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on Transition Economics |
| By: | Jaromir Baxa; Miroslav Plasil; Borek Vasicek |
| Abstract: | The purpose of this paper is to provide a novel look at the evolution of inflation dynamics in selected Central European (CE) countries. We use the lens of the New Keynesian Phillips Curve (NKPC) nested within a time-varying framework. Exploiting a time-varying regression model with stochastic volatility estimated using Bayesian techniques, we analyze both the closed and open-economy version of the NKPC. The results point to significant differences between the inflation processes in three CE countries. While inflation persistence has almost disappeared in the Czech Republic, it remains rather high in Hungary and Poland. In addition, the volatility of inflation shocks decreased quickly a few years after the adoption of inflation targeting in the Czech Republic and Poland, whereas it remains quite stable in Hungary even after ten years' experience of inflation targeting. Our results thus suggest that the degree of anchoring of inflation expectations varies across CE coutries. In addition, we found some evidence that the 'structural' parameters of the NKPC are somewhat related to the macroeconomic environment. |
| Keywords: | Bayesian model averaging, Central European countries, inflation dynamics, New Keynesian Phillips curve, time-varying parameter |
| JEL: | C11 C22 E31 E52 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2012/04&r=tra |
| By: | 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: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1205&r=tra |
| By: | Zhang, Jian (Central University of Finance and Economics); Giles, John T. (World Bank); Rozelle, Scott (Stanford University) |
| Abstract: | Recruiting and retaining leaders and public servants at the grass-roots level in developing countries creates a potential tension between providing sufficient returns to attract talent and limiting the scope for excessive rent-seeking behavior. In China, researchers have frequently argued that village cadres, who are the lowest level of administrators in rural areas, exploit personal political status for economic gain. Much existing research, however, compares the earnings of cadre and non-cadre households in rural China without controlling for unobserved dimensions of ability that are also correlated with success as entrepreneurs or in non-agricultural activities. The findings of this paper suggest a measurable return to cadre status, but the magnitudes are not large and provide only a modest incentive to participate in village-level government. The paper does not find evidence that households of village cadres earn significant rents from having a family member who is a cadre. Given the increasing returns to non-agricultural employment since China‘s economic reforms began, it is not surprising that the returns to working as a village cadre have also increased over time. Returns to cadre-status are derived both from direct compensation and subsidies for cadres and indirectly through returns earned in off-farm employment from businesses and economic activities managed by villages. |
| Keywords: | returns to political status, public sector labor markets, village political economy, rural China |
| JEL: | O16 O17 J45 P25 P26 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6653&r=tra |
| By: | Faber, Malte; Petersen, Thomas |
| Abstract: | Income inequality in China is severe; measured by the Gini-coefficient it amounted to 0.46 in 2011; wealth distribution is even worse with 0.61. These disparities led to a major shift in emphasis of politics in general and of the Five-Year Plan for National Economic and Social Development by the National People´s Congress in particular. While previously the strategy of the Five-Year Plans had been “Making the nation [our emphasis] rich as top priority”, this was changed to “Making people [our emphasis] rich as top priority” in the 12th Five-Year Plan (2011-2015), enacted in March 2011.The strategic change from “nation” to “people” indicates that the political decision-makers in China accepted the aim of a fair income distribution as a political issue of great importance. In this paper, richness is defined in the political-philosophical tradition as the right measure for one’s own needs and wants; only its environmental aspect is focused on in this study. The development of the Chinese environmental conditions is compared with the German ones and the former’s future outlook is judged optimistically because of the achievements in the last five years. However, the complexity and fragility of the environmental system will within a decade confront Chinese politicians with the same problems as it does right now in Germany. In order to provide a solution addressing this development, this paper analyzes what Karl Marx had to say on the long-run dynamics of the economic system. He saw poverty as a necessary yet unintended consequence of the capitalistic system and used this insight as a “precision tool for the study of social change” (Elster 1986), which can also be employed to examine the unintended repercussions of economic activity on nature. Marx, who studied environmental and resource issues in detail, thought that the inventiveness of the capitalistic system would finally overcome all of them in the course of time. In view of the fact that three billion people on earth still have a backlog demand to satisfy basic needs and in addition a further three billion are expected to be born until 2050, the future of the natural environmental conditions looks somber. If it is not possible to decouple economic growth from ensuing environmental strain, Marx may well be right after all in his prediction that the capitalistic system will collapse, although in quite a different manner than he thought. This being the case we take recourse to the thoughts of one of the influential intellectual German figures, to Romano Guardini. He foresaw changes in the self-perception of humankind and in the comprehension of nature. These imply a shift in the ethos of government as well, which would in turn pose three great challenges to politics: (i) understanding nature in a new light, (ii) listening to what drives human hearts, and (iii) governing according to law. |
| Keywords: | Wealth; Distribution; PR China; Environment; Sustainabilit y |
| JEL: | Q56 B14 B51 D31 D63 D90 O13 P26 |
| Date: | 2012–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0526&r=tra |
| By: | Castillo, Leopoldo Laborda; Guasch, Jose Luis |
| Abstract: | This article evaluates the effect of the overdraft facility (or line of credit) policy by comparing a large sample of overdraft facilitated firms and matched non-overdraft facilitated firms from Eastern Europe at the sector level. The sample firms are compared with respect to rates of different performance indicators including: technical efficiency (a Data Envelopment Analysis approach is applied to estimate the technical efficiency level for individual sectors), production workers trained, expenditures on research and development, and export activity. In order to avoid the selectivity problem, propensity score matching methodologies are adopted. The results suggest that a certain level of overdraft facility provided to firms would be needed to stimulate investment in research and development, which will eventually result in increased growth in productivity. |
| Keywords: | Access to Finance,Environmental Economics&Policies,Debt Markets,Economic Theory&Research,Labor Policies |
| Date: | 2012–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6101&r=tra |
| By: | Peter Simmons; Yuan Yuan Xie |
| Abstract: | Guangdong is one of the fastest growing Chinese provinces and has a high level of gross migration flows. Its intra-province migration is 2.7 times higher than its inter-province migration. We study migration between the 18 prefecture-level divisions of Guangdong during 1990-1999 using annual data. In our framework, migration decisions are based on differences in five characteristics between origin and destination: expected urban wage, marriage opportunities, urbanisation and (to reflect profitability of self employed migrants) population and capital stock. We formulate a panel regression equation allowing for both panel heteroscedasticity and inter-cities heterogeneity in the migration process. Remarkably we find that there is a high degree of homogeneity between cities, the only differences being in the impacts of capital stock and degree of urbanisation. Even here, nearly 70% of cities have identical effects. Despite the high level of net migration demonstrated to be largely caused by the above characteristics, intercity inequalities as measured by some of these forces has been growing over our time period. This suggests that a locational equilibrium has not yet been achieved. |
| Keywords: | Intra-provincial migration; intercity inequalities; multivariate choices; equilibrium. |
| JEL: | J61 O15 R23 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:12/16&r=tra |
| By: | Ambrosini, J. William (Amazon); Mayr, Karin (University of Vienna); Peri, Giovanni (University of California, Davis); Radu, Dragos (University College London) |
| Abstract: | This paper uses census and survey data to identify the wage earning ability and the selection of recent Romanian migrants and returnees. We construct measures of selection across skill groups and estimate the average and the skill-specific premium for migration and return for three typical destinations of Romanian migrants after 1990. Once we account for migration costs, we find evidence that the selection and sorting of migrants by skills is driven by different returns in countries of destination. We also find that the return premium increases with migrants' skills and this drives the positive selection of returnees relative to non-migrants. As these findings are consistent with a model of rational choice in the migration decisions, we simulate a rational-agent model of education, migration and return. Our results suggest that for a source country like Romania relatively high rates of temporary migration might have positive long-run effects on average skills and wages. |
| Keywords: | migration premium, selection of migrants, returnees |
| JEL: | F22 J61 O15 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6664&r=tra |