nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒03‒08
fifteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Does current demographic policy in Russia impact on fertility of different educational groups? By Irina Kalabikhina; Alla Tyndik
  2. Ailing Mothers, Healthy Daughters? Contagion in the Central European Banking Sector By Tomas Fiala; Tomas Havranek
  3. Impact of minimum wage on income distribution and poverty in Russia By Kapelyuk Sergey
  4. Incomplete VAT rebates to exporters : how do they affect China's export performance? By Julien Gourdon; Stéphanie Monjon; Sandra Poncet
  5. The Geographic Pattern of China's Growth and Convergence within Industry By Françoise Lemoine; Grégoire Mayo; Sandra Poncet; Deniz Ünal
  6. Origin of FDI and domestic productivity spillovers: does European FDI have a 'productivity advantage' in the ENP countries? By Vassilis Monastiriotis
  7. Grundzüge der wirtschaftlichen Entwicklung und ihre ordnungspolitischen Leitbilder in der VR China seit 1949 By Taube, Markus
  8. South Caucasus–People's Republic of China Bilateral Free Trade Agreements: Why It Matters By Hovhanesian, Hasmik; Manasyan, Heghine
  9. An Empirical Examination of Trade Relations between New Zealand and China in the Context of a Free Trade Agreement By Sayeeda Bano
  10. Firm-level Innovation Activity, Employee Turnover and HRM Practices – Evidence from Chinese Firms By Tor Eriksson; Zhihua Qin; Wenjing Wang
  11. Community supported agriculture: Is it driven by economy or solidarity? By Bîrhală, Brînduşa; Möllers, Judith
  12. Keynesian macroeconomics without the LM curve: IS-MP-IA model and Taylor rule applied to some CESEE economies By Josheski, Dushko
  13. Subjective Well-being and Social Evaluation in a Poor Country By John Knight; Ramani Gunatilak
  14. Estimating the Output Gap to Support the Management of Interest Rates in Vietnam By Giang Huong Nguyen
  15. Alphabetical Order Effects in School Admissions By Stepan Jurajda; Daniel Munich

  1. By: Irina Kalabikhina (Department of Economics, Lomonosov Moscow State University); Alla Tyndik (Institute for Social Analysis and Prediction RANEPA)
    Abstract: This article is devoted to investigation current demographic policy in Russia impact on fertility of different educational groups. Authors use qualitative and quantitative data. Quantitative data for this analysis come from the Gender and Generation Survey in Russia (2004, 2007, 2011 waves). Semi-structured interview method (Moscow, 2010) was used to assess the cognitive and emotional aspects of fertility behaviour (to give birth the next child). One of the important results of this study that Russian population could not be satisfated with current demographic policy. Moreover, higher educated people have stronger demand for family-work measures to reach desired family size. People with higher education estimate influence of existing measures lower as a whole, but influence of potential measures (directed on combination of career and parenthood) the estimated higher.
    Keywords: Demographic policy, fertility, educational groups, Russia
    JEL: J13 J16 J18
    Date: 2014–02
  2. By: Tomas Fiala; Tomas Havranek
    Abstract: Foreign-dominated banking sectors, such as those prevalent in Central and Eastern Europe, are susceptible to two major sources of systemic risk: (i) linkages between local banks and (ii) linkages between a foreign mother bank and its local subsidiary. Using a nonparametric method based on extreme value theory, which accounts for fat-tail shocks, we analyze inter- dependencies in downward risk in the banking sector of the Czech Republic, Hungary, Poland, and Slovakia during 1994-2013. In contrast to the pre- sumptions of the current regulatory policy of these countries, we find that the risk of contagion from a foreign mother bank to its local subsidiary is substantially smaller than the risk between two local banks.
    Keywords: systemic risk, extreme value theory, financial stability, Central Eastern Europe, banking, parent-subsidiary relationship
    JEL: F23 F36 G01 G21
    Date: 2014–01–01
  3. By: Kapelyuk Sergey
    Abstract: To the best of our knowledge, the influence of the minimum wage on poverty in Russia has never before been investigated. Russian data provide a unique opportunity for studying the poverty effects related to the minimum wage due to the significant increases of the minimum wage in recent years, almost complete coverage, and a high representation of full-time workers in poor households. This paper examines the effect of the minimum wage in Russia on the incidence of poverty and transitions into and out of poverty using data from the Russia Longitudinal Monitoring Survey of Higher School of Economics (RLMS-HSE) for the years 2006 to 2011. The results indicate slight poverty-reducing effects of the minimum wage in Russia.
    JEL: J31 J38
    Date: 2014–02–26
  4. By: Julien Gourdon; Stéphanie Monjon; Sandra Poncet
    Abstract: During the last decade, the Chinese government has frequently changed the value added tax (VAT) refund levels offered to exporters. Indeed, China's VAT system is not neutral, in particular because the exporters may not receive complete refund of the domestic VAT paid on their inputs. This paper investigates how changes in the VAT rebates affect export performance in China. Our empirical analysis relies on export volume data at the HS6 product level over the 2003-12 period. To address potential endogeneity, we exploit an eligibility rule that disqualifies processing trade with supplied materials from the rebates. We find that the adjustments to the VAT rebates have significant repercussions on the exported volume: a one percentage point increase in the VAT rebate can lead to a 7% increase in export volumes. This magnitude allows to better understand the strong resistance of China's exports amid the global recession.
    Keywords: VAT system;Export tax;Export performance;China
    JEL: F10 F14 O14
    Date: 2014–02
  5. By: Françoise Lemoine; Grégoire Mayo; Sandra Poncet; Deniz Ünal
    Abstract: Since the mid-2000s, the center of gravity of China's economic growth has shifted from the coastline to the inland and the gap in GDP per capita between the two areas has narrowed. This macroeconomic catch-up reflects, with a time lag, the convergence process which has been at work in manufacturing industry since the end of the 1990s and suggests that China is becoming increasingly integrated in terms of technological level. This pattern is in line with a process whereby the inland catches up the labor productivity level of the coast thanks to the transfer of technology and capital from these most advanced regions.
    Keywords: China;Regional inequality;Manufacturing industry;Convergence;Growth
    JEL: O14 O25 O53 R12
    Date: 2014–02
  6. By: Vassilis Monastiriotis
    Abstract: The process of approximation between the EU and its ‘eastern neighbourhood’ has created conditions for deepening economic interactions and market integration, giving to the EU – and to EU businesses– an elevated role in the process of economic modernisation and transition in the neighbourhood countries. This raises the question as to whether European business activity in these countries produces indeed measureable economic advantages both in absolute and in relative terms (e.g., compared to business activity from other parts of the world). Similarly, a question arises as to whether European business activity reduces or amplifies spatial imbalances within the partner countries. This paper examines these issues for the case of capital flows (foreign ownership) and the related productivity spillovers, using firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS)covering 28 transition countries over the period 2002-2009. We estimate the direct and intraindustry productivity effects of foreign ownership and examine how these differ across regional blocks (CEE, SEE and ENP), according to the origin of the foreign investor (EU versus non-EU), across geographical scales (pure industry versus regional spillovers) and for different types of locations (capital-city regions versus the rest). Our results suggest that FDI of EU origin plays a distinctive role in the countries concerned helping raise domestic productivity significantly more than investments from outside the EU. However, this process appears to operate in a spatially selective manner, thus enhancing regional disparities and spatial imbalances. This, then, assigns a particular responsibility for EU policy, as it continues to promote economic integration (and FDI flows) to its eastern neighbourhood, to devise interventions that will help redress these problems.
    JEL: N0
    Date: 2014–01
  7. By: Taube, Markus
    Abstract: Der Beitrag zeichnet die zentralen Entwicklungs- und Wachstumslinien der chinesischen Volkswirtschaft seit Gründung der VR China nach und stellt die in verschiedenen Perioden verfolgten ordnungspolitisch-institutionellen Leitbilder dar. Die Darstellung geht explizit auf die entsprechenden Entwicklungen im Rahmen der chinesischen Zentralverwaltungswirtschaft, der Wirtschaftswunderjahre und der aktuellen Herausforderungen an eine Fortführung des Wachstumsprozesses ein. -- This paper discusses the major patterns of economic development and growth in the Chinese economy since the foundation of the PR China. In this context it highlights the institutional foundations and economic policy guidelines adhered to during various development periods. The paper deals with respective developments during China's central planning period, the economic miracle era as well as contemporary challenges to continued growth and development.
    Keywords: Wirtschaftliche Entwicklung,Wachstum,Institutionen,Wirtschaftssysteme,Ordnungspolitik,economic development,growth, institutions,economic systems,economic/regulatory policy
    Date: 2014
  8. By: Hovhanesian, Hasmik (Yerevan State University); Manasyan, Heghine (CRRC-Armenia)
    Abstract: Regional integration could be turned into a basic factor for economic growth if combined with a strong economic-development-oriented governmental strategy. The effects of regional integration can be maximized for countries stressing open trade as opposed to creating trade-diverting conditions, which requires drafting different kinds of agreements, particularly free trade agreements (FTAs). The impact of regional integration is significant, especially for small open economies—such as Armenia, Azerbaijan, and Georgia, which together comprise the South Caucasus—entering into an FTA with a large economy like the People’s Republic of China (PRC). At the same time, FTAs have mutual economic and geopolitical benefits for all participant countries. Moreover, taking into consideration the interests of countries like Turkey, Iran, and the Russian Federation in the economic and geopolitical potential of this region, the PRC may have to re-think its role in the South Caucasus. This paper assesses the PRC’s FTA strategy, the potential for regional integration in the South Caucasus, and the likely impacts of an FTA on the economies of Armenia, Azerbaijan, Georgia, and the PRC by using several specific trade indicators and a partial equilibrium modeling approach (SMART Model).
    Keywords: Free trade agreements; regionalization; South Caucasian countries; PRC; SMART model analysis
    JEL: F13 F15 F17 F43 F53
    Date: 2014–01–01
  9. By: Sayeeda Bano (University of Waikato)
    Abstract: This study examines the bilateral trade relations between New Zealand and China between 1980 and 2012. Specifically, it examines, first, the strength of the trade relationship using export and import intensity indices. Secondly, it identifies the degree of trade reciprocity using a 'trade reciprocity index'. Thirdly, it estimates the magnitude of intra-industry trade using the Grubel-Lloyd and Aquino indices. Fourthly, it analyses the results from these indices to consider how trade patterns, directions and trade relations have changed between 1980 and 2012. Finally, it assesses the future prospects of trade and economic cooperation between New Zealand and China in the context of the their 2008 free trade agreement. This is the first - and possibly the only study of its kind - since the signing of the trade agreement.
    Keywords: international trade; New Zealand-China trade; intra-industry trade; economic integration; trade reciprocity; trade intensity indices; FTA; CER
    JEL: F10 F02 F13 F14 F15
    Date: 2014–02–28
  10. By: Tor Eriksson (Department of Economics and Business, Aarhus University, Denmark); Zhihua Qin (Renmin University, China,); Wenjing Wang (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: This paper examines the relationship between employee turnover, HRM practices and innovation in Chinese firms in five high technology sectors. We estimate hurdle negative binomial models for count data on survey data allowing for analyses of the extensive as well as intensive margins of firms’ innovation activities. Innovation is measured both by the number of ongoing projects and new commercialized products. The results show that higher R&D employee turnover is associated with a higher probability of being innovative, but decreases the intensity of innovation activities in innovating firms. Innovating firms are more likely to have adopted high performance HRM practices, and the impact of employee turnover varies with the number of HRM practices implemented by the firm.
    Keywords: Innovation, HRM Practices, Employee Turnover
    JEL: L22 M50 O31
    Date: 2014–02–25
  11. By: Bîrhală, Brînduşa; Möllers, Judith
    Abstract: Searching for possible viable economic pathways for small-scale farms in Eastern Europe, this study is concerned with Community Supported Agriculture (CSA). We are mainly interested in the costs and benefits for both sides, the farmers and the consumers, when entering into a direct, trust-based market relationship in the form of CSA. The study is theoretically embedded in the concept of solidarity economy. The analysis is based on three cases of farmers pioneering the CSA concept in Romania by offering organic vegetable to their local contracted consumers in the Western part of the country. All three CSA groups were initiated by a local NGO. Our empirical results shed light on CSA partnerships in Romania. With regard to consumers we find that they are drawn from a specific group of urban dwellers with higher education and income, and a particular interest in health and nutrition. Consumers show a high level of trust to their partner farmers: this is the basis for a functioning economic relationship. Solidarity is a value that is aspired by the initiating NGO. It is existing as one of the values sought by consumers when taking part in CSA. More important than solidarity is, however, the consumers' wish for organic-quality fresh products, which are not available elsewhere. On the producers´ side, the need for a stable market with fair prices is the main motivation to get involved in CSA. Thus, both farmers and consumer compensate for market failures through the CSA partnership. -- Diese Arbeit beschäftigt sich mit dem Phänomen der Solidarischen Landwirtschaft, welche einen möglichen Ausweg aus der schwierigen Situation für Kleinbetriebe in Osteuropa bieten könnte. Der Schwerpunkt des Interesses liegt auf den Kosten und dem Nutzen für die Akteure - Landwirte und ihre Konsumenten - wenn diese eine auf Vertrauen basierte Marktbeziehung in Form der Solidarischen Landwirtschaft eingehen. Die Studie ist theoretisch in das Konzept der Solidarischen Ökonomie eingebettet. Die Analyse basiert auf drei Fallstudien rumänischer Kleinbetriebe, die als Pioniere das Konzept der Solidarischen Landwirtschaft in Rumänien anwenden, indem sie Gemüse ökologisch anbauen, und an ihre urbanen Vertragspartner liefern. In allen drei Fällen war eine lokale Nichtregierungsorganisation Initiator. Unsere empirischen Ergebnisse geben Einblick in rumänischen Partnerschaften der Solidarischen Landwirtschaft. Die Konsumenten rekrutieren sich aus einer spezifischen Gruppe urbaner Verbraucher. Diese zeichnet sich durch relativ hohe Bildung und Einkommen sowie ihr ausgeprägtes Interesse an Gesundheits- und Ernährungsfragen aus. Die Verbraucher zeigen einen hohen Grad an Vertrauen in ihre landwirtschaftlichen Vertragspartner, was wohl als einer der Schlüsselfaktoren für das Funktionieren der Partnerschaft gesehen werden kann. Solidarität stand im Mittelpunkt des Interesses der initiierenden Organisation. In der praktischen Umsetzung zeigt sich, dass Solidarität in der Tat einer der Werte ist, den die teilnehm enden Konsumenten realisieren wollen. Gewichtiger ist allerdings der Wunsch nach frischen Nahrungsmitteln aus ökologischer Landwirtschaft, die sonst kaum auf dem Markt zu erhalten sind. Die Motivation der Produzenten liegt vornehmlich in dem Wunsch begründet, einen stabilen Absatzmarkt mit fairen Preisen zu betreten. Beide Seiten kompensieren also durch die Partnerschaft bestehendes Marktversagen.
    Keywords: community supported agriculture,CSA,small farmers,organic farming,Romania,solidarity economy,rural development,solidarische Landwirtschaft,kleinbäuerliche Familienbetriebe,ökologische Landwirtschaft,Rumänien,Solidarische Ökonomie,ländliche Entwicklung
    JEL: Q13 P13 O18 P32
    Date: 2014
  12. By: Josheski, Dushko
    Abstract: Applying IS-MP-IA model and the Taylor rule, this study finds that for selected CESEE economies (Albania, Bosnia and Herzegovina, Macedonia and Serbia), lower expected inflation rate, real exchange rate appreciation, a lower world interest rate which is calculated like a federal funds rate minus inflation in US, and more world output would help to increase output of the selected economies in the sample. A lower ratio of government consumption spending to GDP would also increase the output of the selected economies. Hence, fiscal prudence is needed, and the conventional approach of real depreciation to stimulate exports and raise real output does not apply to the selected CESEE economies. When private household consumption is in the model the coefficient on government spending to nominal GDP is insignificant implying that Ricardian equivalence does hold for the selected countries. These results are robust because they are controlled in the period of four decades from 1969 to 2013. Study uses 4 decadal dummies that control for each decade. --
    Keywords: IS-MP-IA,Taylor Rule
    JEL: E52 F41
    Date: 2014
  13. By: John Knight; Ramani Gunatilak
    Abstract: The empirical literature on the economics of happiness has grown rapidly, and much has been learned about the determinants of subjective well-being. Less attention has been paid to its normative implications. Taking China as a case study, this paper first summarises empirical results on the determinants of subjective well-being and then considers whether that evidence can be used for social evaluation. Different criteria for social evaluation give very different answers: on the one hand, real income per capita and the human development index have risen rapidly in recent years but, on the other hand, subjective well-being appears not to have risen at all. Ultimately a value judgement is required: arguments are presented for and against including subjective well-being, either alone or with other criteria, in the social welfare function.
    Keywords: Capabilities; China; Happiness; Human development; Social evaluation; Subjective well-being
    JEL: D03 D63 O15
    Date: 2014
  14. By: Giang Huong Nguyen (The State Bank of Vietnam)
    Abstract: In this paper, I apply three methods to estimate the output gap for Vietnam to support the conduct of monetary policy of the State Bank: the Hodrick-Prescott Filter, the production function approach and Bayesian estimation. I then compare the results obtained from these approaches and discuss their advantages and disadvantages to choose the optimal method for the estimation of the output gap for the State Bank of Vietnam. For the Bayesian approach, my paper closedly relies on the paper of Tim Willems (2011) with some modifications to fit the situation of Vietnam. The output gap estimated by Bayesian method appears to be the most consistent with the economic developments of Vietnam.
    Date: 2014–02–25
  15. By: Stepan Jurajda; Daniel Munich
    Abstract: If school admission committees use alphabetically sorted lists of applicants in their evaluations, one's position in the alphabet according to last name initial may be important in determining access to selective schools. In Jurajda and Münich (2010) we provided evidence consistent with this hypothesis based on graduation exams taken in grade 13 in the Czech Republic: 'Z' students in selective schools had higher exam scores than 'A'.students. In this paper, we use the TIMSS&PIRLS test scores of 4th graders and the PISA test scores of 8th and 9th graders in the Czech Republic to provide evidence on how the alphabetical sorting outcome we uncovered earlier arises during early tracking into selective schools. Using the PISA data, we also provide similar evidence for Denmark.
    Keywords: admissions; alphabetical order; order effects; early tracking;
    JEL: H49 J78 I29
    Date: 2014–02

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