nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒12‒19
28 papers chosen by
J. David Brown
Heriot-Watt University

  1. Using Export Market Performance to Evaluate Regional Preferential Policies in China By Schminke, Annette; Van Biesebroeck, Johannes
  2. Job Separations, Job Loss and Informality in the Russian Labor Market By H. Lehmann; T. Razzolini; A. Zaiceva
  3. Remittances and Children's Capabilities: New Evidence from Kyrgyzstan, 2005-2008 By Kathryn Anderson; Antje Kroeger
  4. How prudent are rural households in developing transition economies: By Jin, Ling; Chen, Kevin Z.; Yu, Bingxin; Huang, Zuhui
  5. Households' savings in China By Riccardo Cristadoro; Daniela Marconi
  6. Are there Spillover Effects from Hong Kong and the United States to Chinese Stock Markets? By Katharina Diekmann
  7. Understanding the Pattern of Growth and Equity in the People’s Republic of China By Liu, Minquan
  8. Credit Growth and Capital Buffers: Empirical Evidence from Central and Eastern European Countries By Adam Gersl; Jakub Seidler
  9. Changes in Job Structure and Rising Wage Inequality in Urban China, 1995-2007 By Xing, Chunbing
  10. Analysing agricultural productivity growth in a framework of institutional quality By Nomman Ahmed, Mirza; Maas, Sarah; Schmitz, P. Michael
  11. Making sense of institutional change in China: The cultural dimension of economic growth and modernization By Herrmann-Pillath, Carsten
  12. Towards a General Theory of Environmental Inequality: Social Characteristics of Townships and the Distribution of Pollution in Chinaâs Jiangsu Province By Schoolman, Ethan D.; Ma, Chunbo
  13. Potential outcomes of private pension developments in China By Javier Alonso, Miguel Angel Caballero, Li Hui, María Claudia Llanes, David Tuesta, Yuwei Hu, Yun Cao; Javier Alonso; Miguel Angel Caballero; Li Hui; Maria Claudia Llanes; David Tuesta; Yuwei Hu; Yun Cao
  14. Labor Markets and the Financial Crisis: Evidence from Tajikistan By Antje Kröger; Kristina Meier
  15. Fiscal discipline and economic growth – the case of Romania By Ionut Dumitru; Razvan Stanca
  16. Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector By Gao, Hang; Van Biesebroeck, Johannes
  17. Barriers to energy efficiency improvement: Empirical evidence from small-and-medium sized enterprises in China By Kostka, Genia; Moslener, Ulf; Andreas, Jan G.
  18. Chinaâs Electricity Market Reform and Power Plants Efficiency By Ma, Chunbo; Zhao, Xiaoli; Ma, Qian; Zhao, Yue
  19. Work Values in Western and Eastern Europe By Benno Torgler
  20. Residential Energy Consumption in Urban China By Zhao, Xiaoli; Li, Na; Ma, Chunbo
  21. Handel zagraniczny panstw Grupy Wyszehradzkiej. Zmiany strukturalne i rola handlu wewnatrzgaleziowego. By Tomasz Brodzicki
  22. The development potential of clusters in Romania By Prejmerean (Dan), Mihaela Cornelia
  23. Size and quality of public sector and economic growth changes occurring in the former communist EU countries By OBREJA-BRASOVEANU, Laura
  24. Especially vulnerable groups in EU and Serbian labor market By Andrei, Jean; Saša, Stefanovic
  25. Economic crisis and its consequences on the living standard and development of the agriculture in Serbia By Marko, Jelocnik; Lana, Nastic
  26. Monetary Policy and Risk-Premium Shocks in Hungary: Results from a Large Bayesian VAR By Alina Carare; Adina Popescu
  27. The growth of Chinese exports: an examination of the detailed trade data By Brett Berger; Robert F. Martin
  28. Price Setting in Lithuania: More Evidence from the Survey of Firms By Ernestas Virbickas

  1. By: Schminke, Annette; Van Biesebroeck, Johannes
    Abstract: We apply program evaluation methods to analyze the effectiveness of two types of preferential regional policy programs in China's manufacturing sector. Economic and Technological Development Zones (ETDZs) aim to facilitate firms' internationalization strategies. Science and Technology Industrial Parks (STIPs) aim to generate technology spillovers. We focus on various dimensions of export market performance as objective indicators for the upgrading of product quality and firm operations. We compare startups that locate into one of these zones with other startups, while controlling for self-selection. The findings suggest that firms locating in an ETDZ do much better on sheer quantity of trade, i.e. the total volume of exports and number of destinations are higher. Firms locating in a STIP perform best on 'quality' dimensions, in particular they fetch higher export prices, even by destination and especially for firms producing machinery.
    Keywords: ETDZ; innovation policy; regional economics; spillover; STIP; treatment effects
    JEL: F14 L2 R11
    Date: 2011–12
  2. By: H. Lehmann; T. Razzolini; A. Zaiceva
    Abstract: Having unique data we investigate the link between job separations (displacement and quits) and informal employment, which we define in several ways posing the general question whether the burden of informality falls disproportionately on job separators in the Russian labor market. After we have established positive causal effects of displacement and quits on informal employment we analyze whether displaced workers experience more involuntary informal employment than their non-displaced counterparts. Our main results confirm our contention that displacement entraps some of the workers in involuntary informal employment. Those who quit, in turn, experience voluntary informality for the most part, but there seems a minority of quitting workers who end up in involuntary informal jobs. This scenario does not fall on all the workers who separate but predominantly on workers with low human capital. We also pursue the issue of informality persistence and find that informal employment is indeed persistent as some workers churn from one informal job to the next. Our study contributes to the debate in the informality literature regarding segmented versus integrated labor markets. It also contributes to the literature on displacement by establishing informal employment as an important cost of displacement. We also look at the share of undeclared wages in formal jobs and find that these shares are larger for separators than for incumbents, with displaced workers bearing the brunt of this manifestation of informality.
    JEL: J64 J65 P50
    Date: 2011–12
  3. By: Kathryn Anderson; Antje Kroeger
    Abstract: The Kyrgyz Republic is one of the largest recipients of international remittances in the world; from a Balance of Payments measure of remittances, it ranked tenth in the world in 2008 in the ratio of remittances to GDP, a rapid increase from 30th place in 2004.Remittances can be used to maintain the household's standard of living by providing income to families with unemployed and underemployed adult members. Remittances can also be used to promote investment not only in businesses and communities but also in people. In this paper, we examine the role that remittances have played in the Kyrgyz Republic in promoting investments in children. Based on the capabilities approach to well-being initiated by Sen (2010), we look at the impact of remittances and domestic transfer payments primarily from internal migration on children's education and health. Our outcomes include enrollment in school and preschool, expenditures, stunting and wasting of preschool children, and health habits of older children. We use unique panel data from the Kyrgyz Republic for 2005-2008 and thus control for some of the biases inherent in cross-sectional studies of remittances and family outcomes. We find that overall remittances and domestic transfers have not promoted investments in the human capital of children. Specifically, preschool enrollments were higher in the urban north but secondary school enrollments were lower in other regions in remittance receiving households; expenditures were also negatively affected in the south and the mountain areas. These negative enrollment results were larger for girls than for boys. We also found evidence of stunting and wasting among young children and worse health habits among boys in remittance or transfer receiving households. In the long run, Kyrgyzstan needs human capital development for growth; our results suggest that remittances are not providing the boost needed in human capital to promote development in the future.
    Keywords: Children’s education and health, Remittances, Kyrgyzstan, Central Asia
    JEL: C23 F22 I21 O53 R23
    Date: 2011
  4. By: Jin, Ling; Chen, Kevin Z.; Yu, Bingxin; Huang, Zuhui
    Abstract: Rural households in developing economies frequently use precautionary saving to cope with income risk. Such prudent behavior can be strengthened in transition economies where more risks are typically faced by households during and after reforms. This paper uses a rich panel of rural households in Zhejiang, China, to examine the correlation between income uncertainty and the target ratio of wealth to permanent income as suggested by the buffer-stock model. The empirical results suggest that Chinese rural households hold a significant level of wealth to mitigate the adverse impacts of income risk. Simulation results show that an increase in income risk leads to a sharp increase in household wealth and precautionary saving could drop substantially if income risk is eliminated. The high level of prudence of rural households under economic transition can help us better understand the developments in China, which will have policy implications for both developing and transition countries.
    Keywords: buffer-stock model, Income risk, precautionary saving,
    Date: 2011
  5. By: Riccardo Cristadoro (Bank of Italy); Daniela Marconi (Bank of Italy)
    Abstract: This paper studies the determinants of Chinese households’ saving. Domestic saving in China is the highest in the world in terms of GDP and it is mirrored in a large and persistent current account surplus. First, we show that notwithstanding the rising contribution of government and firms to national savings, they stand out because of households’ behaviour. Our econometric analysis proceeds from the work of Modigliani and Cao (2004) that explained rising personal saving in China within the life-cycle hypothesis. We prove that their explanation is insufficient. Then, using panel data and exploiting differences among provinces and between urban and rural households, we show that there is a significant dissimilarity in savings decisions in urban and rural areas and that motives other than those envisaged in the life-cycle model might play a major role, above all precautionary savings and liquidity constraints. Our results suggest that to reduce the propensity to save of Chinese households it is necessary to improve the provision of social services and to facilitate access to credit.
    Keywords: China, saving rate, precautionary savings
    JEL: D12 E21 O18
    Date: 2011–11
  6. By: Katharina Diekmann (Universitaet Osnabrueck)
    Abstract: Stock market integration of mainland China is analyzed before and after the liberalization of Chinese stock exchange segments. We apply a causality-in-variance procedure, using four mainland China stock market indices, two indices of the stock exchange in Hong Kong and the Dow Jones Industrial index. We find evidence of global and regional integration, but we do not find evidence for increasing integration after stock market liberalization, neither with Hong Kong nor with the United States.
    Keywords: Chinese Stock Market Integration, Spillover Effects, Causality-in-Variance
    JEL: C23 G10 G15
    Date: 2011–12–12
  7. By: Liu, Minquan (Asian Development Bank Institute)
    Abstract: There are likely to be many factors which have together shaped the current pattern of growth and equity in the People’s Republic of China (PRC). Among them are the foundations laid in the pre-1978 era, especially in respect of land-related institutional reforms and social sector investments. These factors successfully complemented the subsequent export and foreign direct investment FDI promotion strategies the PRC followed in the post-1978 years. However, given the large size of the PRC, while these strategies have helped to kick-start its economic take-off, the long-run growth of the country cannot depend on it.
    Keywords: prc; income distribution; prc growth patterns; foreign direct investment; human capital
    JEL: F14 N35 O15 O53
    Date: 2011–12–08
  8. By: Adam Gersl; Jakub Seidler
    Abstract: Excessive credit growth is often considered to be an indicator of future problems in the financial sector. This paper examines the issue of how to determine whether the observed level of private sector credit is excessive in the context of the “countercyclical capital bufferâ€, a macroprudential tool proposed in the new regulatory framework of Basel III by the Basel Committee on Banking Supervision. An empirical analysis of selected Central and Eastern European countries, including the Czech Republic, provides alternative estimates of excessive private credit and shows that the HP filter calculation proposed by the Basel Committee is not necessarily a suitable indicator of excessive credit growth for converging countries.
    Keywords: Basel regulation, credit growth, financial crisis countercyclical buffer.
    JEL: G01 G18 G21
    Date: 2011–11
  9. By: Xing, Chunbing (Beijing Normal University)
    Abstract: We use household surveys from 1995, 2002, and 2007 to examine how changes in job structure contributed to China's rising urban wage inequality, considering three job characteristics: occupation, industry, and firm ownership. The explanatory power of job structure for wage inequality increased between 1995 and 2007. Both the change in relative number of jobs (composition effect) and the change in between-job and within-job wage gaps (price effect) contributed to rising wage inequality. Price effect was the major contributor, whereas composition effect played a larger role in the 1995-2002 period than in the 2002-2007 period, and at the lower-half distribution. Between-job inequality played a major role in the first period, and within-job inequality played a major role in the second period. Our results suggest that both technological change and institutional features influence job structure and wage inequality.
    Keywords: job structure, wage inequality, urban China, decomposition
    JEL: C21 J31 O15
    Date: 2011–12
  10. By: Nomman Ahmed, Mirza; Maas, Sarah; Schmitz, P. Michael
    Abstract: This paper addresses the question whether the institutional environment of transition countries in Eastern Europe affects productivity growth in the agricultural sector. Situated in a neoclassical growth framework, a dynamic panel model for the period 1996-2005 provides evidence that poor institutional quality leads to a slowdown in agricultural productivity growth. Productivity growth is limited by a high degree of corruption, which is of particular importance given that corruption has been proven to be most prevalent in Eastern European countries. Moreover, agricultural productivity in countries where privatisation and transferability of land is restricted is found to grow at a slower rate than countries supporting market-oriented land reforms. Interestingly, the results suggest that a high degree of openness leads to a loss in agricultural productivity, suggesting that timing and sequencing of trade reforms matter. An improvement of the poor institutional quality is thus of central importance to accelerate productivity growth in Eastern European countries. --
    Keywords: Eastern Europe,Transition,Productivity growth
    Date: 2010
  11. By: Herrmann-Pillath, Carsten
    Abstract: Building on a new model of institutions proposed by Aoki and the systemic approach to economic civilizations outlined by Kuran, this paper attempts an analysis of the cultural foundations of recent Chinese economic development. I argue that the cultural impact needs to be conceived as a creative process that involves linguistic entities and other public social items in order to provide integrative meaning to economic interactions and identities to different agents involved. I focus on three phenomena that stand at the center of economic culture in China, networks, localism and modernism. I eschew the standard dualism of individualism vs. collectivism in favour of a more detailed view on the self in social relationships. The Chinese pattern of social relations, guanxi, is also a constituent of localism, i.e. a peculiar arrangement and resulting dynamics of central-local interactions in governing the economy. Localism is balanced by culturalist controls of the center, which in contemporary China builds on the worldview of modernism. Thus, economic modernization is a cultural phenomenon on its own sake. I summarize these interactions in a process analysis based on Aoki's framework. --
    Keywords: Aoki,culture and the economy,emics/etics,guanxi,relational collectivism,central/local government relations,culturalism,population quality,consumerism
    JEL: B52 P2 Z1
    Date: 2011
  12. By: Schoolman, Ethan D.; Ma, Chunbo
    Keywords: Environmental Inequality, Hukou System, Pollution, China, Community/Rural/Urban Development, Health Economics and Policy, Resource /Energy Economics and Policy, D63, J15, J61, Q53, R12, R23,
    Date: 2011–11–07
  13. By: Javier Alonso, Miguel Angel Caballero, Li Hui, María Claudia Llanes, David Tuesta, Yuwei Hu, Yun Cao; Javier Alonso; Miguel Angel Caballero; Li Hui; Maria Claudia Llanes; David Tuesta; Yuwei Hu; Yun Cao
    Abstract: Despite the fact that China is already one of the most important economies in the world, the country has many big tasks to solve, being one of them the implementation of a comprehensive social agenda, including those related with the old-age stage and the consequently diminishing financial resources upon retirement from active work.. Taking into account the accelerated changes in fertility and longevity trends, it is widely forecasted that the absence of a well developed safety net for the old age stage could undermine economic and social sustainability of the Chinese society. In this sense, the main objective of this paper is to develop a preliminary discussion about prospects of pension system in China, taking into account the ineludible role of government in this social issue and the active potential participation of the private sector. Considering that, this piece of research provides a historical background of Chinese pension; discusses the existing pension schemes in China in order to understand the different areas of future developments; analyzes the potential market for contributory schemes; and strives to develop a model to forecast likely outcomes of the social insurance system by 2020.
    Keywords: Pension Funds, Other Private Financial Institutions, Social Security, Public Pensions
    JEL: H55 G23
    Date: 2011–11
  14. By: Antje Kröger; Kristina Meier
    Abstract: The financial crisis in 2008/2009 substantially influenced the everyday social and economic life of many Tajik people, including their behavior in the labor market. However, not much is known about the dynamics of the labor markets of the transition economies, especially in the context of the current financial crisis. Arguably, this is mainly due to paucity of panel data. In this paper, we aim to study the impact of the economic crisis on individual labor market outcomes in Tajikistan. This is the first study investigating the possible impact of the financial crisis in a transition country and uses a unique panel data set from Tajikistan. Although an impact evaluation in the true sense is impossible, due to the lack of a control group, comparing before and after-crisis outcomes can give insights as to how the crisis might have affected labor market outcomes. We do this by calculating transition probabilities between employment categories between 2007 and 2009, using a simple count method as well as predicted probabilities from multinomial probit regressions. Our results suggest an increased probability of moving into unemployment, inactivity or unpaid work during the crisis, with the self-employed being at more risk than the wage employed. This effect is more pronounced for females, as well as for very young and very old individuals. We also find that labor migration (predominantly to Russia) could be a mitigation strategy during the crisis.
    Keywords: Financial crisis, wage employment, migration, Tajikistan
    JEL: J24 J16 O10
    Date: 2011
  15. By: Ionut Dumitru (Faculty of Finance and Banking, Bucharest University of Economics); Razvan Stanca
    Abstract: The fiscal and budgetary policy should play a key role to alleviate the impact of the business cycle on the real economy. Procyclical fiscal policy is particularly undesirable in developing countries, as it not only exacerbates the business cycle, but also the high output volatility hurts the poorest people with low safety net. This paper assesses the structural budget deficit in Romania during 2000- 2009 and evaluates the role of the fiscal policy during the business cycle. The paper concludes that the fiscal policy in Romania was highly procyclical, exacerbating the economic cycle. In order to escape from this procyclicality, Romania needs deep structural reforms in order to restore the sustainability of the public finances and put Romania on a sustainable growth path.
    Keywords: structural budget balance, procyclicality of fiscal policy, fiscal discipline
    Date: 2011–08
  16. By: Gao, Hang; Van Biesebroeck, Johannes
    Abstract: We study whether the 2002 deregulation and vertical unbundling of the Chinese electricity sector has boosted productivity in the generation segment of the industry. Controlling explicitly for sources of price-heterogeneity across firms and for firm-fixed effects, we find deregulation to be associated with a reduction in labor input and material use of 6 and 4 percent, respectively. This effect only appears two years after the reforms, is robust to alternative ways of identifying restructured firms, and to the nonrandom selection of restructured firms using a matching estimator. Input use of new state-owned firms that start operations two years into the reform period does not differ significantly anymore from input use of private sector entrants.
    Keywords: Productivity; regulation
    JEL: L5 L9 O4
    Date: 2011–12
  17. By: Kostka, Genia; Moslener, Ulf; Andreas, Jan G.
    Abstract: This paper analyzes barriers for energy efficiency investments for small-and medium-sized enterprises (SMEs) in China. Based on a survey of 480 SMEs in Zhejiang Province, this study assesses financial, informational, and organizational barriers for energy efficiency investments in the SME sector. The conventional view has been that the lack of appropriate financing mechanisms particularly hinders SMEs to adopt cost-effective energy efficiency measures. As such, closing the financing gap for SMEs is seen as a prerequisite in order to promote energy efficiency in the sector. The econometric estimates of this study, however, suggest that access to information is an important determinant of investment outcomes, while this is less clear with respect to financial and organizational factors. More than 40 percent of enterprises in the sample declared that that they are not aware of energy saving equipments or practices in their respective business area, indicating that there are high transaction costs for SMEs to gather, assess, and apply information about energy saving potentials and relevant technologies. One implication is that the Chinese government may assume an active role in fostering the dissemination of energy-efficiency related information in the SME sector. --
    Keywords: energy efficiency,SMEs,China,energy policies,information access
    Date: 2011
  18. By: Ma, Chunbo; Zhao, Xiaoli; Ma, Qian; Zhao, Yue
    Abstract: In the past three decades, Chinese electricity industry has experienced a series of regulatory reforms serving different purposes at different stages. In 2002, the former vertically integrated electricity utility - the State Power Corporation (SPC) â was divested and the generation sector was separated from the transmission and distribution networks in an effort to improve production efficiency. In this paper we study the impact of the reform on efficiency of fossil-fired power plants using plant-level data during 2000-2008. Our results from the data envelopment analysis (DEA) and panel regressions show that: 1) the total factor productivity (TFP) growth mainly comes from technological change; 2) the technical efficiency of previously SPC-managed power plants is converging to that of better-performing independent power producers (IPPs); 3) capacity utilization and unit size are significant factors affecting changes in technical efficiency and the pattern of converging technical efficiency between the two kinds of power plants; 4) most plants operate at increasing returns to scale indicating further cost savings could be achieved through increasing output.
    Keywords: Efficiency, DEA, Malmquist Index, China, Electricity, Industrial Organization, Productivity Analysis, Resource /Energy Economics and Policy, D24, L11, L51, L94, L98,
    Date: 2011–11–07
  19. By: Benno Torgler
    Abstract: The paper reports on work values in Europe. At the country level we find that job satisfaction is related to lower working hours, higher well-being, and a higher GDP per capita. Moving to the micro level, we turn our attention from job satisfaction to analyse empirically work centrality and work value dimensions (without exploring empirically job satisfaction) related to intrinsic and extrinsic values, power and social elements. The results indicate substantial differences between Eastern and Western Europe. Socio-demographic factors, education, income, religiosity and religious denomination are significant influences. We find additional differences between Eastern and Western Europe regarding work-leisure and work-family centrality that could be driven by institutional conditions. Furthermore, hierarchical cluster analyses report further levels of dissimilarity among European countries.
    Keywords: work values; job satisfaction; work-leisure relationship; work-family centrality; Eastern Europe; Western Europe
    JEL: P20 D10 J28 J17 J22
    Date: 2011–12
  20. By: Zhao, Xiaoli; Li, Na; Ma, Chunbo
    Abstract: Residential energy consumption (REC) is the second largest energy use category (10%) in China and urban residents account for most of the REC. Understanding the underlying drivers of variations of urban REC thus helps to identify challenges and opportunities and provide advices for future policy measures. This paper applies the logarithmic mean Divisia index (LMDI) to a decomposition of Chinaâs urban REC during the period of 1998-2007 at disaggregated product/activity level using data collected from a wide range of sources. Our results have shown an extensive structure change towards a more energy-intensive household consumption structure as well as an intensive structure change towards high-quality and cleaner energy such as electricity, oil, and natural gas, which reflects a changing life style and consumption mode in pursuit of a higher level of comfort, convenience and environmental protection. We have also found that Chinaâs price reforms in the energy sector have contributed to a reduction of REC while scale factors including increased urban population and income levels have played a key role in the rapid growth of REC. We suggest that further deregulation in energy prices and regulatory as well as voluntary energy efficiency and conservation policies in the residential sector should be promoted.
    Keywords: Residential Energy Consumption, Index Decomposition Analysis (IDA), China, Consumer/Household Economics, Resource /Energy Economics and Policy, Q32, Q43,
    Date: 2011–11–07
  21. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk)
    Abstract: The goal of this article is to investigate structural adjustments in trade relations of the Visegrad countries resulting from their accession into the European Union and advanced stage of economic transition. Particular emphasis is placed on the similarity of adjustments in geographic trade patterns, the intensity and nature of intra-industry trade flows and their decomposition into horizontal and vertical IIT with up-market and down-market specialization. The paper utilizes a novel approach proposed by Ito and Okubo (2011) using the full information on price differentials in imports and exports to calculate unit value differences measure of intra-industry trade. The method brings a considerable improvement in comparison to previous methods. The empirical results for this particular group of small open-economies are compared with theoretical postulates of new trade theories. English summary. Paper in Polish.
    Keywords: international trade, intra-industry trade, Visehrad group, up-market specialization, down-market specialization
    JEL: F10 F14 F15
    Date: 2011–11
  22. By: Prejmerean (Dan), Mihaela Cornelia
    Abstract: Nations and regions find themselves in a constant competition for attracting direct foreign investments, the most important producers, specialized work force, the best researchers etc. From this point of view the former communist countries could be in an unfavorably situation because they just recently managed to adopt the system of the market economy. Clusters are seen as a solution for the economical success in the global competition. The western European countries have in this way a one century tradition, and continue to sustain and finance programs for the development and expansion of clusters. Taking in account the western experience, the question arises if also in the former communist countries clusters can give the key for development and rapid fulfillment of objectives regarding cohesion, regional development, competitiveness at international and global level. The paper investigates the potential of forming clusters in Romania and gives an orientation in the decisional process for founding, localization, development of clusters.
    Keywords: cluster; Romania; competitive advantage; SWOT analysis
    JEL: R10 R11
    Date: 2011–07–30
  23. By: OBREJA-BRASOVEANU, Laura (Universidade Portucalense)
    Abstract: The impact of fiscal policy on economic growth is a complex and contradictory topic in finance debates. Government influences real economy through the impact of public revenues and expenditures on the quantity and quality of production factors, labor and capital. High taxation for supporting big public sector can impede growth. On the other hand, some of the public expenditures can stimulate growth. These opposite effects of the public sector’s intervention through fiscal policy raise the debate about the performance of public sector in stimulating economic growth. The size and the quality of public sector is a reflection of the past and current political decisions. Ex-communist countries face the challenge of reconstructing the public sector, in order to correspond to the requirements of the market economy, but also to ensure a stable macroeconomic and social environment. The aim of this paper is to analyze the differences between developed EU countries and former communist EU countries regarding the public sectors and economic growth.
    Keywords: fiscal policy; size of public sector; quality of public sector; economic growth
    JEL: E62 H11 O10
    Date: 2011–05–30
  24. By: Andrei, Jean; Saša, Stefanovic
    Abstract: The paper analyzes the situation of especially vulnerable groups both in EU and in the Serbian labour market. They include Roma as particularly vulnerable ethnic minority, refugees and displaced persons from Kosovo and Metohija (IDPs) and people with disabilities. The results of the analysis indicate that the position of these groups is particularly disadvantaged since their unemployment rate in Serbia is significantly higher than among the general population. It turned out that the high unemployment and low employment activity rates are the main causes of extreme poverty among the Roma and Romani women which are particularly affected by the problem of unemployment. The population of refugees and IDPs is different than in the general population of Serbia primarily in higher participation of self-employed and lower participation of persons who share the status of unpaid family members. Unemployment rate of persons with disabilities is close to the level of average unemployment rates due to high rates of inactivity. Roma and people with disabilities belong to category of highly vulnerable population, as long as the refugees and internally displaced persons belong to moderately vulnerable population. Due to the lack of data we could have not determined a solid indicator of change in their position during the economic crisis.
    Keywords: Labour Market; Especially Vulnerable Groups; Unemployment
    JEL: J78 J82
    Date: 2011–10–17
  25. By: Marko, Jelocnik; Lana, Nastic
    Abstract: The economic crisis had transferred to Serbia at the end of 2008, causing the economic growth slowdown and macroeconomic stability endangerment. Agriculture, the strategic branch of national economy was affected as well, and despite favourable climatic, natural, human and technical-technological potentials, it had influenced reduction of agricultural development far below the real possibilities. Prior to the crisis potentials for agricultural development in Serbia were unused. Comprehensive and more intensive institutional support lacked, along with growing necessity for the concept based on profitability, market orientation and competitiveness of national agriculture. All segments of agriculture would have to be harmonized with the policies of agrarian and rural development of EU, mainly in terms of agri-food safety, and economic, social and ecological efficiency of agriculture. Due to decrease in living standard in most of the households in Serbia various survival strategies models have been created, in which the great part of personal consumption is being used for purchase of agri-food products. Changes in local population’s daily food consumption are reflected not as much in the reduction of quantities used as in the quality of used nutrients. That leads to a conclusion that to food production in Serbia should be paid greater attention, especially during the period of economic crisis.
    Keywords: Republic of Serbia; agriculture; food security; economic crisis;employment
    JEL: J43 Q11 E21
    Date: 2011–10–17
  26. By: Alina Carare; Adina Popescu
    Abstract: We document the transmission of monetary policy and risk-premium shocks in Hungary, by applying recent advances in the Bayesian estimation of large VAR models. The method allows extracting information from over 100 series, opening the "black box" of the transmission mechanism to provide the most comprehensive description to date of the impact of these two shocks on the economy under the inflation-targeting regime. We find novel evidence that most of the channels of transmission are operational in Hungary, in spite of large liability euroization and high foreign ownership of banks and corporations. Due to financial stability concerns, monetary policy responds procyclically to risk-premium shocks. We also find that the use of such a large panel of data improves inflation forecasting performance over smaller models and renders this model suitable for policy purposes.
    Keywords: Central banks , External shocks , Hungary , Inflation targeting , Monetary policy , Monetary transmission mechanism , Risk premium ,
    Date: 2011–11–08
  27. By: Brett Berger; Robert F. Martin
    Abstract: Over the past decade, Chinese exports have boomed, increasing far faster than GDP growth. What can account for this explosion? Our paper uses finely detailed Chinese export data (8-digit HS codes) combined with U.S. trade data to explore this question. Although exchange rate policy clearly boosted the trade surplus, and the structure of the economy, e.g. abundant cheap labor, encouraged investment, these alone cannot account for the changing composition and acceleration of exports. We find that the growth in exports is most likely a product of effective Chinese industrial policy and fortuitous timing. The detailed trade data reveal that key "new" technology goods, such as cell phones, LCD screens, and laptops played a critical role. Finally, we use the data to examine the relationship between Chinese exports and global manufacturing, in particular U.S. manufacturing employment. We find that increased Chinese competition in both domestic and U.S. export markets likely lowered U.S. manufacturing employment between 2000 and 2007. Chinese policy is not, however, wholly responsible. Some job losses, such as in textile production, were no doubt the result of China's natural comparative advantages, while other U.S. job losses are attributable to relatively low investment and slow GDP growth in the United States following the 2001 recession.
    Date: 2011
  28. By: Ernestas Virbickas (Bank of Lithuania)
    Abstract: The paper examines price setting in Lithuania based on ad hoc survey of the Bank of Lithuania “On Price and Wage Setting”. The study extends the survey data analysis presented in Virbickas (2009). The paper points to the incidence of both the time-dependent and the state-dependent price reviewing policies used by the investigated firms, though the price reviewing practices appear to be somewhat tilted to the state-dependent pricing. Analysis provides evidence on the reasons for upward and downward stickiness of prices. Delayed price adjustment is found to be mostly related to the price adjustment stage rather than the price reviewing stage. The most momentous explanations for not adjusting prices upwards or downwards rest on the cost-based pricing and the explicit contracts. The study finds an asymmetric influence of some of the price factors. In particular, the cost factors are found to be decisive in invoking the price increase rather than the price decrease.
    Keywords: price review, price adjustment, price stickiness
    JEL: D40 E30
    Date: 2011–12–14

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