nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒11‒12
sixteen papers chosen by
J. David Brown
United States Census Bureau

  1. International Patenting Strategies of Chinese Residents: an analysis of foreign-oriented patent families By Mila Kashcheeva; Sacha Wunsch-Vincent; Hao Zhou
  2. What Measures Chinese Monetary Policy? By Sun, Rongrong
  3. Decomposition of productivity considering multi-environmental pollutants in Chinese industrial sector By Hidemichi Fujii; Jing Cao; Shunsuke Managi
  4. Bank capital, adjustment and ownership: Evidence from China By Molyneux , Philip; Liu, Hong; Jiang , Chunxia
  5. The Impacts of "Land of Love, Water Cellar for Mothers" in Western China By Liguo Lin
  6. Distortion Effects of Export Quota Policy: an Analysis of the China - Raw Materials Dispute By Christophe Charlier; Sarah Guillou
  7. Determinants of Vietnam’s exports: Application of the Gravity Model By Nguyen, Huy Quynh
  8. Persistence of cooperation on innovation: Econometric evidence from panel micro data By Srholec , Martin
  9. Implementing HIV Prevention in the Context of Road Construction: A Case Study from Guangxi Zhuang Autonomous Region in the People’s Republic of China By Asian Development Bank (ADB); ; ;
  10. Can Mutual Funds Pick Stocks in China? Evidence from the IPO Market By Johansson, Anders C.; Feng, Xunan
  11. Bank ownership structure, SME lending and local credit markets By Hasan, Iftekhar; Jackowicz , Krzysztof; Kowalewski, Oskar; Kozlowski , Lukasz
  12. Why Give it Away When You Need it Yourself? Understanding Public Support for Foreign Aid in China By Cheng, Zhiming; Smyth, Russell
  13. Superstition and financial decision making By Hirshleifer, David; Jian, Ming; Zhang, Huai
  14. Forms, Factors and Efficiency of Eco-management in Bulgarian Farms with High Eco-activity By Bachev, Hrabrin
  15. Is the Central and Eastern European banking systems stable? Evidence from the recent financial crisis By Karkowska, Renata
  16. Inflation in New EU Member States: A Domestically or Externally Driven Phenomenon? By Tomislav Globan; Vladimir Arčabić; Petar Sorić

  1. By: Mila Kashcheeva (Research Fellow, BB&T Center for Education and Economic Policy Studies, and Center for China Studies, Clemson University, USA.); Sacha Wunsch-Vincent (Economics and Statistics Division, WIPO); Hao Zhou (Economics and Statistics Division, WIPO)
    Abstract: In terms of the number of its patent applications, in 2012 China has emerged as the country with the largest IP office in the world. The performance of the Chinese IP system is thus increasingly in the spotlight. While significant economic studies have been devoted to the rise of domestic patenting in China, hardly any study has focused on Chinese patent filings in foreign countries. This paper analyzes Chinese patenting abroad by using WIPO’s foreign-oriented patent family dataset and a respective enterprise questionnaire. It finds that by the turn of the century China emerged as major actor in terms of international patenting. While this is changing rapidly, the share of Chinese patents which get filed abroad is still a fraction of total patents filed at home and most patents still also only target one foreign IP office. Chinese foreign-oriented patent families are concentrated in a few technology fields, notably those related to the ICT sector, “Digital communication”, followed by “Computer technology”, “Nanotechnology”, and similar fields. A few Chinese firms are responsible for a large share of total Chinese patents filed abroad. The paper however also highlights that some of these trends are changing rapidly towards more intensive and broad-based filing abroad. Initial results from a selective firm survey also show a shift from the desire to protect technologies abroad to more strategic motives: (i) the desire to build patent portfolios avoiding litigation, (ii) facilitating collaboration with other firms, but also to (iii) license and sell IP abroad, and to (iv) further the firm’s reputation as true innovator.
    Keywords: China, innovation, intellectual property, patents, patent families, information technology
    JEL: F20 F23 L86 O3 O31 O34
    Date: 2014–09
  2. By: Sun, Rongrong
    Abstract: This paper models the People’s Bank of China’s operating procedures in a two-stage vector autoregression model to search for a valid good policy indicator for Chinese monetary policy. The model disentangles endogenous components in changes in monetary policy that are driven either by demand for money or the liquidity management needs arising from foreign exchange purchases. There are four main findings. First, the PBC’s procedures appear to have changed over time, and hence no single indicator represents Chinese monetary policy well for the 2000-2013 time period. Second, its operating procedure is neither pure interest-rate targeting nor pure reserves targeting, but a mixture. Third, a set of indicators all contain information about the policy stance. It is hence preferred to use a composite measure to measure Chinese monetary policy. Finally, we construct a new composite indicator of the overall policy stance, consistent with our model. A comparison with several existing measurement approaches suggests that the composite indices, rather than individual indicators, perform better in measuring Chinese monetary policy.
    Keywords: monetary policy, VAR, operating procedures, exogenous (endogenous) components
    JEL: E52 E58
    Date: 2014–08
  3. By: Hidemichi Fujii (Graduate School of Fisheries Science and Environmental Studies, Nagasaki University); Jing Cao (Tsinghua University); Shunsuke Managi (Graduate School of Environmental Studies, Tohoku University)
    Abstract: The objective of this study is to calculate and decompose productivity incorporating multi-environmental pollutants in Chinese industrial sectors from 1992 to 2008. We apply a weighted Russell directional distance model to calculate productivity from both the economic and environmental performance. Main findings are, 1) Chinese industrial sectors increased productivity, with the main contributing factors being labor saving prior to 2000. 2) The main contributing factors for productivity growth in coastal areas include both economic and environmental performance improvement. While central and west regions improved productivity due to economic development, they have a trade-off relationship between economic and environmental performance.
    JEL: O47 Q53 Q56
    Date: 2014–10
  4. By: Molyneux , Philip (BOFIT); Liu, Hong (BOFIT); Jiang , Chunxia (BOFIT)
    Abstract: We investigate ownership effects on capital and adjustments speed to the target capital ratio in China from 2000 to 2012 and find that state-owned banks hold higher levels of capital than banks of other ownership types. Foreign banks are more highly capitalized than local non-state banks but under-capitalized compared with the bigger non-state banks with nationwide presence. Foreign banks adjust risk-weighted capital towards their optimal targets at a slower speed than domestic banks, while foreign minority ownership results in a faster adjustment process. Capital is positively influenced by profitability, asset diversification and liquidity risk, but negatively influenced by bank market power. Capital ratios typically co-move with the business cycle although this relationship is reversed during the crisis period due to active government intervention. Our results are robust to various modelling specifications and have important policy implications.
    Keywords: banking; capital; adjustment; ownership; China
    JEL: C32 G21 G28
    Date: 2014–09–15
  5. By: Liguo Lin
    Abstract: In this study, we estimate the impacts of the “Land of Love, Water Cellar for Mothers” project that was launched to address comparatively serious water scarcity in western China. In these areas, male labourers flock to cities as a result of China's social transformation, leaving women as the main workforce in the poverty- and droughtstricken countryside of the region. We conducted two waves of a household survey: one prior to installation of a water storage facility referred to as a “water cellar” and a second wave after installation. In this paper, we first present theory of how the effects of the water cellar project are transmitted and then we empirically estimate the impact of project. We show that the water cellar project increases household incomes by an average of 4.6%. The water cellar project also significantly increases women’s on- and off-farm labour supply. The water cellar project is not shown to lead to a statistically significant impact in children’s school attendance or household health conditions.
    Keywords: Water cellar, Western China, Drought
    JEL: C23 J22 Q25
    Date: 2013
  6. By: Christophe Charlier (Université Nice Sophia Antipolis and GREDEG/CNRS); Sarah Guillou (OFCE - Sciences-Po Paris, GREDEG/CNRS and SKEMA Business School)
    Abstract: The China - Raw Materials dispute recently arbitrated by the WTO opposed China as defendant to the US, the EU and Mexico as claimants on the somewhat unusual issue of export restrictions on natural resources. For the claimants, Chinese export restrictions on various raw materials, of which the country is a major producer, create shortages in foreign markets increasing the prices of these goods. China defends export limitations by presenting them as a natural resource conserving policy. This paper offers a theoretical analysis of the dispute with the help of a model of a monopoly extracting a non-renewable resource and selling it on both the domestic and foreign markets. The theoretical results focus on the effects of imposing an export quota on quantities, prices and price distortion. Given the crucial importance of demand elasticity in this theoretical understanding of the conflict, the empirical part of the paper provides estimates of import demand elasticity of the parties for each product concerned in the case. The model and the empirical results challenge the ideas that an export quota always favours conservation of natural resource, that a higher foreign price necessarily follows this policy and that it inherently increases price distortion and therefore discrimination.
    Keywords: Export Restrictions, WTO, Exhaustible Natural Resources, Price Discrimination, Article XX of the GATT 1994
    JEL: F13 F18 F51 K33 Q37
    Date: 2014–10
  7. By: Nguyen, Huy Quynh
    Abstract: The success of exports in Vietnam has become a driving force for economic growth since the reform in 1986. The paper uses data from 2001 to 2004 to estimates the gravity model for Vietnam’s exports with the random effect estimation. The empirical results show that the bilateral trade of Vietnam has positive relationship with the country’s GDP and importing countries’ GDP. Furthermore, it has a negative relationship with distance from Vietnam to trading partners. These results are the same as the previous studies of the gravity model. Particularly, foreign direct investment, border effects and exchange rate play a significant role in promoting exports of Vietnam. Besides, the deepened integration into the region and world market also has significant impacts on expanding exports of Vietnam. Therefore, these factors have contributed to explaining the success in exports of Vietnam over the past few years.
    Keywords: Gravity model, exports , determinants of exports
    JEL: F14 F15
    Date: 2014–10–10
  8. By: Srholec , Martin (CERGE-EI, Prague and CIRCLE, Lund University)
    Abstract: Arrangements to cooperate on innovation facilitate access to external sources of knowledge. Using panel data derived from five waves of Community Innovation Survey in the Czech Republic, we examine whether firms engage in these arrangements persistently or rather revert to other behaviour. Econometric estimates of dynamic random effects and multivariate probit models provide strong support to the thesis of persistence, particularly of linkages with the university sector and suppliers. The results are robust to the initial conditions problem and serial correlation in idiosyncratic errors. Government programs initiating cooperation on innovation therefore have the potential to induce durable changes in the innovative behaviour of firms.
    Keywords: Innovation; cooperation; persistence; panel data; Community Innovation Survey; Czech Republic
    JEL: C23 C25 L20 O31 O32
    Date: 2014–09–28
  9. By: Asian Development Bank (ADB); (East Asia Department, ADB); ;
    Abstract: This case study documents HIV prevention work on the Longbai Expressway in Guangxi in the People’s Republic of China. It describes how to build HIV prevention into existing processes in road construction projects. It also highlights opportunities and constraints for HIV prevention work in the transport context. Finally it brings examples to show that the basic model can be adapted and replicated.
    Keywords: HIV/AIDS, HIV prevention, road construction, transport, road construction workers, PRC, Guangxi, ADB
    Date: 2014–04
  10. By: Johansson, Anders C. (Stockholm China Economic Research Institute); Feng, Xunan (Southwestern University of Finance and Economics)
    Abstract: This study examines the stock-picking ability of mutual funds in China using evidence from the IPO market. We hypothesize that the decision to invest in the IPO market contains positive information about a fund’s underlying expectation of newly listed firms’ future prospects. Using residuals from a model on the determinants of mutual funds purchases in the IPO market as proxy for consensus expectations, we find that IPO firms with high residual funds have significantly better stock returns and operating performance than those with low residual funds. In other words, residual funds can predict IPO future performance. This result is also robust to different specifications and alternative explanations such as mutual fund preferences or monitoring effects.
    Keywords: Mutual funds; Stock picking ability; IPO; China
    JEL: G15 G23 G30 L25
    Date: 2014–09–12
  11. By: Hasan, Iftekhar (Fordham University and Bank of Finland); Jackowicz , Krzysztof (Kozminski University); Kowalewski, Oskar (Institute of Economics of the Polish Academy of Sciences (INE PAN)); Kozlowski , Lukasz (BGZ SA)
    Abstract: In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative banks lend more to small businesses than do large domestic banks and foreign-owned banks, even when controlling for the financial situation of the cooperative banks. Additionally, our results suggest that cooperative banks provide loans to small businesses at lower costs than foreign-owned banks or large domestic banks. Finally, we show that small and medium-sized firms perform better in counties with a large number of cooperative banks than in counties dominated by foreign-owned banks or large domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry consolidation may raise valid concerns for small firms in developing countries.
    Keywords: small-business lending; cooperative banks; foreign banks; post-transition countries
    JEL: G21 G28
    Date: 2014–07–30
  12. By: Cheng, Zhiming; Smyth, Russell
    Abstract: Public support for foreign aid in donor countries is highly correlated with how much donor countries are willing to give. There is, perhaps surprisingly, relatively little evidence on the determinants of public support for foreign aid in donor countries. And the evidence that does exist is for donors that are developed democratic countries. In this study we examine the determinants of public support for foreign aid in China. China is a particularly interesting case because it is both a recipient and donor of foreign aid. Thus, one would expect that the public’s perceptions of China’s own development needs would influence its support for China donating to other countries. We find that while political ideology and sense of national identity are the most important determinants of support for foreign aid, several demographic characteristics are also important. We also find that those living in the lower income western provinces and in provinces with higher poverty rates express less support for giving foreign aid. We draw policy implications from the findings for better targeting engagement strategies designed to garner support for foreign aid.
    Keywords: China; public support; foreign aid; donor country
    JEL: D70 F50 P33
    Date: 2014–10–03
  13. By: Hirshleifer, David; Jian, Ming; Zhang, Huai
    Abstract: In Chinese culture, certain digits are lucky and others unlucky. We test how such numerological superstition affects financial decision in the China IPO market. We find that the frequency of lucky numerical stock listing codes exceeds what would be expected by chance. Also consistent with superstition effects, newly listed firms with lucky listing codes are initially traded at a premium after controlling for known determinants of valuation multiples, the lucky number premium dissipates within three years of the IPO, and lucky number firms experience inferior post-IPO abnormal returns.
    Keywords: Finance; Asset pricing; Investment
    JEL: G12 G14 G15
    Date: 2014–09–15
  14. By: Bachev, Hrabrin
    Abstract: This paper presents the results of a first large-scale study on forms, factors, and efficiency of eco-management in Bulgarian farms with a high eco-activity. First, a brief characterisation of surveyed “eco-active†farms is made. After that, diverse (internal, private, contract, market, formal, informal, hybrid etc.) forms and the scope of eco-management in agricultural farms are analysed. Next, different (ideological, economic, market, social etc.) factors of eco-management in farms are specified. After that, analysis is made on costs, effects, efficiency and perspectives of eco-management in agricultural farms. Finally, conclusions from the study are summarised.
    Keywords: environmental management, agriculture, agro-eco-management, Bulgaria, forms, factors, efficiency
    JEL: Q12 Q18 Q2 Q20 Q3 Q30
    Date: 2014–08–31
  15. By: Karkowska, Renata
    Abstract: Systemic risk is a very important but very complex notion in banking and how to measure it adequately is challenging. We introduce a new framework for measuring systemic risk by using a risk-adjusted balance sheet approach. The measure models credit risk of banks as a put option on bank assets, a tradition that originated with Merton. We conceive of an individual bank’s systemic risk as its contribution to the potential sector-wide net. In this regard, the analysis of public commercial banks operating in 7 countries from Central and Eastern Europe, shows potential risk which could threaten all the financial system. The paper shows how risk management tools can be applied in new ways to measure and analyze systemic risk in European banking system. The research results is a systemic risk map for the CEE banking systems. The study finds also instability of systemic risk determinants.
    Keywords: systemic risk, banking system, instability, emerging markets, Merton option model
    JEL: A10 C01 C32 C58 G13 G21 G32 G33
    Date: 2014–01
  16. By: Tomislav Globan (Faculty of Economics and Business, University of Zagreb); Vladimir Arčabić (Faculty of Economics and Business, University of Zagreb); Petar Sorić (Faculty of Economics and Business, University of Zagreb)
    Abstract: This paper analyzes the domestic and external inflation determinants for eight non-eurozone new EU member states (NMS). The empirical literature has been rather silent on the comparison of the relative importance of domestic vs. foreign inflation determinants. This paper aims to fill this gap and add to the literature by several methodological and empirical contributions. Empirical analysis is based on the structural vector autoregression (SVAR) model. It enables the authors to decompose inflation into its domestic and foreign component via historical decomposition analysis. Results indicate that foreign shocks are a major factor in explaining inflation dynamics in the medium run, while the short run inflation dynamics is mainly influenced by domestic shocks. Moreover, the importance of the foreign inflation component has had a rising trend in the pre-crisis period in all NMS, while the start of that trend mostly coincided with their accession to the EU. The global financial crisis seems to have decreased the importance of the foreign inflation component, although the results vary across countries. Since foreign shocks proved to be a very important determinant of inflation in NMS, the main policy implication of this study is the need to augment the classical Taylor rule with foreign factors in case of small open economies.
    Keywords: domestic and external inflation determinants, historical decomposition, inflation, new EU member states, consumer surveys
    JEL: C22 E31 E52 F41
    Date: 2014–10–23

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