|
on Transition Economics |
| By: | Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Summary This paper analyses the speed and patterns of economic convergence in the new EU Member States of Central and Eastern Europe during transition and the first years of EU membership. After a brief discussion of measurement and data issues, the paper provides stylised facts on growth and convergence in Europe, and explores various convergence measures proposed in the growth literature. It employs several analytical approaches in order to reveal convergence speed and patterns univariate growth regressions, multivariate econometric analysis, including the testing of convergence models and running different growth regressions. The aim is to look at various aspects of convergence processes by using alternate approaches and then, by putting those together, to seek common and distinct features. We confirm that the one-off direct negative effects of the crisis on GDP growth were considerably stronger in the case of NMS. The growth patterns were interrupted and the convergence process slowed down. The paper underlines the significant, sometimes even increasing, heterogeneity of growth, pointing more generally to uneven economic convergence within the EU. This concerns not only the lasting differences between the NMS and the rest of the EU, but also significant dissimilarities between the growth patterns among individual countries within each of these subgroups. |
| Keywords: | economic growth, growth determinants, real convergence, European Union, Central and Eastern Europe |
| JEL: | C21 C23 O11 O40 O52 O57 F43 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:395&r=tra |
| By: | Peter Havlik (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Summary This paper analyses the extent and impact of structural changes on aggregate economic growth that occurred in European economies during the past two decades, focusing on the new EU Member States of Central and Eastern Europe. After presenting some stylised facts related to employment and output restructuring, we use a conventional shift and share analysis in order to evaluate the impact of broader sectoral shifts on GDP growth, focusing on the period 1995-2011. A decomposition of aggregate GDP/GVA growth using the shift and share analysis shows a distinct North-South pattern of growth and restructuring while the previous NMS-OMS divisions are becoming less relevant. In the North, manufacturing and trade have fuelled growth whereas in the South there has been much less structural change. Apart from these differences, our results partly differ from earlier findings of similar analyses for the NMS. Finally, we analyse differentiated impacts of the recent (2008-2011) crisis on structural changes in Europe and find interesting similarities between (groups of) NMS and OMS in terms of both growth patterns and responses to the crisis. |
| Keywords: | economic restructuring, growth, output, employment, crisis |
| JEL: | O11 O57 F43 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:394&r=tra |
| By: | Andor, László |
| Abstract: | The aim of this article is to evaluate the situation of the Central and Eastern European countries within the EU on the 10th anniversary of the Eastern Enlargement. Since 2004, the region has shown a trend to catch up with Western Europe in terms of both employment and economic performance. However, the financial and economic crisis which started in 2008 disrupted the previous trends of convergence for some, and greater differences emerged between individual countries' performances. The eastward enlargement has practically doubled labour mobility within the EU, and this phenomenon is likely to be sustained as long as income disparities between Member States persist. The 2004 and 2007 enlargements brought more welfare to the countries receiving mobile workers, whereas countries of origin bear the real risks of labour mobility from east to west. Today, it can be said that most of the newer Member States, irrespective of the varying speeds of convergence have developed within the EU as an 'inner periphery'. In order to make better use of the potential for economic growth in Central-Eastern Europe, investing in human capital should become a priority. The major question for the second decade of our enlarged European Union - aside from the reform of the monetary union - is whether the EU’s eastern region can continue to catch up without the internal socio-economic polarisation observed thus far, and whether the latter process can in fact be reversed. |
| Keywords: | European Union, enlargement, economic integration, labour mobility |
| JEL: | F15 |
| Date: | 2014–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2014/14&r=tra |
| By: | Ruslan Aliyev; Dana Hajkova; Ivana Kubicova |
| Abstract: | This paper uses firm-level financial data for Czech firms and tests for the role of companies’ financial structure in the transmission of monetary policy. Our results indicate that higher short-term interest rates coincide with lower shares of total debt, short-term bank loans, and long-term debt. We find that firm-specific characteristics, such as size, age, collateral, and profit, affect the way in which monetary policy changes are reflected in the external financing decisions of firms. These findings indicate the presence of informational frictions in credit markets and hence provide some empirical evidence of the existence of broad credit and relationship lending channels in the Czech Republic. |
| Keywords: | Credit channel, Czech Republic, external finance, monetary policy transmission |
| JEL: | E44 E51 E52 G21 G32 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2014/05&r=tra |
| By: | Maciej Krzak; Grzegorz Poniatowski; Katarzyna W¹sik |
| Abstract: | This paper presents forecasts for the Financial Stress Index (FSI) and the Economic Sensitivity Index (ESI) for the period 2014-2015 for six countries in the region, namely the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. It is a continuation of the endeavor to construct synthetic indices measuring financial stress and economic sensitivity for twelve Central and East European countries using the Principal Component Analysis. In order to obtain forecasts of the FSI, we estimated Vector Autoregression (VAR) models on monthly data for the period 2001-2012 separately for all the countries. Using quarterly historical values of ESI and FSI, we estimated Dynamic Panel Data Model for the complete sample of countries. Parameters of the model were later used for forecasting the ESI. Obtained results suggest that the FSI will start to rise in 2014 in the Czech Republic, Lithuania, and Estonia. For Latvia and Hungary, we observed a conversion in the trend, i.e. at the beginning of 2015, when the index should start to fall. According to our forecasts, the ESI will be rising in the next two years, except for Hungary, where we predict a continuous decrease in economic sensitivity. |
| Keywords: | financial stress, economic sensitivity, economic indicators, Central and Eastern Europe |
| JEL: | G01 E32 C43 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0474&r=tra |
| By: | Gourdon, Julien; Monjon, Stéphanie; Poncet, Sandra |
| 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 signifi cant 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 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/13784&r=tra |
| By: | Bartolini, Stefano; Sarracino, Francesco |
| Abstract: | The formidable economic growth of China in the past few decades led to outstanding improvements in virtually all objective indicators of standards of life. However, these objective records are in striking contrast with subjective ones. Between 1990 and 2007, Chinese average subjective well-being substantially declined. Using data from the World Values Survey, this paper identifies the predictors of the trend of life satisfaction in China between 1990 and 2007. Our findings suggest that subjective data capture something that objective data miss and that can explain the decrease in well-being: the increase in the importance of social comparisons and the decline of social capital. Moreover, economic growth resulted in higher well-being inequality: those in the lowest three income deciles and the middle-class experienced a significant reduction in well-being, whereas the latter increased among richer people. Differences in the erosion of social capital and in the impact of social comparisons seem to be the key to well-being differences among classes. |
| Keywords: | China; Easterlin paradox; GDP; economic growth; subjective well-being; life satisfaction; social capital; Oaxaca-Blinder decomposition; WVS |
| JEL: | I31 O12 O15 |
| Date: | 2014–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57765&r=tra |
| By: | ZhongXiang Zhang (Distinguished University Professor and Chairman, School of Economics, Fudan University, Shanghai, China) |
| Abstract: | China has gradually recognized that the conventional path of encouraging economic growth at the expense of the environment cannot be sustained. It has to be changed. This article focuses on China’s efforts towards energy conservation and environmental quality. The article discusses a variety of programs, prices, market-based instruments, and other economic and industrial policies and measures targeted for energy saving and pollution cutting, and the associated implementation and reliability issues. The article ends with some concluding remarks and recommendations. |
| Keywords: | Energy Saving; Environmental Quality, Low-Carbon Development, Power Generation, Energy Prices, Market-Based Instruments, Economic Policies, Industrial Policies, Resource Taxes, Implementation and Reliability, China |
| JEL: | H23 H71 O13 O53 P28 Q43 Q48 Q52 Q53 Q54 Q56 Q58 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2014.60&r=tra |
| By: | Bojan Bugaric |
| Abstract: | After the fall of the Berlin Wall and the collapse of communist regimes, many Central and East European countries successfully managed a ‘return to Europe’. For many observers, the ‘return to Europe’ signaled the ultimate victory of democracy and rule of law over the legacy of totalitarianism in these countries. In contrast to this optimistic view, history is not over and the rising illiberalism in Hungary as well as in some other CEE countries represents a major challenge to liberal democracy. All those who expected that a decade of ‘EU accession’ for CEE legal regimes would lead to an irreversible break with the totalitarian past were simply naive. They forgot that institutions of liberal democracy cannot be created overnight. It is not only that developing liberal democracy requires more time; it also depends on continuous support and endorsement by the people. The rise of illiberal authoritarianism in Hungary is reminiscent of the dramatic events in Europe’s most horrible century. Even if the existence of the EU makes the danger of rising illiberalism less dramatic, there are still reasons to be worried about the authoritarian illiberal attacks on liberal democracy. As the Hungarian case shows, the EU has quite limited powers to effectively prevent the slide to authoritarianism. The irony is that conditionality, so powerful before the CEE countries joined the EU, loses much of its teeth once countries become member states of the EU. Yet, the discussion of the EU instruments to contain such slides into illiberalism has also shown that they are not totally unimportant and that they can be further improved. As I tried to argue, safeguarding democracy and the rule of law in the EU requires serious improvements in the legal toolkit currently available to deal with the slide to authoritarianism in Hungary. Ultimately, EU political actors must respect the limits of the EU political constitution and not attempt to go too far in their otherwise noble aim of protecting democracy in the EU. |
| Keywords: | rule of law; Hungary; European law; transition processes |
| Date: | 2014–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:leqsxx:p0079&r=tra |
| By: | Joakim Westerlund (Deakin University); Paresh Kumar Narayan (Deakin University) |
| Abstract: | The few panel data tests for predictability of returns that exist are based on the prerequisite that both the number of time series observations, T, and the number of crosssection units, N, are large. As a result, these tests are impossible for stock markets where lengthy time series data are scarce. In response to this, the current paper develops a new test for predictability in panels where T ≥ 2 but N is large, which seems like a much more realistic assumption when using firm-level data. As an illustration, we consider the Chinese stock market, for which data is only available for 17 years but where the number firms is relatively large, 160. |
| Keywords: | Panel data; Predictive regression; Stock return predictability; China. |
| JEL: | C22 C23 G1 G12 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:ecomet:fe_2014_13&r=tra |
| By: | Chong, Terence Tai Leung; Ding, Haoyuan; Park, Sung Y |
| Abstract: | The causality between the real estate and stock markets of China remains a mystery in the literature. This paper investigates the non-linear causal relationship between real estate property and stock returns in China from the perspective of conditional quantiles. The results of the quantile causality test suggest a significant causal relationship between these two markets, especially in the tail quantile. |
| Keywords: | Property return; Stock return; Causality; Quantile regression. |
| JEL: | C22 O18 R31 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57774&r=tra |
| By: | Masahiro Kawai (Asian Development Bank Institute (ADBI)); Victor Pontines |
| Abstract: | With the rise of the People’s Republic of China (PRC) as the world’s largest trading nation (measured by trade value) and second largest economic power (measured by GDP), its economic influence over the neighboring emerging economies in East Asia has also risen. The PRC introduced some exchange rate flexibility in July 2005, and in the wake of the global financial crisis has been pursuing a policy to internationalize its currency, the renminbi (RMB). Clearly the exchange rate policy of the PRC has significant implications for exchange rate regimes in emerging East Asia. This paper examines the behavior of the RMB exchange rate and the impact of RMB movements on those of other currencies in emerging East Asia during the period 2000–2014. We apply the Frankel–Wei regression model to identify changes in the RMB exchange rate regime over time and a modified version of the model, developed by the authors in their earlier paper, to estimate the RMB weight in an emerging East Asian economy’s currency basket. We find that the US dollar continues to be the dominant anchor currency in the region, while the RMB has taken on increasing importance in the currency baskets of many East Asian economies in recent years. The paper also explores how monetary and currency cooperation—led by the PRC and Japan—can promote intra-East Asian exchange rate stability under the pressure of rising financial market openness in the PRC. |
| Keywords: | Remminbi, China, PRC, exchange rate regime, East Asia, exchange rate policy, the Frankel–Wei model, Japan, financial market openness |
| JEL: | F15 F31 F36 F41 O24 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:eab:financ:24218&r=tra |
| By: | Yin, Wei (Cardiff Business School); Matthews, Kent (Cardiff Business School) |
| Abstract: | Using a sample of 151 banks over the period 2003 to 2010, this paper estimates a model that examines the effect of switching costs in the Chinese loan market on banking profitability. In keeping with the extant empirical literature it reports a positive relationship between bank profitability and switching costs. Furthermore it reports the estimation of a systems model of switching costs and profitability. The main result is that bank size measured by total assets is has a complex relationship with switching costs. Competition between small banks creates the incentive for lock-in and increased switching costs whereas very large banks are less exercised by lock-in and switching costs. The study also finds that concentration has a negative relationship with switching costs and profitability, confirming the accepted view that the large state-owned banks are concerned with social as well as profit objectives. |
| Keywords: | Chinese banking; switching costs; bank profitability |
| JEL: | G21 C51 L14 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2014/13&r=tra |
| By: | Piotr Rosik; Marcin Stepniak; Musial-Malagó, Monika |
| Abstract: | The main goal of the paper is to present the results of the potential accessibility model, which enables simulations of changes of accessibility in Poland to be performed due to the opening of the model to the international dimension. The most important conclusions from the analysis of potential accessibility are as follows. The spatial distribution of potential accessibility depends most upon the value of the beta parameter appearing in the exponential distance decay function and upon the spatial scale (national vs. international variant of the analysis). The opening up of the potential model to the entire European continent significantly changes the image of accessibility in Poland, in particular when long trips are taken into account. For shorter trips the areas located along the German border benefit, mainly owing to the proximity of Berlin, yet the highest accessibility still remains in Warsaw and Upper Silesia (as in the national variant). For longer trips the areas with the best accessibility are Lower Silesia (south-western part of Poland), along with the areas bordering Germany and the Czech Republic. The accessibility level decreases in a north-easterly direction. Railway accessibility changes to a much smaller extent when the model is opened to the European dimension. The results of the study may find application in planning analyses, in strategies, in relation to cohesion, regional and transport policies, and also in the transboundary context. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:sit:wpaper:14_03&r=tra |