nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒09‒05
25 papers chosen by
J. David Brown
United States Census Bureau

  1. Strategic Options for Urbanization in the People's Republic of China: Key Findings By Asian Development Bank (ADB); ; ;
  2. The Domestic Segment of Global Supply Chains in China under State Capitalism By Tang, Heiwai; Wang, Fei; Wang, Zhi
  3. Possible Economic Effects of CU—EU Free Trade Agreement By Bekkhan Chokaev; Aleksandr Knobel
  4. Market Competition in Transition Economies: A Literature Review By Klaus S. Friesenbichler; Michael Böheim; Daphne Channa Laster
  5. Gender and occupational wage gaps in Romania: from planned equality to market inequality? By Daniela Andrén; Thomas Andrén
  6. Designing an Emissions Trading Scheme for China – An Up-to-date Climate Policy Assessment By Michael Hübler; Sebastian Voigt; Andreas Löschel
  7. Demographic Changes in China's Three Major Megalopolises (Japanese) By MENG Jianjun
  8. What common factors are driving inflation in CEE countries? By Aleksandra Halka; Grzegorz Szafrański
  9. Can Google searches help nowcast and forecast unemployment rates in the Visegrad Group countries? By Jaroslav Pavlicek; Ladislav Kristoufek
  10. Minorities in Rural China: Poorer but Inherently Happier? By John Knight; Li Shi; Yuan Chang
  11. Learning to Export from Neighbors By Fernandes, Ana; Tang, Heiwai
  12. Social Economy, Its Perception and Possibilities of Its Development in Conditions of the Slovak Republic By Lenka PCOLINSKÁ
  13. Modeling of household economic security By Maria Piotrowska
  14. A Research of the trades of multi-country-section carbon emissions and energy uses under the drive of the process-technology progress By Zheng Wang; GU Gaoxiang
  15. Spillover Effects in the Customs Union of Russia, Kazakhstan and Belarus By Yulia Vymyatnina
  16. Vietnamese Inter – regional labor migration: system approach to the modeling 1989, 1999, 2009. By Tadashi Kikuchi
  17. The Trans Pacific Partnership for Vietnam: a good thing for Vietnam? By Jean Louis Brillet
  18. Knowledge-Based Economy in the Competitiveness Equation. The Case of the Republic of Serbia By Tosic, Natasa; Iordan-Constantinescu, Nicolae
  19. Macroeconomic Performance, Individual Characteristics and Preference for Democracy By Maryia Akulava
  20. The career intention of informal workers in China: voluntary or forced? By Hong Zuo; Jiro Nemoto
  21. Estimating Dynamic Equilibrium Level of Economic Growth By Lal Almas; Nazim U. Hajiyev
  22. A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior By Leonardo Bursztyn; Davide Cantoni
  23. An empirical analysis on the parallel foreign exchange market: The case of Vietnam By Duy Hung Bui
  24. A Long-run Macroeconomic Model of the Slovak Republic (Long-term sustainability of the pension system) By Tomáš Domonkos; Štefan Domonkos; Miroslava Jánošová; Filip Ostrihoň
  25. Food demand patters in the new EU member states: The case of Slovakia By Marian Rizov; Anrej Cupak; Jan Pokrivcak

  1. By: Asian Development Bank (ADB); (East Asia Department, ADB); ;
    Abstract: Over the past 30 years, rapid urbanization and economic growth have transformed the cities of the People’s Republic of China (PRC). But this unprecedented urbanization has highlighted challenges that demand significant changes to basic urban management and planning policies. This report is based on a 2011–2012 policy study for the PRC’s forthcoming national urbanization plan that will set out urban development policies and guidelines over the coming decade. It examines the PRC’s urbanization challenges and suggests actions for improving the urban environment through changes in the design, financing, administration, and social integration of cities.
    Keywords: china, urban development, people’s republic of china, prc, urbanization plan, urban housing, municipal finances, urban society, urban administration, urban population, migrant workers, urban planning, urban strategy, city, cities, megacities, conurbation
    Date: 2013–09
  2. By: Tang, Heiwai (Johns Hopkins University and CESIfo); Wang, Fei (University of International Business and Economics); Wang, Zhi (United States International Trade Commission)
    Abstract: This paper proposes methods to incorporate firm heterogeneity in the standard IO-table based approach to portray the domestic segment of global value chains in a country. Using Chinese firm census data for both manufacturing and service sectors, along with constrained optimization techniques, we split the conventional IO table into sub-accounts, which are used to estimate direct and indirect domestic value added in exports of different types of firm. We find that in China, both state-owned enterprises (SOEs) and small and medium domestic private enterprises (SMEs) have much higher shares of indirect exports and ratios of value-added exports to gross exports (VAX), compared to foreign-invested and large domestic private firms. Based on IO tables for both 2007 and 2010, we find increasing VAX ratios for all firm types, particularly for SOEs. By extending the method proposed by Antràs et al. (2012), we find that SOEs are consistently more upstream while SMEs are consistently more downstream within industries. These findings suggest that SOEs still play an important role in shaping China’s exports.
    Keywords: China; input-output; trade
    JEL: C67 C82 F1
    Date: 2014–06–01
  3. By: Bekkhan Chokaev; Aleksandr Knobel
    Abstract: This paper investigates the possible economic effects of free trade agreement, implying a mutual zero import tariffs in the trade between the Customs Union (Russia, Belarus, Kazakhstan) and the European Union. Analysis of the effects is made using CGE model.We estimate the impact of an FTA on the economies, both at the level of the entire economy and at the industry level. The sensitivity analysis is made. It is shown that, in both relative and absolute terms, Russia potentially benefits from the agreement more than the EU. The cumulative gain of the CU is strictly positive, but the benefits and costs are unevenly distributed among its members.
    Keywords: Russia, General equilibrium modeling, Trade issues
    Date: 2014–07–03
  4. By: Klaus S. Friesenbichler (WIFO); Michael Böheim (WIFO); Daphne Channa Laster
    Abstract: This paper provides a survey of the effects of market competition in the transition economies of Eastern Europe and Central Asia. The pivotal element of the transition was inter-firm competition, which replaced economic planning as the method to identify demand. Pro-competitive policies that facilitated the transition are discussed, including international trade, attracting foreign direct investment and firm entry. Research topics with respect to competition changed as the transition advanced. The focus shifted from churn and macroeconomic shock-management in the initial phases toward firm entry, privatisation and restructuring of incumbents. In the later phases of transition, differentials in aggregate economic performance became obvious, pointing at institutional differences and their interplay with transitions. These are equally reflected by the degree of competition of the business environment. Also the methods changed with the evolution of the research agenda. Early case studies were displaced by large-scale, cross-country econometric studies as survey data became increasingly available.
    Keywords: competition, transition, survey, Eastern Europe and Central Asia
    Date: 2014–08–18
  5. By: Daniela Andrén; Thomas Andrén
    Abstract: In Romania, the communist regime promoted an official policy of gender equality for more than 40 years, providing equal access to education and employment, and restricting pay differentiation based on gender. After its fall in December 1989, the promotion of equal opportunities and treatment for women and men did not constitute a priority for any of the governments of the 1990s. This paper analyzes both gender and occupational wage gaps before and during the first years of transition to a market economy, and finds that the communist institutions did succeed in eliminating the gender wage differences in female- and male-dominated occupations, but not in gender-integrated occupations. During both regimes, wage differences were in general much higher among workers of the same gender working in different occupations than between women and men working in the same occupational group, and women experienced a larger variation of occupational wage differentials than men.
    Keywords: Romania, female- and male-dominated occupations, gender wage gap, occupational wage gap.
    JEL: J24 J31 J71 J78 P26 P27
    Date: 2014–08–25
  6. By: Michael Hübler; Sebastian Voigt; Andreas Löschel
    Abstract: We assess recent Chinese climate policy proposals in a multi-region, multi-sector computable general equilibrium model with a Chinese carbon emissions trading scheme (ETS). We conduct a quantitative assessment of the Chinese emissions trading scheme (ETS) with the help of PACE (Policy Analysis based on Computable Equilibrium). PACE is a multi-sector, multi-region computable general equilibrium (CGE) model of global production, consumption, trade and energy use which is calibrated for the year 2005 proceeding in five-year time steps until the year 2030. The model is recursive dynamic, this means, it is solved for a sequence of global market equilibria. The equilibria are connected via investments and other exogenous drivers of economic growth. The benchmark data for the year 2004/2005 are taken from the GTAP 7 data base (Global Trade Analysis Project; Badri and Walmsley, 2008). Data for the dynamic business-as-usual (BAU) calibration until 2030 are taken from IEO (2008/2010). IEO (2008/2010) provides detailed regional data on fuel-specific primary energy consumption and carbon emissions. Pricing of carbon emissions with the help of an ETS results in macroeconomic effects (welfare, GDP, net exports etc.) and sectoral effects (output reductions). When the emissions intensity per GDP in 2020 is required to be 45% lower than in 2005, the model simulations indicate that the climate policy- induced welfare loss in 2020, measured as the level of GDP and welfare in 2020 under climate policy relative to their level under business-as-usual (BAU) in the same year, is about 1%. The Chinese welfare loss in 2020 slightly increases in the Chinese rate of economic growth in 2020. When keeping the emissions target fixed at the 2020 level after 2020 in absolute terms, the welfare loss will reach about 2% in 2030. If China’s annual economic growth rate is 0.5 percentage points higher (lower), the climate policy-induced welfare loss in 2030 will rise (decline) by about 0.5 percentage points. When imposing a laxer 40% intensity target, the losses will decline to 1.7% in 2030. Full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation, but the results differ significantly at the sector level. Linking the Chinese to the European ETS and restricting the transfer volume to one third of the EU’s reduction effort creates at best a small benefit for China, yet with smaller sectoral output reductions than auctioning. These results highlight the importance of designing the Chinese ETS wisely.
    Keywords: People's Republic of China, General equilibrium modeling, Impact and scenario analysis
    Date: 2014–07–03
  7. By: MENG Jianjun
    Abstract: The economic development and urbanization of China in recent years have resulted in the formation of a few large-scale megalopolises, mostly in the eastern coastal area. The three major megalopolises are the Bohai Sea rim area around Beijing, the Yangtze River Delta area around Shanghai, and the Pearl River Delta area around Guangdong Province. I define the three major megalopolises as having been formed by 156 urban areas that are administratively categorized as districts or larger units as a result of rapid infrastructure development in recent years. Per the 2010 census, the average population in these urban areas is five million. This paper analyzes the causes and characteristics of demographic changes in the three major megalopolises, using 2000 and 2010 census data of the 156 urban areas. First, I define and categorize the three megalopolises according to their regional characteristics. Next, through a quantitative analysis of the census data, I examine the similarities and differences of the demographic changes in the three megalopolises. Then, the causes of the demographic changes are analyzed. Finally, the impact of demographic changes on Chinese economic society and related policy issues are discussed.
    Date: 2014–08
  8. By: Aleksandra Halka; Grzegorz Szafrański
    Abstract: The aim of the research is to find common driving forces in the inflation development across 10 emerging economies from the Central and Eastern Europe (CEE). As opposite to the previous research on this subject we are going to differentiate not only between regional and country specific common factors. We also believe that there are some common price movements across the particular sectors in the CEE countries. The common trends may stem from the fact that all the countries in the region have undergone the period of structural (market) reforms, foreign trade liberalization (especially with EU countries), productivity improvements and hyperinflation on the unprecedented scale. Afterwards, a common source of price determination across the region was the economic stabilization towards meeting Economic and Monetary Union (EMU) criteria of nominal and fiscal convergence. In the last decades we also observe a growing synchronization of the business cycle among these economies. We decompose product-level HICP indices into common aggregate (regional in terms of CEE countries), country, and sector specific components to study the co-movements in inflation rates across group of CEE countries in a systematic manner. To this end we apply a hierarchical factor model with an overlapping country-sector structure and estimate it with an iterative method of Beck, Hubrich and Marcellino (2011). Our findings are also closely related to the hypotheses on differences in the degree of volatility and persistence at the aggregate and disaggregate level (Bils and Klenov, 2004, Klenow and Kryvtsov, 2008, Boivin, Giannoni, and Mihov, 2009, Maćkowiak and Wiederholt, 2009).The research finds a considerable degree of price co-movements across countries and sec-tors. The more open economies the more vulnerable they are to external shocks coming from changes in commodity prices, exchange rates and other parts of financial global market. We find that all common factors explain about 36.5% of variance in product-level monthly price changes. Among them the most important are two aggregate (regional) factors that contribute to about half of the total variance explained (17%), less important are country (6.5%) and sector-specific (3%) components. The contribution of CEE regional component varies considerably between different countries and sectors. It is the most prominent determinant of inflation in Romania (explaining 55% of price variability), and the least important for Estonia (10%), the Czech Republic (8%) and Slovenia (6%). For the other countries the fraction of explained variance is between 13% (Poland) and 18% (Bul-garia). The regional CEE component explains from 11% of variance in food and non-durable sector to 24% in services on average being the most important price determinant in each of them. The first regional common factor may be associated with the disinflationary process explaining lowering of the inflation expectations that occurred in CEE countries, whereas the second regional factor reveals correlations with the global factors, especially commodity prices and euro area price development. As the sector specific factors are concerned, according to the expectations, prices of food and other non-durable goods (which mostly consist of energy goods) strongly depend on the commodity markets. Prices of services revel the highest correlation with the unemployment in the analyzed countries mirroring the impact of the business cycles on the prices in services., though it is not a strong one. Surprisingly there is hardly no influence of the changes in the global or domestic economic activity on the prices of durable and semi-durable goods. Probably it is due to the fact, these prices of these components are influenced by the globalization process, which leads to the price decreases regardless the phase of the business cycle.
    Keywords: Central and Eastern Europe (CEE) countries, Macroeconometric modeling, Monetary issues
    Date: 2014–07–03
  9. By: Jaroslav Pavlicek; Ladislav Kristoufek
    Abstract: Online activity of the Internet users has been repeatedly shown to provide a rich information set for various research fields. We focus on the job-related searches on Google and their possible usefulness in the region of the Visegrad Group -- the Czech Republic, Hungary, Poland and Slovakia. Even for rather small economies, the online searches of their inhabitants can be successfully utilized for macroeconomic predictions. Specifically, we study the unemployment rates and their interconnection to the job-related searches. We show that the Google searches strongly enhance both nowcasting and forecasting models of the unemployment rates.
    Date: 2014–08
  10. By: John Knight; Li Shi; Yuan Chang
    Abstract: This is a pioneering study of the determinants of the subjective well-being of ethnic minority people in rural China, using a specially designed sample survey relating to 2011. The underlying hypothesis is that the lifestyle and attitudes of ethnic minorities contribute to their happiness. Five related hypotheses are tested. The minority group is equally happy as the Han group. However, whereas minorities’ much lower income reduces their happiness, this disadvantage is neutralised by their greater inherent capacity for happiness - much of it derived from personal relationships but not, it seems, from lesser materialism or concentrated living together. There is evidence of considerable heterogeneity in happiness across various ethnic minorities. Suggestions are made for further research, including analysis of the (positive) effects of lifestyle against the (negative) effects of perceived discrimination. There is a deeper question with which the paper connects: if subjective well-being is accepted as a criterion for social evaluation, does economic development produce cultural change for the better or for the worse?
    Keywords: China; Culture; Ethnic minorities; Happiness function; Lifestyle; Subjective well-being
    JEL: I31 J15 Z10
    Date: 2014
  11. By: Fernandes, Ana (University of Exeter); Tang, Heiwai (Johns Hopkins University and CESIfo)
    Abstract: This paper studies how learning from neighboring firms affects new exporters’ performance. We develop a statistical decision model in which a firm updates its prior belief about demand in a foreign market based on several factors, including the number of neighbors currently selling there, the level and heterogeneity of their export sales, and the firm’s own prior knowledge about the market. A positive signal about demand inferred from neighbors’ export performance raises the firm’s probability of entry and initial sales in the market but, conditional on survival, lowers its post-entry growth. These learning effects are stronger when there are more neighbors to learn from or when the firm is less familiar with the market. We find supporting evidence for the main predictions of the model from transaction-level data for all Chinese exporters from 2000 to 2006. Our findings are robust to controlling for firms’ supply shocks, countries’ demand shocks, and city-country fixed effects.
    Keywords: export; sales
    JEL: F1 F2
    Date: 2014–06–01
  12. By: Lenka PCOLINSKÁ (University of Economics in Bratislava, The Faculty of business economics in Košice, Slovak Republic)
    Abstract: The given article reflects the situation of Slovak social economy. It takes into account and presents the evolution of social economy and its present perception in Slovakia. Within the Central European countries, Slovakia was the first country to define social economy in terms of legislative measures. However, it is important to analyze its operation in terms of legislative definition which determines its possibilities and limits of development and, consequently, the possibilities and limits of development of the national economy as a whole - to which social economy can significantly help.
    Keywords: social economy, social enterprise, social entrepreneurship, legislative, employment
    JEL: A13 J64 K31 N84 Z13
    Date: 2014–10
  13. By: Maria Piotrowska
    Abstract: The global economic and financial crisis (2008-2009) showed that growing sectoral imbalances (for example, too much housing investment) and financial risks (for instance,excessively leveraged financial institutions, excess household indebtedness, excess maturity mismatches in the banking system, recourse to off-balance-sheet products entailing large tail risks) ultimately led to the severe recession. The monetary policy rate was not a proper tool to deal with the kind of imbalances. More-targeted macroprudential tools should be used for that task. These tools can be classified into three categories: (1) tools influenced lenders’ behavior, such as cyclical capital requirements, leverage ratios, or dynamic provisioning; (2) tools focusing on borrowers’ behavior, such as ceilings on loan- to-value ratios (LTVs) or on debt-to-income ratios (DTIs); and (3) capital flow management tools (Blanchard, Dell'Ariccia, Mauro, 2013, p. 18). Focusing on loan-to-value (LTV) and debt-to-income (DTI) ratios, limits on LTV and DTI are aimed to prevent excess household indebtedness. Growing vulnerabilities on borrower side could lead to bankruptcies and foreclosures and finally to macroeconomic busts. However, implementation of LTV and DTI may be linked with significant costs. When the limits are not appropriate, their use may create expansion of credit by nonbanks, less-regulated financial institutions or stimulate political opposition, ( for example, young households may strongly object to a decrease in the maximum LTV). Introducing macroprudential tools focusing on borrowers’ behavior requires information on economic security of households and its sensibility to different dimensions. In the paper economic security of households is defined as the ability to achieve income necessary for covering household needs at its suitable level and to create financial reserves to be at disposal in case of unfavorable accidence (sickness, job loss, family breakdown). The purpose of the paper is to build a structural equation model (SEM) in which economic security of households is a main endogenous concept. The detailed objectives: • to verify hypotheses on relationships between concepts used in the model; • to evaluate the relevance of different economic security dimensions (identified both as latent variables and measured variables); • to measure economic security (an index of household economic security); • to define criterion for considering the family secure or insecure; • to simulate the impact of changes in economic security dimensions (including household indebtedness) on the economic security index. Economic security of households is described by: 3) its latent dimensions, like: income stability; propensity to save; propensity to borrow; loan burden; financial survival (abilities to survive in a critical financial situation); propensity to insure; wealth (real estate); heritage (parents’ wealth, educational level of parents); burden of chronic illness; and 4) its measured variables, like: income level; level of savings; level of debts. The latent dimensions of economic security are estimated in the model from the 54 scale items in the questionnaire, each of which is predicted to “tap into'” the latent variables. The paper uses the data from the questionnaire survey carried out across households in Poland in 2013 by the professional polling agency. The whole sample (N=1082 households) is broken into two sub-samples to represent “young” households (N=399) and “older” households (N=683). Exploratory factor analysis and confirmatory factor analysis are applied to estimate the SEM. The model is estimated separately for “young” households (a head in age between 18 and 39) and “older” ones ( a head in age of 40 and more) to identify differences and similarities in dimensions of economic security for these two groups. Findings should be useful directly for macroprudential policy as well as indirectly for monetary policy.
    Keywords: Poland, Monetary issues, Finance
    Date: 2014–07–03
  14. By: Zheng Wang; GU Gaoxiang
    Abstract: the process-technology progress which is caused by the improvement of the productive technologies can reduce the demands of the intermediate inputs in the productive process, and then reduce the energy demands and the carbon emissions. Thus, to improve the level of process technologies is an important way for the global carbon emission abatement. In this paper, based on Jin (2012)’s model, a general equilibrium model of multi-country-section economy was built. Coupled with the climate system of RICE model, a climate-economy integrated assessment model was built with the interactions between the economic system and the climate system.Coupled with the climate system of RICE model, a climate-economy integrated assessment model was built with the interactions between the economic system and the climate system.Based on this model, the carbon emissions and the energy demands of different countries and sections were studied. The simulated outcomes show that the process-technology progress can bring on early peaks of energy demands and carbon emissions. Under the three different scenarios, China will reach its carbon emission peak at year 2034, 2030, and 2022 respectively. In the more bold scenario 3, the accumulated carbon emission of China can reduce to 93GtC, accomplishing the abatement target of 100GtC. Besides, along with the progress of the process technologies, the developing countries like China and India have larger abatement potentials, which in the sections, the energy section and the service sections have larger abatement potentials.
    Keywords: China, US, EU, Japan, India and Russia, Energy and environmental policy, General equilibrium modeling
    Date: 2014–07–03
  15. By: Yulia Vymyatnina
    Abstract: A Common Economic Area (CEA) formed by Russia, Kazakhstan and Belarus since January 1st 2012, following creation of the Customs Union between these countries in 2007 (and in operation since mid-2010), raises a number of topical questions on whether it can be sustainable, trade-stimulating, efficient in terms of long-run economic growth etc. However, an important part in the effects of inter-country influence within such a union is played by the degree the countries are connected through other than trade policies - monetary policy in general and exchange rate policy in particular. The nature of such inter-connectedness is influenced by the proneness of these countries to ‘resource curse' (or ‘Dutch disease' broadly understood as reallocation of production inputs in the economy due to its dependence on natural resource exports). Our objective is to check how monetary policies (including exchange rate policies) in these countries influence the others in the Customs Union.We use quarterly data for 1996-2010 for Russia, Belarus and Kazakhstan on the following economic indicators: real GDP, inflation, bilateral and effective exchange rates, interest rates. Additional data are collected on oil prices, oil-related real GDP in all three countries (estimated using the method suggested by Masaaki 2009), capital flows and a proxy for ‘world GDP’ in real terms. We build a small inter-country forward-looking simultaneous equations model based on the New Keynesian Phillips curve in which economies of Russia, Belarus and Kazakhstan are described using a number of equations. The model contains two layers of links between countries: explicit one through real effective exchange rates (that rely also on trade intensity between the countries) and implicit one using inter-country averages suggested by GVAR methodology (Chudik and Pesaran 2007). Unlike GVAR, our model uses a small number of countries only, and contains one dominating country (Russia). However, as Monte-Carlo experiments described in Charemza et al (2009) suggest, GVAR methodology can be successfully used in case of small number of countries with a dominating country. Our version of the inter-country model is an adaptation of the model built in Charemza et al (2009) with a number of changes suitable for a different set of countries. While Belarus can be considered small opened economy and microfoundations for the type of model used can be found in e.g. Gali and Monacelli (2005) and Benigno and Benigno (2006), for Russia microfoundations have to be different and are loosely derived following the argument from Sosunov and Zamulin (2007) and Charemza et al (2009). Kazakhstan might be regarded as a somewhat ‘middle’ case, since in terms of economy size it is closer to Belarus, but in terms of expected macroeconomic dependencies might be reasonably considered closer to Russia with a potential threat of the Dutch disease. The first equation for each country describes output gap depending on its own lagged values, real effective exchange rate (REER), world output gap, base interest rate and inter-country averages of output gaps (GVAR methodology). The second equation describes dynamics of non-systematic part of current inflation through lagged inflation, output gap (alternatively – oil-related real GDP), REER, expected deviation of future inflation from its target level (forward-looking equation) and inter-country averages of inflation. The REER is modeled as consisting of two parts – external (proxied by REER with USD and Euro) and internal (REER with the other two countries from the model) with trade shares used as weights (third equation of the model). Bilateral exchange rates are modeled as related to output gaps and REERs of corresponding countries (fourth equation of the model). The model is closed by requiring that bilateral exchange rates (after proper transformations) are inversely related to each other. The last equation of the model describes monetary policy rule for each country, allowing for different modifications depending on the previous research on the topic, Central Banks announcements etc. Bilateral exchange rates modeling allows also to reflect the degree of exchange rate control by the Central Banks of the relevant countries. The equations are estimated using GMM method. The model includes 18 equations in total, being quite parsimonious in terms of parameters – 77 in all equations. Being heavily inter-related through both exchange rates inter-influence and trade inter-influence, the model allows us to simulate spillover effects of various policy measures and pass-through effects of the ‘Dutch disease' between the CEA countries. Simulation experiments (modeling changes in exchange rate regimes, base interest rate (monetary policy changes) and external changes reflected in external part of REER) demonstrate that Belarus is most dependent on the other two counterparts of the union.
    Keywords: Russia, Kazakhstan, Belarus, Macroeconometric modeling, Trade issues
    Date: 2014–07–03
  16. By: Tadashi Kikuchi
    Abstract: Author used the data of Vietnam Population Census 1989, 1999, 2009 and estimated inter regional labor migration function of Vietnam. Based on the method of system approach of Poot (1986), author adapted it to Vietnamese data and also studied the convergence speed of the migration function. The method of system approach is applied to the Vietnam Population Census Data 1989, 1999, 2009. Estimation of migration function is OLS methods. More information is mentioned in attached summary. Author states here, in brief, four interesting findings in the paper. (1)Apart from dynamical in and out migration all over the country, Vietnam, from the end of 1980s to the early of 2000s, author shows the evidence that there exists regional inflow and out flow of migrations between Hochiminh city and its neighbor provinces. (2)There exists a decrease, “slow down,” of the influence on the in – migration power in all provinces in Vietnam. For example, during the years that economic recession was covering over developing countries from 1990s to the early of 2000s, high regional average income became less attractive to make labor force in – migrate from outside into the region/province. (3)Coincidently, neighbor provinces of Hochimonh, such as Dong Nai, Binh Duong, started industrialization and regional development from 1990s to the early of 2000s. This resulted in an inverse labor inflow from the region with high income Hochiminh city to regions with low income neighbor provinces of Hochimonh. (4)Based on these finding, author then extended the model to study on long term labor migration. Author estimated ECM, error correction model, and showed that the coefficient of convergence to the long term model is – 0.534. It means that Vietnamese migration would converge by nine ty percent until 2020, and ninety nine percent until 2050.
    Keywords: Vietanman, Developing countries, Regional modeling
    Date: 2014–07–03
  17. By: Jean Louis Brillet
    Abstract: To study the consquences of the Trans Pacific Partnership on the Vietnamese economy Using a five product econometric modelto measure the impact of individual elements, then synthetize the full set of measures. Vietnam, along with 11 other countries having a Pacific coast (including the USA and Canada), is now finalizing negotiations on an agreement, which will change profoundly the conditions of trade in the region. Our goal is to understand the consequences of the agreement, and test if it will have favorable consequences for Vietnam, considering that, as all treaties of this kind, we have to measure the balance of both positive and negative individual decisions. For this we shall use a five product model, developed for the Vietnamese Ministry of Planning and Investment. The products are: Agriculture, Manufacturing, Construction, Non-Financial Services and Financial Services. The model will use annual data for the period 1995-2012, built especially for the project by the General Statistical Office. Its structure can be described as short term Keynesian, with long term classical features. Its uses a Cobb-Douglas production function, and it features a price-wage loop, with a WS-PS wage determination. Its equations follow globally an error correction framework. It identifies Foreign Direct Investment, through its motivations and its impact on structural parameters of the economy. It has been estimated using a system method, and the process mostly met with success, in spite of the volatility of data and the ongoing transition process, which questions the stability of formulations. In our study, we shall start from a reasonable 10 year forecast, and shock in success the elements of the agreement: tariffs rates, quotas, local subsidies. Then we will use the actual decisions, or what we know of them at the time of the study, to summarize the outcome of the actual agreement.
    Keywords: Vietnam, Macroeconometric modeling, Trade issues
    Date: 2014–07–03
  18. By: Tosic, Natasa; Iordan-Constantinescu, Nicolae
    Abstract: The study presents the new approaches of the knowledge‐based economies and competitiveness policy using two major indexes and methodologies developed by two prestigious world institutions, the World Bank and the World Economic Forum, as well as the practical consequences of their implementation at the level of individual economies in a dynamic globalised world. The main conclusion derived from the study is that without firm and steady measures for a comprehensive implementation of the mix of policies included in the two indexes, there are fewer chances of winning a better position of a country in the global concert of people and increasing the nation's wealth and standard of living. A particular attention is given to the case of the Republic of Serbia, candidate country to the European Union, pointing out both the achievements and the need for further action at the national level.
    Keywords: knowledge‐based economy, competitiveness, globalisation, Global Competitiveness Index, Serbia
    JEL: E42 E61 F36 F43 G15 O47
    Date: 2014–08–01
  19. By: Maryia Akulava
    Abstract: What affects individual preference for different types of political regime? This paper investigates the determinants of individual preferences for democratic values and looks at differences in impact of influencing factors in transition and non-transition countries. It combines both individual and country level characteristics in order to see whether they impact personÕs attitude. I found that preferences for democracy are formed by impact of both individual and country-level factors. However, the direction of impact depends on the type of political regime and stage of economic development in the country. First, GDP per capita, growth of inequality and inflation are positively affecting personal preferences for democratic values in the democratic countries and negatively in the countries with autocratic regime. In turn, growth of unemployment in democratic countries decreases individual support of democracy and has a positive impact on support in the countries with autocratic regime. That agrees with the literature that beliefs and attitude towards political systems depend on countryÕs past experience. Age has different effect in transition and non-transition economies proving that being raised in different environments matters in terms of formation of political preferences.
    Keywords: Democracy, macroeconomic factors, individual characteristics, transition countries
    JEL: D7 J2 O1 P1 P2
    Date: 2014–08
  20. By: Hong Zuo; Jiro Nemoto
    Abstract: There have been many studies show that there are significant differences in wages between China's workers engaged in formal employment and informal employment, but very few studied the career intention of informal workers. Informally workers in such a disadvantageous position, are they voluntary or forced to engage in informal employment? In China, there is still no empirical research in this area, the purpose of this study is to clarify the career intention of informal workers to provide evidence for policy makers that which part of the informal workers should the government policies support and help.We employ the econometric model which is developed by Günther and Launovboth (2012). It is able to detect unobserved heterogeneity in the informal labor force. The framework can be classified as a finite mixture regression with sample selection. It provides us with consistent estimates of wage equations within any of the segments of the informal workers, taking selection bias into consideration. Furthermore, it can help us to identify the size of voluntary and forced informal workers in the whole informal labor force.The results show that not all the informally employed workers are in a disadvantageous position, voluntary and forced informal workers accounts for about half of all the informal labor force, respectively.
    Keywords: China, Labor market issues, Developing countries
    Date: 2014–07–03
  21. By: Lal Almas; Nazim U. Hajiyev
    Abstract: The economic condition in each country can be determined based on two ratios. One of them is inflation and the other is economic growth. The inflation level is an indicator of economic stability in the country; however, sustainable development is an indicator of economic development and the welfare of the country. Due to the fact that economic development is a vast phenomenon, it consolidates social, ecological, ethical and other factors. The main point here is provision of a fecund environment for sustainable economic development. We would like to note that economic growth cannot provide an adequate approximation of the long-term development; therefore, the provision of the dynamic equilibrium level of economic growth is essential. The research covers a time span of 1996 through 2010 and has the following goals: • Evaluation of the country’s economy and the determination of its dynamic equilibrium level of economic growth using Keynesian Domar model; • Determination of changes in the basic economic determinants by the conduction of Domar table; • Effect of application of obtained results in measurements dedicated to the support of economic growth. The models of economic growth reflect the real economic processes using some simplifications, but holding the main concepts. These models analyze the different points of the economic development and make possible the identification of certain consistencies and rules. We would like to note that the differentiating features of the economic growth models are their ability to grow only in account of capital and labor forces. We know that the economic development is possible under various circumstances such as quality and quantity of economic resources and their changes, economic technologies, technical progress and etc. However, it is not possible without an initial investment. For this reason, the Keynesian model is considered to be the most basic model of economic growth. Thus the main point in this model is determination of factors enabling the dynamic equilibrium growth model. During the modeling of the economic process the simplification and identification of initial inputs is also important. The Domar model is considered a simple Keynesian model and reflects this in the following way [3, 180], [2, 519-520], [4, 250]: (1) here, - the speed of the economic growth t period; - the capital efficiency limit; and - saving norm. As we can see the capital efficiency limit and saving norm are the basic variables of the model and can be estimated using the following quotations: (2) (3) Where - output growth in t period, - investment in the capital in t period, - savings in t period, - output level in t period, and σ - constants. It is obvious that all models are estimated under conditions of predefined limitations. This is due to the fact that a model cannot account for all conditions and terms of actual economic process, which can bring about additional complexity and inconsistencies. From this point of view, the Domar model consists of the following initial conditions [1, 231], [2, 519], [4, 249-250]: 1. The model is based only on the products/goods market; 2. The technology of the production is reflected by the Leontyev function, i.e. the limit of capital efficiency is constant; 3. The labor market is in a saturation condition and there is no lack of labor force; 4. The excessive supply on labor market supports the stable prices; 5. The growth in investments reflects the growth in total supply and total demand, i.e. both total demand and total supply increase only due to increase in investments; 6. There is no amortization of capital; and 7. Correlation between capital (K) and quantity of goods (Y) is (K/Y) reflecting the saving norm Due to the initial terms of the model ( ) is constant. The major conclusions drawn from the model are that limits of product output, investments and capital growth are equal to each other [2, 520], [4, 250]. In other words, (4) During the composition of this model for the Azerbaijani economy we considered the specifics of economic growth and the oil factor of the economy. Considering that the oil and natural gas resources are scarce and limited and the national economy cannot fully rely on it (Holland syndrome), necessary measurement and changes in the national economic policy should be taken. A number of policy measures were implemented in this direction such as establishment of oil fund, saving of oil revenue in foreign banks and etc. However, in order to continue the obtained economic growth, we need to establish and realize the complexity of the necessary measurements. The major role in the establishment of sustainable economic development in Azerbaijan is the identification of the dynamic equilibrium levels of economic growth and the qualitative and quantitative evaluation of actual deviations from this level. It will play a crucial role in the formation of the national economic policy. In order to evaluate the Domar model we should determine its basic inputs – saving norm and the efficiency limit of the capital. Therefore the econometric evaluation of equation (2) was as following: Table 1. the results of econometric evaluation of saving norm Variable ratio Standard deviation t-statistics Probability R_GDP 0.627099 0.0416 15.06642 0.000 C -561.353 300.9516 -1.86526 0.095 Determination ratio 0.94583 Average of the variable 4346.899 Clarified Determination ratio 0.94166 Standard deviation of variable 3197.992 Standard deviation of regression 772.393 Akayk information factor 16.260 Sum of squares of deviations 775568 Schwartz factor 16.355 Log relevance to reality -119.95 F-statistics 226.100 Statistics of Durbin-Watson 1.22534 Probability (F-statistics) 0.00003 Source: the valuation was made by author It can be seen from the results that the model is significant from an economic point of view. According to the determination ratio, 95% of increase in real savings during 1997-2000 can be explained by the increase in real GDP during this period. At the same time, the high level of t-statistics (15.066) shows that the GDP taken as an explanatory variable has a really large impact on other variables within the model. The model supports the stability test and coefficient test at the required level and provides the basis for the economic conclusions. According to the results of the model increase in GDP by one million Azeri Manat (AZN) brings about an increase in savings by 0.62 million AZN. In other words, if our country’s population spends one AZN, it reflects as 38 kopeks of consumption and 62 kopeks for saving. From the population’s point of view this result seems unrealistic. In reality, an increase in income brings about an increase in consumption. It is explained by the fact that the consumption demands of the population are not met yet. However, considering that the inputs of the model contained information not only about population, but also about the government, companies and other organization, we believe that the obtained results can be considered as reliable. Thus the governmental bodies and companies direct their revenues to savings rather than consumption, which forms the savings base of our country. Now let us identify the limit of capital efficiency. For this purpose we observed the relation between the growth of real GDP and capital investments using the econometric evaluation tools: Table 5. The results of evaluation of limit of capital efficiency Variable ratio Standard deviation t-statistics Probability R_CI 0.153436 0.024873 6.168736 0.0000 Determination ratio 0.377072 Average of variable 978.5786 Clarified Determination ratio 0. 377072 Standard deviation of variable 844.4061 Standard deviation of regression 666.4543 Akayk information factor 15.91057 Sum of squares of deviations 5774098. Schwartz factor 15.95622 Log relevance to reality -110.3740 Statistics of Durbin-Watson 0.97980 Source: the valuation was made by author
    Keywords: Azerbaijan, Growth, Impact and scenario analysis
    Date: 2014–07–03
  22. By: Leonardo Bursztyn; Davide Cantoni
    Abstract: This paper examines the impact of exposure to foreign media on the economic behavior of agents in a totalitarian regime. We study private consumption choices focusing on former East Germany, where differential access to Western television was determined by geographic features. Using data collected after the transition to a market economy, we find no evidence of a significant impact of previous exposure to Western television on aggregate consumption levels. However, exposure to Western broadcasts affects the composition of consumption, biasing choices in favor of categories of goods with high intensity of pre-reunification advertisement. The effects vanish by 1998.
    JEL: D12 E21 Z10
    Date: 2014–08
  23. By: Duy Hung Bui
    Abstract: Vietnam is a developing country with a fixed exchange rate regime and the use of foreign currency is under control of the monetary authorities. Hence, like other developing countries, Vietnam also has the parallel exchange market that exists together with the official exchange market though, it is illegal. The existence of the parallel exchange market creates several complications to the State Bank of Vietnam in their attempts to manage the foreign exchange market and the exchange rate. Fluctuations in the parallel market rates affect both the level of international reserves, the position of the economy and portfolio decisions of the public. Therefore, a strong understanding of the parallel foreign exchange market will help the State bank of Vietnam have sound policies in the foreign exchange market. The monetary approach to the parallel foreign exchange market initially developed by Blejer (1978) and then further developed by Agénor (1991) is used. This approach focuses on the disequilibrium in the money market in explaining movements in output, price, the parallel market exchange rate, and change in net foreign assets An increase of money supply by 1% causes the exchange rate in the parallel market depreciated by 0.015%. A 1 per cent devaluation of the official exchange rate would bring about 1.33 per cent devaluation of the parallel market rate. These results bespeak the State Bank of Vietnam’s efforts to reduce the market premium seem to be not success and stimulating economic growth by money supply would lead to deprecation in both markets
    Keywords: Vietnam, Macroeconometric modeling, Monetary issues
    Date: 2014–07–03
  24. By: Tomáš Domonkos; Štefan Domonkos; Miroslava Jánošová; Filip Ostrihoň
    Abstract: Using a complex long-run growth model, this paper investigates the long-term sustainability of the pension system in the Slovak Republic. The long-run growth model employed in the paper is able to perform projections for several decades ahead, which is necessary for this type of analysis. The model is composed of seven interrelated blocks. Special attention is dedicated to the labour market, social security and public sector. Instead of econometric estimations, the parameters are calibrated in accordance with economic theory. As an empirical application, we assess the long-term sustainability of the Slovak multi-pillar pension system in its latest form. Subsequently, we compare the economic effects of various hypothetical amendments to the existing social security legislation in the Slovak Republic.
    Keywords: Slovak Republic, Public finance, Impact and scenario analysis
    Date: 2014–07–03
  25. By: Marian Rizov; Anrej Cupak; Jan Pokrivcak
    Abstract: We estimate a food demand system for Slovakia using a recent household budget survey data for the period 2004-2011. The Quadratic Almost Ideal Demand System (QUAIDS) augmented with demographic, regional and expenditure controls is employed based on preliminary non-parametric Engel curve analysis. In most samples demand for meat and fish and fruits and vegetables is expenditure and own-price elastic. On average all five food groups are found to be normal goods. Rural and low-income households appear more expenditure and price sensitive compared with the urban and high-income ones. Overall the food security situation in Slovakia has improved since the country’s EU accession.
    Keywords: Slovakia, Agricultural issues, Agent-based modeling
    Date: 2014–07–03

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