nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒10‒01
sixteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Canada's and Russia's Experiences with Land Taxation Reform: Lessons for China By Denis Nitikin; Chunli Shen; Heng-fu Zou
  2. Regional Inequality in Contemporary China By Qinghua Zhang; Heng-fu Zou
  3. Europeanization of Private Law in Central and Eastern Europe Countries (CEECs): Preliminary Findings and Research Agenda By Fabrizio Cafaggi; Olha Cherednychenko; Marise Cremona; Kati Cseres; Lukasz Gorywoda; Rozeta Karova; Hans-Wolfgang Micklitz; Karolina Podstawa
  4. Overview of the Evolution of China's Central Bank and Monetary Policy: Correlation to the European Union By Skold, Alida S.
  5. Structural convergence among selected European countries. Multidimensional analysis By Olczyk, Magdalena; Lechman, Ewa
  6. Pre-Accession Changes to Residence-based Naturalisation Requirements in Ten New EU Member States By Katja Swider
  7. Cities in Transition By Oleksandr Shepotylo
  8. Post-Accession Conditionality - Support Instrument for Continuous Pressure? By Eli Gateva
  9. Structural changes in the Polish economy - the analysis of input-output By Olczyk, Magdalena
  10. Europeanization Subverted? The European Union’s Promotion of Good Governance and the Fight against Corruption in the Southern Caucasus By Tanja A. Börzel; Yasemin Pamuk
  11. Trusting only whom you know, knowing only whom you trust: the joint impact of social capital and trust on individuals’ economic performance and happiness in CEE countries By Katarzyna Growiec; Jakub Growiec
  12. Assessment of the income situation of households in the Czech Republic By Turčínková, Jana; Stávková, Jana
  13. Political Pressure on the National Bank of Slovakia By Peter Kukuk; Adam Gersl
  14. The Relationship between Volatility and Trading Volume in the Chinese Stock Market: A Volatility Decomposition Perspective By Tianyi Wang; Zhuo Huang
  15. The EU labour market crisis and recovery policies. The Bulgarian response to the crisis By Beleva, Iskra
  16. Financial Deepening and Economic Growth in the European Transition Economies By Mirdala, Rajmund

  1. By: Denis Nitikin; Chunli Shen; Heng-fu Zou
    Date: 2011
  2. By: Qinghua Zhang (Peking University); Heng-fu Zou (CEMA, Central University of Finance and Economics)
    Date: 2011
  3. By: Fabrizio Cafaggi; Olha Cherednychenko; Marise Cremona; Kati Cseres; Lukasz Gorywoda; Rozeta Karova; Hans-Wolfgang Micklitz; Karolina Podstawa
    Abstract: Since its creation, European Union (hereinafter: ‘the EU’) has experienced various enlargements. In 1973, Denmark, Ireland and the United Kingdom joined the EU. Greece became a Member in 1981 and was followed by Spain and Portugal in 1986. Austria, Finland and Sweden accessed the EU in 1995. In 2004, ten Central and Eastern European Countries (hereinafter: ‘the CEECs’) became EU members. Finally, another two CEECs, i.e. Bulgaria and Romania, joined the EU on 1 January 2007. What impact did previous enlargements have on national systems of private law? It is an important question since there are ongoing accession negotiations with Croatia and Turkey and also other countries (Macedonia, Bosnia and Herzegovina, Albania Serbia and Montenegro, Ukraine and Moldova) are interested in adhering to the EU. Not only these countries but also Russia has developed specific relationships with the EU which affect its private law system. Learning from previous experience may help structuring better pattern of Europeanization. But the broader question is whether the process of Europeanization of private law in CEECs can be considered concluded with membership or ‘regional policies’ are needed to contextualize the implementation of EU law and to govern its spillovers.
    Keywords: European law; harmonisation; East-Central Europe
    Date: 2010–10–01
  4. By: Skold, Alida S.
    Abstract: As an innovator in the financial system, China was the first to use paper currency. Eventually the form of currency was held responsible for devastating inflation and was abandoned during the Ming Dynasty. Going forward in time, uprisings and discontent have emphasized the importance of controlling inflation. The central bank is pivotal in issuing monetary policy to control inflation and to maintain financial stability as the government transforms itself from a planned economy to a mixed market economy. The transforming economy is moving toward a free market system through series of economic reforms. The correlation between China’s structure and the European Union’s structure provides opportunities for further study to determine next steps for both.
    Keywords: China; central bank; monetary policy; inflation; economy
    JEL: E0 H60 E5
    Date: 2011–07–17
  5. By: Olczyk, Magdalena; Lechman, Ewa
    Abstract: The main aim of the paper to test for structural convergence among arbitrary selected European countries. The authors choose four transition economies: Poland, Czech Republic, Hungary and Slovak Republic which are widely recognized as structurally similar economies. All four countries` economy structures are consequently compared with the structure of German economy – here selected as the reference country. The authors want to find out whether it is possible to confirm the hypothesis about the structural convergence between the four selected economies and Germany. The data sample covers the period of 2000-2007. The empirical part of analysis bases on 18 different indicators connected with the economy structure. To verify the hypothesis the authors apply multidimensional taxonomy methods
    Keywords: structural convergence; structural changes
    JEL: F00 F43
    Date: 2011
  6. By: Katja Swider
    Abstract: This study investigates how access to residence-based naturalisation has changed in ten Central and Eastern European EU member states before their accession. It focuses on the legislative amendments made during the time of EU pre-accession conditionality, specifically between the entry into force of the Europe Agreement and the date of accession, when the supervision of the EU Commission over legal and political developments in those states was strongest. The changes are analysed and evaluated as to their liberal nature, which shows that while the EU pre-accession documents promote the principle of inclusiveness, the legislative amendments in the field of naturalisation that were in fact introduced during the pre-accession time result in higher exclusion.
    Date: 2011–03–15
  7. By: Oleksandr Shepotylo (Kyiv School of Economics, Kyiv Economic Institute)
    Abstract: Cities in transition face a unique set of challenges that came forth due to interplay of the legacy of socialist urban policies and transition to the market economy. The socialist urban policies restrained growth of the largest cities and distorted the spatial equilibrium towards more uniform distribution of urban population. The transition to the market economy reduces distortions but the convergence is slow. Housing market rigidities, inadequate urban infrastructure, and inconsistent government policies prevent people from moving to the largest cities.
    Keywords: urban development, transition, cities, Zipf's law, local governance, housing market
    JEL: P25 R12 R23
    Date: 2011–09
  8. By: Eli Gateva
    Abstract: The establishment of a Cooperation and Verification Mechanism for monitoring Bulgaria’s and Romania’s progress in the areas of judiciary and fight against corruption not only confirms the evolutionary nature of EU conditionality, but introduces a new feature, that of post-accession conditionality. More than three years after accession, neither Bulgaria nor Romania have managed to tackle the remaining issues and the scrupulous monitoring mechanism is still maintained. What are the main features and limitations of post-accession conditionality? Why does the effectiveness of EU conditionality deteriorate after accession? The article outlines a conceptual framework for comparative study of pre-accession and post-accession conditionality. On the basis of a stage-structured conditionality model, it discusses the transformations of the main elements of conditionality before and after accession and argues that the absence of accession advancement rewards combined with toothless explicit threats for sanctioning non-compliance produce very weak negative incentive structure which undermines the effectiveness of post-accession conditionality. The study, which draws on extensive interviews with senior EU officials and examination of key EU documents, highlights the growing application of differentiated and targeted conditionality and concludes with a reflection on the future of the mechanism and its implications for the ongoing enlargement of the Union with countries of the Western Balkans and Turkey.
    Keywords: EU-East-Central Europe; enlargement; Europeanization; Europeanization
    Date: 2010–10–21
  9. By: Olczyk, Magdalena
    Abstract: This paper analyses the structure of Polish economy using three input-output tables for years 1995, 2000 and 2004. Applying the traditional methods proposed by Rasmussen the sector’s backward and forward linkages are identified. Industries with large backward and forward linkages are named “key sectors” and play an important role in the development strategy of a country, so the outcome of the paper may be used for the development strategy of Polish economy. At the beginning of the article the idea of input-output table and Rasmussen’s methodology of identifying the key sectors are discussed in detail. Then, based on three input-output tables, the key sectors in the Polish economy are selected and the role of these sectors over the years 1995-2004 is examined.
    Keywords: structural changes; input-output; poland; transition economy
    JEL: L16 O33 R11 L1
    Date: 2011
  10. By: Tanja A. Börzel; Yasemin Pamuk
    Abstract: In order to foster peace, stability and prosperity in its near abroad, the European Union has invoked the European Neighbourhood Policy that seeks to transform the domestic structures of the Newly Independent States in the post-Soviet space thus building a ring of friends that share European norms and principles of democracy, rule of the law, market economy, and good governance. Empirical evidence, however, suggests that the EU’s capacity to hit across its borders and to realize its reform agenda seems limited. Moreover, most neighborhood countries appear to be stuck in transition and suffer from serious problems of both weak state capacity and defect democracy. Hence, EU efforts may also bear the danger of unintended and negative effects on the domestic structures of states, as its policies and institutions do not only empower liberal reform coalitions, to the extent that they exist in the first place, but can also bolster the power of incumbent authoritarian and corrupt elites. This paper intends to capture this dark side of Europeanization (Schimmelfennig 2007). It thus conceptualizes ENP as a political opportunity structure that provides opportunities and constraints to both supporters and opponents of the European Union’s reform agenda. Which of the two ultimately get empowered depends not only on the EU’s capacity to push for reforms but also on the pull of domestic actors.
    Keywords: neighbourhood policy; EU-South-Eastern Europe; EU-South-Eastern Europe; governance; Europeanization; Europeanization
    Date: 2011–04–20
  11. By: Katarzyna Growiec (Szkoła Wyższa Psychologii Społecznej); Jakub Growiec (National Bank of Poland, Economic Institute)
    Abstract: This paper demonstrates that bridging and bonding social capital as well as social trust interdependently affect individuals’ earnings and happiness. Based on crosssectional World Values Survey 2000 data on individuals from eight Central and Eastern European countries (CEECs), we provide evidence that majority of citizens of these countries have likely fallen in a “low trust trap” where deficits of bridging social capital and trust reinforce each other in lowering individuals’ incomes and happiness. Apart from gradual modernization and economic growth, also increases in labor market participation are identified as a potential way out of this “trap”, because employed people in CEECs tend to have statistically significantly more bridging social capital and more trust. While assessing robustness of our empirical results, we have found a high risk of regressor endogeneity and omitted variables bias, generally overlooked in earlier studies. These issues are carefully addressed in the current contribution.
    Keywords: bridging social capital, bonding social capital, social trust, CEE countries, earnings, happiness
    JEL: D10 J20
    Date: 2011
  12. By: Turčínková, Jana; Stávková, Jana
    Abstract: The paper deals with the assessment of income situation of households in the Czech Republic. The primary source for the analysis were the data of the survey EU-SILC European Union – Statistics on Income and Living Conditions. The basic variable for the analysis is the level of the household income in 2005–2008. In addition to the decile classification, characteristics such as the average income per one household member, poverty threshold, poverty depth coefficient, Lorenz curve and Gini coefficient. were calculated in order to evaluate the income situation. The results show an increase of the average household income. The Lorenz curve followed by the Gini coefficient demonstrate the uniformity of distribution of income values. The results show a decreasing income differentiation. The poverty threshold was defined on the level of 60% of the median value and with this given threshold, the households were assessed, whether they belong to the ones at the risk of poverty. The results reveal a decreasing number of households at the risk of poverty. The poverty depth coefficient has a stronger explanatory power and shows how far below the poverty threshold the households are, or what is an income deficit of these households. Each category of households at the risk of poverty varies with the depth of poverty. The analysis also provides the results of how the households’ income situation or poverty is perceived by the households themselves.
    Keywords: income differentiation of households; households at risk of poverty; material deprivation; perception of the income situation; EU SILC
    JEL: J17 R00 D10
    Date: 2011–02–07
  13. By: Peter Kukuk (UniCredit Bank, Prague); Adam Gersl (Czech National Bank; Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This paper analyzes political pressure on the National Bank of Slovakia, using the Havrilesky (1993) methodology based on media signalling. This methodology allows the pressure on the Central Bank of Slovakia to be compared with the pressure on the central banks to which the methodology was already applied, namely – the U.S. Federal Reserve, the Deutsche Bundesbank and the Czech National Bank. The analysis and the comparison reveals a relatively weak signalling of pressure in media in Slovakia and prevailance of financial sector representatives as the main commentaries on monetary policy of the National Bank of Slovakia in the period before euro adoption.
    Keywords: political economy, central banks, monetary policy
    JEL: E52 D78
    Date: 2011–09
  14. By: Tianyi Wang (China Center for Economic Research, National School of Development, Peking University); Zhuo Huang (China Center for Economic Research, National School of Development, Peking University)
    Abstract: We use heterogeneous autoregressive (HAR) model with high-frequency data of Hu-Shen 300 index to investigate the volatility-volume relationship via the volatility decomposition approach. Although we find that the continuous component of daily volatility is positively correlated with trading volume, the jump component reveals a significant and robust negative relation with volume. This result suggests that the jump component contains some "public information" while the continuous components are more likely driven by "private information". Discussion of the intertemporal relationship supports the information-driven trading hypothesis. Lagged realized skewness only significantly affects the continuous component.
    Keywords: High Frequency, Price Jump, Trading Volume
    JEL: G10 G12 G14
    Date: 2011
  15. By: Beleva, Iskra
    Abstract: The current study analyzes the status of both the European and the Bulgarian labor markets from the standpoint of the effects of the current crisis, which has affected the supply and demand of labor as well as the employment structure. It further examines the anti-crisis policies, which have been implemented by the EU and the member-countries of the Community as a means to mitigate the negative effects of the present global crisis that has befallen labor markets. It examines the scale of the crisis and the magnitude of its effect on the quantitative and qualitative parameters, which characterize the labor markets in the European countries and in Bulgaria. The current paper comments on the effects of the short-term policies aimed at overcoming the initial crisis-induced shocks. It further underlines the palliative characteristic of those measures and the need for a modern transition towards policies of a structural character. The combination of short-term anti-crisis measures with fundamental structural changes within labor markets is the successful strategy for restructuring labor markets as a means to achieve a higher level of labor productivity alongside a greater degree of competitiveness and dynamic economic growth. The book analyzes the status of both European and Bulgarian labour markets in regards to the effects of the current crisis on the labour supply and demand and employment structure. Further it examines anti-crisis policies implemented by EU member countries as a means to mitigate the negative effects of the current global crisis on the labour markets. The study examines the scale of the crisis and the magnitude of its effect on the quantitative and qualitative parameters characterizing the labour markets in EU countries and Bulgaria. The book comments on the effects of the short-term policies for overcoming the initial crisis-induced shocks. It underlines the palliative characteristic of those measures and the need for a modern transition towards structural policies. The combination of short-term anti-crisis measures and substantial structural changes is a successful strategy for restructuring the labour markets. Thus, a higher labour productivity and higher competitiveness and dynamic economic growth will be achieved.
    Keywords: labour market policy; labour demand; labour supply; unemployment; anti-crisis measures
    JEL: J21 J24 J23
    Date: 2011
  16. By: Mirdala, Rajmund
    Abstract: Various effects of the financial deepening came to the centre of academics as well as policy-makers discussions during last four decades especially in relation to the financial sector development. Together with financial liberalization and international financial integration economists focus their attention to the financial deepening especially due to its potential effects on the real economy. Perspective of the fast and sustainable economic growth at the end of the 1990s increased an attractiveness of the European transition economies (ETE) for the foreign investors that resulted in increased foreign capital inflows to ETE. International capital inflows (especially debt and portfolio capital flows) stimulate financial deepening through higher demand for financial services. As the underdeveloped financial markets obviously constrain domestic capital mobilization, the international financial integration is considered to be very useful vehicle in fostering financial sector advancement. One of the most discussed areas related to the overall effects of the financial deepening is a bi-directional relationship between financial development and economic growth. It is generally expected there is a positive effect of financial development on economic growth. On the other hand especially some country-specific institutional characteristics and different policies may significantly distort positive incentives of the financial deepening. In the paper we analyze the main aspects of the financial deepening in ten ETE in the period 2000-2010 using vector error correction model (VECM). In order to meet this objective we implement a multivariate cointegration methodology introduced by Johansen (1988, 1991) and Johansen and Juselius (1990) to estimate the relationships between financial depth indicators and real output in the selected group of countries. To find the order of integration of endogenous variables we test the time series for the unit root presence. In order to determine cointegrating (long-run) relationships, we follow a Johansen cointegration procedure to perform the trace test and maximum eigenvalue test. We also test the direction of the causality relationships between financial depth indicators and real output using linear Granger causality test. Using the estimated VEC model, the dynamic responses of the endogenous variables to the money stock, domestic bank deposits and domestic bank loans one standard deviation shocks are computed for each country from the group of ETE.
    Keywords: financial deepening; economic growth; vector error correction model; granger causality; impulse-response function
    JEL: G14 G15 O16 F43
    Date: 2011–06

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