nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒12‒29
28 papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Persistent effects of empires: Evidence from the partitions of Poland By Grosfeld, Irena; Zhuravskaya, Ekaterina
  2. Informal Employment in Russia: Definitions, Incidence, Determinants and Labour Market Segmentation By Hartmut Lehmann; Anzelika Zaiceva
  3. When Does FDI Have Positive Spillovers? Evidence from 17 Transition Market Economies By Gorodnichenko, Yuriy; Svejnar, Jan; Terrell, Katherine
  4. The Polish Wage Curve: Micro Panel Data Analysis Based on the Polish Labor Force Survey By Baltagi, Badi H.; Rokicki, Bartlomiej
  5. Asset Stripping, Rule of Law and Firm Survival: The Hoff-Stiglitz Model and Mass Privatization in Montenegro By Koman, Matjaž; Lakičević, Milan; Prašnikar, Janez; Svejnar, Jan
  6. Minimum Wages and Employment in China By Fang, Tony; Lin, Carl
  7. Parametric modelling of income distribution in Central and Eastern Europe By Michał Brzeziński
  8. Market discipline and the Russian interbank market By Andrievskaya, Irina; Semenova , Maria
  9. Economic reforms and industrial policy in a panel of Chinese cities By Simon Alder; Lin Shao; Fabrizio Zilibotti
  10. Russia’s regions: governance and Well-being, 2000-2008 By Alisher Akhmedjonov; Irina N. Il’ina; Carol S. Leonard; Zafar Nazarov; Evgenij E. Plisetskij; Elena S. Vakulenko
  11. ChinaÕs Human Resources Development: Recent Evolution and Implications for the Global Market By Andrea Pontiggia; Lala Hu; Marco Savorgnan
  12. Emissions embodied in Chinese exports taking into account the special export structure of China By Matthias Weitzel; Tao Ma
  13. Влияние Центрального Банка на замедление экономики России By Blinov, Sergey
  14. Mixing Business with Politics: Political Participation by Entrepreneurs in China By Feng, Xunan; Johansson, Anders C.; Zhang, Tianyu
  15. Understanding Chinese consumption: The impact of hukou By Dreger, Christian; Wang, Tongsan; Zhang, Yanqun
  16. Macroeconomic Dynamics in Four Selected New Member States of the EU By Pasquale Foresti; Ugo Marani; Giuseppe Piroli
  17. When Size Does Matter. Trends of SMEs Internationalization Strategies in Chinese Economy By Andrea Pontiggia; Tiziano Vescovi
  18. Leverage and Employee Death: Evidence from China’s Coalmining Industry By Nie, Huihua; Zhao, Huainan
  19. Who Suffers the Penalty? A Panel Data Analysis of Earnings Gaps in Vietnam By Roubaud, François; Nordman, Christophe Jalil; Nguyen, Huu Chi
  20. Regional Inflation and Financial Dollarization By Brown, M.; Haas, R. de; Sokolov, V.
  21. Expansion of Higher Education, Employment and Wages: Evidence from the Russian Transition By Natalia Kyui
  22. Money demand models for Russia: A sectoral approach By Krupkina, Anna; Ponomarenko , Alexey
  23. Consolidation of the banking sector in Poland in 1989-2013 in comparison with the structural changes of the banking sector in the USA and the EU By Sylwester Kozak
  24. MOY effects in returns and in volatilities of the Romanian capital market By Stefanescu, Razvan; Dumitriu, Ramona
  25. Budget Policy and Economic Growth By Georgy Idrisov; Sergey Sinelnikov-Murylev
  26. Market power issues in the reformed Russian electricity supply industry By Nadia Chernenko
  27. Soviet foreign trade and the money supply By Nakamura , Yasushi
  28. External debt management in Romania By Dumitriu, Ramona; Stefanescu, Razvan

  1. By: Grosfeld, Irena; Zhuravskaya, Ekaterina
    Abstract: Using spatial RD, we test the persistence of historical partition of Poland among three empires—Russia, Austria-Hungary, and Prussia. The formerly Prussian lands compared with the Russian lands have better infrastructure built during industrialization, resulting in higher support for anticommunist parties. The population of the Austrian compared with Russian lands believes in democracy more because of Austrian decentralized governance. People in the Russian territories are less religious than in the other two empires due to Russian imperial policies undermining trust in the Catholic Church. Both liberals and religious conservatives find higher support in the Austrian compared to the Russian lands.
    Date: 2013–12
  2. By: Hartmut Lehmann; Anzelika Zaiceva
    Abstract: This paper takes stock of informal employment in Russia analysing its incidence and determinants. Using the regular 2003-11 waves and an informality supplement of the Russian Longitudinal Monitoring Survey (RLMS) it develops several measures of informal employment and demonstrates that the incidence varies widely across the different definitions. We also show that the determinants of informal employment are roughly stable across the different measures: workers who are males, relatively young, unskilled and employed in construction and trade and related services have a higher likelihood to have an informal job. We also take a look at the issue of labour market segmentation along the informal-formal divide by estimating an informal-formal wage gap at the means and across the entire wage distributions. We find only weak evidence for labour market segmentation in Russia when estimating an informal-formal wage gap for salaried workers at the mean. The results of quantile regressions show a wage penalty in the lower half of the distribution and no gap in the upper half for informal employees. In contrast, informal self-employed and entrepreneurs have conditional mean wages that are higher than the mean wages for the formally employed. Across the entire wage distribution, however, we find a negative wage gap in the lowest quartile and a strongly positive wage gap in the highest quartile, pointing to a segmented informal sector with a lower free entry tier and an upper rationed tier. This Working Paper relates to the 2014 OECD Economic Survey of the Russian Federation ( L'emploi informel en Russie : Définitions, incidence, déterminants et segmentation du marché du travail Ce document de travail propose un bilan sur l'emploi informel en Russie et analyse son incidence et ses déterminants. En utilisant les données régulières 2003-11 et un supplément sur l'informalité de l'Enquête "Russian Longitudinal Monitoring Survey" (RLMS), nous suggérons plusieurs mesures de l'emploi informel et démontrons que l'incidence varie considérablement selon les différentes définitions. Nous montrons également que les déterminants de l'emploi informel sont à peu près stables avec les différentes mesures: les travailleurs hommes, relativement jeunes, non qualifiés et employés dans la construction et le commerce et les services connexes ont une probabilité plus élevée d'avoir un emploi informel. Nous examinons également la question de la segmentation du marché du travail en terme de division entre marché formel et informel en estimant l'écart de salaire entre secteurs en moyenne et sur l'ensemble de la distribution des salaires. Nous ne trouvons que de faibles signes de segmentation du marché du travail en Russie pour l'estimation à la moyenne. Les résultats des régressions par quantile montrent une pénalité salariale pour les employés informels dans la moitié inférieure de la distribution et pas de différence dans la moitié supérieure. En revanche, les indépendants et les entrepreneurs du secteur informel ont des salaires moyens conditionnels plus élevés que les salaires moyens pour l'emploi formel. Sur l'ensemble de la distribution des salaires, cependant, nous constatons un écart salarial négatif dans le quartile inférieur et un écart salarial fortement positive dans le quartile le plus élevé, indiquant un secteur informel segmenté avec libre entrée dans le bas et du rationnement dans le haut. Ce Document de travail se rapporte à l’Étude économique de l’OCDE 2014 sur la Fédération de Russie (
    JEL: J31 J40 P23
    Date: 2013–12–04
  3. By: Gorodnichenko, Yuriy (University of California, Berkeley); Svejnar, Jan (Columbia University); Terrell, Katherine (University of Michigan)
    Abstract: We use rich firm-level data and national input-output tables from 17 countries over the 2002-2005 period to test new and existing hypotheses about the impact of foreign direct investment (FDI) on the efficiency of domestic firms in the host country (i.e., spillovers). We document that backward linkages have a consistently positive effect on productivity of domestic firms while horizontal and forward linkages show no consistent effect. We also examine how the strength of spillovers varies by sector, FDI source, business environment (corruption, red tape, level of development), firm's distance to the technological frontier, education of workers, and other firm- and country-specific characteristics.
    Keywords: FDI, spillovers, transition economies, efficiency
    JEL: F23 M16 O16 P23
    Date: 2013–12
  4. By: Baltagi, Badi H. (Syracuse University); Rokicki, Bartlomiej (Warsaw University)
    Abstract: This paper analyzes the Polish wage curve using individual data from the Polish Labor Force Survey (LFS) at the 16 NUTS2 regions over the period 1999 - 2010. This survey does not gather information on wages of self-employed or paid family workers. After excluding the unemployed, inactive and missing observations, we are left with over 102,924 observations. We find evidence in favor of the Polish wage curve with an unemployment elasticity of -0.06. We also find that males in Poland are significantly more responsive to local unemployment rates (-0.08) than their female counterparts (-0.04). Moreover, if the lagged unemployment rate is used as an instrument for current unemployment rate, we find that the unemployment elasticity increases substantially for less experienced and temporary workers.
    Keywords: wage curve, fixed effects, regional labor markets
    JEL: C26 J30 J60
    Date: 2013–12
  5. By: Koman, Matjaž (University of Ljubljana); Lakičević, Milan (University of Podgorica); Prašnikar, Janez (University of Ljubljana); Svejnar, Jan (Columbia University)
    Abstract: We provide the first test of the Hoff and Stiglitz (2004) model predicting whether and under what conditions mass privatizations are accompanied by asset stripping. In addition to directly testing the theory, we also tackle an important policy-oriented issue of why a large number of efficient firms disappeared during mass privatization in a booming economy of Montenegro. Econometrically, we present the first study to look at firms that disappeared during a mass privatization transition, improving upon prior studies that focused only on existing firms and assumed away survival bias. Our analysis suggests that asset stripping and firm disappearance were present, and that asset stripping was a likely reason for the loss of efficient firms. We show that because more productive firms were liquidated, it is important to model survival bias in the selection of firms remaining in samples when estimating the effects of privatization or other ownership changes. We also show that one needs to distinguish between true start-ups and liquidated firms that re-appear as start-ups. In the absence of the rule of law, many firms that appear to have disappeared were in fact appropriated by managers and politically connected individuals.
    Keywords: comparison of public and private enterprises, socialist systems and transitional economies, socialist enterprises and their transitions
    JEL: L33 P24 P31
    Date: 2013–12
  6. By: Fang, Tony (Monash University); Lin, Carl (Beijing Normal University)
    Abstract: Since China promulgated new minimum wage regulations in 2004, the magnitude and frequency of changes in the minimum wage have been substantial, both over time and across jurisdictions. This paper uses county-level minimum wage panel data and a longitudinal household survey from 16 representative provinces to estimate the employment effects of minimum wage changes in China over the period of 2004 to 2009. In contrast to the mixed results of previous studies using provincial-level data, we present evidence that minimum wage changes have significant adverse effects on employment in the Eastern and Central regions of China, and result in disemployment for females, young adults, and low-skilled workers.
    Keywords: minimum wage, China, employment
    JEL: J38
    Date: 2013–12
  7. By: Michał Brzeziński (Faculty of Economic Sciences, University of Warsaw)
    Abstract: This paper models income distribution in four Central and Eastern European (CEE) countries (the Czech Republic, Hungary, Poland and the Slovak Republic) in 1990s and 2000s using parametric models of income distribution. In particular, we use the generalized beta distribution of the second kind (GB2), which has been found in the previous literature to give an excellent fit to income distributions across time and countries. We have found that for Poland and Hungary, the GB2 model fits the data better than its nested alternatives (the Dagum and Singh-Maddala distributions). However, for Czech Republic and Slovak Republic the Dagum model is as good as the GB2 and may be preferred due to its simpler functional form. The paper also found that the tails of parametric income distribution in the Czech Republic, Poland and the Slovak Republic have become fatter in the course of transformation to market economy, which provides evidence for growing income bi-polarization in these societies. Statistical inference on changes in income inequality based on parametric Lorenz dominance suggests that, independently of inequality index used, income inequality in the Czech Republic, Poland and the Slovak Republic has increased during transformation. For Hungary, there is no Lorenz dominance and conclusions about the direction of changes in income inequality depend on the cardinal inequality measure used.
    Keywords: generalized beta of the second kind (GB2) distribution, parametric modelling, income distribution, Lorenz dominance, Central and Eastern Europe
    JEL: C46 D31 P36
    Date: 2013
  8. By: Andrievskaya, Irina (BOFIT); Semenova , Maria (BOFIT)
    Abstract: The interbank market plays an important role in the overall function of the financial system. The efficiency of the interbank market, in turn, depends largely on its inherent disciplining mechanisms. This paper investigates the discipline mechanisms of Russia’s interbank market, testing the hypothesis that market discipline in Russia was strong enough to constrain excessive risk-taking by participating banks before, during, and after the 2008–2009 financial crisis. The existence of quantity-based market discipline is investigated using Heckman’s sample selection model and the efficiency of market discipline is studied with a panel data model. Our approach detects market discipline only during the financial crisis, not before or after. Even during the crisis, its efficiency in curbing bank risk-taking was rather low.
    Keywords: market discipline; interbank market; risk-taking; banks; Russia
    JEL: G01 G21 P20
    Date: 2013–11–29
  9. By: Simon Alder; Lin Shao; Fabrizio Zilibotti
    Abstract: The process of economic reforms launched in 1978, and gradually extended until current days, has catapulted China into a stellar growth trajectory that has proven highly resilient. In this paper, we estimate the effect on economic development of China’s industrial policy, in particular, the establishment of Special Economic Zones (SEZ), a salient economic reform. We use data from a panel of 276 Chinese cities and prefectures from 1988 to 2010. Our difference-in-difference estimator exploits the variation in the establishment of SEZ across time and space. We find that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20%, but not with a permanently steeper growth path. This finding is confirmed with alternative specifications and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. Decomposing the effect of SEZ on GDP into different channels shows that this worked mainly through the accumulation of physical capital, although there is some evidence of increasing productivity and human capital investments. Using light intensity as an alternative measure for economic activity confirms the positive effects of SEZ.
    Keywords: China, economic growth, economic reforms, difference-in-difference, industrial policy, investments, satellite light, total factor productivity, Special Economic Zones
    JEL: H72 L52 O25 O38 O53 P21 R11
    Date: 2013–11
  10. By: Alisher Akhmedjonov (Zirve University); Irina N. Il’ina (National Research University Higher School of Economics); Carol S. Leonard (National Research University Higher School of Economics); Zafar Nazarov (Cornell University); Evgenij E. Plisetskij (National Research University Higher School of Economics); Elena S. Vakulenko (National Research University Higher School of Economics)
    Abstract: This paper assesses the impact of the quality of governance on economic performance in Russia’s 83 regions (Oblasts, Republics, Krais and Okrugs) from 2000 to 2008, a period of rapid economic advancement. Defining governance broadly as how authority is exercised, and using as a proxy a measure of the investment risk by region, this paper contributes to the literature on identifying the economic impact of governance. Our results find a significant association between governance in Russia’s diverse regions and economic well-being, that is, we find a performance gap in government practices. Specifically, our study shows that the main components of effective governance are the ability of the government to run effective public health programs aimed at decreasing the overall mortality rate among the working-age population, to create fair labor market conditions for all individuals who are still capable of working, and to improve the investment climate in the region leading to a higher level of investment in fixed assets. Our results implicitly suggest that effective governance comprises the tangible aspects of policymaking such as the adoption of effective public health, investment and labor policies and most importantly, for the regions of Russian Federation, although effective governance can be also an artifact of unobserved and unmeasurable managerial attributes of the local government to implement federal and region level laws and regulations
    Keywords: governance, Russian regions, well-being, economy, Russia, investment, investment risk, mortality, public health, labor market
    JEL: O47
    Date: 2013
  11. By: Andrea Pontiggia (Dept. of Management, Università Ca' Foscari Venice); Lala Hu (Dept. of Management, Università Ca' Foscari Venice); Marco Savorgnan (Polins Center for Innovation Studies)
    Abstract: Our purpose in this article is to develop a framework for studying organizational arrangements used by Chinese Global firms in allocating work and managing human resources in the international context. Our framework based on human capital theory, transaction cost economics, and resource-based view of the firm investigate four factors: institutional, demographic, legislative, and educational changes in China, drawing some of the main challenges in Human Resources Management (HRM) for both Chinese and foreign firms. The paper contains a brief review of literature concerning the role of human capital in economic growth, then it focuses on the recent evolution of the Chinese labor market, and finally, it draws some implications for human capital management in China from global point of view. Our general framework contribute: first, to the formulation of research hypothesis of convergence (or divergence) of HRM practices in global markets, second, it emphasizes the relationship between the institutional and country's specificities of labor market and the HRM, and last it shows some effects of institutional policies and reforms on the quality and the availability of human capital China. These three points seem to support a broad idea of competitiveness based on labor market efficiency and how the internationalization strategies depend on the sources of human capital.
    Keywords: Chinese Labor Market; Labor Market Regulations and Laws; Human Resources Management Strategies; Human Capital Development and Leverage.
    JEL: J24 J41 J82 L22 M12 M54
    Date: 2013–12
  12. By: Matthias Weitzel; Tao Ma
    Abstract: Quantification of CO2 emissions embodied in China's trade is important for an informed debate on whom to blame for the recent rise in Chinese emissions or the calculation of border carbon adjustments. Applying input output techniques, we calculate these emissions in (1) a standard model, (2) a regionally disaggregated model, taking into account that export production is concentrated in more advanced and more emission efficient provinces and (3) in a model with export processing, taking into account that almost half of Chinese exports relies on a large share of imported intermediates and little domestic value and emissions added. We compare year 2007 emissions embodied for in Chinese exports in a unified framework. We also report emissions embodied in Chinese imports used for intermediate production of exports by combining calculations for China with data from global IO models. We find that both a model with 30 provinces (1730 Mt CO2) and a model accounting for export processing (1580 Mt) yield lower Chinese emissions embodied in exports compared to the standard model (1782 Mt). In the regional model, emissions are even lower (1522 Mt), if interprovincial trade is not taken into account
    Keywords: Emissions embodied in trade, China, input-output modelling, export processing, spatial disaggregation
    JEL: C67 F18 Q54
    Date: 2013–12
  13. By: Blinov, Sergey
    Abstract: This paper is looking into the causes of the GDP decline in Russia during 2008-2009 and the slow-down of the GDP growth during 2012-2013. The impact of the money supply on the GDP is discussed. Analogies are drawn with the crises in the USA: the Great Depression during 1929-1933 and the 2008-2009 crisis. Possible measures necessary for growth in Russia are investigated.
    Keywords: денежная масса; Великая депрессия; рецессия; центральный банк
    JEL: E41 E51 G01
    Date: 2013–12–24
  14. By: Feng, Xunan (Shanghai University); Johansson, Anders C. (Stockholm China Economic Research Institute); Zhang, Tianyu (Chinese University of Hong Kong)
    Abstract: We study how Chinese private entrepreneurs benefit from participating in politics. Using original hand-collected data on listed firms controlled by private entrepreneurs, we document a significant positive relationship between political participation and change in firm performance. We also provide evidence that the change in social status cannot explain the change in performance. We then identify several ways through which firms gain preferential treatment when the controlling entrepreneur participates in politics: better access to debt financing, preferential tax treatment, more government subsidies, and superior access to regulated industries.
    Keywords: Political participation; Entrepreneurs; Corporate governance; Rent seeking; Debt financing; Tax burden; Government subsidies; Mergers and acquisitions; Regulated industries; China
    JEL: G30 G32 G34 H20 P26
    Date: 2013–12–17
  15. By: Dreger, Christian; Wang, Tongsan; Zhang, Yanqun
    Abstract: The Chinese growth miracle was based on exports and investment in recent years. While strong output growth has been maintained even during the financial crisis, the imbalances within the country increased. To return to a more sustainable path of development, policies are directed to improve the role of private consumption. However, the institutional framework is an impediment to the transformation, as it weakens the incentives of households to consume. Besides a low degree of social security and highly regulated financial markets, we stress the relevance of the hukou system as the main driver for modest consumption, especially in recent years. After controlling for different income levels, the average propensity to consume is significantly lower for migrants, as their access to public services is limited. The downward pressure on consumption will increase in the future. The urbanization strategy of the government will likely raise the number of migrants with limited hukou rights, if it is not accompanied by respective reforms. Therefore, the transformation towards consumption driven growth is endangered without further reforms. --
    Keywords: Chinese private consumption,urbanization strategy,hukou system
    JEL: E21 O15 R23
    Date: 2013
  16. By: Pasquale Foresti; Ugo Marani; Giuseppe Piroli
    Abstract: In this paper, we employ a block structured near-vector autoregression in order to compare the reactions to euro-area shocks in four New Member States (Bulgaria, Hungary, Czech Republic and Romania) and in the Old Member State of the EU. Thanks to the methodology adopted we also study the effects of national economic policies and their reactions to national shocks in each New Member State. Our analysis highlights that possible asymmetric effects of the ECB's monetary policy cannot be excluded and that the potential accession of the New Member States may increase the level of fiscal indiscipline in the eurozone.
    Keywords: Monetary Union, Monetary and Fiscal Policies Interaction, Economic Shocks.
    JEL: E52 E61 F33 F36
    Date: 2013–12–14
  17. By: Andrea Pontiggia (Dept. of Management, Università Ca' Foscari Venice); Tiziano Vescovi (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The strategies of internationalization have been one of hottest topics in managerial literature in the last decade. Interestingly to notice how deep and unexpected changes have challenged the mainstream of international management theories. This paper illustrates a framework and some preliminary results aim to comprehend how and why MMNEs (Medium-size Multinational Entreprise) internationalization strategies deviate from the more established strategies of multinational and global companies (MNC). We study a sample of Italian SMEs, analyzing the strategy choice and the governance models adopted in China businesses. Qualitative analysis highlights both the feasibility and sustainability of governance models (criteria and components) and forms (model execution and implementation). This paper investigates the specificities of SMEs: The adaptation process and, in some cases, the innovative governance forms analyzed in our sample of cases (described in the paper) are strongly affected by the following factors: first, the size does not fit the potential or actual dimension of market (size factor); Second, increasing difficulties to access to the countries? institutional externalities and strong reliance on the efficiency of markets in order to purchase product and services which they can not internalize (make or buy factor);. Third, negative effects of size preventing to reach arrangements with local and national government (government and local shareholders factor); Fourth, being part of the supply chain of larger firms (MNC) is a common entry mode in Chinese market. Last factor refers to the lack of resources (human, market and relational capital).
    Keywords: International Management, Emerging Economies and Markets, International Marketing Strategies, Small and Medium Enterprises.
    JEL: F23 M16 M31 D22 D21
    Date: 2013–12
  18. By: Nie, Huihua; Zhao, Huainan
    Abstract: China’s coalmining fatalities were 140 times higher than the U.S. in the last decade. To shed light on this issue, we form and examinea unique panel dataset of 25,387 firm-year observations for China’s coalmining industry. We show that a firm’s leverage significantly determines its coalmining fatality: A 10% increase in the debt ratio leads, on average, to a 3% increase in the number of death tolls. It suggests that reducing leverage in coalmining firms can be an effective way to curbemployee fatalities. Our study highlightsthe importance of corporate finance in helpingsolving social and institutional problems.
    Keywords: Leverage, Debt, Capital Structure, Stakeholder Interest, Employee Death, CoalminingAccident
    JEL: G30 G32 J81
    Date: 2013–12–18
  19. By: Roubaud, François; Nordman, Christophe Jalil; Nguyen, Huu Chi
    Abstract: In spite of its predominant economic weight in developing countries, little is known about the informal sector earnings structure compared to that of the formal sector. Taking advantage of the rich VHLSS dataset in Vietnam, in particular its three wave panel data (2002, 2004, 2006), we assess the magnitude of various formal–informal earnings gaps while addressing heterogeneity at three different levels: the worker, the job (wage employment vs. self-employment) and the earnings distribution. We estimate fixed effects and quantile regressions to control for unobserved individual characteristics. Our results suggest that the informal sector earnings gap highly depends on the workers’ job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting Vietnam’s labour market specificity
    Keywords: Informal employment; earnings gap; transition matrix; panel data; Vietnam;
    JEL: J21 J23 J24 J31 O17
    Date: 2013–12
  20. By: Brown, M.; Haas, R. de; Sokolov, V. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: 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 dollarization. Our results show that regions with higher inflation experience an increase in the dollarization of household deposits and a decrease in the dollarization of (long-term) household credit. The negative impact of inflation on credit dollarization 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 dollarization;financial integration;regional inflation
    JEL: E31 E42 E44 F36 G21 P22 P24
    Date: 2013
  21. By: Natalia Kyui
    Abstract: This paper analyzes the effects of an educational system expansion on labour market outcomes, drawing upon a 15-year natural experiment in the Russian Federation. Regional increases in student intake capacities in Russian universities, a result of educational reforms, provide a plausibly exogenous variation in access to higher education. Additionally, the gradual nature of this expansion allows for estimation of heterogeneous returns to education for individuals who successfully took advantage of increasing educational opportunities. Using simultaneous equations models and a non-parametric model with essential heterogeneity, the paper identifies strong positive returns to education in terms of employment and wages. Marginal returns to higher education are estimated to decline for lower levels of individual unobserved characteristics that positively influence higher education attainment. Finally, the returns to higher education are found to decrease for those who, as a result of the reforms, increasingly pursued higher education.
    Keywords: Development economics; Labour markets
    JEL: J24 I20
    Date: 2013
  22. By: Krupkina, Anna (BOFIT); Ponomarenko , Alexey (BOFIT)
    Abstract: We estimate money demand models for certain monetary aggregates across different institutional sectors (a novelty for the Russian case). Our results comprise a collection of money demand equations that include different combinations of explanatory variables. Comparing the validity of these models on the basis of statistical criteria is virtually implausible. Therefore we suggest the simultaneous employment of a whole set of such models and illustrate the approach by presenting the distribution of monetary overhangs calculated on the basis of the estimated models.
    Keywords: monetary aggregates; money demand; households; non-financial corporations
    JEL: C22 D14 D22 E41
    Date: 2013–12–17
  23. By: Sylwester Kozak (Department of Financial System, Narodowy Bank Polski; Economic Faculty of SGGW)
    Abstract: Consolidation of the Polish banking sector was greatly associated with development and expansion of the banking sectors of EU countries and followed some consolidation patterns used by US banks. Deregulation of 1989 contributed to creation of a large group of small private banks and paved the way to privatization of the state-owned banks comprising majority of the market. In the 1990s consolidation resulted mostly from takeovers of insolvent newly created banks and had a limited impact on the banking sector. At the turn of the 1990s and the 2000s, after completion of privatization, large banks controlled by the same foreign investors merged within their capital groups and harmonized operations in one entity, frequently after changing names for parent bank names. This process impacted market concentration the most. Poland`s entrance to EU resulted in cross-border consolidation relied on taking over subsidiaries by branches of their parent banks in Poland. Developments of the EU banking sector significantly contributed to mergers and acquisitions of Polish banks. Takeovers of parent banks resulted in immediate mergers of their subsidiaries, and the post-crisis recovery process resulted in a forced sale-out their subsidiaries, creating opportunities for consolidation and market expansion of some Polish medium-sized banks.
    Date: 2013
  24. By: Stefanescu, Razvan; Dumitriu, Ramona
    Abstract: This paper explores Month-of-the-year effects in returns and in volatilities of the Bucharest Stock Exchange. Our investigation covers two periods: the first one, from January 2000 to January 2006, corresponds to the last stage of Romania’s transition to a capitalist system, while the second one, from January 2007 to August 2013, is marked by the adhesion to European Union and by the effects of the global crisis. We use GARCH models to identify the monthly seasonality in returns and in volatilities. The results indicate significant changes of this calendar anomaly from the first to the second period.
    Keywords: Monthly Seasonality, Romanian Capital Market, GARCH
    JEL: G02 G10 G14 G19
    Date: 2013–10–25
  25. By: Georgy Idrisov (Gaidar Institute for Economic Policy); Sergey Sinelnikov-Murylev (Gaidar Institute for Economic Policy)
    Abstract: This article examines the relationship between government budgetary policy and the pursuit of accelerated economic growth. The authors review the academic debate over long-term economic growth and associated short-term fluctuations and conclude that Russian budgetary intended to smooth fluctuations in economic activity are of limited effect and that there are no opportunities for increasing public expenditure in the medium and long-term. For these reasons, the structure of expenditures must be changed and budgetary institutions must be transformed with a view to creating the preconditions for economic growth in the long-term.
    Keywords: economic growth, budgetary policy, government expenditure.
    JEL: O23 O4 H5
    Date: 2013
  26. By: Nadia Chernenko
    Abstract: The paper examines long-run and short-run levels of market power in the liberalised Russian electricity market. We observe that despite potential for market power abuse, actual exercise of market power as measured by price-cost markups remained low. We attribute the result to the bid-at-cost rule implemented as a part of a special unit commitment procedure on the day-ahead market. We first look at the restructured industry and discuss the mergers and acquisitions and their impact on competition in long term. The M&A were undertaken in different market zones and thus did not seem to increase concentration (HHI remains almost unchanged) although with future zone integration competition in long run is put at risk. We then examine short-run level of market power by estimating hourly price-cost mark-ups and assessing their dynamics in 2010 and 2011, a year preceeding and following the market liberalisation respectively. Using time series models (AR models) we reject hypothesis of actual market power abuse. Further, using a Tobit regression we find that the liberalisation decreased the mark-ups by about 1.66 percetage points.
    Keywords: Russian electricity market, liberalisation, market power, concentration, price-cost mark-ups
    JEL: L11 L13 L94
    Date: 2013–07–12
  27. By: Nakamura , Yasushi (BOFIT)
    Abstract: This study uses newly available data in a quantitative examination of the relationship between Soviet special foreign trade earnings (SFEs) and changes in the money supply. During the Soviet era, SFEs were effectively taxes on imports and exports. They generated as much as 7–15% of state budget revenues in the 1970s and 1980s. The results show that changes in net foreign assets and the money supply accounted for around 10% of SFEs. The remaining 90% of SFEs involve redistribution of existing domestic funds within a constellation of government agencies and state-owned enterprises. The lack of data precluded further exploration of this redistribution.
    Keywords: Soviet; foreign trade; money; state budget; flow of funds
    JEL: E66 N14 P33 P34
    Date: 2013–12–16
  28. By: Dumitriu, Ramona; Stefanescu, Razvan
    Abstract: This paper approaches the evolution of Romania’s foreign debt in three periods of time: during Nicolae Ceausescu regime, in the transition period and the one which followed the adhesion to European Union. For all three periods the external debt management had to deal with different circumstances: the sharp increase of real interest rates from the 1980s, the lack of credibility on international financial markets from the 1990s or the recent global crisis. We conclude that political regime, the efficiency of the allocation of the borrowed funds or the international context played major roles in the external debt management.
    Keywords: External Debt, Crisis, External Deficits
    JEL: F34 G01 H63
    Date: 2013–09–24

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.