nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒08‒20
23 papers chosen by
J. David Brown
United States Census Bureau

  2. Key trends in the development of the budgetary system of the Russian Federation in 2013 By Arseny Mamedov
  3. Russia’s Foreign Trade in 2013 By Nadezhda Volovik
  4. Analysis of the main parameters of the federal budget of the RF in 2009-2013 and for the period 2014-2016 By Arseny Mamedov
  5. Russia’s Banking Sector in 2013 By Mikhail Khromov
  6. Russia’s Inter-budgetary Relations and Sub-national Finances in 2013 By Arseny Mamedov; Andrey Alaev; Igor Arlashkin; Alexander Deryugin; Vladimir Nazarov
  7. Birth Control In Russia: Overcoming The State System Resistance By Victoria I. Sakevich; Boris P. Denisov
  8. The People’s Republic of China’s Financial Markets : Are They Deep and Liquid Enough for Renminbi Internationalization? By Prince Christian Cruz; Yuning Gao; Lei Lei Song
  9. Russia’s Oil and Gas Sector in 2013 By Yuri Bobylev
  10. Paths to a Reserve Currency : Internationalization of the Renminbi and Its Implications By Yiping Huang; Daili Wang; Gang Fan
  11. Russian Industrial Enterprises in 2013 By Sergey Tsukhlo
  12. Public Sector and Privatisation in Russia in 2013 By Alexander Radygin; Georgy Malginov
  13. An Inquiry into the Determinants of Graduate Entrepreneurship in Hong Kong and Guangzhou (Mainland China) By Frank Bickenbach; Dirk Christian Dohse; Wan-Hsin Liu
  14. Consumption Of Counterfeit Alcohol In Contemporary Russia: The Role Of Cultural And Structural Factors By Zoya Kotelnikova
  15. Republic of Poland: 2014 Article IV Consultation - Staff Report; Press Release; and Statement by the Executive Director for the Republic of Poland By International Monetary Fund. European Dept.
  16. The Rise of the “Redback†and the People’s Republic of China’s Capital Account Liberalization : An Empirical Analysis of the Determinants of Invoicing Currencies By Hiro Ito; Menzie Chinn
  17. "Политиките на пазарот на труд и сиромаштијата во Македонија, 2008 - 2013" By Bashevska, Marija
  18. The Announcement Effects of Regional Tourism Industrial Policy:The Case of the Hainan International Tourism Island Policy in China By Jianjun Sun; Su Zhang; Nobuyoshi Yamori
  19. Republic of Azerbaijan: 2014 Article IV Consultation-Staff Report; Press Release By International Monetary Fund. Middle East and Central Asia Dept.
  20. Changes in Public and Private Sector Pay Structures in Two Emerging Market Economies during the Crisis By Jelena Nikolic; Ivica Rubil; Iva Tomic
  21. Kyrgyz Republic: Sixth Review Under the Three-Year Arrangement Under the Extended Credit Facility; Staff Report; and Press Release By International Monetary Fund. Middle East and Central Asia Dept.
  22. Republic of Lithuania: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the Republic of Lithuania By International Monetary Fund. European Dept.
  23. Psychological Incentives, Financial Incentives, and Risk Attitudes in Tournaments: An Artefactual Field Experiment By C. Bram Cadsby; Jim Engle-Warnick; Tony Fang; Fei Song

  1. By: Popov, Vladimir
    Abstract: Why even after the dramatic increase in inequality in the 1990s and after the emergence and enrichment of “oligarchs”, the alternative (leftist, social democratic) economic policies that could have improved material and social wellbeing of the majority of the population is not supported by this majority? It is argued that in immature democracies (without efficient restrictions for the participation of private capital in politics) mass media and electoral campaigns are controlled by the rich, so there is vicious circle: market reforms and private property create the class of the wealthy (“oligarchs”) that are not only interested in these reforms, but also have power to maintain their political and eonomic might through mass media and democratic elections. The return of public opinion to the “norm” so that it reflects interests of the majority is possible only if mass media and political process are separated from private capital and private financing. =================================================== Почему после резкого увеличения неравенства в 90-е годы прошлого века, после появления и стремительного обогащения «олигархов», альтернативная (левая, социал-демократическая) экономическая политика, которая могла бы улучшить материальное и социальное положение значительного большинства населения не поддерживается этим большинством? В статье доказывается, что в условиях незрелой демократии (без эффективных барьеров для участия частного капитала в политике) средства массовой информации и избирательные кампании контролируются владельцами крупных состояний, так что возникает замкнутый круг: рыночные рефоры и частная собственность рождают класс богатых («олигархов»), которые не только заинтересованы в этих реформах, но и обладают рычагами поддержания своего экономического и политического влияния через СМИ и демократические выборы. Возвращение общественных предпочтений к «норме» – к стереотипам, отражающим интересы большинства, возможно лишь при отделении СМИ и политического процесса в целом от частного капитала и частного финансирования.
    Keywords: Public opinion, transition from socialism to capitalism, inequalities, elections, mass media
    JEL: H00 P26 P3
    Date: 2014–08–08
  2. By: Arseny Mamedov (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia's budgetary system
    Keywords: Russian economy; state budget, budgetary system
    JEL: E62 H20 H50
    Date: 2014
  3. By: Nadezhda Volovik (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with the broad specter of Russia's foreign trade issues. The authors analyze major indicators, geographical profile regulation and the terms of Russia's foreign trade.
    Keywords: Russian economy; foreign trade; Russia's foreign trade regulations;
    JEL: F10 F13 F19
    Date: 2014
  4. By: Arseny Mamedov (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia's federal budget
    Keywords: Russian economy; state budget
    JEL: E62 H20 H50 H61 H70
    Date: 2014
  5. By: Mikhail Khromov (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia's banking sector in 2013. The author focuses on relationship between banks and corporate customers, foreign transactions in the banking sector, banking regulation
    Keywords: Russian economy; banking sector; foreign transactions; banking regulation;
    JEL: E41 E51 E58 E21 E24
    Date: 2014
  6. By: Arseny Mamedov (Gaidar Institute for Economic Policy); Andrey Alaev (Gaidar Institute for Economic Policy); Igor Arlashkin (Gaidar Institute for Economic Policy); Alexander Deryugin (Gaidar Institute for Economic Policy); Vladimir Nazarov (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia's inter-budgetary relations and sub-national finances
    Keywords: Russian economy; fiscal relations; subnational finances; federal budget; road funds; subnational budgets
    JEL: H5
    Date: 2014
  7. By: Victoria I. Sakevich (National Research University Higher School of Economics); Boris P. Denisov (Moscow State University)
    Abstract: This paper considers the changes in the major proximate determinants of fertility in Russia within the framework of demographic transition theory and Bongaarts approach to fertility analysis. After World War II Russian fertility became a fully controlled process. The complex interplay of abortion and contraception during the Soviet period resulted in a very high abortion level. The Russian government has almost never supported and promoted family planning as an alternative to abortion. However couples' preferences for few offspring appeared more powerful than the will of authorities. Current trends show that despite the lack of governmental support society itself is evolving towards more humanistic and effective birth control. Estimates based on recent surveys' data confirm the validity of official statistics showing there is a decline in the number of abortions
    Keywords: birth control, abortion, contraception, reproductive health, RLMS-HSE, Russia.
    JEL: I18 J13
    Date: 2014
  8. By: Prince Christian Cruz (Asian Development Bank Institute (ADBI)); Yuning Gao; Lei Lei Song
    Abstract: Domestic financial market development is a key determinant of a currency’s international status, and financial depth and market liquidity are two essential attributes for an international currency. This paper discusses the status of the People’s Republic of China’s (PRC) financial markets and their depth and liquidity conditions. The paper also compares the PRC’s financial markets with those in developed and emerging economies, contemporaneously and historically. The paper finds that the PRC’s financial markets are not as deep and liquid as those in developed economies, and are much less so than those with international currencies. To support the internationalization of the renminbi, the PRC needs to remove several major obstacles to deepen its financial markets and improve their liquidity conditions.
    Keywords: financial market, financial development, financial depth, market liquidity, Currency Internationalization
    JEL: E4 E5
    Date: 2014–04
  9. By: Yuri Bobylev (Gaidar Institute for Economic Policy)
    Abstract: Oil and gas comprise the main sector of the Russian economy that continues to play a key role in shaping the state budget revenues and the balance of trade. In 2013, against the background of continuing high global prices for oil and gas, petroleum production in Russia reached its highest level since 1990, and the export of oil and petroleum products reached a historic high. However, there was then a slowdown in petroleum production and a worsening of conditions for its production. In 2013, in order to create appropriate conditions for the further development of the oil and gas sector legislative solutions were adopted involving tax incentives for the development of resources where oil recovery was difficult, the differentiation of gas production taxation and the application of a special tax regime for deposits being developed on the continental shelf, together with a liberalisation of the export of liquefied natural gas (LNG)?
    Keywords: Russian economy; oil world prices; oil production structure; oil and gas exports; tax regulation of the oil and gas sector;
    JEL: L71 L72
    Date: 2014
  10. By: Yiping Huang (Asian Development Bank Institute (ADBI)); Daili Wang; Gang Fan
    Abstract: In this paper we try to address the question of what could help make the renminbi a reserve currency. In recent years, the authorities in the People’s Republic of China (PRC) have made efforts to internationalize its currency through a two-track strategy : promotion of the use of the renminbi in the settlement of cross-border trade and investment, and liberalization of the capital account. We find that if we use only the quantitative measures of the economy, the predicted share of the renminbi in global reserves could reach 12%. However, if institutional and market variables are included, the predicted share comes down to around 2%, which is a more realistic prediction. By reviewing experiences of other reserve currencies, we propose a three-factor approach for the PRC authorities to promote the international role of the renminbi : (i) increasing the opportunities of using renminbi in the international community, which requires relatively rapid growth of the PRC economy and continuous liberalization of trade and investment; (ii) improving the ease of using renminbi, which requires depth, sophistication, and liquidity of financial markets; and (iii) strengthening confidence of using renminbi, which requires more transparent monetary policy making, a more independent legal system, and some political reforms. In general, we believe that the renminbi’s international role should increase in the coming years, but it will take a relatively long period before it plays the role of a global reserve currency.
    Keywords: liberalization of the capital account, renminbi internationalization, global reserve currency, three-factor approach, transparent monetary policy
    JEL: F30 F33 F36 F42
    Date: 2014–05
  11. By: Sergey Tsukhlo (Gaidar Institute for Economic Policy)
    Abstract: The section is prepared using data of monthly business surveys conducted by the Gaidar Institute for Economic Policy (IEP) among managers of industrial enterprises since September 1992. The surveys are based on the European harmonized methodology and encompass the entire territory of the Russian Federation. The size of the panel is about 1000 enterprises that employ over 13% of the total number of employed in industry. The panel is biased towards large enterprises in each of the selected branches. The rate of response to questionnaires ranges from 70% to 75%.
    Keywords: Russian industry performance; lending to industry; labor problems; anti-crisis government measures;
    JEL: C53 E37 L21 L52
    Date: 2014
  12. By: Alexander Radygin (Gaidar Institute for Economic Policy); Georgy Malginov (Gaidar Institute for Economic Policy)
    Abstract: The core events which took place last year and which are related to the issues under consideration are the approval of a new three year privatisation programme for 2014–2016, including corporate control of market transactions associated with Rosneft and Gazprom, as well as the restructuring of the space industry, which is similar to that performed in relation to the aerospace and ship building industries.
    Keywords: Russian economy; privatization; public sector; public sector in the economy; structural policy
    JEL: H82 K11 L32 L33
    Date: 2014
  13. By: Frank Bickenbach; Dirk Christian Dohse; Wan-Hsin Liu
    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: entrepreneurial intention, self-employment preference, personal traits, social capital, China, Hong Kong
    JEL: M13 O15
    Date: 2014–07
  14. By: Zoya Kotelnikova (National Research University Higher School of Economics)
    Abstract: The majority of Russians believe that counterfeit alcohol may cause death. Nevertheless, alcohol is a common target of counterfeiting in contemporary Russia as are branded clothes, accessories and audio products. This paper aims to reveal whether counterfeit alcohol consumers are distinctive in terms of structure and culture. It investigates the prevalence and structure of counterfeit alcohol purchasing and consumption; attitudes and beliefs about counterfeit alcohol; and predictors of counterfeit alcohol consumption. The research is based on the Russia Longitudinal Monitoring Survey (RLMS-HSE), an annual nationwide panel survey designed to monitor the health and economic welfare of households and individuals in the Russian Federation. The research findings demonstrate that cultural and structural factors contribute a lot to the consumption of counterfeit alcohol. Counterfeit alcohol consumption is associated with hazardous alcohol drinkers and homemade alcohol drinkers who tend to ignore trademarks and the taste of alcoholic beverages. Blur counterfeiting is a characteristic of hazardous alcohol drinkers and vodka-lovers who are inclined to be price sensitive and to ignore brands. Social networks play a significant role in consumption of counterfeit alcohol. Counterfeit alcohol consumers are highly likely to represent lower classes.
    Keywords: counterfeiting; blur counterfeiting; illicit alcohol; unrecorded consumption; compulsory consumption; emerging markets.
    JEL: Z
    Date: 2014
  15. By: International Monetary Fund. European Dept.
    Abstract: The economy is steadily recovering from a substantial slowdown in 2012–13, helped by improving conditions in main trading partners and a rebound in job creation and household consumption. Financial markets and the zloty have stayed relatively stable amidst renewed global financial market turmoil. Going forward, growth is expected to continue to strengthen, though external risks remain on the downside.
    Keywords: Article IV consultation reports;Economic recovery;Economic growth;Fiscal consolidation;Pensions;Fiscal reforms;Monetary policy;Banking sector;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Poland;
    Date: 2014–06–26
  16. By: Hiro Ito (Asian Development Bank Institute (ADBI)); Menzie Chinn
    Abstract: We investigate the determinants of currency choice for trade invoicing in a cross-country context while focusing on the link between capital account liberalization and its impact on the use of the renminbi (RMB). We find that while countries with more developed financial markets tend to invoice less in the US dollar, countries with more open capital accounts tend to invoice in either the euro or their home currency. These results indicate that financial development and financial openness are among the keys to challenging the US dollar dominance in general, and to internationalizing the RMB for the People’s Republic of China (PRC). Our model also suggests that the share of the RMB in export invoicing should have been higher than the actually observed share of less than 10%. The underperformance of RMB export invoicing can be attributed to the inertia in the choice of currency for trade invoicing; once a currency is used for trade invoicing or settlements, it becomes difficult for traders to switch from one currency to another. This same phenomenon was also observed in the cases of the Japanese yen and the euro at their inceptions as international currencies. Our model predicts that the share of RMB invoicing for the PRC’s exports will rise to above 25% in 2015 and above 30% in 2018, whether or not the PRC implements drastic financial liberalization. As the near future path of RMB use is also expected to be inertial, these forecasts are probably at the upper end of the actual path of RMB export invoicing.
    Keywords: Capital account liberalization, renminbi (RMB), PRC, export invoicing currency
    JEL: F32 F41
    Date: 2014–04
  17. By: Bashevska, Marija
    Abstract: The positive economic performance of Macedonian economy before the onset of the global economic crisis did not spilled over its effects on the improvements of job creation, inequality and poverty. In 2007, Macedonia experienced 6.1% real GDP growth, thus reaching the pre-transition level of GDP growth, but at the same time, the unemployment rate and the relative poverty rate were one of the highest in Europe, 34.9% and 29.4%, respectively. The global economic crisis worsened the economic developments in the country, further increasing the poverty rates (30.4% relative poverty rate in 2012) and inequality (Gini index in 2011 is 44.2), while the rate of unemployment remained above 30%. In the policy responses to counteract the impact of the economic crisis, Macedonian government introduced different set of measures mainly focused on the support of the private sector. Parts of the measures were announced as direct improvement of the labour market and the protection of vulnerable groups. Most of the recent studies assessing the impact of the Government policies during the crisis are mainly focused on the capacities in sustaining the macroeconomic stability of the economy, while only few addressed the effects and impact of the policies in improving the employment, social protection and reduction of poverty. This analysis puts focus on the Government employment policies and poverty-reduction programs introduced in the period from 2007 until 2013. The aim of the research is to explore the effectiveness of the government programs through the assessment of their design and implementation, the level of their usage by the targeted social groups and the government consistency in their enforcement. This research also explore the ability of the programs to produce medium to long-term results and thus give real positive impact on the unemployment and poverty in the country. The research is based on the analysis of the government documents, official statistics data and secondary data.
    Keywords: labour market, employment policies, poverty, Macedonia
    JEL: I32 I38 J4 J48
    Date: 2014–04–16
  18. By: Jianjun Sun (College of Tourism Hainan University,China); Su Zhang (School of Economics, Central University of Finance and Economics, China); Nobuyoshi Yamori (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: China's Hainan Island has a rich diversity of attractions and opportunities for nature-based tourism, outdoor recreation, and sporting activities. Moreover, Hainan Island has a natural and socioeconomic base and environment, hosting the implementation of a tourism industrial policy. On December 31, 2009, China's State Council announced to the world the national policy of the establishment of Hainan International Tourism Island. Hence, China's Hainan Island is well suited for investigating the announcement effects of regional tourism industrial policy on the market values of firms in a tourist destination region. Based on a sample of 19 listed firms in Hainan, or Hainan concept firms, consisting of various industries, we explore the announcement effects of the national policy of Hainan International Tourism Island using an event-study approach. Two statistical methods, mean adjusted and market-model adjusted, are employed to calculate the daily abnormal returns and the cumulative abnormal returns. The results with and without considering the clustering issue show that, first, the averages of (standardized) accumulative abnormal returns are not different from zero prior to the announcement; second, the (standardized) accumulative abnormal returns of Hainan concept stock continuously go up over trading days after the announcement of a regional tourism industrial policy. As a robustness check, we also investigate the effect of the policy on Guangdong concept listed firms. We find no significant impacts of the policy announcement on the Guangdong concept listed firms. In sum, these findings indicate that regional tourism industrial policy is valuable not only to the tourism industry in the destination region but also to other industries in that region.
    Keywords: Announcement effects, Tourism, Regional industrial policy, Tourism industrial identity, Hainan
    JEL: O25 R11
    Date: 2014–07
  19. By: International Monetary Fund. Middle East and Central Asia Dept.
    Abstract: KEY ISSUES Context Economic activity accelerated in 2013 as oil output stabilized while non-oil growth continued at close to 10 percent. Inflation remained low and the external position strengthened further. President Aliyev won a third term in the October election. Favorable economic prospects and large buffers provide an opportune environment to speed up reforms. Focus of consultation and recommendations In an environment of high oil prices but with a relatively short oil production horizon, the overarching challenge for Azerbaijan remains bringing fiscal policy to a sustainable position while accelerating structural reforms to foster broad-based private sector-led growth. Staff recommends: • Pursuing a growth-friendly fiscal consolidation strategy by cutting investment projects with small growth returns and advancing decisive reforms to improve the business environment and thereby create opportunities for private investment; • Maintaining monetary policy in a neutral stance while improving the transmission mechanism and taking steps to enable greater exchange rate flexibility in the medium term; and • Fostering private sector–led growth in the non-oil sector by ensuring financial stability, promoting the deepening of financial markets, strengthening governance, and removing barriers to competition and trade. Previous Consultation During the 2013 Article IV Consultation, Directors encouraged the authorities to: (i) undertake a moderate front-loaded fiscal consolidation based on a rules-based fiscal framework; (ii) discontinue the Central Bank’s direct lending to the real economy; (iii) strengthen the supervisory framework and adopt prudential measures to contain the growth of consumer credit; and (iv) advance ambitious structural reforms to reduce barriers to trade and competition. Since then, the authorities have signaled a change in the course of economic policies by approving a budget for 2014 that contains government spending, unwinding part of the central bank’s directed lending to the real sector, and adopting measures to rein in consumer credit. The pace of reforms aimed at strengthening the fiscal framework and improving governance and the business climate remains slow.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Nonoil sector;Private sector;Fiscal consolidation;Fiscal reforms;Banking sector;Monetary policy;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Azerbaijan;
    Date: 2014–06–11
  20. By: Jelena Nikolic (LSEE Research on South Eastern Europe, European Institute, LSE); Ivica Rubil (The Institute of Economics, Zagreb); Iva Tomic (The Institute of Economics, Zagreb)
    Abstract: This paper estimates public-private sector wage differentials in two emerging market economies - Croatia and Serbia - between 2008 and 2011 in order to understand changes in the gap resulting from austerity measures undertaken by each sector. The paper focuses on counterfactual decompositions of the wage gap at the mean and at selected quantiles along the wage distribution, performed using an extension to the Oaxaca-Blinder method based on Recentered Influence Function (RIF) regressions and reweighting. The main results indicate that there was a wage premium in the public sector for both countries and in both years. Although the total wage gap decreased in Serbia during the crisis, the wage structure effect, or the returns to workers’ characteristics, increased in both countries. The paper shows that the private sector in both countries adjusted wages relative to the public sector more at the bottom than at the top of the wage distribution, which led to an increase in the relative public sector wage compression, especially in Croatia. While in Croatia the wage gaps stemming from differences between the public and private sector in the returns to characteristics for similar workers were within the range usually estimated for EU countries, these gaps were considerably higher in the case of Serbia.
    Keywords: public-private wage gap, recession, unconditional quantile regression, recentered influence function, decomposition, Croatia, Serbia
    JEL: H3 J31 J33 J45 P2 P3
    Date: 2014–07
  21. By: International Monetary Fund. Middle East and Central Asia Dept.
    Abstract: EXECUTIVE SUMMARY Political context. On April 3, 2014, parliament approved a new government, led by Mr. Otorbaev, the new Prime Minister. The ministers of economy and finances kept their positions. Moreover, on May 7, 2014, a new chairperson was appointed for the National Bank of the Kyrgyz Republic (NBKR). No major changes in economic policies are expected. In February 2014, parliament approved a new deal with Centerra, ending a two-year dispute over the Kumtor gold mine. Background. In the first quarter, growth moderated to 5.6 percent (year-on-year) after the 2013 growth spike at 10.5 percent related to an unexpectedly high level of gold production. In the same period, inflation picked up slightly, owing to depreciation of the som in response to pressures from the depreciation of the Russian ruble and the devaluation of the Kazakh tenge. The NBKR intervened heavily to mitigate these pressures, but has recently rebuilt reserves to ensure a more comfortable level of over three months of imports. The current account is expected to deteriorate this year because of higher imports related to large public investments and FDI-financed infrastructure projects. Fiscal performance in 2013 was better than expected, with a deficit of 4 percent of GDP, but revenue headwinds call for a cautious budget in 2014. The medium-term outlook remains broadly favorable, provided prudent macroeconomic policies continue and are supported with structural reforms, including tax policy and administration reforms, public financial management (PFM) reforms, and implementation of FSAP recommendations, in particular the Banking Code. Program. The program is broadly on track, with all end-December 2013 quantitative performance criteria and all but one indicative targets (IT) met for end-December 2013. Although three March 2014 ITs were missed, since then there has been progress in rebuilding reserves and enhancing tax collections. The two structural benchmarks (SBs) for end-December were met, and the SB on signing the contract with one of the big four audit companies to audit the Debt Resolution Agency (DEBRA) is expected to be completed with delay. The remaining SB on introducing the Treasury Single Account (TSA) on a pilot basis was missed. Overall, the Kyrgyz authorities are completing a broadly successful three-year ECF arrangement, although further reforms will be needed to preserve and deepen the accomplishments. Despite occasional domestic political turmoil, the authorities have regained and maintained macroeconomic stability, consolidated the fiscal position, implemented a new monetary framework, and embarked on a comprehensive banking sector reform. The authorities have not yet expressed their intentions regarding a successor program.
    Keywords: Extended Credit Facility;Economic growth;Fiscal policy;Fiscal consolidation;Fiscal reforms;Monetary policy;Economic indicators;Staff Reports;Letters of Intent;Press releases;Kyrgyz Republic;
    Date: 2014–07–11
  22. By: International Monetary Fund. European Dept.
    Abstract: This 2014 Article IV Consultation highlights that Lithuania’s economy has entered a broadly favorable trajectory of healthy and balanced growth, but income convergence with Western Europe has a long way to go. With inflation at historical lows and well-advanced repair of public finances damaged by the 2008/09 crisis, meeting the entry criteria seems on track. Financial stability has improved further in 2013, with the capital adequacy ratio exceeding 17 percent and steady progress in reducing nonperforming loans. The main challenge is now resuscitating the sluggish private sector credit growth, which could undermine investment and the recovery if it continued for much longer.
    Keywords: Article IV consultation reports;Fiscal policy;Fiscal consolidation;Unemployment;Labor market policy;Fiscal reforms;Banking sector;Economic indicators;Staff Reports;Press releases;Lithuania;
    Date: 2014–05–08
  23. By: C. Bram Cadsby (Department of Economics and Finance, University of Guelph); Jim Engle-Warnick (McGill University); Tony Fang (Monash University); Fei Song (Ryerson University)
    Abstract: Tournaments are widely used to assign bonuses and determine promotions. Tournament-based compensation is motivating because of the link between relative performance and financial rewards. However, performing relatively well (poorly) may also yield psychological benefits (pain). This may also stimulate effort. Through a real-effort artefactual field experiment with factory workers in China, we examine how both psychological and financial incentives, together with attitudes toward risk, may influence motivation and performance. For comparison purposes, Chinese undergraduate students also participated in a comparable laboratory experiment. We provided performance-ranking information both privately and publicly, with and without rank based financial incentives. Our results show that performance-ranking information had a significant motivational effect on average performance for students, but not for workers. Adding financial incentives based on rank provided little evidence of further improvements. Much of the difference between workers and students can be explained by differences in attitudes toward risk. Indeed, for both groups the size of both financial and psychological incentive effects is inversely related to individual levels of risk aversion, and is positive and significant both for workers and for students who are sufficiently risk-tolerant. Lastly, performance did not deteriorate when incentives were removed, suggesting that they worked through the encouragement of learning.
    Keywords: incentives, social comparison, performance feedback, peer pressure, tournament, risk aversion, artefactual field experiment
    JEL: C91
    Date: 2014

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