nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒08‒16
thirty papers chosen by
J. David Brown
United States Census Bureau

  1. New Evidence on the Relationship between Risk Attitudes and Self-Employment By Skriabikova, Olga; Dohmen, Thomas; Kriechel, Ben
  2. Deficiencies in the Development of an Estonian Welfare State By Klaus Schrader; Claus Friedrich Laaser; Janno Reiljan
  3. The Effects of Greenfield FDI and Cross-border M&As on Total Factor Productivity By Ayesha Ashraf; Dierk Herzer; Peter Nunnenkamp
  4. Problems Encountered during the Transition to Market Economy in Azerbaijan and Solution Attempts By Suleymanov, Elchin; Yusifov, Sabuhi
  5. Economic System and Transition Mode : A Comparative Research on Transition Economies By Yang, Liu
  6. Aging and Migration in a Transition Economy: The Case of China By Bodvarsson, Örn B.; Hou, Jack W.; Shen, Kailing
  7. Credit Constraints and Spillovers from Foreign Firms in China By Natasha Agarwal; Chris Milner; Alejandro Riaño
  8. Foreign Investments in Russia in 2013 By Ekaterina Ilyukhina
  9. Analysis of the main tax receipts to the budgetary system of the Russian Federation By Sergey Belev
  10. Russia’s Macrostructure of Production in 2013 By Olga Izryadnova
  11. Russia’s Domestic Investments in Fixed Assets in 2013 By Olga Izryadnova
  12. Russian Agriculture: the First Year within the World Trade Organization By Natalia Karlova; Vasily Uzun; Natalia Shagaida; Renata Yanbykh
  13. Russia’s Financial Markets and Financial Institutions in 2013 By Alexander Abramov
  14. Russia’s Market for Municipal and Subfederal Borrowings in 2013 By Artem Shadrin
  15. Russia’s Monetary Policy in 2013 By Alexandra Bozhechkova; Anna Kiyutsevskaya; Pavel Trunin
  16. Russian Federation: Selected Issues By International Monetary Fund. European Dept.
  17. The Living Standards of Russia's Population in 2013 By Svetlana Misikhona
  18. The Benefits and Costs of Renminbi Internationalization By Liqing Zhang; Kunyu Tao
  19. A Field Study of Chinese Migrant Workers’ Attitudes toward Risks, Strategic Uncertainty, and Competitiveness By Li Hao; Daniel Houser; Lei Mao; Marie Claire Villeval
  20. Programs, Prices and Policies Towards Energy Conservation and Environmental Quality in China By ZhongXiang Zhang
  21. Russian Federation: 2014 Article IV Consultation-Staff Report; Informational Annex; Press Release By International Monetary Fund. European Dept.
  22. Divorce, Abortion and Children's Sex Ratio: The Impact of Divorce Reform in China By Sun, Ang; Zhao, Yaohui
  23. The Renminbi and Exchange Rate Regimes in East Asia By Masahiro Kawai; Victor Pontines
  24. Ukraine: 2013 Article IV Consultation and First Post-Program Monitoring-Staff Report; Press Release; and Statement by the Executive Director for Ukraine By International Monetary Fund. European Dept.
  25. Republic of Croatia: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the Republic of Croatia By International Monetary Fund. European Dept.
  26. Exports and Employment in China, Indonesia, Japan and Korea By Kozo Kiyota
  27. Hungary: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for Hungary By International Monetary Fund. European Dept.
  28. Distributional impacts of the 2008 global food price spike in Vietnam By McKay, Andy; Tarp, Finn
  29. Republic of Latvia: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the Republic of Latvia By International Monetary Fund. European Dept.
  30. Should Parents Work Away from or Close to Home? The Effect of Temporary Parental Absence on Child Poverty and Children’s Time Use in Vietnam By Nguyen Viet Cuong; Vu Hoang Linh

  1. By: Skriabikova, Olga (Maastricht University); Dohmen, Thomas (University of Bonn); Kriechel, Ben (Economix Research & Consulting)
    Abstract: This paper analyses the impact of risk attitudes on the decision to become self-employed among individuals who grew up under the communist regime in Ukraine, which banned self-employment so that individuals could not observe what it is like to be self-employed. Since the intra-family transmission of self-employment experiences was largely shut down, the observed correlation between risk preferences and self-employment after transition is unlikely to be driven by parents transmitting self-employment experience and risk preferences to their children. Robustness checks on a sample of East Germans confirm that such a third factor explanation is implausible, thus shedding light on the causal nature of the relation between risk preferences and the decision to become self-employed.
    Keywords: self-employment, risk attitudes, intergenerational transmission of self-employment and risk attitudes, SOEP, ULMS
    JEL: J24 D81 P3
    Date: 2014–07
  2. By: Klaus Schrader; Claus Friedrich Laaser; Janno Reiljan
    Abstract: Estonia is widely regarded as a paramount example for a successful transformation of a socialist economic system to a functioning market economy. Against the backdrop of this positive image which contrasts strongly with the crisis scenarios in Southern Europe the remaining problems of Estonia are often ignored. Estonia has hardly succeeded in catching-up economically with the richer countries of the euro area. Correspondingly, the level of social security is rather limited. In this paper the authors raise the question what the causes of the sluggish catching-up process are, and which opportunities Estonian economic policy has in order to close the wealth gap
    Keywords: Catching-up, social security, growth and structural change
    JEL: F43 H55 O52
    Date: 2014–07
  3. By: Ayesha Ashraf; Dierk Herzer; Peter Nunnenkamp
    Abstract: Based on original survey data, this paper analyses and compares the role of personal traits and social capital in determining entrepreneurial intentions of students in Hong Kong and in Guangzhou (mainland China). The two cities are culturally closely related but differ strongly with respect to their formal institutions and the maturity of their business environment. Our findings suggest that the determinants of entrepreneurial intentions among students in Hong Kong very much resemble those found in Western economies, whereas the entrepreneurial mindsets of students in Guangzhou differ substantially from previous findings
    Keywords: greenfield FDI; cross-border mergers and acquisitions; total factor productivity
    JEL: F21 F23 O47
    Date: 2014–07
  4. By: Suleymanov, Elchin; Yusifov, Sabuhi
    Abstract: After re-gaining its independence on 18 October 1991, the Republic of Azerbaijan started the transformation to the market-based economy and the integration into the world economy. The country’s oil and natural gas reserves have been considered the main source for financing a range of government programs for reforms. On the one hand, these reserves had to be used effectively; on the other hand, there was a huge demand for foreign investment for extraction. To this end, Azerbaijan has signed “Contract of the Century” in 1994. Although Azerbaijan has wide oil and natural gas reserves, it has faced a number of difficulties in its transition path. This study analyzes these problems and reforms for solving them. One of the types of the problems related to the economic structure of the former Soviet Union: disruption of the economic ties between the republics resulted in a decline of production, high levels of unemployment and prices and consequently led to an economic recession in all of the republics. Another set of problems related to the lack of sufficient institutional bases to transform to the market economy. Moreover, internal conflicts between the political parties and groups for having authority as well as political chaos in the republic can be considered other serious problems during the transition period. Furthermore, Karabakh war and occupation of 20 percent of the Azerbaijani territory by the Armenian military forces had made the situation extremely complicated. Despite all of these extremes, Azerbaijan transformed to the market-based economy decidedly and even became one of the fast growing countries of the world. Even in 2013, with the GDP growth rate of 5.6 percent, Azerbaijan was a leader among growing economies. In parallel with this significant economic development, there is still a need for some socio-economic and institutional reforms in order to get a well-functioning market-based economy in Azerbaijan.
    Keywords: Azerbaijan, oil, natural gas, informal sector, energy resources, oil dependency
    JEL: P2 P21
    Date: 2014–07–14
  5. By: Yang, Liu
    Abstract: This passage mainly deals with the problem of why different transition countries have different transition mode and different economic performance. According to this research, it has been found that the economic system of the traditional socialist countries played an important role in their process of reform and transition. The socialist countries with their different economic systems had determined the economic performance, the space, as well as the environment of the transition. All of this jointly formed the initial conditions of the transition, which further determined the different transition mode of the (post) socialist countries. The success or failure of internal reform on planned economies profoundly affected their later transition. On this occasion, it was not the different countries chose the specific transition mode, but was the transition mode had already been determined in the process of institutional change. If we concentrate on the process of the whole institutional change in these (post) socialist countries, the preconceptions of “radicalism” or “gradualism” will not lead the problems to the wrong path. By making the comparative research on different transition countries, an institutional reason was provided in order to better illustrate the China’s catch-up development after her reform and opening compared with other transition economies in their process of system transition and institutional change.
    Keywords: economic system, socialist country, transition economy, institutional change, transition mode, structural reform, economic performance,
    Date: 2014–07
  6. By: Bodvarsson, Örn B. (California State University, Sacramento); Hou, Jack W. (California State University, Long Beach); Shen, Kailing (Xiamen University)
    Abstract: Post-reform China has been experiencing two major demographic changes, an extraordinary amount of internal migration and an aging population. We present a general migration model which captures the idea that older migrants have shorter durations in the destination but possibly larger general human capital to transfer. Therefore, the incentive to migrate is ambiguously related to age. We test the theoretical implication using an extended modified gravity model, nuanced to fit the case of a transition economy. We find that shifts in China's age distribution have generated significant changes in the country's migration patterns.
    Keywords: internal migration, age distribution, reforms
    JEL: J61 J11
    Date: 2014–07
  7. By: Natasha Agarwal; Chris Milner; Alejandro Riaño
    Abstract: This paper examines whether credit constraints affect Chinese ï¬rms’ absorption of productivity spillovers originating from the activity of foreign-owned ï¬rms. Using ï¬rm-level data for 2001-2005, we ï¬nd evidence of positive spillovers originating from foreign-owned ï¬rms from countries other than Hong Kong, Macau and Taiwan for non-state owned Chinese ï¬rms operating in the same industry and province. Using an index of external ï¬nance dependence to measure credit constraints, we ï¬nd that only non state-owned ï¬rms operating in industries with external ï¬nance dependence below the index median exhibit signiï¬cantly positive spillovers from the activity of foreign ï¬rms.
    Keywords: Foreign direct investment; knowledge spillovers; credit constraints; China
    Date: 2014
  8. By: Ekaterina Ilyukhina (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with foreign investments in Russia 2013
    Keywords: Russian economy, foreign invetment
    JEL: E22
    Date: 2014
  9. By: Sergey Belev (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with tax receipts of the Russia's budgetary system
    Keywords: Russian economy; state budget, budgetary system, tax receipts
    JEL: E62 H20 H50
    Date: 2014
  10. By: Olga Izryadnova (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia’s marcoeconomic structure. The author analyzes major trends and drivers, major GDP characteristics, changes in GDP structure, production development and structure by type of economic activity.
    Keywords: Russian economy; Russia’s GDP
    JEL: O11 G18 G28
    Date: 2014
  11. By: Olga Izryadnova (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with domestic capital investments in Russia in 2013.
    Keywords: Russian economy, domestic investment
    JEL: F34 G24
    Date: 2014
  12. By: Natalia Karlova (Gaidar Institute for Economic Policy); Vasily Uzun (Gaidar Institute for Economic Policy); Natalia Shagaida (Gaidar Institute for Economic Policy); Renata Yanbykh (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with the outcome of the first year of Russia’s membership in WTO.
    Keywords: Russian economy, Russian agricultural production, WTO
    Date: 2014
  13. By: Alexander Abramov (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with a wide scope of issues, starting with the post-crisis recovery of Russia's financial market. The author analyzes the market for shares issued by Russian companies, investigates dependence on the global conjuncture of prices and inflow and outflow of foreign portfolio investment. He also studies currency exchange rate, looks at the competition on the domestic share market, and analyzes preliminary results of the merger of the RTS and MICEX. The article deals with the market for ruble-denominated bonds. The author provides analysis of financial market risks and looks at the development of Russia's domestic savings system
    Keywords: Russia's financial market; portfolio investment; exchange rate; share market; financial institutions; bond market;
    JEL: J14 G15 G32 E44
    Date: 2014
  14. By: Artem Shadrin (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia’s market for municipal and sub-federal borrowings.
    Keywords: Russian economy; municipalities, municipal debt, borrowing
    JEL: H74 H76 H77
    Date: 2014
  15. By: Alexandra Bozhechkova (Gaidar Institute for Economic Policy); Anna Kiyutsevskaya (Gaidar Institute for Economic Policy); Pavel Trunin (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia's monetary policy in 2013
    Keywords: Russian economy; monetary policymoney market; inflation; balance of payments; exchange rate;
    JEL: E31 E43 E44 E51 E58 E52
    Date: 2014
  16. By: International Monetary Fund. European Dept.
    Abstract: Russia’s trend growth is volatile. The transition from a centrally planned to a market economy started in 1991, hence time series are relatively short compared to other countries. The size and depth of structural reforms during the 1990’s, the financial crisis and default in 1998, followed by the oil boom in the 2000’s, and subsequent GFC, make identification of a stable “long run†growth trend a very hard task. Hence, it is complicated to pin down an accurate estimate of potential growth and the output gap.
    Keywords: Economic growth;Gross domestic product;Economic reforms;Capacity utilization;Economic indicators;Labor market characteristics;Production functions;Production growth;Market economies;Selected Issues Papers;Russian Federation;
    Date: 2014–07–01
  17. By: Svetlana Misikhona (Gaidar Institute for Economic Policy)
    Abstract: Over 2013, the population’s real disposable income rose by 3.3%. The salary level in the budget-funded sphere was being raised at a high rate – which, however, proved to be insufficient to meet the targets set in the President of the Russian Federation's Executive Order of 7 May 2012, No. 597 'On Measures Aimed at the Implementation of Government Social Policy'. The income inequality index over the period January–September 2013 somewhat increased. The poverty level over the first 9 months of 2013 was 0.5 pp. above its level over the corresponding period of 2012, due in the main to the alterations introduced into the methodology applied for estimating the subsistence level. The impact of social transfers on the child poverty level in Russia is low by comparison with that in the European Union.
    Keywords: Russian economy; personal income; poverty; consumptio
    JEL: I31 I32
    Date: 2014
  18. By: Liqing Zhang; Kunyu Tao
    Abstract: Despite the increasing recognition that the renminbi (RMB) may eventually become a key global currency, several important questions remain to be answered. This paper analyzes the benefits and costs of the RMB becoming an international currency. The benefits include reduced exchange risk, promotion of the development of the financial market, and expansion of firms in the People’s Republic of China. The costs include general costs, which complicate monetary policy and exchange rate policy, and several transitional risks. We argue that the benefits of RMB internationalization should surpass its costs, particularly in the long run, and provide comprehensive policy choices for a sustainable process of RMB internationalization
    Keywords: RMB, renminbi internationalization, International currency, financial market, PRC, transitional risks
    JEL: F42 F31 F36
    Date: 2014–05
  19. By: Li Hao (Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR 72701, USA); Daniel Houser (George Mason University, 4400 University Drive, MSN 1B2, Fairfax, VA 22030 USA); Lei Mao (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: Using a field experiment in China, we study whether migration status is correlated with attitudes toward risk, ambiguity, and competitiveness. Our subjects include migrants and non-migrants. We find that, migrants exhibit no differences from non-migrants in risk and ambiguity preferences elicited using pairs of lotteries ; however, migrants are significantly more likely to enter competition in the presence of strategic uncertainty when they expect competitive entries from others. Our results suggest that migration may be driven more by a stronger belief in one’s ability to succeed in an uncertain and competitive environment than by risk attitudes under state uncertainty.
    Keywords: Migration, risk preferences, strategic uncertainty, ambiguity, field experiment
    JEL: C93 D03 D63 J61
    Date: 2014
  20. By: ZhongXiang Zhang (School of Economics, Fudan University)
    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 ChinaÕs 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
  21. By: International Monetary Fund. European Dept.
    Abstract: KEY ISSUES AND RECOMMENDATIONS Context. The growth slowdown continued in 2013, reflecting pre-existing structural reasons, despite accommodative policies. The fallout from geopolitical tensions relating to Ukraine is bringing the economy to a standstill. Fiscal tightening is expected this year as the non-oil deficit remains near record high. In response to mounting pressures on the ruble, the Central Bank of Russia (CBR) raised interest rates to address risks to medium- term inflation and increased intervention to support the ruble. Some structural reforms were initiated, including a partial pension reform and a new procurement law. Near-term macroeconomic policy mix. Faced with exceptional circumstances, policies should aim at preserving macroeconomic stability. A tighter monetary stance is required over the next year to attain the 2015 inflation target. The CBR should resume its policy towards greater exchange rate flexibility as soon as the current uncertainty subsidies. Modest fiscal tightening, despite the economic slowdown, appears justified as output remains close to potential. Adhering to the fiscal rule is essential to support its credibility and the needed medium-term fiscal consolidation. Medium-term policy challenges. Structural reforms remain essential to enhance Russia’s growth potential. Continued efforts at global integration are necessary to attract investment and boost potential growth. Reforms discussed in the context of the stalled OECD accession negotiations should continue, including improving labor markets and reducing tax burden, administrative barriers, and corruption. Pushing ahead with the privatization plans should enhance economic efficiency. Additional fiscal consolidation in outer years is recommended to rebuild buffers and to safeguard intergenerational equity.
    Keywords: Article IV consultation reports;Economic conditions;Monetary policy;Fiscal policy;Exchange rate policy;Economic reforms;Inflation targeting;Political economy;Financial soundness indicators;Sanctions;Financial Sector Assessment Program;Staff Reports;Press releases;Russian Federation;
    Date: 2014–07–01
  22. By: Sun, Ang (Renmin University of China); Zhao, Yaohui (Peking University)
    Abstract: This paper explores how the relative circumstances of men and women following marital dissolution affect sex-selection behavior within marriages. China's 2001 divorce reform liberalized divorce in favor of women and secured women's property rights after separation. We use this improvement in women's bargaining power in marriage for a regression discontinuity analysis of the demand for sex-selective abortions. We show that the increase in women's bargaining power reduces the propensity to have a son after a firstborn daughter by 8.9 percentage points. We also find that the effect is larger for women with higher health risks.
    Keywords: gender inequality, intra-household allocation, divorce law
    JEL: D13 J12 J13 J16
    Date: 2014–05
  23. 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
  24. By: International Monetary Fund. European Dept.
    Abstract: KEY ISSUES Context: Weak external demand and inconsistent macroeconomic policies have contributed to a prolonged economic recession. A combination of an effectively pegged exchange rate, loose fiscal policy, and sizable quasi-fiscal losses in the energy sector has pushed the fiscal and external current account deficits to very high levels. A gradual depletion of international reserves and other buffers is making the economy particularly vulnerable to external shocks. Outlook and risks: A modest economic recovery should commence in late 2013. However, a difficult business climate and impaired external competitiveness are weighing on the medium-term outlook. The current policy mix is not sustainable as it generates large imbalances and depresses growth. The risk of a costly market-forced adjustment is high. Main policy recommendations: * Allow the exchange rate to adjust to its equilibrium level and increase its flexibility. Accelerate preparations for the introduction of inflation targeting. * Strengthen the financial system’s resilience to shocks, including by developing comprehensive contingency plans to cover potential capital and liquidity shortfalls under various scenarios. * Curtail the fiscal deficit through a reform-based current expenditure consolidation and the cancelation of unaffordable tax cuts. * Reduce the quasi-fiscal losses in the energy sector by increasing the very low household gas and heating tariffs in the context of a comprehensive energy sector reform plan, while protecting the most vulnerable households. * Launch broad structural and governance reforms to improve the business climate and boost sustainable growth.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Government expenditures;Fiscal consolidation;Fiscal reforms;Energy policy;Monetary policy;Devaluation;Flexible exchange rate policy;Economic indicators;Post-program monitoring;Staff Reports;Press releases;Ukraine;
    Date: 2014–06–11
  25. By: International Monetary Fund. European Dept.
    Abstract: This 2014 Article IV Consultation highlights that Croatia remains stuck in an unusually drawn out recession. In 2013, real GDP contracted for the 5th consecutive year, and stands now at less than 90 percent of the end-2008 level. Unemployment has risen to 17 percent. Domestic demand remains depressed as corporations and households focus on reducing excessive debts accumulated in the 2000s. Exports and foreign direct investment are also feeble. The outlook is for an additional contraction in 2014 of almost 1 percent. Real domestic demand would remain feeble, reflecting both weak private sector demand and fiscal consolidation.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Fiscal consolidation;Labor market reforms;Monetary policy;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Croatia;
    Date: 2014–05–19
  26. By: Kozo Kiyota
    Abstract: This paper examines the effects of exports on employment in China, Indonesia, Japan and Korea. It draws on input-output data for the period from 1995 to 2009 to estimate the effects on each industry's employment (i.e. direct effects) and on other industries' employment through intra-industry linkages (i.e. indirect effects). There are four major findings. First, at the aggregate level, the implied employment from exports increased in China, Japan and Korea. Second, at the industry level, exports and the shares of implied employment from exports increased in machinery-related industries such as Machinery (NEC), Electrical and Optical Equipment, and Transport Equipment in China, Indonesia and Korea. Third, although more than 80% of exports in the four study countries are from manufacturing industries, the employment effects are not limited to manufacturing industries. A significant number of workers in non-manufacturing industries depend upon manufacturing exports through vertical inter-industry linkages. Non-manufacturing industries account for between 40% and 60% of the implied employment from exports. Finally, in 2009, the share of implied employment from Chinese final demand exceeded that from the US final demand in both Japan and Korea. An implication of the overall results is that even in cases where an industry is not particularly directly export-oriented, the industry may still be subject to potential effects – positive or negative – of changes in export demand.
    Keywords: trade, employment, intra-industry linkages, exports
    JEL: F16
    Date: 2014–08–01
  27. By: International Monetary Fund. European Dept.
    Abstract: KEY ISSUES Context. The economy is recovering gradually, helped by supportive macroeconomic policies, favorable external conditions, and improved market confidence. This, together with a welcome reduction in vulnerabilities, supported Hungary’s financial stability during bouts of volatility in emerging markets over the past year. Nevertheless, external and public debts remain high, thus making the economy susceptible to shocks; and the country faces subdued growth prospects. The government’s strategy to address these challenges included sizeable fiscal consolidation and unconventional measures that increased the state’s role in the economy and shifted the burden of adjustment to specific sectors. Policy recommendations. Policies should aim at building buffers and comprehensively addressing obstacles to strong, sustained growth. ? Fiscal policy. Adopt an ambitious and growth-friendly fiscal adjustment strategy to reduce the public debt ratio sustainably and build policy space. The strategy should rely on durable expenditure consolidation, enhanced composition of spending, and a gradual elimination of distortionary taxes. ? Monetary policy. Stop monetary policy easing and stand ready to raise the policy rate if market conditions warrant. A clear communication strategy will play a crucial role in guiding market expectations. Maintain adequate reserve coverage to support financial stability. ? Financial sector. Help restore financial intermediation by improving the banks’ operating environment, including steps to facilitate faster resolution of nonperforming loans and to reduce the tax burden on banks. The Funding for Growth Scheme should remain limited, targeted, and time-bound, with fiscal costs clearly recognized. ? Structural reforms. Advance structural reforms aimed at removing labor market bottlenecks, enhancing the business climate, and boosting productivity in the services sectors. Limited government interference in the economy and increased policy predictability could strengthen confidence, and foster private sector investment and employment creation.
    Keywords: Article IV consultation reports;Fiscal policy;Public debt;Fiscal consolidation;Fiscal reforms;Public enterprises;Monetary policy;Banking sector;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Hungary;
    Date: 2014–06–06
  28. By: McKay, Andy; Tarp, Finn
    Abstract: Agriculture and food cultivation production remains a key sector in the Vietnamese economy in terms of productive activities, income generation, and national export earnings. Higher world market prices should therefore in principle have a beneficial impac
    Keywords: food prices, rice, Vietnam, transmission
    Date: 2014
  29. By: International Monetary Fund. European Dept.
    Abstract: Latvia entered the euro area in January 2014 with the fastest rate of growth in Europe. The 2014 Article IV Consultation highlights that a slowdown in investment and exports was partly compensated by robust consumption demand, supported by rising real wages, bringing GDP growth in 2013 to 4.1 percent. Strong job creation reduced the unemployment rate to 11.3 percent by end-2013, close to its structural level. Consumer price inflation fell to an average of about zero in 2013, mainly owing to weakening energy prices. The 2013 general government deficit outturn of 1.0 percent of GDP was below the target of 1.4 percent.
    Keywords: Article IV consultation reports;Economic recovery;Economic growth;Fiscal policy;Labor markets;Fiscal reforms;Banking sector;Bank credit;Bank supervision;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Latvia;
    Date: 2014–05–08
  30. By: Nguyen Viet Cuong; Vu Hoang Linh
    Abstract: Working away from home might bring higher earnings than working near home. However, the absence of parents due to work can have unexpected effects on children. This paper examines the effects of the temporary absence of parents on the well-being of children aged 5–8 years old in Vietnam, using indicators of household poverty, per capita consumption expenditure, and child time allocation. The paper relies on OLS and fixed-effects regression and panel data from the Young Lives surveys in 2007 and 2009. It finds a positive correlation between parental absence and per capita expenditure. Parental absence tends to increase per capita food expenditure instead of per capita nonfood expenditure. Regarding the way children spend their time, there are no statistically significant effects of parental absence.
    Keywords: parental migration, child poverty, remittances, impact evaluation, Vietnam.
    JEL: O15 R23 I32
    Date: 2014–07–24

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