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on Transition Economics |
| By: | Fang, Hai (University of CO, Denver); Eggleston, Karen N. (Walter H Shorenstein Asia-Pacific Research Center, Stanford University); Rizzo, John A. (Stony Brook University, SUNY); Zeckhauser, Richard J. (Harvard University) |
| Abstract: | Data on 2,355 married women from the 2006 China Health and Nutrition Survey are used to study how female employment affects fertility in China. China has deep concerns with both population size and female employment, so the relationship between the two should be better understood. Causality flows in both directions. A conceptual model shows how employment prospects affect fertility. Then a well-validated instrumental variable isolates this effect. Female employment reduces a married woman's preferred number of children by 0.35 on average and her actual number by 0.50. Ramifications for China's one-child policy are discussed. |
| JEL: | J13 J18 O15 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-054&r=tra |
| By: | François Rycx; Stephan Kampelmann |
| Abstract: | This paper aims to provide a comprehensive, evidence-based, and up-to-date assessment of minimum wages in a range of European countries. A first step towards a better understanding of where Europe stands today on this issue requires to grasp the diversity of European minimum wage systems, a key objective of the paper at hand. The second objective is to document international differences in the so-called "bite" of the minimum wage. This leads to questions such as "how do national minimum wages compare to the overall wage distribution?" and "how many people earn minimum wages in each country?" that are assessed for a set of nine countries from Western, Central and Eastern Europe: Belgium, Bulgaria, Germany, Hungary, Ireland, Poland, Romania, Spain, and the United Kingdom. This sample was designed to include countries for which recent evidence has been missing prior to this paper. What is more, the study also overcomes the narrow focus of extant overviews that have typically focussed only on full-time employment. Crucially, the study improves on existing work by looking beyond aggregate numbers; it provides a detailed panorama of the population of minimum wage earners in each country under investigation, notably by describing their composition in terms of a range of socio-demographic characteristics. |
| Keywords: | Minimum wage systems; Europe; Socio-economic consequences |
| JEL: | J51 J58 J83 |
| Date: | 2013–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:2013/137078&r=tra |
| By: | Hasan, Iftekhar; Jackowicz, Krzysztof; Kowalewski, Oskar; Kozłowski, Łukasz |
| Abstract: | The Central European banking industry is dominated by foreign-owned banks. During the recent crisis, for the first time since the transition, foreign parent companies were frequently in worse financial conditions than their subsidiaries. This situation created a unique opportunity to study new aspects of depositor discipline. In this article, we investigate whether depositors flexibly accommodated to the changing sources of risk. We also analyse the informational foundations of depositors’ decisions. Using a comprehensive data set, we find that the recent crisis did not change the sensitivity of deposit growth rates to accounting risk measures. We establish that depositors’ actions were much more strongly influenced by press rumours concerning parent companies than by fundamentals, and that the impact of rumours on deposit growth rates was highly economically significant. Additionally, we document that public aid announcements were interpreted by depositors primarily as a confirmation of a parent company’s financial distress. Our results have important policy implications, as depositor discipline is usually the only viable and universal source of market discipline for banks in emerging economies. |
| Keywords: | depositor behaviour; market discipline; crisis; emerging markets |
| JEL: | G28 G21 |
| Date: | 2012–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43693&r=tra |
| By: | Saich, Tony (Harvard University); Hu, Biliang (Beijing Normal University) |
| Abstract: | This paper uses a case study of the evolution of education and healthcare provision in Yantian Village, Guangdong Province to examine broader trends in China's evolving social policies. It makes no claims that development in Yantian is typical for rural China but it may allow some tentative conclusions to be drawn about the extent of inclusiveness of social policy and the moves towards citizenship as a basis for redistribution policies and welfare provision. Yantian is not a normal village but rather is what people refer to as an "urban village" and it has been one of the major beneficiaries of economic reform. Lying close to Hong Kong and Shenzhen, it is in the hub of the Pearl River Delta that has become a key link in the global reorganization of manufacturing and production. The economic reforms, especially the opening to foreign investment, pursued since the late-1970s have replaced the water buffalo and rice paddies with China's main export processing center. It has been a key center for foreign direct investment and, as a result, has attracted a large migrant community. The province of Guangdong is home to some 30 million migrants, 80,000 of whom lived in Yantian in 2010. The migrants work primarily in the 200 or so foreign invested enterprises vested in Yantian (there were over 400 at their peak). However, the group of migrants is not homogenous and this has consequences for how they are treated within the village. Investors are treated far better than those working in the factories. Most importantly, the migrants are not eligible for any payout from the dividends from the village collective that has provided the relative wealth for the local residents. The rapid development of Yantian with the influx of foreign investment and the large number of migrants who moved into the village put tremendous pressure on the educational services. This led to the emergence of a network of different types of schools catering to the varied needs within the community. The range of schools available did mean that all children in Yantian were able to find schooling irrespective of family background, but the quality and investment varied significantly. Most importantly, from 2008 the government budget covered the costs for migrant children helping overcome the biggest inequity of the previous years. Yet, differences remained with respect to the quality of the teachers and the infrastructure in the schools. As elsewhere in China, economic reforms had a major impact on medical insurance in Yantian. From the early-1980s, Yantian Village started to transform its healthcare system from one based on a collective, cooperative scheme to one where village clinics ran on contracts. This meant villagers no longer enjoyed any guarantees for healthcare provision. Some of the wealthier families purchased commercial medical insurance, while certain production teams set aside a partial fund from their collective revenues to subsidize members who suffered catastrophic or chronic disease and to provide a limited medical allowance. However, by 2000 Yantian Village had achieved universal coverage for its residents through a three-phase development. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-053&r=tra |
| By: | Kuznetsov, Alexey |
| Abstract: | The paper examines flows of foreign direct investment within the Baltic region. The author demonstrates close investment ties among the EU members, which are of special importance for Estonia, Latvia and Lithuania. Transborder corporate integration in the region is characterized by significant imbalances. In many aspects, it can be viewed as Sweden’s economic expansion or development of domestic markets for northern European companies. Although many German, Polish and Russian companies are involved in corporate integration in the Baltic region, other vectors of their foreign economic relations are still more important for them. As a result, the integration of Russian business in the Baltic part of the European integration area is still rather weak despite Russia’s considerable foreign direct investment in the Baltic States. |
| Keywords: | foreign direct investment; the Baltic region; European integration; transnational corporations |
| JEL: | F15 F23 F21 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43736&r=tra |
| By: | Wang, Di; Zhou, Ang; Wang, Dong |
| Abstract: | The issue of the change of the value of the Chinese currency has been focused by the world for several years. Its influences on not only China but also the rest of the world could not be neglected. Briefly historical background of the change of the Chinese currency as well as the influences it caused will be discussed in this essay by using the Mundell-Fleming Model as the basic concept to research and explain the particular situation in China. The result is that China should do the steady appreciation in terms of its currency rather than revalue it rapidly to improve the Chinese economy and several recommendations will be listed as well. |
| Keywords: | exchange rate; FDI; monetary policy |
| JEL: | E43 F0 E5 |
| Date: | 2012–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43733&r=tra |
| By: | Saich, Tony (Harvard University) |
| Abstract: | Are China's citizens sufficiently satisfied to reduce potential challenges to the Chinese Communist Party (CCP) rule? It is reasonable to assume that if a significant percentage of citizens are more satisfied with government performance and the provision of public goods, the government will have a greater capacity for policy experimentation and enjoy a residual trust that may help them survive policy errors. This paper asks three sets of questions. The first set asks about the general levels of satisfaction with government across different levels. Second, we ask about how citizens view the performance of local officials in dealing with the public and in implementing policy. Third, we look at the level of satisfaction with the provision of a number of specific goods and services, with a more in-depth look at dealing with corruption. In particular, we compare responses among those who live in major cities, small towns and townships, and villages. Findings are based on a survey that was conducted together with Horizon Market Research Company in the fall of 2003, 2004, 2005, 2007, 2009, and 2011. The survey is a purposive stratified survey ranging from 3,800 to 4,150 respondents selected from three administrative levels: city, town, and village. Rather than a nationwide probability sample, the survey comprises a number of sites selected on the basis of three variables: geographic location, average per capita income, and population. Survey findings reveal that the new leadership that takes power through late-2012 and 2013 is likely to inherit a mixed situation. There is clearly much dissatisfaction with the performance of local government and its officials; very few have faith that the government can deal effectively with the problem of corruption. Yet, there is still good will towards the Central government that is not identified with the problems that are seen to blight the performance of those levels of government closer to the people. The surveys confirm the view of others that Chinese citizens do "disaggregate" the state and would appear to retain faith in the central government. In addition, the satisfaction with all levels of government has risen since we began the surveys in 2003. This may give the Central leadership some cushion if it makes policy errors in the future. However, as we have seen in the recent past, seemingly stable authoritarian regimes can unravel quickly, and citizen frustration can spill out onto the streets. Our survey also suggests that citizens feel that local officials are not very effective in promoting the interests of ordinary folk, but are quite adept at pursuing their own interests. It will be a notable challenge for the new leadership to bring about significant improvement in those areas of public service citizens deem most important without increasing transparency and accountability in local government. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-051&r=tra |
| By: | Wang, Dong |
| Abstract: | This paper investigates the conflicts which are resulted from coal tax reform in China from economic and public policy perspectives. An analytical framework involving actors, values, interests and institution has been applied. China’s central government eagers to achieve fiscal revenue increase, environmental protection and energy conversation goals by a good governance of coal system. As a traditional and feasible policy instrument, taxation is regarded for dealing with energy issues in politics and governance. However, coal tax reform proposal has induced many controversies in China. The causes of that include value conflicts of all actors, competing interests of all parties and institutional barriers of economic, politics and legislation. Therefore, the government cannot regulate coal issues only through taxation. The case reveals that good governance on coal cannot be achieved only by economic tools as the coal system contains so high stake and involves so many players. |
| Keywords: | energy tax; coal tax regime; policy instrument; energy conflicts |
| JEL: | Q38 Q32 H20 Q48 |
| Date: | 2012–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43750&r=tra |
| By: | Lea, Kubíčková |
| Abstract: | Small and medium sized companies (SMEs) are very important subjects playing the dominant role in most of economics – they are considered as a factor of social stability and of the economic development in the Czech Republic as well as in the whole EU. SMEs share of employment since 2002 is more than 61%, GNP share is about 35% and their import share is continuously increasing, from 2004 it is more than 50%. The paper deals with SMEs operating in the textile industry and is focused on the internationalization process of SMEs. In recent years the Czech companies have to face significant competition coming from Asian countries and therefore the big rivalry in the domestic market leads Czech companies to efforts to succeed in foreign markets. All companies entering foreign market have to face many risks, for small and medium-sized enterprises is even more difficult to deal with these risks because they often have less experience and finance than large companies. Internationalization of the firms is generally defined as the involvement in the international environment. The process of internationalization can be also defined as “the process of increasing involves in international operations” (Welch, Luostarinen; 1988). The process essentially involves the adaption of firm operations like strategy, structure, resources etc., to perfectly fit the international environments. Furthermore, the degree of internationalization can be measured as foreign sales relative to total sales. (Welch, Luostarinen; 1988).The internationalization process is defined in the literature in many ways; there is a countless variety of different approaches and models of internationalization process of companies. Like all processes in the firm also the international process is accompanied by risks. The main aim of this paper is to identify the key risk factors of this process - knowing the risk factors it is possible to propose to SMEs the way how to reduce or eliminate possible risks in their activities on foreign markets. To reveal the key risk there was conducted the survey in the last half of 2011 and in 2012 among 803 Czech SMEs operating in the textile industry, 161 responses were processed and evaluated. The obtained data were analyzed by statistical method. Potential risks of entry into foreign market were rated according to their impact on businesses. According to processed responses the greatest influences on the process of successful internationalization have a shortage of capital, lack of the information on foreign markets and high transportation costs. Other factors that may impede the successful internationalization are language barriers, inexperience of management with the internationalization and high prices of products. Furthermore, a survey has investigated what factors cause that some SMEs are able to enter the foreign market, but after some time they are not successful there. It was found that the main factors of failure of SMEs are the unreliable and incompetent management, lack of promotion of the products and lack of contacts abroad. Based on these findings there some proposals were suggested to eliminate or reduce the impact of these risk factors. |
| Keywords: | Internationalization; small and medium-sized enterprises; crucial key factors; internationalization process; textile industry |
| JEL: | F18 L10 F02 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43758&r=tra |
| By: | Saich, Tony (Harvard University) |
| Abstract: | The relationship between the US and China is at the core of both economic and geopolitical trends that will define the future of Asia in this century. China's economic rise and its more assertive diplomacy have created a new environment for neighboring countries to react. This has necessitated other powers in Asia to work within a regional order that is no longer based on US primacy as the key guarantor of global and regional public goods. Despite relative decline, the Obama administration, first with its unwieldy phrase of a pivot to Asia and the later notion of rebalancing, has indicated clearly that it intends to retain a key role in Asia. The potential danger that this can give rise to is shown by the tension that arises periodically over territorial disputes. Most recently, there have been three unsettling trends. First, is the dispute between the Philippines and China over the Scarborough Shoal, which falls within the long tongue of the South China Seas that China claims as a "core interest." Second, in mid-June 2012, China announced that it had set up a prefectural city, Sansha, to oversee three South China Sea islands. Third, there has been yet another escalation of sovereignty claims over the Senkaku islands between China and Japan. There have also been territorial spats between Japan and South Korea. Whether the US will be drawn into an avoidable conflict by its allies in the region or whether it will renege on its alliances to maintain a viable relationship with China heightens the insecurity. It is even more important for the US and China to find a way to cooperate in the Asia region than it is for the other countries within the region. There is no alternative leader within the region or group of countries that can provide the kind of balance that will enable the necessary public goods to be produced. This will entail modification of behavior by both the US and China, and it will not be easy. China's strategic goals are directed to the defense of a continental power with growing maritime interests, as well as to Taiwan's unification and other sovereignty claims and are largely conservative, not expansionist from their own perspective. China's continued economic rise may nevertheless spawn a new security dilemma in East Asia, increasing regional instability and undermining China's attempts at the diplomacy of reassurance. China has always shown itself willing to use force to protect what is sees as "legitimate" territorial claims. To be effective, both the US and China will have to make accommodations. China will have to define its national interest more clearly, and this will mean acknowledging that other principles of its foreign policy may be overridden under certain circumstances. China's commercial activities have become a major issue in the domestic politics of a number of countries in the region. China needs to feel comfortable with the framework for international governance of which it is now a key member; reduce its suspicion of hostile foreign intent; and adjust its outdated notion of sovereignty to accept that some issues need transnational solutions and that international monitoring does not have to erode the Chinese Communist Party's power. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-052&r=tra |
| By: | Xu, Xiaoran; Wang, Dong |
| Abstract: | This paper examines the China’s coal chemical strategy. As a part of national energy strategy, China’s coal chemical industry induces conflicts on technical level, economic level and policy level. The analysis of this paper is under the policy framework and discusses the causes and effects of these conflicts and also proposes some possible solutions. |
| Keywords: | Coal chemical industry; low carbon; renewable energy |
| JEL: | L5 Q42 P28 Q43 L88 |
| Date: | 2013–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43753&r=tra |
| By: | Tara M. Sinclair (Department of Economics/Institute for International Economic Policy, George Washington University); |
| Abstract: | Recent research examining U.S. macroeconomic data suggests that revisions may be much more important than traditionally assumed. This paper extends the analysis to Chinese data, where there has been substantial debate about data quality for some time. The key finding in this paper is that indeed the Chinese macroeconomic data revisions are not well-behaved, but that they are not much different from U.S. macroeconomic data revisions. |
| Keywords: | forecasting, China, Real-Time Data, Data Revisions |
| JEL: | C82 E01 E30 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2012-09&r=tra |
| By: | Zhang, Zhichao; Chau, Frankie; Xie, Li |
| Abstract: | This paper proposes a new approach to strategic asset allocation for central banks’ management of foreign reserves. This eclectic approach combines the behavioural portfolio management in the framework of mean-variance mental accounting (MVMA) with the improvements on asset return forecast offered by the Black-Litterman (B-L) model, proving particularly suitable for the reserve management policy with multiple objectives. The B-L model is embedded into the MVMA framework to obtain both the equilibrium and the B-L returns as our improved forecasts, formulating forward-looking investment strategies. The approach is applied to the case of China to derive optimal asset allocation for the Chinese central bank. |
| Keywords: | Reserve Management; Strategic Asset Allocation; Mental Accounting; Black-Litterman model; China’s Foreign Reserves |
| JEL: | G11 E58 C61 G0 C11 |
| Date: | 2012–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43654&r=tra |
| By: | Mirdala, Rajmund |
| Abstract: | Economic theory provides clear suggestions in fixed versus flexible exchange rates dilemma in fighting high inflation pressures. However, relative diversity in exchange rate regimes in the European transition economies revealed uncertain and spurious conclusions about the exchange rate regime choice during last two decades. Moreover, eurozone membership perspective (de jure pegging to euro) realizes uncertain consequences of exchange rate regime switching especially in the group of large floaters. Successful anti-inflationary policy associated with stabilization of inflation expectations in the European transition economies at the end of 1990s significantly increased the role of short-term interest rates in the monetary policy strategies. At the same time, so called qualitative approach to the monetary policy decision-making performed in the low inflation environment, gradually enhanced the role of real interest rates expectations in the process of nominal interest rates determination. However, economic crisis increased uncertainty on the markets and thus worsen expectations of agents. In the paper we analyze sources of nominal interest rates volatility in ten European transition by estimating the structural vector autoregression (SVAR) model. Variance decomposition and impulse-response functions are computed to estimate the relative contribution of inflation expectations and expected real exchange rates to the conditional variability of short-term money market interest rates as well as responses of nominal interest rates to one standard deviation inflation expectations and expected real interest rates shocks. Effects of economic crisis are considered by estimation of two models for every single economy from the group of the European transition economies using data for time periods 2000-2007 and 2000-2011. |
| Keywords: | interest rates; inflation expectations; expected real interest rates; SVAR; variance decomposition; impulse-response function |
| JEL: | E43 C32 E31 E52 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43756&r=tra |
| By: | Lea, Kubíčková; Lenka, Procházková |
| Abstract: | In context of discussionsabout the Czech foreign trade development, questions of the Czech enterprises’ability to participate in the internationalization processare often considered. The main aim of this article is to present various points of view on the globalization and enterprise internationalization processwith a special accent on the analysis of the specifics in the internationalization process of small- and medium-sized enterprises (SMEs). Those enterprises represent a significant part of the Czech economy because they considerably contribute to the creation of vacancies and GDP; they are a source of innovation and technological progress and the factors of their successful functioning in foreign trades differ from the large-sized enterprises.For this reason, SMEshave been more frequently analysed in an effort to identify key factors, which involvetheir ability to succeed in international activities. Those factors could positively influence other SMEs in their plans to participate in the foreign trade. However, not all the enterprises have equal conditions for entering the foreign marketfield.In some business spheres, the export of SMEs is supported, which is considerably helpful, mainly in case of enterprises with insufficient funds. Some of the other spheresfacilitate access to the foreign market because of their sort ofproduction. Besides analysing the internationalization process of SMEs, this article is also focused on identification of both key factors of success and risk factors of the process.Determinants of SMEs success in the foreign market were examined using several extensive researches among Czech small and medium-sized enterprises of various business spheres. Results of the research have produced interesting information. It was discovered that all SMEs, although they operate in different business spheres, share similar problems concerning the internationalization process. Key factors, which determine success of Czech small and medium-sized enterprises in the internationalization process, are analogous in spite of diverse business spheres, but nevertheless every particular branch has a strong effect on an opportunity and willingness of SMEs to participate in the internationalization process. |
| Keywords: | SMEs; internationalization; success; keyfactors; successevaluation |
| JEL: | M20 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43759&r=tra |
| By: | José Soares da Fonseca (Faculty of Economics University of Coimbra and GEMF, Portugal) |
| Abstract: | This article studies the international integration of twelve Eastern Europe Stock Markets and two Middle East Stock Markets. It is commonly accepted that the returns in these markets have a low correlation with the other markets, which means that they are still weakly integrated in the world financial market. This assumption is the object of the empirical analysis in the present article, in which the co-integration of each of these national stock markets with the international market is estimated. Co-integration is a well adapted methodology to study the international integration of stock markets, since it puts in evidence, simultaneously, the long-term relation between the stock prices of a domestic market and those representing the international market and the short-term relation between the changes in those prices. The results obtained show that, in general, these stock markets are co-integrated with one or more international indexes. |
| Keywords: | financial integration, stock markets, structure breaks. |
| JEL: | F36 F37 G15 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2013-01.&r=tra |
| By: | Mariann Endrész (Magyar Nemzeti Bank (central bank of Hungary)); Gyõzõ Gyöngyösi (Magyar Nemzeti Bank (central bank of Hungary)); Péter Harasztosi (Magyar Nemzeti Bank (central bank of Hungary)) |
| Abstract: | This paper investigates currency mismatch in the Hungarian corporate sector. Using a novel dataset on non-financial firms we first identify firms with mismatch, measure their weight in the economy and show their main characteristics. We then analyze the performance of firms during the crisis. We find that a significant share of firms with FX debt had no natural hedge, i.e. no FX revenues from exports. The firms exposed to currency mismatch had a sizeable share both in real aggregates and on the loan market before the crisis. Firms with currency mismatch tended to be larger and more indebted, which suggests that FX borrowing might have eased their liquidity constraint before the crisis. During the crisis balance sheet effects were likely to be triggered by the large depreciations. Firms with FX loans had a larger fall in investment, and were more likely to go bankrupt. Their deteriorating performance and the reassessment of holding FX debt both by banks and firms led to major changes on the loan market. FX lending became less popular, and firms with mismatch were less likely to get new loans. |
| Keywords: | currency mismatch, liability dollarisation, firm level data |
| JEL: | F31 F34 G32 L25 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:wpaper:2012/8&r=tra |
| By: | Dezhina , Irina; Simachev, Yuri |
| Abstract: | The paper presents the results of 2-year survey conducted in 2011-2012 among Russian universities and companies who jointly implement R&D projects aimed at development of high-tech manufacturing. The joint projects represent a new government instrument to stimulate the development of linkages between universities and companies by giving matching grants for R&D to companies with obligation to order R&D to a university-partner. The objectives of the survey included analysis of motivation for cooperation both from side of universities and companies; primary effects and side-effects of such initiative; changes that may be introduced to the government regulations concerning matching grants. Total 38 teams were surveyed. Our findings show that major motivations from side of universities were access to new practical research tasks from companies, selection of most competitive teams of researchers capable to work with companies, and strengthening reputation in business environment. Companies were interested in getting government funding in order to solve their technological problems; to strengthen, due cooperation with universities, their research capacity, and to use modern research infrastructure located at universities. The analysis allowed identification of the major effects of the matching grants mechanism. They included: strengthening of university orientation towards solving practical tasks which are of interest to business; institutionalization of relations between universities and business in the sphere of innovation activity; broadening of research cooperation and the formation of research consortiums; harmonization of research and educational tasks in universities, and orientation of the parties towards continuing cooperation in the innovation sphere. |
| Keywords: | STI policy evaluation; public R&D subsidies; matching grants; university-industry linkages; behavioral additionality; innovations |
| JEL: | D21 I28 O31 |
| Date: | 2012–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43622&r=tra |
| By: | Péter Benczúr (Magyar Nemzeti Bank (central bank of Hungary)); Gábor Kátay (Magyar Nemzeti Bank (central bank of Hungary)); Áron Kiss (Magyar Nemzeti Bank (central bank of Hungary)) |
| Abstract: | We present a new general-equilibrium behavioural microsimulation model designed to assess long-run macroeconomic and fiscal consequences of reforms to the tax and transfer system. General-equilibrium feedback effects are simulated by embedding microsimulation in a parsimonious macro model of a small open economy. We estimate and calibrate the model to Hungary, and then perform three sets of simulations. The first one explores the impact of personal income tax rate reductions which are identical in cost but different in structure. The second one compares three different tax shift scenarios, while the third one evaluates actual policy measures between 2008 and 2013. The results suggest that while a cut in the marginal tax rate of high-income individuals may boost output, it does not have a significant employment effect. On the other hand, programs like the Employee Tax Credit do have a significant employment effect. We find that policy measures since 2008 substantially increase income inequality in the long run; the contribution of the changes after 2010 are about three times that of the changes before 2010. Our results highlight that taking account of household heterogeneity is crucial in the analysis of the macroeconomic effects of tax and transfer reforms. |
| Keywords: | behavioural microsimulation, linked micro macro model, tax system, transfers |
| JEL: | H22 H31 C63 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:wpaper:2012/7&r=tra |