nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒12‒06
38 papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Measuring, Explaining and Addressing Patent Quality Issues in China By Prud'homme, Dan
  2. Informal loans in Russia: credit rationing or borrower’s choice? By Maria Semenova; Victoria Rodina
  3. Proceedings with participation of foreign persons in international procedural law of Russia and Kazakhstan By Natalia Erpyleva
  4. Customs regulation in the EurAsEC customs union and financial law development in the Russian federation By Alexander Kozyrin
  5. Crowding-out or co-existence? the competitive position of EU members and China in global merchandise trade By Benkovskis, Konstantins; Silgoner, Maria; Steiner, Katharina; Wörz, Julia
  6. The Russian Electricity Supply Industry: from Reform to Reform? By Nadia Chernenko
  7. Natural-resource or market-seeking FDI in Russia? An empirical study of locational factors affecting the regional distribution of FDI entries By Ksenia Gonchar; Philipp Marek
  8. The Balassa-Samuelson effect and the channels of its absorption in the Central and Eastern European Countries By Karolina Konopczak
  9. Changes in household composition as a shock-mitigating strategy By Kseniya Abanokova; Michael Lokshin
  10. Leniency program and cartel deterrence in Russia: effects assessment By Gyuzel Yusupova
  11. Financial architecture and corporate performance: evidence from Russia By Maria Kokoreva; Anastasia Stepanova
  12. The effects of mergers on sellers, customers, and competitors in Russia’s ferrous and non-ferrous metal industries: the application of financial event study By Dina Tsytsulina
  13. How Well do Analysts Predict Stock Prices? Evidence from Russia By Henry Penikas; Proskurin S.
  14. Open sourse: the Russian experience (legislation and practice) By Alexander Savelyev
  15. Energy Efficiency in Market versus Planned Economies: Evidence from Transition Countries By Rabindra Nepal; Tooraj Jamasb
  16. Do unobserved components models forecast inflation in Russia? By Bulat Gafarov
  17. Do capital requirements affect bank efficiency? Evidence from China By Pessarossi , Pierre; Weill , Laurent
  18. Earnings inequality and informal Employment in Russia By Anna Lukiyanova
  19. Adopting new medical technologies in Russian public hospitals: what causes inefficiency? By Liudmila Zasimova; Sergey Shishkin
  20. What impact does antitrust intervention have on competition? The case of public drug procurement in Russia By Maria Ostrovnaya; Elena Podkolzina
  21. Contracts for the benefit of a third party: the problem of classification By Yury Fogelson
  22. Does education or underlying human capital explain liberal economic attitudes? By John V.C. Nye; Sergiy Polyachenko
  23. Business community and authorities: constitutional and legal forms of relationship By Svetlana Vasileva
  24. A note on central bank transparency and credibility in Poland By Tomasz Łyziak
  25. Minimum wages and labor market outcomes: evidence from the emerging economy of Russia By Alexander Muravyev; Aleksey Oshchepkov
  26. An asymmetric approach to the cost of equity estimation: empirical evidence from Russia By Yury Dranev; Sofya Fomkina
  27. Regional inflation and financial dollarisation By Martin Brown; Ralph De Haas; Vladimir Sokolov
  28. The Competitiveness of Global Port-Cities: The Case of Shanghai, China By Zhen Hong; Olaf Merk; Zhao Nan; Jing Li; Xu Mingying; Xie Wenqing; Du Xufeng; Wang Jinggai
  29. Linkages between the euro zone and the south-eastern European countries: a global VAR analysis By Minoas Koukouritakis; Athanasios P. Papadopoulos; Andreas Yannopoulos
  30. Outward FDI from the Central and Eastern European Transition Economies – A Discrete Choice Analysis of Location Choice within the European Union By Cantner, Uwe; Günther, Jutta; Hassan, Sohaib Shahzad; Jindra, Björn
  31. Panel data evidence on the effects of fiscal impulses in the EU New Member States By Paweł Borys; Piotr Ciżkowicz; Andrzej Rzońca
  32. An impact of different regulatory regimes on the effectiveness of public procurement By Andrey Yakovlev; Andrey Tkachenko; Olga Demidova; Olga Balaeva
  33. Collusion detection in procurement auctions By Ilya Morozov; Elena Podkolzina
  34. Interest rate derivative markets in Hungary between 2009 and 2012 in light of the K14 dataset By Zalán Kocsis; Csaba Csávás; István Mák; György Pulai
  35. Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania By Ur Rehman, Ijaz; Shahbaz, Muhammad; Kyophilavong, Phouphet
  36. The choice of lobbying strategy: direct contacts with officials or mediation via business associations By Andrei Govorun
  37. Bad management, skimping, or both? The relationship between cost efficiency and loan quality in Russian banks By Mikhail Mamonov
  38. The Competitiveness of Global Port-Cities: The Case of Hong Kong, China By Olaf Merk; Jing Li

  1. By: Prud'homme, Dan
    Abstract: Although China became the world's leading patent filer in 2011, patent quality is still a serious issue in the country. This article first provides a statistical snapshot of this situation and then discusses how China's network of patent-related policies and practices in certain cases actually contributes to this problem and hampers innovation. The article also looks at the negative consequences of poor patent quality, paying special attention to the impacts on foreign companies in China.
    Keywords: patent quality; patent quality metrics; China's patent policy; China's innovation policy; indigenous intellectual property rights
    JEL: K11 O25 O31 O34 O38
    Date: 2013–03–01
  2. By: Maria Semenova (National Research University Higher School of Economics. Center for Institutional Studies. Research fellow); Victoria Rodina (National Research University Higher School of Economics. Center for Institutional Studies. Research assistant)
    Abstract: This paper examines the strategies of Russian households for choosing either the formal or informal banking sector as a source of credit. We aim to learn why households refuse to become clients of a bank and prefer to instead raise funds by borrowing from individuals – friends, colleagues, relatives, and other private parties. We use the results of “Monitoring the Financial Behavior of the Population” (2009-2010), a national survey of Russian households. Our results suggest that a household’s choice of the informal credit market is based not only on economic factors, but also on some institutional ones, including financial literacy, trust in the banking sector, and credit discipline. We show that choosing the informal market is explained by a lack of financial literacy, measured by mathematical competence and home accounting, as well as by a lack of trust in the banking sector as a whole. Borrowers from private parties demonstrate a higher degree of credit discipline: those who believe that repaying a loan is not obligatory are less frequently among informal borrowers and they choose the bank credit market. Our findings, however, are still in line with credit rationing theory. We show that better financial conditions reduce a household’s probability to use both formal and informal credit markets in favor of pure bank borrowing
    Keywords: household, consumer loans, informal loans, Russia
    JEL: D14 G21 P2
    Date: 2013
  3. By: Natalia Erpyleva (National Research University “The Higher School of Economics”. Faculty of Laws. Department of Private International Law, the Head of the Department)
    Abstract: This article is dedicated to one of the most interesting aspects of International Procedural Law – litigation with participation of foreign persons. Author focused on a comparative analysis of Russian and Kazakh legislation concerning the regulation of international procedural relations. Article includes two paragraphs: the first one considers international jurisdiction of Russian arbitrazh courts and Kazakh economic courts on commercial matters; the second one examines the recognition and enforcement of foreign judgments in commercial matters on the territory of Russia and Kazakhstan. Author deeply scrutinized a wide range of legal documents including domestic legislation and multilateral international treaties of regional character in order to show the convergences and divergences in Russian and Kazakh law concerning participation of foreign persons in international commercial litigation
    Keywords: International Procedural Law; International Civil Procedure; International Jurisdiction; Foreign Persons; International Commercial Litigation
    JEL: K41
    Date: 2013
  4. By: Alexander Kozyrin (Doctor Habilitated in Law, Professor, Head of Department, Financial Law, National Research University Higher School of Economics)
    Abstract: Customs payments play special role in the economy of the Russian Federation. They composed just over 50 percent of the total budgetary income on the eve of the Russian Federation’s entry into the EurAsEC Customs Union. The article considers the changes which occurred in the legal base of customs regulation since the EurAsEC Customs Union was created and the Russian Federation became a member. The customs legislation structure of the Customs Union is analyzed in the article. Special attention is given to the acts which became the source of financial law in the Russian Federation, being adopted by supranational regulator, the Eurasian Economic Commission
    Keywords: EurAsEC, customs union, customs legislation, customs payments, financial law
    JEL: K33 K34
    Date: 2013
  5. By: Benkovskis, Konstantins; Silgoner, Maria; Steiner, Katharina; Wörz, Julia
    Abstract: In this paper, we analyse export competition between individual EU Member States and China in third-country goods markets. We find that competitive pressure from China is strongest for small and peripheral EU members, especially for the Southern periphery, Ireland and Central, Eastern and South-eastern European EU members. While we find no hard evidence for "cut-throat" competition between China and EU countries, we see an increasing tendency of smaller EU exporters leaving markets that are increasingly served by China. We base our findings on traditional market share analysis, the exploration of intensive versus extensive margin export growth and on a Dynamic Trade Link Analysis. The latter, a newly developed tool, identifies different types of competitive pressure at the detailed product-destination market level. We use UN Comtrade data at the highest level of disaggregation (6-digit HS) for 75 world exporters and importers over the period 2000-2011. JEL Classification: F14, F15, O57
    Keywords: China, competitiveness, European Union, extensive margin, sectoral market shares, trade links
    Date: 2013–11
  6. By: Nadia Chernenko
    Abstract: The paper looks at the development of the industry in the post-Soviet Russia, starting from the ealry 1990s. The main focus is on the last reform 2003-11 and the relationship of cost, prices and investment. In particular, the author examines the new designs for the electricity and capacity markets and their impact on incentives for short-run production and long-term planning and construction. The author defends the pro-competitive approach to the electricity industry reform in Russia and traces the roots of its success and failures.
    Keywords: Russian Electricity Industry, RAO EES, reform 2003-11, restructuring, market liberalisation, capacity markets
    JEL: L11 L22 L43 L52 L94
    Date: 2013–11–27
  7. By: Ksenia Gonchar (National Research University Higher School of Economics); Philipp Marek (Institute for Economic Studies – Halle)
    Abstract: This paper conducts an empirical study of the factors that affect the spatial distribution of foreign direct investment (FDI) across regions in Russia; in particular, this paper is concerned with those regions that are endowed with natural resources and market-related benefits. Our analysis employs data on Russian firms with a foreign investor during the 2000-2009 period and linked regional statistics in the conditional logit model. The main findings are threefold. First, we conclude that one theory alone is not able to explain the geographical pattern of foreign investments in Russia. A combination of determinants is at work; market-related factors and the availability of natural resources are important factors in attracting FDI. The relative importance of natural resources seems to grow over time, despite shocks associated with events such as the Yukos trial. Second, existing agglomeration economies encourage foreign investors by means of forces generated simultaneously by sector-specific and inter-sectoral externalities. Third, the findings imply that service-oriented FDI co-locates with extraction industries in resource-endowed regions. The results are robust when Moscow is excluded and for subsamples including only Greenfield investments or both Greenfield investments and mergers and acquisitions (M&A)
    Keywords: foreign direct investment, location, regional development
    JEL: F23 R11 Q34
    Date: 2013
  8. By: Karolina Konopczak (Warsaw School of Economics and Institute for Market, Consumption and Business Cycles Research)
    Abstract: The aim of the study is to estimate the magnitude of the Balassa-Samuleson effect as well as the effectiveness of the labour and the product market in its absorption in Poland, the Czech Republic, Hungary and Slovakia. The obtained results allowed to determine the magnitude of the systematic component of inflation differentials relative to the euro area, hence to assess the risk of common monetary policy inadequacy with respect to these economies. The obtained estimates suggest that the catching-up driven inflationary pressure is a non-negligible issue in the context of the CEECs integration with the euro area, since the systematic inflation differentials were comparable in size to those experienced by the so-called peripheral member states in the first decade after the introduction of the euro. Moreover, in the case of Poland none of the potential absorption mechanisms of the Balassa-Samuelson effect seemed to mitigate the convergence-induced inflationary pressure over the sample period. The outcomes suggest that ignoring the non-fulfilment of theoretical model assumptions regarding wages and markups, which is common in the literature, distorts estimation results.
    Keywords: Balassa-Samuelson hypothesis, monetary integration, real convergence, panel cointegration
    JEL: F41 E31 C33
    Date: 2013
  9. By: Kseniya Abanokova (National Research University Higher School of Economics (Moscow, Russia).); Michael Lokshin (World Bank and National Research University Higher School of Economics (Moscow, Russia). “Centre for Labour Market Studies (CLMS)”)
    Abstract: This paper uses data from the Russian Longitudinal Survey that span the two recent economic recessions of 1998 and 2008 to study the effect of declining incomes on household composition. We hypothesize that individuals face a tradeoff between taking advantages of economies of scale and specialization when living with others and individual privacy. Consumption smoothing is achieved by forgoing privacy during a crisis and results in an increase in household size. Our empirical results suggest that members of the households that experienced negative income shocks are more likely to move in with others than households whose income remained the same or increased.
    Keywords: household structure, coping strategy, macroeconomic shocks, Russia
    JEL: J10
    Date: 2013
  10. By: Gyuzel Yusupova (National Research University Higher School of Economics, Institute of Industrial and Market Studies, associate professor)
    Abstract: The empirical assessment of leniency program (LP) in Russia shows the effects of changes in the rules on the behavior of market participants. In this paper we test hypotheses about LP enforcement against the characteristics of cartels: their subject, duration and the number of participants. We show that LP in Russia makes enforcement of the behavior of market participants less effective and accordingly reduces cartel discoveries. However the reforms of Program in 2009 give some positive results
    Keywords: Leniency Program, Collusion, Antitrust legislation
    Date: 2013
  11. By: Maria Kokoreva (National Research University Higher School of Economics. Department of Finance, Corporate Finance Center); Anastasia Stepanova (National Research University Higher School of Economics. Department of Finance, Corporate Finance Center)
    Abstract: In this paper we study the performance effects of capital structure, ownership structure and corporate governance of Russian companies. To address the lack of research in corporate performance modeling in emerging markets we contribute to the literature by introducing a cluster analysis of the financial architecture and market performance of Russian companies. Our goal is to find out the most efficient and inefficient types of financial architecture in emerging markets. Using a sample of 52 of the largest Russian non-financial companies between 2005-2010 we demonstrate the existence of three sustainable types of financial architecture. Using cluster analysis we form clusters of companies in the pre-crisis period and then demonstrate the relationship between the type of financial architecture and the level of market performance
    Keywords: capital structure, ownership structure, emerging markets, performance
    JEL: G32 G34
    Date: 2013
  12. By: Dina Tsytsulina (National Research University Higher School of Economics. Economics Department. Lecturer.)
    Abstract: Russian producers are large participants in both domestic and international markets of ferrous and non-ferrous metals. Their market power is limited on the world market due to the presence of competitors, while in Russia most of them have achieved an “almost monopolistic” position strengthened by a high market share as a result protection from import tariffs. During 1999-2011 numerous mergers in these industries were completed and approved by the Federal Antitrust Service – Russia’s competition agency. The key problem of merger analysis in Russia’s ferrous and non-ferrous metal industries is the trade-off between a (possible) weakening of competition in domestic markets and achieving competitive advantages in international markets. Most merger deals were approved only together with precisely developed merger remedies aimed at preventing dominance abuse. However, it is still unknown whether the weakening of competition and the abuse of dominance on the domestic market as the result of a merger indeed lead to harmful consequences. Using the financial event study method developed by Eckbo and Wier (1985), this paper empirically verifies the significance of anticompetitive effects of mergers in the domestic ferrous and non-ferrous metal markets. I find that, according to the financial market, mergers between Russian metal producers restrict competition and reduce consumer gains
    Keywords: merger, competition, financial event study, Russia.
    JEL: G14 L40
    Date: 2013
  13. By: Henry Penikas (National Research University Higher School of Economics (Moscow, Russia). International Laboratory of Decision Choice and Analysis); Proskurin S. (National Research University Higher School of Economics, Department of Finance)
    Abstract: In this research we found that 56.8% of expert recommendations on selling or buying stocks of Russian companies were profitable. We show that the recommendations being publically released have an impact on stock prices, hence market players are likely to follow the recommendations. There also no difference in an analyst’s gender and almost no difference in the day the recommen-dation was made
    Keywords: financial analyst, forecast
    JEL: G32
    Date: 2013
  14. By: Alexander Savelyev (National Research University Higher School of Economics)
    Abstract: The emergence of so-called “free” or “open source” software and the growth of its economic importance in various industries makes questions regarding the legal status of free/open source licenses especially important. In December 2010 new draft amendments to the Russia’s Civil Code were published, introducing new concepts in order to reflect the ideas pursued by these types of licenses. This article analyzes existing problems with the legal status of free/open source licenses, whether proposed amendments may solve them, and what risks they may create. Since Russia is among the first countries trying to include provisions on free/open source licenses in its legislation, such analysis may be of interest to foreign lawmakers since the concept of open source is universal all over the world
    Keywords: open source, free software, GPL
    JEL: K19
    Date: 2013
  15. By: Rabindra Nepal; Tooraj Jamasb
    Abstract: Economic theory suggests that market-based policies and reforms should promote energy efficiency in developing and transition countries. This paper, therefore, analyses the impacts of a varied set of market-oriented macro-level reforms on macro level energy efficiency across the transition countries. Since the early 1990s, these economies experienced a rapid marketization process which transformed them from central planning towards more market driven economies. The results from the relatively new bias corrected fixed-effect analysis (LSDVC) technique suggest that between 1990 and 2010, reforms in overall market liberalisation, financial sector and infrastructure industries, excluding the power sector, drove the energy efficiency improvements in these countries. Also, privatisation programmes only improved energy efficiency in the SEE countries. Thus, the empirical evidence support market driven energy efficiency policies aimed at addressing the market failures in the network industries and capital markets. We conclude that these results can help explain the energy efficiency policy puzzles in developing and transition countries where energy efficiency improvement can be a leading policy response to growing climate change and security of supply concerns.
    Keywords: market reforms, energy efficiency, transition countries, institutions
    JEL: P28 Q54 C33
    Date: 2013–11–27
  16. By: Bulat Gafarov (Higher School of Economics (Moscow, Russia). Laboratory for Inflation Problems and Economic Growth Research.)
    Abstract: I apply the model with unobserved components and stochastic volatility (UC-SV) to forecast the Russian consumer price index. I extend the model which was previously suggested as a model for inflation forecasting in the USA to take into account a possible difference in model parameters and seasonal factor. Comparison of the out-of-sample forecasting performance of the linear AR model and the UC-SV model by mean squared error of prediction shows better results for the latter model. Relatively small absolute value of the standard error of the forecasts calculated by the UC-SV model makes it a reasonable candidate for a real time forecasting method for the Russian CPI.
    Keywords: Stochastic volatility, MCMC, Russia, CPI, forecasting.
    JEL: C53 E37
    Date: 2013
  17. By: Pessarossi , Pierre (BOFIT); Weill , Laurent (BOFIT)
    Abstract: This paper contributes to the debate on the effect of capital requirements on bank efficiency. We study the relation between capital ratio and bank efficiency for Chinese banks over the period 2004-2009, taking advantage of the profound regulatory changes in capital requirements that occurred during this period to measure the exogenous impact of an in-crease in the capital ratio on banks’ cost efficiency. We find that such an increase has a positive effect on cost efficiency, the size of which depends to an extent on the bank’s ownership type. Our results therefore suggest that capital requirements can improve bank efficiency.
    Keywords: bank; capital requirements; efficiency; China
    JEL: G21 G28
    Date: 2013–11–08
  18. By: Anna Lukiyanova (Senior Reseacher, Centre for Labor Market Studies, Higher School of Economics, Moscow.)
    Abstract: In this paper I investigate the impact of informality on earnings inequality in Russia using RLMS-HSE data for 2000-2010. I find that during the whole period earnings inequality was substantially higher in the informal sector. Informality increases earnings polarization, thereby widening both tails of the distribution. Changes in the earning distribution of the formal sector were mainly generated by changes in the distribution of hourly earnings. In the informal sector, reduction of inequality occurred via two channels: Differences in hourly rates and working hours both declined. Changes in the structure of informality and conditional wage differentials did not have a significant impact on the overall earnings inequality, with the exception of decline in irregular employment
    Keywords: earnings inequality, informal economy, decomposition, recentered influence functions
    JEL: C21 D63 J31 J42
    Date: 2013
  19. By: Liudmila Zasimova (National Research University Higher School of Economics, Laboratory for Economic Research in Public Sector, deputy head); Sergey Shishkin (National Research University Higher School of Economics, Institute of Health Economics, research supervisor)
    Abstract: The adoption of new medical technologies in Russian public hospitals is an important part of healthcare modernization and thus is a subject for public finance and regulation. Here we examine the decision-making process on adoption of new technologies in Russian hospitals, and the institutional environment in which they are made. We find that public hospitals operate within a strategic-institutional model of decision making and tend to adopt technologies that bring indirect benefits to their heads/physicians. Unlike Western clinics, the interests of Russian hospital heads and physicians are driven by the possibilities to obtain income from a part of hospital activities: the provision of chargeable medical services to the population, as well as receiving informal payments from patients. The specifically Russian feature of the decision-making process is that hospitals are strongly dependent on health authorities’ decisions about new equipment acquisition. The inefficiency problems arise from the contradiction between hospitals’ and authorities’ financial motivation for acquiring new technologies: hospitals tend to adopt technologies that bring benefits to their heads/physicians and minimize maintenance and servicing costs, while authorities’ main concern is initial cost of technology. The main reason for inefficiency of medical technology adoption arises from centralization of procurement of medical equipment for hospitals that creates the preconditions for rent-seeking behaviour of persons making such decisions
    Keywords: medical technology, adoption, public hospital, Russia, causes of inefficiency
    JEL: I10
    Date: 2013
  20. By: Maria Ostrovnaya (Research Assistant in the Center for Institutional Studies at the National Research University Higher School of Economics); Elena Podkolzina (Ph.D. in economics, Senior Researcher in the Center for Institutional Studies at the National Research University Higher School of Economics)
    Abstract: In this paper we study antitrust intervention in long-term relationships between public procurer and his preferred supplier in one of the Russian regions. We presume that antitrust control of auctions held by affiliated procurer increases the risks of implementing long-term relationships with his preferred supplier. However we found out that after the intervention of antitrust agency the number of bidders in the auctions increased, but relative contract prices remained the same. We argue that procurer and preferred bidder invited firm with passive bidding strategy to decrease the risks of antitrust punishment. Thereby, antitrust intervention led to fake competition, but not to honest non-corrupt behavior in public auctions
    Keywords: public auctions, antitrust policy, pharmaceuticals, Russia.
    JEL: H57 L40
    Date: 2013
  21. By: Yury Fogelson (National Research University Higher School of Economics. Public Policy Department. Professor)
    Abstract: On the basis of analyzing disputes connected with the classification of contracts for the benefit of third parties, history, and development of this construct in Russian law and analyzing its use in foreign legal systems, this work shows that the formal approach, applied in Russia with regard to contracts for the benefit of third parties, considerably belittles the sphere of application of the construct. Another approach, based on conferring material benefit upon a third party, is developed. It is also shown that the former approach allows us to resolve a number of problems that arise when applying of the analysed contractual construct
    Keywords: contract law, contract for the benefit of a third party, privity of contract, classifying characteristics of contract
    JEL: K12
    Date: 2013
  22. By: John V.C. Nye (George Mason University, Department of Economics. Professor); Sergiy Polyachenko (National Research University Higher School of Economics, Center for Institutional Studies. Junior Research Fellow)
    Abstract: There is a worldwide tendency for more educated people to trust in markets, private business, and trade, and to distrust government regulation and public provision relative to the less educated even in countries where people generally favor regulation (Aghion, et al. 2010). Individual survey data drawn from the Russian RMLS indicate that for Russia, as for most of the world, respondents with higher levels of education are more likely to trust private businesses and privatization, to distrust government regulation, and to favor lesser provision of services by the State (vs. the private sector). This matches the macro survey findings of Aghion et al. (2010) for the transition economies and the work of Caplan (2001, 2002, 2007). However, it is not clear whether education is a causal factor in these preferences or whether education is proxying for different levels of cognitive ability, health, or other forms of human capital. We use individual height data as instruments for formal education to remove the contemporaneous effects of schooling itself on the education-trust link. We find that this IV estimation leaves us with clear and persistent links between education and market friendly attitudes in Russia. This human capital effect is also quite independent of the role of age in determining liberal attitudes and is not simply a cohort effect. This seems to conform to the worldwide observation that – whatever the independent changing institutions – greater health and cognitive ability seem to promote market liberal beliefs in and of themselves. In contrast, socially liberal attitudes are not correlated with education in the IV regressions
    Keywords: Non-cognitive abilities, human capital, IV, trust, market liberal preferences, Russia
    JEL: I21
    Date: 2013
  23. By: Svetlana Vasileva (Candidate of Legal Sciences, Associate Professor, Department of Constitutional and Municipal Law, National Research University Higher School of Economics)
    Abstract: The author analyzes the different forms of relationships between businesses and bodies of state power in Russia: private and public partnership, the delegation of public powers and property, self-regulation, the transfer of government authority to the private organizations, self-regulation, and how public power is influenced including by specialists. The experience of foreign countries and the legal view on the social responsibility of business are provided. The political-legal traditions of the relationships between private organizations and bodies of state power are analyzed. This has predetermined the current legislation. The informal and relatively new mechanisms of protection of the rights of businesses are described
    Keywords: Private and public partnership, delegating public powers and property, self-regulation, social responsibility of the business community, regulatory impact assessment
    JEL: K10 K20 K23
    Date: 2013
  24. By: Tomasz Łyziak (Narodowy Bank Polski)
    Abstract: This note extends the study by Lyziak et al. (2007), providing up-to-date assessment of central bank transparency in Poland. We highlight the role of inflation projections prepared by the staff of the National Bank of Poland in building transparency of monetary policy. The results suggest that central bank inflation projections, published since 2004, have led to improvements in the predictability of interest rate decisions. The note updates also previous estimates of the degree of central bank credibility in Poland, using survey-based measures of inflation expectations formed by consumers, enterprises and financial sector analysts. It is confirmed that inflation expectations of enterprises and – especially – of financial sector analysts display a high degree of anchoring at the NBP inflation target, while consumer inflation expectations are driven mainly by developments in subjectively perceived inflation.
    Keywords: Transparency, Credibility, Expectations, Inflation Targeting, Poland.
    JEL: D84 E52 E58
    Date: 2013
  25. By: Alexander Muravyev (Institute for the Study of Labor (IZA, Bonn) and St. Petersburg University Graduate School of Management.); Aleksey Oshchepkov (Center for Labor Marker Studies, Higher School of Economics (HSE), Moscow.)
    Abstract: This paper revisits the effect of minimum wages on employment by taking advantage of a unique institutional setting and data from Russia. The main strength of the paper is the use, for identification purposes, of the large variation in labor market outcomes as well as in the minimum wage across the 89 regions (states) over 10 years, from 2001 to 2010. The study relies on the standard methodology introduced by Neumark and Wascher, in which various labor market outcomes at the regional level are related to the relative minimum wage (captured by the Kaitz index) in a panel setting. We find adverse effects of the minimum wage on young workers in the form of higher unemployment among those aged 16-24. There are also signs that minimum wage increases lead to higher unemployment in the general population, but the effect is small. Our analysis also suggests that higher minimum wages lead to an increase in the share of workers employed in the informal sector.
    Keywords: minimum wages, unemployment, informal employment, Russia.
    JEL: J38 J23
    Date: 2013
  26. By: Yury Dranev (National Research University Higher School of Economics); Sofya Fomkina (National Research University Higher School of Economics)
    Abstract: The choice of an appropriate model for the estimation of the cost of equity in emerging markets is still a very challenging problem. Market inefficiency, limited opportunities for diversification, as well as liquidity issues inspire researches to look for risk characteristics beyond the traditional framework of the classical capital asset pricing model. Various models have been developed over the past several decades proposing new ways of risk assessment. However, the empirical evidence of these models requires careful consideration. Most asset pricing models were developed in terms of either a symmetric mean-variance or a folded mean-semivariance framework. These models have several drawbacks in capturing investors’ attitudes to stock price movements. We provide a brief description of the recently proposed entropic risk characteristics which assign greater weight to the downside movements of asset prices and smaller weight to the upside movements. The goal of this study is to determine which model has better explanatory power for returns in the Russian capital market. We compare the performance of risk measures in the Russian stock market on a dataset of 63 stocks for the period from 2003 to 2012. Empirical results show certain advantages of entropic risk characteristics over other risk measures in explaining returns on Russian equities.
    Keywords: rate of return, cost of equity, CAPM, entropic variance.
    JEL: G12 G32
    Date: 2013
  27. By: Martin Brown (Swiss Institute of Banking and Finance, University of St.Gallen); Ralph De Haas (EBRD); Vladimir Sokolov (Higher School of Economics)
    Abstract: In this paper, we exploit variation in consumer price inflation across 71 Russian regions to examine the relationship between the perceived stability of the local currency and financial dollarisation. Our results show that regions with higher inflation experience an increase in the dollarisation of household deposits and a decrease in the dollarisation of (long-term) household credit. The negative impact of inflation on credit dollarisation is weaker in regions with less integrated banking markets, suggesting that the asset-liability management of banks constrains the currency-portfolio choices of households.
    Keywords: Financial dollarisation, financial integration, regional inflation
    JEL: E31 E42 E44 F36 G21 P22 P24
    Date: 2013–11
  28. By: Zhen Hong; Olaf Merk; Zhao Nan; Jing Li; Xu Mingying; Xie Wenqing; Du Xufeng; Wang Jinggai
    Abstract: This working paper offers an evaluation of the performance of the port of Shanghai, an analysis of the impact of the port on its territory and an assessment of policies in this field. It examines port performance over the last decades and identifies the principal factors that have contributed to it. The effect of the port on economic and environmental questions is studied and quantified where possible. The major policies governing the port are assessed, along with policies governing transport and economic development, the environment and spatial planning. Based on the report’s findings, recommendations are proposed with a view to improving port performance and increasing the positive effects of the port of Shanghai.
    Keywords: transportation, regional development, ports, regional growth, inter-regional trade, urban growth
    JEL: D57 L91 R11 R12 R15 R41
    Date: 2013–11–28
  29. By: Minoas Koukouritakis (University of Crete); Athanasios P. Papadopoulos (University of Crete); Andreas Yannopoulos (University of Crete)
    Abstract: In the present paper we assess the impact of the Eurozone’s economic policies on specific South-Eastern European countries, namely Bulgaria, Croatia, Cyprus, Greece, Romania, Slovenia and Turkey. Since these countries are connected to the EU or the Eurozone and economic interdependence among them is continuously evolving, we implemented a Global VAR model. Our results indicate that all sample countries, except Turkey, react in a similar manner to changes (a) in the macroeconomic policies of the Eurozone, and (b) in the nominal exchange rate of the euro against the US dollar. There is evidence of linkages among the EU or Eurozone members of the region, and between each of them and the Eurozone.
    Keywords: Monetary Transmission; Global VAR Model; Weak Exogeneity; Impact Elasticities; Generalised Impulse Responses.
    JEL: E43 F15 F42
    Date: 2013–10
  30. By: Cantner, Uwe; Günther, Jutta; Hassan, Sohaib Shahzad; Jindra, Björn
    Abstract: The location determinants of outward foreign direct investment (OFDI) have received extensive attention in contemporary literature, largely from the perspective of advanced economies. Less attention has been focused on OFDI from emerging economies. This applies, in particular, to Central and East European Countries (CEEC). Apart from traditional OFDI motives such as market-seeking, there is a growing debate regarding the relevance of knowledge-seeking as an investment motive for firms from catch-up economies. We apply a conditional-logit approach to assess OFDI location factors at the host country level for a sample of 1,036 firms from 10 CEEC that entered the EU between 1995 and 2010. We find that firms from CEEC primarily target economies characterized by high growth rates and geographic proximity, i.e., often other transition economies within the EU. The impact of market size increases significantly after EU accession, when more firms are located in advanced economies (EU15 countries). In terms of knowledge-seeking, we find that firms from CEEC seem to be primarily attracted by human capital endowment rather than by the R&D intensity of other EU economies.
    Keywords: Outward FDI, Conditional-logit, Location Choice, Transition Economies, Knowledge Seeking, CEEC
    JEL: F23
    Date: 2013–01–18
  31. By: Paweł Borys (Warsaw School of Economics); Piotr Ciżkowicz (Warsaw School of Economics); Andrzej Rzońca (Warsaw School of Economics and Monetary Policy Council in Narodowy Bank Polski)
    Abstract: We identify fiscal impulses in the EU New Member States using four different methods and apply econometric panel data techniques to determine what is the response of the output and its components to those impulses. We also directly test the effects of fiscal impulses on labour costs and housholds’ expectations. The results confirm that the composition of impulses matters for output and its components’ response. Notably, we find evidence that investment and export growth accelerates after fiscal adjustment and decelerates after fiscal stimulus when the impulses are expenditure-based. In turn, private consumption seems not to respond to fiscal impulses regardless of their size. The analysis confirms that expenditure-based fiscal adjustments enhance wage moderation and thereby competitiveness of domestic enterprises, while expenditure-based fiscal stimuli weaken it. By contrast, we do not find evidence that fiscal impulses have an effect on households’ confidence.
    Keywords: fiscal consolidation, non-Keynesian effects, New Member States, panel data
    JEL: C23 D22 D81 E23 E32 E44 E62
    Date: 2013
  32. By: Andrey Yakovlev (National Research University Higher School of Economics (Moscow, Russia). Institute for Industrial and Market Studies. Director;); Andrey Tkachenko (National Research University Higher School of Economics (Moscow, Russia). Empirical analysis of the enterprises and markets in transition economies. Researcher;); Olga Demidova (National Research University Higher School of Economics (Moscow, Russia). Empirical analysis of the enterprises and markets in transition economies. Laboratory Head;); Olga Balaeva (National Research University Higher School of Economics (Moscow, Russia). Empirical analysis of the enterprises and markets in transition economies. Senior Researcher;)
    Abstract: The reform of budget-sector entities enables us to compare the impact of different types of public procurement regulations in budget and autonomous organizations in Russia. Such analysis is important in light of the critical discussion of the effects of current procurement regulation (94-FL), as well as taking into account the introduction of the Federal Contract System in 2014. Using the difference-in-differences methodology, we shall consider public procurements of two national universities in 2011–2012. All procurements of the first university were regulated by the 94-FL requirements. Procurements of the second university were regulated by the 94-FL until June 2011. Later this university introduced its own Procurements Provision. A comparative analysis of procurements of these organizations enables us to estimate the impact of the different types of regulations on the effectiveness of public procurement, as measured by the level of competition and price decline in public tenders, as well as the timely execution of procurement contracts.
    Keywords: public procurement, public organizations, institutional reforms, procurement effectiveness
    JEL: H57
    Date: 2013
  33. By: Ilya Morozov (Research Assistant, International Laboratory for Institutional Analysis of Economic Reforms); Elena Podkolzina (Senior Researcher, International Laboratory for Institutional Analysis of Economic Reforms)
    Abstract: This paper proposes a method of bid-rigging detection, which allows us to reveal cartels in procurement auctions without any prior knowledge of the market structure. We apply it to data on highway construction procurements in one of the Russian regions and show that five suppliers demonstrated passive bidding behavior, which is consistent with the so called ‘rotating bidding’ scheme of collusion. The suggested methodology can be potentially used by both researchers and anti-trust agencies for cartel disclosure in various markets.
    Keywords: Bid-rigging, Tacit collusion, Public procurement, Cartel, Open auction.
    JEL: H57 L41 L92
    Date: 2013
  34. By: Zalán Kocsis (Magyar Nemzeti Bank (central bank of Hungary)); Csaba Csávás (Magyar Nemzeti Bank (central bank of Hungary)); István Mák (Magyar Nemzeti Bank (central bank of Hungary)); György Pulai (Magyar Nemzeti Bank (central bank of Hungary))
    Abstract: MNB has received daily, transaction-level data on key Hungarian interest rate derivatives markets since the beginning of 2009 with the launching of the K14 report. The dataset that has accumulated since early 2009 provides an opportunity to better comprehend the structure and functioning of these markets. The goal of the current paper is two-fold: to study the data from a monetary policy perspective and to present a descriptive type of analysis of these markets for those interested; from active market participants to analysts, researchers. An important finding from a central banking viewpoint is that interest rate expectations are the main motives for trading in the FRA market, hence price quotes are not biased by structural, risk management factors. However, the speculative and hedging motives are both present in the IRS market; the latter may alter pricing relative to expectations. The 3x6s in the FRA and the 2-year rates in the IRS market are respectively the most liquid and, hence, informationally the most reliable products. In the past years domestic banks positioned toward lower interest rates relative to foreign counterparties, though the extent of such open positions has changed over time. The empirical relationship between bank analyst rate expectations and FRA-positioning has been weak. However, in times of greater variation in analyst forecasts FRA-positions have varied more as well. In the CIRS market domestic banks’ activities of hedging the balance sheet currency mismatch and of foreign exchange liquidity management have led to a structural extra demand of foreign currency receiving swaps, which also resulted in large (negative) CIRS spreads. The commonly used CIRS transactions in the Hungarian market are floating-floating type basis swaps, and thus they are basically not used for interest rate risk management.
    Keywords: interest rate derivative, currency swap, forward rate agreement, financial crisis, counterparty limit, foreign exchange liquidity
    JEL: E44 F31 F32 G01
    Date: 2013
  35. By: Ur Rehman, Ijaz; Shahbaz, Muhammad; Kyophilavong, Phouphet
    Abstract: We study the relationship between financial development, technological development and economic growth in Romania. We construct aggregate indices of financial development and technological development using principal component analysis. The ARDL bounds testing approach shows the presence of cointegration between financial development, technological development and economic growth. Financial development and technological development contribute to economic growth. Moreover, financial development leads technological development which Granger causes economic growth. Our empirical evidence suggest that economic growth is driven by financial development via technological development and that, in Romania,a stable financial system and capital market can facilitate technological innovations.
    Keywords: Financial development, technological development, economic growth, Romania
    JEL: E00
    Date: 2013–11–21
  36. By: Andrei Govorun (National Research University Higher School of Economics. Institute for Industrial and Market Studies. Junior Research Fellow;)
    Abstract: The influence of lobbying activity on economic growth and welfare is widely observed in the literature. Many scholars consider lobbying as a sort of rent-seeking and blame it for non-optimal redistribution of assets, additional costs for firms, and resource reallocation from productive activities to lobbying activities. Lobbying may result in policies and regulations that benefit a small range of firms at the cost of others. Yet some scholars argue that under some conditions lobbying may benefit society, or at least result in second-best optimality. The total outcome of lobbying should depend on how it proceeds. Although the literature on lobbying is vast and multifaceted, many studies investigate how firms choose among different lobbying strategies. This study contributes to the literature by investigating how Russian firms choose ways of lobbying. The results of the study are based on a 1000-firm survey conducted by the Higher School of Economics and the Levada Center. The study investigates channels of lobbying mentioned by the respondents and focuses on the two most common channels, which are having direct contacts with officials and collective lobbying through business associations. The findings of the study are as follows. First, the data show that these lobbying channels are more likely to be complements. Second, a comparison of the effectiveness of different channels shows that the most common ways of lobbying are also the most effective. Moreover, the effectiveness of associations and personal contacts turned out to be statistically similar. Firms that have personal connections use direct personal contacts more often. But those who have problems with access to state officials tend to use business associations. Finally, the data show that those firms that interact with officials experience a higher risk of being captured by them
    Keywords: lobbying, corruption, business associations, imperfect institutions.
    JEL: D72 D73 O43
    Date: 2013
  37. By: Mikhail Mamonov (Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF); National Research University Higher School of Economics, Laboratory for Analysis and Forecast of Economic Pro-cesses, Center for Fundamental Studies. Senior Expert)
    Abstract: This paper investigates the relationship between operating cost efficiency and the loan quality of Rus-sian banks. It tries to answer the question whether it is always beneficial for banks to be highly cost effi-cient (the “bad management” hypothesis) or whether this higher cost efficiency could mean inadequate spending on borrower screening, which could subject banks to higher credit risk exposures in the future (the “skimping” hypothesis)? Our main result implies that, while the “bad management” hypothesis holds on average for the banking sector as a whole, the “skimping” hypothesis could be the case for those Russian banks that are not just highly cost efficient, as predicted by Berger and DeYoung (1997) for US banks, but that at the same time pursue aggressive strategies in the market for loans to house-holds and non-financial firms, especially during the pre-crisis periods when banks are too optimistic to pay increased attention to the quality of borrowers in order to extract higher profits in the short run. In-terestingly, we show that the “skimping” strategy is not the case for those Russian banks that demon-strate a lower equity-to-assets ratio and that are highly cost efficient at the same time because, as we be-lieve, higher financial leverage forces these banks to filter out low quality borrowers to be able to repay borrowed funds. From perspective of regulatory policy, these conclusions provide clear arguments in favor of differential prudential regulation in Russia, which could, if being implemented, positively affect the loan quality of both banks that are skimpers (through restricting loans growth by higher capital ade-quacy requirements and/or increased payments to the Russian Deposit Insurance Agency) and banks that are not (through eliminating incentives to grow too fast), thus improving the stability of the banking sector as a whole
    Keywords: Russian banks, credit risk, cost efficiency, skimping, bad management, stochastic fron-tier analysis, market power
    JEL: G21 G28 D22 D43 C23
    Date: 2013
  38. By: Olaf Merk; Jing Li
    Abstract: This working paper offers an evaluation of the performance of the port of Hong Kong, an analysis of the impact of the port on the territory and an assessment of policies in this field. It examines port performance over the last decades and identifies the principal factors that have contributed to it. The effect of the port on economic and environmental questions is studied and quantified where possible. The major policies governing the port are assessed, along with policies governing transport and economic development, the environment and spatial planning. Based on the report’s findings, recommendations are proposed with a view to improving port performance and increasing the positive effects of the port of Hong Kong.
    Keywords: transportation, regional development, ports, regional growth, inter-regional trade, urban growth
    JEL: D57 L91 R11 R12 R15 R41
    Date: 2013–11–26

This nep-tra issue is ©2013 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.