nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒10‒22
25 papers chosen by
J. David Brown
United States Census Bureau

  1. Governors and governing institutions: a comparative study of state-business relations in Russia's regions By Gharafutdinova, Gulnaz; Kisunko, Gregory
  2. The Dynamics of Residential Housing Commissioning in Russia By Georgy Malginov; G. Sternik
  3. Technological diversification in China: Based on Chinese patent analysis during 1986-2011 By Lutao Ning; Martha Prevezer; Yuandi Wang
  4. Republic of Kazakhstan: 2014 Article IV Consultation-Staff Report; Press Release By International Monetary Fund. Middle East and Central Asia Dept.
  5. Modern Models Of Interaction Between Business And Government In Russia: Corporatism Or Pluralism? By Alexander N. Shokhin; Kirill Kisel
  6. Systemic Interbank Network Risks in Russia By A. V. Leonidov; E. L. Rumyantsev
  7. People’s Republic of China: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the People’s Republic of China By International Monetary Fund. Asia and Pacific Dept
  8. Extending The Scope Of Antitrust Legislation Over The Area Of Exclusive Ip-Rights Exercise: Evidence From Russia By Mikhail S. Zhuravlev
  9. Republic of Belarus: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the Republic of Belarus By International Monetary Fund. European Dept.
  10. The Determinants of the Benchmark Interest Rates in China: A Discrete Choice Model Approach By Hyeongwoo Kim; Wen Shi
  11. Internationalization of Middle Size Multinational Enterprises in Chinese Markets: Mirroring Back Effects By Andrea Pontiggia; Tiziano Vescovi
  12. The Sloping Land Conversion Program in China: Effect on Rural Households’ Livelihood Diversification By Zhen Liu
  13. The capital structure of Polish small and medium-sized enterprises and its impact on their competitiveness By Robert Wolañski
  14. Competition in commercial banks in Poland – analysis of Panzar-Rosse H-statistics By Filip Switala; Malgorzata Olszak; Iwona Kowalska
  15. Monetary and macroprudential policy with foreign currency loans By Michał Brzoza-Brzezina; Marcin Kolasa; Krzysztof Makarski
  16. The application of local indicators for categorical data (LICD) in the spatial analysis of economic development By Michal Bernard Pietrzak; Justyna Wilk; Tomasz Kossowski; Roger Bivand
  17. Estimating Direct and Indirect Effects of Foreign Direct Investment on firm Productivity in the Presence of Interactions between Firms By Sourafel Girma; Yundan Gong; Holger Görg; Sandra Lancheros
  18. A foreigner or a Pole – which employee to choose? By Alicja Dobrzynska
  19. Credit Booms and Busts in Emerging Markets: The Role of Bank Governance and Risk Managment By Andries, Alin Marius; Brown, Martin
  20. The Internationalization of Polish Firms: An Empirical Investigatin of the M-P Relationship By Grzegorz Karasiewicz; Jan Nowak
  21. The Euro Changeover in Estonia: implications for inflation By Tairi Rõõm; Katri Urke
  22. Ukraine: First Review Under the Stand-By Arrangement, Requests for Waivers of Nonobservance and Applicability of Performance Criteria, and a Request for Rephasing of the Arrangement; staff Statement; Press Release; and Statement by the Executive Director for Ukraine By International Monetary Fund. European Dept.
  23. Georgia: Request for a Stand-By Arrangement; Press Release; and Statement for the Executive Director for Georgia By International Monetary Fund. Middle East and Central Asia Dept.
  24. The Kyrgyz Republic: Poverty Reduction Strategy Paper By International Monetary Fund. Middle East and Central Asia Dept.
  25. The Impact of High-Stakes School-Admission Exams on Study Effort and Achievements: Quasi-experimental Evidence from Slovakia By Miroslava Federicova

  1. By: Gharafutdinova, Gulnaz; Kisunko, Gregory
    Abstract: The paper uses the latest 2011 round of the Business Environment and Enterprise Performance Survey for the Russian Federation, which for the first time was designed to be representative of Russian regions. The paper takes a closer look at regional-level factors influencing the business environment in Russia and, more specifically, conditions that favor the emergence of symbiotic relations between regional authorities and regional businesses. Considering the argued significance of informal rules, norms, and agreements for the regional-level business environment in Russia, the paper uses proxy variables such as tenure and origin of regional governors to identify how these rules are being institutionalized. The findings reveal that, at least in case of Russia, juxtaposing the state and business actors as separate and opposed to each other may overstate the distinction between these two groups of actors and understate the fact that many localities in Russia have witnessed the emergence of mutually beneficial state-business arrangements. Defining whether these arrangements are beneficial or harmful to regional development is beyond the scope of this exploratory paper.
    Keywords: Environmental Economics&Policies,Regional Economic Development,Common Property Resource Development,Teaching and Learning,Parliamentary Government
    Date: 2014–09–01
  2. By: Georgy Malginov (Gaidar Institute for Economic Policy); G. Sternik (Gaidar Institute for Economic Policy)
    Abstract: The situation in Russia’s residential housing market over the past year was largely determined by the near-stagnation macroeconomic situation and the current phase of market development, which resulted in a multi-vectored movement of prices in the housing markets of different cities, because in most of them the period of post-crisis recovery was already over, while some cities were still struggling with the consequences of the crisis
    Keywords: Russian economy, house construction, house prices
    JEL: R21 R31 R52
    Date: 2014
  3. By: Lutao Ning; Martha Prevezer; Yuandi Wang
    Abstract: This paper confirms the positive relationship between national technological size and technological diversification (following Cantwell, Vertova 2004 for major developed economies) for China over three periods: from its premarket status 1986-1990, through its rapid marketization of 1991-2000, to its globalization phase from 2001-2011. The Chinese technological trajectory differs from the earlier developed world model significantly in tending to greater technological specialization from the outset of technological growth in the 1990s. We analyse a dataset of 3.7 million Chinese patents at the SIPO, Chinese patent office. Using shift-share analysis, we decompose changes in the relationship between technological size and diversification into those attributable to the increase in size (number of patents, population, GDP) and those attributable to the structural shift towards diversification or specialization between technological fields. We find that although the positive relation between size and diversification holds over all three periods, there is a structural shift between each period towards greater technological specialization. We argue that this mirrors the ‘globalizing’ FDI-driven shift that occurred in the US towards technological specialization between 1965 and 1990 (Cantwell and Vertova 2004). In China this represents a shift away from traditional fields such as consumer goods and equipment or transportation towards electronics and computing fields.
    Keywords: technological diversification and specialization; patents; China; R&D investment structure; size-diversification relationship
    JEL: O1 O3 O5 P5
    Date: 2014–09
  4. By: International Monetary Fund. Middle East and Central Asia Dept.
    Abstract: KEY ISSUES Context: Solid growth in recent years, supported by high oil prices and output, has boosted living standards. This year, the economy is slowing down, in large part because of weaker domestic and external demand, and regional tensions. Inflation is expected to accelerate temporarily due to the devaluation of the tenge (February 2014). Enhancing the policy architecture and promoting a business environment unencumbered by the state remain key challenges for Kazakhstan to become a dynamic emerging market economy and ensure durable and balanced long-term growth. The recent reappointment of Prime Minister Massimov was accompanied by the authorities’ commitment to speeding up structural reforms. In this context, the government is strengthening its links with the multilateral development banks (MDBs). The May 29 signing of the Eurasian Economic Union (EEU), with Russia and Belarus, is not expected to have near-term economic effects; medium-term effects will depend on how the Union’s rules and regulations will be implemented. Focus of consultation and key recommendations: Amid uncertain external and domestic environments, the consultation focused on policy measures to mitigate shocks and achieve the authorities’ short- and medium-term objectives, in particular: (i) restoring confidence and stability in the post-devaluation environment; (ii) resolving the nonperforming loans (NPL) problem, in line with the recent FSAP recommendations; (iii) bolstering the monetary and fiscal policy frameworks, as recommended last year; and (iv) accelerating structural reforms, including the implementation of industrialization and diversification policies carefully and transparently. Previous consultation: During the 2013 Article IV Consultation, Directors encouraged the authorities to take advantage of the positive outlook to strengthen the macroeconomic policy architecture, including by (i) showing greater determination to addressing the high level of NPLs; (ii) following through on the planned introduction of a new policy interest rate to enhance the transmission mechanism of monetary policy; and (iii) revamping the medium-term fiscal framework through improved coverage and transparency. Since then, the authorities have been more resolute in dealing with the NPL problem. However, progress in strengthening the monetary and fiscal policy frameworks has been slow.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Fiscal reforms;Monetary policy;Banking sector;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Kazakhstan;
    Date: 2014–08–05
  5. By: Alexander N. Shokhin (National Research University Higher School of Economics); Kirill Kisel (National Research University Higher School of Economics)
    Abstract: This work focuses on studying and defining the modern models of interaction between business and government. The fact that Russia is in a new stage of development and a course of modernization, for better interaction between business and government there is a need for institutionalized cooperation, daily dialogue, and a system of a joint goal-setting and decision-making. This work identifies the characteristic features of the interaction model between business and government through business associations. In this working paper we analyze different approaches to the problem of interaction between business and government. According to Russian realities we suggested the typologization of models of interaction between business and government. This typology is based on an analysis of the institutional practices in leading foreign states. The empirical base of research is a series of interviews with representatives of the business community, the heads and staff of business structures, business associations and public authorities. This paper shows that a model of interaction between business and government through business associations is the most effective for the Russian Federation. In this study several different tasks are solved: to examine existing approaches to business and government interaction; to compare existing models of interaction between business and government; to characterize institutional practices in foreign countries.
    Keywords: business, government, interaction, GR, policy making, interest groups, lobbying, business associations
    JEL: Z
    Date: 2014
  6. By: A. V. Leonidov; E. L. Rumyantsev
    Abstract: Modelling of contagion in interbank networks is discussed. A model taking into account bow-tie structure and dissasortativity of interbank networks is developed. The model is shown to provide a good quantitative description of the Russian interbank market. Detailed arguments favoring the non-percolative nature of contagion-related risks in the Russian interbank market are given.
    Date: 2014–10
  7. By: International Monetary Fund. Asia and Pacific Dept
    Abstract: KEY ISSUES Context. After three decades of remarkable growth, the economy has been slowing. Much of the slowdown has been structural, reflecting the natural convergence process and waning dividends from past reforms; weak global growth has also contributed. Moreover, since the global financial crisis, growth has relied too much on investment and credit, which is not sustainable and has created rising vulnerabilities. Growth was 7.7 percent in 2013, and is expected to slow to around 7½ percent this year and decline further over the medium term. Focus. The pattern of growth since the global financial crisis is not sustainable and has resulted in rising vulnerabilities. The discussions focused on assessing the risks posed by the continued build-up of vulnerabilities; reforms to unleash new, sustainable engines of growth and reduce vulnerabilities; and how to best manage aggregate demand in this context, as growth is slowing yet risks are still rising. A key takeaway is that to secure a safer development path, accommodative policies need to be carefully unwound, accompanied by decisive implementation of the announced reform agenda to promote rebalancing. The result will be somewhat slower but safer growth in the near term, with the significant long-run benefit of securing more inclusive, environment-friendly, and sustainable growth. Risks. Credit and ‘shadow banking,’ local government finances, and the corporate sector— particularly real estate—are the key, and interlinked, areas of rising vulnerability. In the near term, the risk of a hard landing is still considered low as the government has the capacity to combat potential shocks. However, without a change in the pattern of growth, the hard-landing risk continues to rise and is assessed to be medium-likely over the medium term. Reform agenda. The authorities have announced a comprehensive and ambitious blueprint of reforms. Successful implementation should achieve the desired transformation of the economy, but will also be challenging. Demand management. Reining in credit growth, local government borrowing, and investment will address the risks, but also slow growth. Macro support should be calibrated to allow needed adjustments to take place, while preventing growth from slowing too much. Scenarios and spillovers. With faster adjustment and reform implementation, growth will be somewhat lower in the near term, with moderate spillovers for trading partners. However, in the medium term, income and consumption will both be higher—a result that is good for China and good for the global economy.
    Keywords: Article IV consultation reports;Economic growth;Demand;Credit expansion;Fiscal reforms;Financial sector;Monetary policy;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;China;
    Date: 2014–07–30
  8. By: Mikhail S. Zhuravlev (National Research University Higher School of Economics)
    Abstract: This paper deals with the issues of competition law and IP law interaction. Current Russian legislation provides absolute immunity from extending the antitrust prohibitions over the exercise of exclusive IP-rights. The idea of the article is that this approach needs to be revised. Russian court practice, legal doctrine and economic theory necessitate more flexible antitrust regulation in the area of IP. The analysis of US, EU, and Japanese models of legal regulation has revealed different approaches to the issues of antitrust policy in this field of social relations. Therefore, this paper suggests a different concept of regulation¬ – keep the general immunity from the application of antitrust prohibitions to rightholders, but make it conditional. At the same time, in order to ensure the optimal balance between private and public interests and to maintain the incentives for innovative activity, antitrust legislation should provide a system of guarantees for rightholders
    Keywords: competition law, IP law, anticompetitive exercise of IP-rights, Russian antitrust legislation, economic approach, balance of interests, amendments to legislation
    JEL: K21
    Date: 2014
  9. By: International Monetary Fund. European Dept.
    Abstract: KEY ISSUES Context: Attempts to boost activity with policy stimulus, in lieu of much-needed structural reform, have failed to raise growth and contributed to large external imbalances. Adverse developments in the region further cloud the outlook. High financing needs and low buffers leave Belarus highly dependent on external financial support. The risk of disorderly adjustment remains high. Challenges: Mitigating immediate risks and facilitating external adjustment through a sharp change in macroeconomic policies. Advancing the transition to a market-based economy to raise sustainable growth. Policy recommendations: • Halt wage increases and reduce subsidized lending to slow demand growth; • Reduce foreign exchange interventions and tighten monetary policy to facilitate external adjustment; • Enhance market orientation of the economy through a rapid phase-out of price controls and mandatory targets and by privatization of state-owned enterprises.
    Keywords: Article IV consultation reports;Fiscal policy;Fiscal reforms;Wage increases;Monetary policy;Intervention;Banking sector;Bank supervision;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Belarus;
    Date: 2014–07–25
  10. By: Hyeongwoo Kim; Wen Shi
    Abstract: This paper empirically investigates the determinants of key benchmark interest rates in China using an array of constrained ordered probit models for quarterly frequency data from 1987 to 2013. Specifically, we estimate the behavioral equation of the People's Bank of China that models their decision-making process for revisions of the benchmark deposit rate and the lending rate. Our findings imply that the PBC's policy decisions are better understood as responses to changes in inflation and money growth, while output gaps and the exchange rate play negligible roles. We also implement in-sample fit analyses and out-of-sample forecast exercises. These tests show robust and reasonably good performances of our models in understanding dynamics of these benchmark interest rates.
    Keywords: Monetary Policy; People's Bank of China; Ordered Probit Model; Deposit Rate; Lending Rate; In-Sample Fit; Out-of-Sample Forecast
    JEL: E52 E58
    Date: 2014–09
  11. By: Andrea Pontiggia; Tiziano Vescovi
    Abstract: In this paper, we focus on the internationalization strategies implemented by Middle Size Multinational Enterprises (MMNE) in Chinese markets. We assume that these strategies differs from those of the large multinational companies. Differences explained by the size of the company (medium) compared to the size of the potential market (large). The hypothesis is that in the internationalization strategy of Medium size Multinational Enterprises (MMNEs) is recursive and based on two-way innovation process. This processes is defined as a mirroring back phase and its shown by companies prone to innovate the business model because of the international exposure. Culturally distant and large markets may support firms to increase their strategic innovation rate. Evidences based on case studies show the content and the modes of the internationalization of MMNEs.
    Keywords: management, finance, economics.
    JEL: F23 M16 M31 D22 D21
    Date: 2014–09
  12. By: Zhen Liu (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: By overcoming the barriers that limit access to financial liquidity and human resource, the Sloping Land Conversion Program (SLCP) can promote rural livelihood diversification. This paper examines this effect using a household survey data set spanning the 1999 implementation of the Sloping land conversion program. Our results show that SLCP works as a valid external policy intervention on rural livelihood diversification. In addition, the findings demonstrate that there exist heterogeneous effects of SLCP implementation on livelihood diversification across different rural income groups. The lower income group was more affected by the program in terms of income diversification.
    Keywords: Sloping Land Conversion Program; China; Livelihood diversification; Income diversity index; Identification condition; Difference in differences
    JEL: Q12 Q15 Q58
    Date: 2014–09
  13. By: Robert Wolañski (Faculty of Management, University of Warsaw)
    Abstract: The article discusses the problem of the relationship between the capital structure and the level of competitiveness of SMEs in Poland. The objective of the article is to determine the impact capital structure has on the level of competitiveness of SMEs in Poland. The capital structure of SMEs is dominated by internal funds. Among external sources of financing, bank loans and leasing are predominant. This structure is consistent with the relevant theoretical models. The study shows no significant differences in the financing of current operations, innovation, and competitiveness improvement. The lack of relationship indicates that the capital structure of SMEs has little impact on their competitiveness. The results of the study demonstrate that all external sources of financing improve the competitiveness of SMEs, but the strength of their impact is different. The strongest impact is shown for venture capital, guarantees, and leasing; the weakest – for bank loans and the issuance of shares and bonds. A significant factor is the degree of alignment of a particular financing source with the special needs of SMEs. This significant relationship is demonstrated for all the sources most commonly used by SMEs.
    Keywords: : SMEs, competitiveness, capital structure
    JEL: L25 L26
    Date: 2013–05
  14. By: Filip Switala (University of Warsaw, Faculty of Management); Malgorzata Olszak (University of Warsaw, Faculty of Management); Iwona Kowalska (University of Warsaw, Faculty of Management)
    Abstract: This paper aims to find out how intense is the competition in Polish commercial banks loan market. Using Panzar – Rosse H-statistics and applying several estimation techniques (GLS, one-step GMM and two-step GMM) we find that this intensity is sensitive to the estimator applied. Upon analysis of results, one can conclude that competition evolves differently across years in Poland. In some years, competition was relatively high, as the H-statistics reached the level of 0.75, which is relatively close to perfect competition. In other years it gradually decreased reaching its bottom line in 2010, and took upward trend in 2011 and 2012. Generally, the values of our competitive environment measure indicate at monopolistic competition in Poland.
    Keywords: competition intensity, marginal costs, contestabily, banking industry
    JEL: G21 G28 L1 L16
    Date: 2013–12
  15. By: Michał Brzoza-Brzezina (Narodowy Bank Polski and Warsaw School of Economics); Marcin Kolasa (National Bank of Poland, Warsaw School of Economics); Krzysztof Makarski (Narodowy Bank Polski and Warsaw School of Economics)
    Abstract: In a number of countries a substantial proportion of mortgage loans is denominated in foreign currency. In this paper we demonstrate how their presence affects economic policy and agents’ welfare. To this end we construct a small open economy model with financial frictions where housing loans can be denominated in domestic or foreign currency. We calibrate the model for Poland - a typical small open economy with a large share of foreign currency loans (FCL) - and use it to conduct a series of simulations. They show that FCLs negatively affect the transmission of monetary policy. In contrast, their impact on the effectiveness of macroprudential policy is much weaker but positive. We also demonstrate that FCLs increase welfare when domestic interest rate shocks prevail and decrease it when risk premium (exchange rate) shocks dominate. Under a realistic calibration of the stochastic environment FCLs are welfare reducing. Finally, we show that regulatory policies that correct the share of FCLs may cause a cyclical slowdown.
    Keywords: foreign currency loans, monetary and macroprudential policy, DSGE models with banking sector
    JEL: E32 E44 E58
    Date: 2014
  16. By: Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland); Justyna Wilk (Wroclaw University of Economics, Poland); Tomasz Kossowski (Adam Mickiewicz University in Poznan, Poland); Roger Bivand (Norwegian School of Economics (NHH) in Bergen, Norway)
    Abstract: The objective of this paper is to identify classes of regions presenting different economic situations and apply a join-count test to examine spatial dependences between these classes. The test examines spatial autocorrelation on the basis of qualitative data. The global join-count test indicates general interactions occurring between regions, while the local join-count test examines a tendency to form the spatial clusters (e.g. metropolitan areas). The study covers the situations of 66 Polish NUTS 3 regions in 2011. Regions were divided into two classes presenting relatively low and high levels of economic development. Taxonomic methods of multivariate data analysis were applied in the research. The global test proved spatial clustering of economically poor regions but was statistically insignificant as regards well-developed regions. Thus the join-count local join-count test was additionally applied. The test indicated the occurrence of five spatial clusters of NUTS 3 regions. Three of them include economically well-developed regions, while two of them present poor economic situations. Furthermore three spatial outliers (local growth centres), which deteriorate the economic situation of eastern Poland, were also recognized.
    Keywords: join-count test, spatial dependence, local indicators of spatial association (LISA), explorative spatial data analysis (ESDA), economic development
    JEL: C21 C51 J64 R11
    Date: 2014–08
  17. By: Sourafel Girma; Yundan Gong; Holger Görg; Sandra Lancheros
    Abstract: We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms
    Keywords: foreign direct investment, treatment effects, SUTVA, propensity score matching
    JEL: F23 C19
    Date: 2014–09
  18. By: Alicja Dobrzynska (University of Warsaw, Faculty of Management)
    Abstract: The work presents the results of the preliminary research on the employment of foreigners’ that were conducted among Polish banking institutions being the international corporations with a global reach. The initial results of the analysis shows the potential impact that specific employment policies exert on personal attitudes of foreign executives and operations of the companies in which they are employed. The analysis described in this work identifies the most important elements which hinder the development of those banks whose employment policies are based on the assumption that hiring foreigners is more beneficial than taking on local managers regardless of their familiarity with Polish market mechanisms. The qualitative research that were conducted in the form of the scenario-based interviews, were carried out with both, a group of managers (mainly heads of HR departments and senior executives) cooperating with the foreigners on everyday basis, and the foreigners themselves. The preliminary studies have revealed a number of trends and phenomenon that were described within this work.
    Keywords: foreigners, employment, banking, labour
    JEL: F22 J33 J31 J24 J41 M51
    Date: 2014–03
  19. By: Andries, Alin Marius; Brown, Martin
    Abstract: This paper investigates to what extent risk management and corporate governance mitigate the involvement of banks in credit boom and bust cycles. Using a unique, handcollected dataset on 156 banks from Central and Eastern Europe during 2005-2012, we assess whether banks with stronger risk management and corporate governance display more moderate credit growth in the pre-crisis credit boom as well as a smaller credit contraction and fewer credit losses in the crisis period. With respect to bank governance we document that a higher share of financial experts on the supervisory board is associated with more rapid credit growth in the pre-crisis period and a larger contraction of credit in the crisis period, but not with larger credit losses. With respect to risk management we document that a strong risk committee is associated with more moderate pre-crisis credit growth but not with fewer credit losses in the crisis. We find no evidence of an organizational learning process among crisishit banks: those banks with the largest credit losses during the crisis are least likely to improve their risk management in the aftermath of the crisis
    Keywords: Credit boom and busts, corporate governance, risk management
    JEL: G21 G32 P34
  20. By: Grzegorz Karasiewicz (University of Warsaw, Faculty of Management); Jan Nowak (Tischner European University)
    Abstract: The purpose of this paper was to determine the nature of the relationship between multinationality and performance (M-P relationship) among Polish companies. It is based on a sample of over 300 Polish companies listed on Warsaw Stock Exchange, studied over two years (625 observations were used for statistical processing). Multiple regression and t-statistic analyses were applied to test three hypotheses. The dependent variable was company performance and the independent variable was the degree of company internationalization. A number of control variables were also incorporated in the regression models. The statistically significant results of the multiple regression analyses show that Polish companies experience a negative linear relationship between their degree of internationalization and performance for two variants of the dependent variable, and a non-linear, U-shaped relationship for one dependent variable. The results also show that companies operating on international markets achieve lower market-valuation results than their domestic counterparts, and companies with lower levels of multinationality perform better than those with higher levels of multinationality.
    Keywords: international business, company internationalization, company performance, emerging markets, Poland
    JEL: M16 L25 F23 L21
    Date: 2014–04
  21. By: Tairi Rõõm; Katri Urke
    Abstract: Estonia changed over from the kroon to the euro in January 2011. This paper analyses the inflationary effect of this event. The analysis is based on the Harmonised Indices of Consumer Prices. The difference-in-differences method is employed where the treated group is Estonia and the control group consists of the other EU member states. The estimation results imply that the inflationary impact of the euro changeover was either insignificant or small in magnitude, depending on which treatment period is considered. The acceleration in inflation mostly occurred in the second half of 2010, during the six-month period prior to the adoption of the euro. Although the actual effect of the euro changeover on inflation was modest, most Estonian citizens felt that the introduction of the new currency increased consumer prices considerably.
    Keywords: euro, currency changeover, consumer prices, inflation
    JEL: D49 P46 E58
    Date: 2014–10–10
  22. By: International Monetary Fund. European Dept.
    Abstract: EXECUTIVE SUMMARY The first review discussions took place in a context of heightened geopolitical tensions and deepening economic crisis. Intensification of the conflict in the East and escalation of the gas dispute with Gazprom, two of the key risks identified at the time of the program request, have materialized. These developments have affected confidence, balance of payment flows, economic activity, and budget execution. The banking sector has had to cope with larger-than-anticipated deposit outflows, and the exchange rate has depreciated more than expected at the time of the program request. The authorities have implemented policies broadly as agreed, but significant pressures have emerged. All but one performance criteria for end-May were met and all structural benchmarks have been implemented, albeit some with a delay. However, the deterioration in the economic outlook, fiscal and quasi-fiscal pressures, and heightened balance of payment difficulties are putting the initial program targets in jeopardy. Two end-July PCs are estimated to have been missed; and the end-2014 targets are out of reach. All continuous PCs were met. Discussions focused on the appropriate policy response to these short-term pressures and on reforms to support sustained growth. There was agreement that the policy effort should focus on compensatory measures to meet key program objectives, while allowing some temporary deviations from the initial targets. In particular, the NBU will limit the decline in reserves through market purchases; the government will take additional fiscal measures to keep public finances sustainable; and Naftogaz will strengthen current and past gas bills collection. Discussions also focused on reforms aimed at modernizing the monetary policy framework, preserving financial stability, addressing governance issues and improving the business climate. Nonetheless, risks loom large. The program hinges crucially on the assumption that the conflict will begin to subside in the coming months. Should active fighting continue well beyond that, the small buffers under the revised baseline would be quickly exhausted, requiring a new strategy, including additional external financing. A further heightening of geopolitical tensions could also have significant economic consequences. Domestically, policymaking may become more difficult in case of early elections. Strong policy performance and adherence to the planned reforms is therefore critical. Staff supports the authorities’ request for completion of the first review and the waivers for nonobservance and applicability of performance criteria. The purchase released upon completion of the review would be in the amount of SDR 0.914 billion, of which SDR 0.650 billion will be used to finance the budget deficit.
    Keywords: Stand-by arrangement reviews;Fiscal policy;Energy policy;Governance;Transparency;Financial sector;Monetary policy;Staff Reports;Press releases;Phasing of purchases;Performance criteria waivers;Ukraine;
    Date: 2014–09–02
  23. By: International Monetary Fund. Middle East and Central Asia Dept.
    Abstract: KEY ISSUES Context. Georgia’s previous Fund-supported program, which expired in April 2014, met most of its objectives, in particular by reducing Georgia’s external and fiscal imbalances. The program also helped preserve the central bank’s independence after the 2012–13 political transition and strengthened its inflation-targeting framework. However, over time it proved increasingly difficult to reconcile the program’s fiscal objectives with the new government’s policies of increasing social spending, especially after the economy slowed and revenues fell short in 2013. Also, despite the progress achieved under the program, macroeconomic challenges remain. The current account deficit and external debt are high, leaving the economy susceptible to shocks. Strong and inclusive growth is needed to reduce widespread poverty and high unemployment. More recently, the external outlook has worsened, opening up a balance of payments need in 2014. Program and its objectives. To address these challenges, the authorities request a new three-year SDR 100 million (67 percent of quota) Stand-by Arrangement to address an external financing need in 2014 related in part to the realignment of fiscal policies to more social spending. The program will facilitate Georgia’s external adjustment, reduce key macroeconomic vulnerabilities, rebuild policy buffers, and support growth. Program policies. In 2014, the program balances supporting domestic demand with the need to safeguard external stability. To reduce the output gap, fiscal policy provides a measured stimulus, while monetary policy remains accommodative. However, the authorities will tighten policies and allow the exchange rate to adjust if balance of payments pressures were to intensify. From 2015, the fiscal deficit will be reduced to keep public debt low and to create space for countercyclical policies. This consolidation will rely on raising revenue by broadening the tax base and containing current expenditure, while protecting pro-poor spending and public investment. Monetary policy will aim at price stability through improved inflation targeting. The program will seek to rebuild international reserves while encouraging greater exchange rate flexibility. Strengthening of the financial sector will continue, helped by the recommendations of the recent FSAP mission. The program also aims to contain risks from quasi-fiscal activities and support improvements in tax administration, and will complement the authorities’ reforms to strengthen the business environment, improve education and training, create jobs and reduce poverty and inequality.
    Keywords: Stand-by arrangement requests;Fiscal policy;Budget deficits;Fiscal risk;Fiscal reforms;Monetary policy;Inflation targeting;Economic indicators;Debt sustainability analysis;Staff Reports;Letters of Intent;Press releases;Georgia;
    Date: 2014–08–20
  24. By: International Monetary Fund. Middle East and Central Asia Dept.
    Keywords: Poverty Reduction Strategy Papers;Sustainable development;Economic growth;Fiscal policy;Labor markets;Private sector;Fiscal reforms;Banking sector;Energy sector;Agricultural sector;Mining sector;International trade;Kyrgyz Republic;
    Date: 2014–08–12
  25. By: Miroslava Federicova
    Abstract: High-stakes admission exams to selective schools create incentives for more intensive study effort possibly increasing study achievements of students. Exploiting the exogenous change of a schooling system and using two waves of TIMSS survey data we find that high-stakes exams increase math test scores of ten-year-old students by 0.2 standard deviations. This effect additionally accrues by around 0.05 standard deviations for students in the top decile, i.e. students who apply for selective schools with the highest probability. Although the effects are similar for both genders, there are indications that girls exert higher study efforts than boys in a more competitive environment. The most perceptive to incentives are test items referring to the cognitive domain of reasoning requiring a deeper understanding of math problems.
    Keywords: high-stakes exams; students’motivation; achievement;
    JEL: I21 I24
    Date: 2014–09

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