of exports to China from 159 partner countries between 1991 and 2008 to test to which extent bilateral tensions affect trade with autocratic China. In order to account for the potential endogeneity of meetings with the Dalai Lama, the number of Tibet Support Groups and the travel pattern of the Tibetan leader are used as instruments. Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China. However, this ‘Dalai Lama Effect’ is only observed for the Hu Jintao era and not for earlier periods. Furthermore, we find that this effect is mainly driven by reduced exports of machinery and transport equipment and that it disappears two years after a meeting took place.
    Keywords: International Trade, International Political Economy, Diplomatic Relations, Exports to China, Tibet, Dalai Lama
    JEL: F13 F51 F59
    Date: 2011–01–26
  3. By: Ralitza Dimova; Ira N. Gang (Osteuropa-Institut, Regensburg (Institut for East European Studies)); John Landon-Lane
    Abstract: In Central and Eastern European women started the process of transition from socialist to market economies with a status quo that differed markedly from women in both de-veloped western and traditional developing economies. They enjoyed an equal or higher level of education than men, virtually no unemployment, only temporary labor force departures, lavish maternity and child related benefits. Using panel data constructed from the 1995 and 1997 Bulgarian Integrated Household Surveys, our results reveal striking gender differences with respect to the reallocation of male and female employ-ees to and out of the public and private sectors.
    Keywords: Employment, Mobility, Gender, Household
    JEL: J21 J23 J31 J62 P2
    Date: 2011–02
  4. By: Chyong, C-K.; Hobbs, B. F.
    Abstract: The mathematical formulation of a large-scale equilibrium natural gas simulation model is presented. Although large-scale natural gas models have been developed and used for energy security and policy analysis quite extensively (e.g., Holz (2007), Egging et al. (2008), Holz et al. (2009) and Lise et al. (2008)), this model differs from earlier ones in its detailed representation of the structure and operations of the Former Soviet Union (FSU) gas sector. In particular, the model represents: (i) market power of transit countries, (ii) transmission pipelines in Russia, Ukraine, Belarus and Central Asia, (iii) differentiation among gas production regions in Russia, and (iv) gas trade relations between FSU countries (e.g., Gazprom’s re-exporting of Central Asian gas). To demonstrate the model, a social benefit-cost analysis of the Nord Stream gas pipeline project from Russia to Germany via the Baltic Sea is provided. It is found that Nord Stream project is profitable for its investors and the project also improves social welfare in all market power scenarios. Also, if transit countries (Ukraine and Belarus) exert substantial market power then the economic value of Nord Stream to its investors and to society improves substantially. We also found that the value of Nord Stream investment is rather sensitive to the degree of downstream competition in European markets and that lack of downstream competition might result in the negative value of the Nord Stream system to Gazprom.
    JEL: C61 C72 L13 L95 H43
    Date: 2011–04–05
  5. By: Li Zhao
    Abstract: This paper aims to fill one knowledge gap on understanding the issue of capital formation in new co-operatives in developing countries. By doing so, it presents the main findings of capital formation and investment in a small sample of horticulture shareholding co-operatives in rural China, because shareholding co-operatives, as one best example of new multi-stakeholder co-operatives in China, have become a vehicle to mobilize additional resources. To better understand shareholder co-operatives’ stakeholder heterogeneity, two main groups of stakeholders are identified, namely, member stakeholders (investor-members and patron-members) and non-member stakeholders (non-member investors and non-member donors/grant-givers). Following a brief theoretical overview concerning co-operative multi-stakeholdership and capital acquisition and constraints, I then analyze both the rules-in-form and rules-in-use with respect to the co-operative stakeholders’ capital involvement in China. Cases observed indicate a hybridization feature of the co-operative capital base, including member contributions, public subsidies, income from the market sale, institutional capital and social capital. There exist at least four ways to raise equity capital from co-operative members. External capital comes mostly from direct government support in the form of grants and project funding, and indirect financial support through preferential treatment and policies. Different from the situation in the West, debt capital does not appear to be a widely-used traditional financing source. New co-operatives in China have difficulty even in borrowing short-term debt, not to mention receiving long-term loans. Also specialized/non-traditional external capital sources such as those provided by co-operative banks do not suffice. Co-operative banks are not always ready to provide micro-credit to co-operatives. Only when the government plays an active role, this lending process is facilitated. Many innovative financial systems are also observed in the field, which facilitate the mobilization of more external capital for co-operatives.
    Keywords: Capital Formation, Co-operative, Multi-stakeholder, China
    JEL: H44 K29 O13 P13 P26 Q13 Q18
    Date: 2011
  6. By: Fritzsch, Jana; Möllers, Judith; Buchenrieder, Gertrud
    Abstract: Changes in the rural labour market, especially the increase of rural non-farm employment are recognised as one dimension of structural change. Labour allocation decisions are driven by economic incentives such as wage differentials, but also non-economic motives may play a decisive role. This paper summarises theoretical insights and presents an integrated conceptual framework reflecting the drivers of employment shifts. Methodologically, the conceptual framework is implemented in fuzzy logic to analyse the household potential to diversify its income activities. The empirical analysis draws on a survey of 1,077 farm households in rural Bulgaria, Hungary, Poland, Romania, and Slovenia. […] This report is structured as follows: Chapter 2 presents a review of theory, an integrated theoretical framework as well as an overview of current trends of employment diversification. Chapter 3 then introduces fuzzy logic methodology and presents the model that is implemented to assess the non-farm income diversification potential in the survey countries. This is followed by a brief description of the database in Chapter 4. Simulation results are presented in Chapter 5 and Chapter 6. The last chapter summarises the main outcomes and gives policy recommendations. --
    Date: 2011
  7. By: Ma, Debin
    Abstract: This article offers a critical review of recent literature on Chinese legal tradition and argues that some subtle but fundamental differences between the Western and Chinese legal traditions are highly relevant to our explanation of the economic divergence in the modern era. This paper seeks to elucidate the fundamental feature of traditional Chinese legal system and the mechanism of dispute resolution within the framework of a disciplinary mode of administrative law within a bureaucratic hierarchy and intermediation within social-networks. By comparing the contrasting development of the legal professions in China and Western Europe, it reveals the importance of political institution, legal regime and the growth of jurisprudence that would ultimately affect property rights, contract enforcement and ultimately long-term growth trajectories.
    Keywords: adjudication; common law; disciplinary mode of justice; economic growth; great divergence; jurisprudence; law; rule of law
    JEL: N00 O10
    Date: 2011–05
  8. By: Janusz Jablonowski; Christoph Müller (Research Center for Generational Contracts, University of Freiburg); Bernd Raffelhüschen (Research Center for Generational Contracts, University of Freiburg)
    Abstract: During the next few decades the populations of most developed countries will grow older and older as a result of the low fertility rates since the 1970s and/or the continuously increasing life expectancy. Poland, one of the biggest countries in Central Europe, will be confronted rather seriously by this development. Generational Accounting which was introduced in the early nineties, can illustrate the effects of this ageing process on a country’s fiscal situation. We show that the demographic development produces a major challenge for the long term stability of Polish public finances. In particular the healthcare system deserves special attention for policy makers in the medium and long run, whilst the general pension system shall stabilise in the long term.
    Keywords: Generational Accounting, Fiscal sustainability, Fiscal policy, Poland, Pension reform
    JEL: H50 H55 H60 H68 J10 H30
    Date: 2010–10
  9. By: Ralitza Dimova; Ira N. Gang (Osteuropa-Institut, Regensburg (Institut for East European Studies)); Monnet Gbakou; Daniel Hoffman
    Abstract: With fortuitously timed data - collected before, during and after a major macro-financial crisis in Bulgaria - we revisit several hypotheses in the economics and nutritional literature related to the tendency of households to smooth their nutritional status over time. We explore the dietary impact of both falling real incomes in the context of hyperinflation and crisis and changing relative prices and the changing responsiveness of different groups of people to these incomes and prices over six year of fundamental structural reforms of the economy. Our results highlight large and dramatically changing food and nutrient elasticities, which challenge the perception of household ability to smooth their nutrient stream during economic crises and transitions.
    Keywords: Crisis, Diet, Fluctuation, Health, Nutrition
    JEL: E32 I12 P23 P24 P36
    Date: 2011–03
  10. By: Zsolt Darvas; Valentina Kostyleva (OECD Public Governance and Territorial Development Directorate)
    Abstract: This paper studies the role of fiscal and monetary institutions in macroeconomic stability and budgetary control in central, eastern and south-eastern European countries (CESEE) in comparison with other OECD countries. CESEE countries tend to grow faster and have more volatile output than non-CESEE OECD countries, which has implications for macroeconomic management: better fiscal and monetary institutions are needed to avoid pro-cyclical policies. The paper develops a Budgetary Discipline Index to assess whether good fiscal institutions underpin good fiscal outcomes. Even though most CESEE countries have low scores, the debt/GDP ratios declined before the crisis. This was largely the consequence of a very favourable relationship between the economic growth rate and the interest rate, but such a favourable relationship is not expected in the future. Econometric estimations confirm that better monetary institutions reduce macroeconomic volatility and that countries with better budgetary procedures have better fiscal outcomes. All these factors call for improved monetary institutions, stronger fiscal rules and better budgetary procedures in CESEE countries.
    Keywords: CESEE countries, Budgetary Discipline Index, budget process, fiscal institutions, budgetary institutions, monetary institutions, macroeconomic stability, econometric analysis, budgetary procedures, fiscal outcomes, fiscal rules
    JEL: E32 E50 H11 H60
    Date: 2011–04
  11. By: Richards, Greg; Rotariu, Ilie
    Abstract: This study presents the results of a ten year monitoring programme on cultural and tourism development in the city of Sibiu. Over the ten year research period the programme expanded to cover a wide range of data sources, including resident and visitor surveys, stakeholder interviews and secondary statistical data. The research started at a fairly low level with studies of single events in the cultural agenda of Sibiu. The programme was significantly expanded in 2007 thanks to the staging of the European Capital of Culture in the city. Support from the ECOC allowed the scale of the research to be increased. Since 2007 the Lucian Blaga University has continued to collect data using its own resources. This study is unique as it is probably the first long-term study of the cultural and tourism development of a city in a former Socialist country in Central and Eastern Europe. The data in the current report build on and extend the analysis provided in the earlier report “The Impact of the 2007 European Cultural Capital in Sibiu: A long term perspective”, published in 2010. This research includes a number of different elements: regular surveys of residents and visitors, analysis of tourism flows and other statistics, Interviews with stakeholders in the city, Data from the regular surveys carried out by ATLAS in other parts of Europe. This report provides a summary of some of the major findings of the research to date, mainly based on the resident and visitor surveys.
    Keywords: cultural tourism; European Cultural Capital; Sibiu
    JEL: L83
    Date: 2011–05
  12. By: Matthias Morys; Martin Ivanov
    Abstract: Based on a freshly built data set and relying on a Bayesian Dynamic Factor Model, this paper constructs business cycle indices for five South-East European (SEE) countries (Austria(-Hungary), Bulgaria, Greece, Romania, Serbia/Yugoslavia) to address two questions: to what extent has there been a common SEE business cycle, and has there been synchronisation of business cycles with England, France and Germany? We find limited but increasing business cycle integration before World War I, both within SEE and vis-à-vis the core economies. The trend towards increasing levels of business cycle synchronisation accelerates in the interwar period and is not even interrupted by the arrival of the Great Depression. The onset of the Cold War almost completely extinguishes regional business cycle integration, but the reorientation of some communist countries towards the West (early on by Yugoslavia, from the mid-1970s also by Romania) also sees the re-emergence of a common business cycle vis-à-vis Austria and Germany. JEL classification:
    Keywords: South-East European business cycle, national historical accounts, common dynamic factor analysis
    JEL: N13 N14 C43 E32
    Date: 2011–05
  13. By: Nepal, R.; Jamasb, T.
    Abstract: This paper quantitatively explores high-level links between power sector reforms and wider institutional reforms in the economy for a set of 27 diverse countries in rapid political and economic transition since 1990. Panel-data econometrics based on bias corrected dynamic fixed effect analysis (LSDVC) is performed to assess the impact of reforms on macroeconomic and power sector outcomes. The results indicate that power sector reform is indeed a more complicated process than initially perceived. The results also show that power sector reform is greatly inter-dependent with reforms in other sectors in the economy. We conclude that the success of power sector reforms on outcomes in developing countries will largely depend on the extent in which countries are able to synchronize inter-sector reforms in the economy.
    JEL: C33 P28 Q4
    Date: 2011–02–24
  14. By: Aurelijus Dabušinskas; Tairi Rõõm
    Abstract: In this paper, we give a comprehensive overview of wage and price adjustment practices in Estonia, drawing from two managerial surveys which were conducted in autumn 2007 and summer 2009 within the framework of the Wage Dynamics Network (WDN), a joint research project by the Eurosystem/ESCB. Our discussion covers a broad range of results, including firm-level descriptive evidence for several institutional and structural characteristics of the Estonian economy such as unionisation and collective bargaining coverage, labour intensity of production, remuneration methods, product market competition, etc., and insights into the wage and price setting behaviour of Estonian firms. To illustrate this behaviour, we give an overview of the frequency and timing of wage and price changes; the extent of downward nominal and real wage rigidity; the determinants of wages paid to newly employed workers; and finally, the nature of firms\' adjustments to cost push and negative demand shocks
    Keywords: survey data, wage setting, price setting, Estonia
    JEL: E3 J3
    Date: 2011–05–27

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