nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒11‒17
23 papers chosen by
J. David Brown
United States Census Bureau

  1. Energy Prices, Subsidies and Resource Tax Reform in China By ZhongXiang Zhang
  2. Is China Catching up Human Health-related Applications of Biotechnology? By Petr Hanel
  3. What Types of Science and Technology Policies Stimulate Innovation? Evidence from Chinese firm-level data By ITO Asei; Zhuoran LI; Min WANG
  4. Interregional Inequality and Federal Expenditures and Transfers in Russia By Torbenko, Alexander
  5. Innovations as factor of absorptive capacity of FDI spillovers across regions of Russian Federation By Didenko, Alexander; Egorova, Tatiana
  6. The offshore renminbi exchange rate: Microstructure and links to the onshore market By Cheung, Yin-Wong; Rime , Dagfinn
  7. Capital Freedom, Financial Development and Provincial Economic Growth in China By Söderlund, Bengt; Gustavsson Tingvall, Patrik
  8. The Harsh Reality of Pursuing Innovations: Emerging Market Perspectives By Quan Hoang Vuong
  9. Environmental Management in Agriculture – Case of Bulgaria By Bachev, Hrabrin
  10. Explaining the Differences between Local Currency versus FX-denominated Loans and Deposits in the Central-Eastern European Economies By Judit Temesváry
  11. The Influence of Oil Price Shocks on China’s Macroeconomy : A Perspective of International Trade By Shiyi Chen; Dengke Chen; Wolfgang K. Härdle;
  12. Exchange Rate Impact on Russia’s Exports: Some Evidence from an Evolutionary Co-spectral Analysis By Bouoiyour, jamal; Selmi, Refk
  13. A new approach to measuring and studying the characteristics of class membership: The progress of poverty, inequality and polarization of income classes in urban China. By Gordon Anderson; Alessio Farcomeni; Grazia Pittau; Roberto Zelli
  14. House Prices and Stock Prices: Evidence from a Dynamic Heterogeneous Panel in China By Nannan Yuan; Shigeyuki Hamori; Wang Chen
  15. Benchmarking Methods in the Regulation of Electricity Distribution System Operators By Janda, Karel; Krska, Stepan
  16. Differences of small-scale farmers and the related short agri-food value chains An empirical evidence from Hungary By Zsófia Benedek; Imre Fertõ; Lajos Baráth; József Tóth
  17. Fine structure of the price-demand relationship in the electricity market: multi-scale correlation analysis By Afanasyev, Dmitriy; Fedorova, Elena; Popov, Viktor
  18. In Lands of Foreign Currency Credit, Bank Lending Channels Run Through? The Effects of Monetary Policy at Home and Abroad on the Currency Denomination of the Supply of Credit By Steven Ongena; Ibolya Schindele; Dzsamila Vonnak
  19. The Natural Resource Curse in Post-Soviet Countries : The Role of Institutions and Trade Policies By Roman Horváth; Ayaz Zeynalov
  20. Determinants of poverty among ethnic minorities in the Northwest region, Vietnam By Quang Tran, Tuyen; Hong Nguyen, Son; Van Vu, Huong; Quoc Nguyen, Viet
  21. Panel analysis of home prices in the primary and secondary market in 17 largest cities in Poland By Leszczyński, Robert; Olszewski, Krzysztof
  22. Ethnicity and politics in the Romanian space. The case of northwestern Transylvania By Brie, Mircea
  23. Vietnam: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for Vietnam By International Monetary Fund. Asia and Pacific Dept

  1. By: ZhongXiang Zhang (ZhongXiang Zhang, Fudan University, Shanghai (China))
    Abstract: The Chinese leadership in November 2013 determined to embark upon a new wave of comprehensive reforms in China. This is clearly reflected by the key decision of the Third Plenum of the 18th Central Committee of Communist Party of China to assign the market a decisive role in allocating resources. To have the market to play that role, getting the energy prices right is crucial because it sends clear signals to both producers and consumers of energy. While the overall trend of China’s energy pricing reform since 1984 has been moving away from the pricing completely set by the central government in the centrally planned economy towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This paper discusses the evolution of price reforms for coal, petroleum products, natural gas and electricity in China, provides some analysis of these energy price reforms, and suggests few areas of reforms could take place in order to have the market to play a decisive role in allocating resources and to help China’s transition to a low-carbon economy.
    Keywords: Energy Prices, Tiered Prices, Differentiated Tariffs, Subsidies, Coal, Electricity, Natural Gas, Petroleum Products, Resource Taxes, Desulfurization and Denitrification, State-Owned Enterprises, China
    JEL: H23 H71 O13 O53 Q43 Q48 Q53 Q58
    Date: 2014–08
  2. By: Petr Hanel (Département d'économique, Université de Sherbrooke, Centre interuniversitaire de recherche sur la science et la technologie (CIRST), UQAM)
    Abstract: Biotechnology is still in the early stage of development. It offers a window of opportunity for emerging developing countries catching up. Scientific research and industrial applications of biotechnology in China have been rapidly developing. The paper examines whether Chinese biotechnology is catching up leaders in the field. The approach follows the conceptual framework of Malerba’s Sectoral System of Innovation and Production (Malerba and Nelson, 2012), complemented by Mathew’s (2002) insight into strategies for latecomer firms. The data for the empirical analysis are mostly from China’s Science and Technology and High Technology Industry Yearbooks and bibliographic data on Chinese scientific publications and patenting. Brief case studies of outstanding organizations complement the statistical analysis. The results of the study show that China is fast catching up in scientific research, and more moderately in industrial production of biotechnology-based manufacturing of drugs and medical devices.
    Date: 2014–11
  3. By: ITO Asei; Zhuoran LI; Min WANG
    Abstract: Since the Chinese government's rapid increase in expenditure on science and technology (S&T) during the 2000s, numerous related policies have been implemented by national-, provincial-, city-, and prefecture-level governments in China. Each level of government aims to promote innovation activities; however, few empirical evaluations have been conducted on each policy level and category. This paper estimates the treatment effects of innovation policies at each government level and category by using firm-level survey data from the inland city of Chengdu. Results suggest that S&T policies stimulate effective firm-level innovation activities; in particular, city-level policies and various government services. On the other hand, some policy categories, including tax incentives, seem to be inefficient. Restructuring the current policy menu and establishing further feedback mechanisms for S&T policy will improve the efficacy of such spending.
    Date: 2014–09
  4. By: Torbenko, Alexander
    Abstract: The paper considers the influence of federal government expenditures and transfers on interregional convergence in gross regional product (GRP) per capita and wages in Russia over 2005--2011. Such an influence is not found. The federal government's policy was reactive and was not focused on decreasing interregional inequality during this period. Wages growth depended more on GRP per capita growth than on federal government spendings and transfers per capita growth. The dependence between GRP per capita growth and federal government spendings and transfers per capita growth was very weak. Moreover, the paper shows that in this period inequality of Russian regions in GRP per capita and wages was diminishing. In the given period in Russian regions there existed unconditional $\beta$-convergence, poor regions grew faster than rich ones. This result confirms the prediction of neoclassical theory of regional growth and challenges a new economic geography prediction. Comparing our results to the results of previous research the process of interregional convergence in Russia can be seen. In the 1990s, with the state pressure having been eliminated, the differentiation between Russian regions began, while in the 2000s a natural process of (conditional or unconditional) convergence started.
    Keywords: convergence, federal expenditures and transfers, wages, Russia, regions, gross regional product
    JEL: H72 H77 R58
    Date: 2014–01–27
  5. By: Didenko, Alexander; Egorova, Tatiana
    Abstract: We study how innovations affect increase of regional total factor productivity (TFP) as a result of productivity spillovers from foreign direct investment (FDI), and confirm the presence of phenomenon in Russian data. TFP is modeled using data envelopment analysis (DEA) with the human capital, energy and capital as inputs, and the gross regional product as output. We develop innovations index for the regions of the RF, proxying for regional absorptive capacity, based on 17 variables, characterizing economic, social and infrastructural aspects of regional development. FDI variable accounts for spatial distribution of FDI flows. We confirm the presence of FDI spillovers in Russia and moderating role of innovations.
    Keywords: FDI, productivity spillovers, innovations, absorptive capacity, data envelopment analysis
    JEL: F21 O11 O30 R11 R12
    Date: 2014–09
  6. By: Cheung, Yin-Wong (BOFIT); Rime , Dagfinn (BOFIT)
    Abstract: The offshore renminbi (CNH) exchange rate is the exchange rate of the Chinese currency transacted outside China. We study the CNH exchange rate dynamics and its links with onshore exchange rates. Using a specialized microstructure dataset, we find that CNH is significantly affected by its order flow and limit-order imbalance. The offshore CNH exchange rate has an increasing impact on the onshore rate, and significant predictive power for the official RMB central parity rate. The CNH order flow also affects the onshore RMB exchange rate and the central parity rate. The interactions between variables are likely to be time-varying.
    Keywords: foreign exchange market microstructure; order flow; limit-order imbalance; CNH; CNY; central parity rate
    JEL: F31 F33 G14 G15 G21 G28
    Date: 2014–09–29
  7. By: Söderlund, Bengt (The Ratio institute and Stockholm School of Economics); Gustavsson Tingvall, Patrik (Södertörn University and The Ratio Institute)
    Abstract: For more than three decades, China has managed to combine rapid economic growth with a heavily regulated financial sector. The discrepancy between economic and financial development has raised the question of whether China might be an exception to the so-called finance-growth nexus. This study examines the relationship between finance and growth at the provincial level in China using a new set of measures of capital freedom and financial development. The results indicate that capital freedom and financial development are associated with both higher income and growth rates. In particular, we find that the marketization of financial institutions and strengthening of legal and government institutions have a particularly strong impact on income and growth in low-income provinces.
    Keywords: Keywords: China; Economic growth; Financial institutions
    JEL: C23 E44 G28 O11 O43
    Date: 2014–10–02
  8. By: Quan Hoang Vuong
    Abstract: This short conference paper serves as a distillation of a keynote address delivered at the the Second National Conference on Management and Higher Education Trends & Strategies for Management & Administration hosted by Bangkok-based Stamford International University (Thailand) on November 1, 2014.Innovation is discussed as the heart of entrepreneurial processes occurring in today's capitalist economic systems, including transition economies like China and Vietnam, which underscores economic competitiveness of firms and economies. But the innovation effort and process also face dilemma of "entrepreneurial curse of innovation". Advantages and disadvantages are weighed for a more balanced view, especially in the context of outnumbering SMEs and given existence of pitfalls and traps along the innovation path of development. Toward the end, the value of the market is once again stressed amid the concern of subjective assumption and illusion about availability of market opportunities in the mind of innovators, which may contrast totally with the dismal outcome the actual market realities may show ex post.
    Keywords: innovation; emerging markets; capitalist economic system; entrepreneurial process
    JEL: L26 O32 P17 P23
    Date: 2014–11–05
  9. By: Bachev, Hrabrin
    Abstract: This paper presents a holistic framework for analysing, assessment and improvement of environmental management in agriculture, and assesses the forms, factors and efficiency of agro-eco-management in Bulgaria during post-communist transition and EU integration. It incorporates an interdisciplinary approach, and suggests a modern framework for analysing and evaluating the system of environmental management in agriculture. After that is analysed evolution of diverse formal and informal management forms for environmental management in Bulgarian agriculture, and identifies and assesses the forms, factors, efficiency and perspectives of environmental management in “eco-active†farms of different type and location.
    Keywords: environmental management, agriculture, mechanisms and forms of governance, eco-managment indicators, Bulgaria, EU CAP implementation, market, private, public modes, farm managment
    JEL: Q12 Q13 Q15 Q18 Q2 Q20 Q3 Q30 Q5 Q51 Q52 Q53 Q54 Q56 Q57 Q58
    Date: 2014–09
  10. By: Judit Temesváry (Department of Economics, Hamilton College)
    Abstract: Foreign currency-based loans and deposits became very popular in Central-Eastern European countries (CEECs) over the 2000-2011 period. This paper employs a structural approach to simultaneously examine the demand-side (consumer-related) and supply-side (bank-related) determinants of the quick spread of FX-based banking. The econometric analysis uses a unique newly constructed dataset on FX and domestic currency loans, deposits and interest rates, covering 16 CEECs overtime. Results show that deregulation and cheap funding from parents abroad helped fuel FX lending. There is substantial heterogeneity across market segments, currencies and maturities. Corporate sector FX lending is fundamentally different from retail and mortgage markets.
    Keywords: Bank lending, Interest rate choices, Discrete choice, Simultaneous equations, Cross-country analysis
    JEL: E44 F31 G21 G28
    Date: 2014–01
  11. By: Shiyi Chen; Dengke Chen; Wolfgang K. Härdle;
    Abstract: International trade has been playing an extremely significant role in China over the last 20 years. This paper is aimed at investigating and understanding the relationship between China’smacro-economy and oil price fromthis newperspective. We find strong evidence to suggest that the increase of China’s price level, resulting fromoil price shocks, is statistically less than that of its main trade partners’. This helps us to understand the confused empirical results estimated within the SVAR framework and sheds light on recent data. More specifically, as for the empirical results, we find China’s output level is positively correlated with the oil price, and oil price shocks slightly appreciate the RMB against the US dollar. Positive correlation between China’s output and oil price shocks presumably results from the drop in China’s relative price induced by oil price shocks, which is inclined to stimulate China’s goods and service exports. The slight appreciation of the RMB could be justified by the drop in China’s relative price, which is indicated by economic theory. Moreover, constructing a simple model, our new perspective also helps us to understand the recent fact that together with the dramatic surge of the world oil price, while the oil imports of the other major countries (especially the largest oil import country US) in the world steadily decline or remain stable, China’s oil imports, in contrast, have kept rising steeply since the year 2004.
    Keywords: Oil price shocks, International trade, China’s macro-economy
    JEL: F41 Q43 Q48
    Date: 2014–10
  12. By: Bouoiyour, jamal; Selmi, Refk
    Abstract: The core focus of this paper is to analyze the dynamic interactions between changes in exchange rate (nominal and real terms) and exports to GDP ratio in Russia. To this end, we apply a new approach based on a time varying dynamic coherence function, called, evolutionary co-spectral analysis. Our results put in evidence that coherence pattern differs over time, suggesting that nonlinearities are an important issue when assessing the focal relationship. These observed outcomes change substantially in terms of magnitude when subtracting energy, while differential price stills the major player. We can attribute these findings to the limited effectiveness of exchange rate policy and the inefficiency of sterilization coupled with a lack of competitiveness of banking sector.
    Keywords: Exchange rate; exports; time varying dynamic coherence function; Russia.
    JEL: C6 F14
    Date: 2014–09
  13. By: Gordon Anderson; Alessio Farcomeni; Grazia Pittau; Roberto Zelli
    Abstract: Classifying agents into subgroups in order to measure the plight of the "poor", "middle class" or "rich" is common place in economics, unfortunately the definition of class boundaries is contentious and beset with problems. Here a technique based on mixture models is proposed for surmounting these problems by determining the number of classes in a population and estimating the probability that an agent belongs to a particular class. All of the familiar statistics for describing the classes remain available and the possibility of studying the determinants of class membership is raised. As a substantive illustration we analyze household income in Urban China in the last decade of the 20th Century. Four income groups are classified and the progress of those "poor", "lower middle", "upper middle" and "rich" classes are related to household and regional characteristics to study the impact of urbanization and the one child policy on class membership over the period.
    Keywords: Poverty Frontiers, Mixture Models, Class membership, Urban China.
    JEL: C14 I32 O1
    Date: 2014–10–20
  14. By: Nannan Yuan (Graduate School of Economics, Kobe University); Shigeyuki Hamori (Graduate School of Economics, Kobe University); Wang Chen (Graduate School of Economics, Kobe University)
    Abstract: Several studies have focused on the relationship between stock and house prices, but they reached contradictory conclusions. This paper contributes to the literature by analyzing the effects of stock prices on house prices with panel data of 28 regions in China for the 2003:Q1 to 2012:Q4 period. Compared with the previous studies, we explain these contrasting effects by distinguishing between the long- and short-run effects of stock prices. Our main results show that stock prices have a negative effect on house prices in the long run but positive effects in the short run. Furthermore, we determine that high market openness and low composition risk account for the opposite short-run effects of stock prices.
    Keywords: house prices, stock prices, dynamic relationship
    JEL: G32 E31 E44
    Date: 2014–10
  15. By: Janda, Karel; Krska, Stepan
    Abstract: This paper examines the regulation of distribution system operators (DSOs) focused on the Czech electricity market. It presents an international benchmarking study based on data of 15 regional DSOs including two Czech operators. The study examines the application of yardstick methods using data envelopment analysis (DEA) and stochastic frontier analysis (SFA). We find that the cost efficiency of each of the Czech DSOs is different, which indicates a suitability of introduction of individual efficiency factors in the regulatory process.
    Keywords: Regulation, benchmarking, electricity.
    JEL: K23 L43 L94
    Date: 2014–10–22
  16. By: Zsófia Benedek (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Imre Fertõ (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Lajos Baráth (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); József Tóth (Gazdálkodástudományi Kar, Agrárközgazdasági és Vidékfejlesztési Tanszék, Budapesti Corvinus Egyetem)
    Abstract: Recently, short food supply chains have been thoroughly studied in some countries; however, data are sparse from others. In Hungary, the local food movement has been developing very fast and an outburst in the number of farmers markets has happened, due to the changes of the legal environment. The paper addresses the question whether farmers selling at various short food supply chains are different based on their socio-demographic, farm- and production-related characteristics, expectations and motivations. Employing survey data our results confirm that short supply chains are different in terms of farmers’ profiles. The outcomes are important in the light of the coming EU funding schemes as different small-scale farmers require different supporting frameworks and solutions.
    Keywords: Short food supply chain, local food system, farmers’ market, organic farming
    JEL: Q13 Q18 R58
    Date: 2014–03
  17. By: Afanasyev, Dmitriy; Fedorova, Elena; Popov, Viktor
    Abstract: The price-demand relationship in the electricity market is a complicated phenomenon. In order to thoroughly investigate the peculiarities of this relationship, a multi-scale correlation analysis of electricity price and demand is carried out in this research. Using a modified method of socalled time-dependent intrinsic correlation (TDIC) (Chen et al., 2010), based on the complete ensemble empirical mode decomposition with adaptive noise (CEEMDAN) (Torres et al., 2011), and bootstrapping, we investigate the problems of dynamic interconnection between electricity demand and prices over different time scales (i.e. its fine structure). We formulate and test three hypotheses on the type and strength of correlations between them in the short-, medium- and long-runs. In this research we analyze the data from two largest price zones of Russian wholesale electricity market: Europe-Ural and Siberia. These two zones differ from each other by the structures of electricity generation and consumption. It is shown that these two price zones significantly differ in internal price-demand correlation structure over the comparable time scales, and not each of the theoretically formulated hypotheses is true for each of the price zones. This allows us to conclude that the answer to the question whether it is necessary to take into account the influence of demand-side on electricity spot prices over different time scales, is significantly dependent on the structure of electricity generation and consumption on the corresponding market.
    Keywords: electricity spot price, electricity demand, price-demand correlation, empirical mode decomposition, time-dependent intrinsic correlation, trend estimation
    JEL: C14 C40 C65 L94
    Date: 2014–09
  18. By: Steven Ongena (University of Zurich, Swiss Finance Institute and CEPR); Ibolya Schindele (BI Norwegian Business School and Central Bank of Hungary); Dzsamila Vonnak (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: We analyze the differential impact of domestic and foreign monetary policy on the local supply of bank credit in domestic and foreign currencies. We analyze a novel, supervisory dataset from Hungary that records all bank lending to firms including its currency denomination. Accounting for time-varying firm-specific heterogeneity in loan demand, we find that a lower domestic interest rate expands the supply of credit in the domestic but not in the foreign currency. A lower foreign interest rate on the other hand expands lending by lowly versus highly capitalized banks relatively more in the foreign than in the domestic currency.
    Keywords: bank balance-sheet channel, monetary policy, foreign currency lending
    JEL: E51 F3 G21
    Date: 2014–10
  19. By: Roman Horváth (Institute of Economic Studies, Charles University); Ayaz Zeynalov
    Abstract: We examine the effect of natural resource abundance on economic performance during the 1996–2011 period in the 15 independent countries that formerly comprised the Soviet Union. These countries were a largely homogeneous group with respect to institutional development, liberalization and economic performance; however, these countries began to demonstrate marked differences from one another with respect to these factors during the transition, which has resulted in unique cross-section and time variation. Using several panel regression models that address the endogeneity issues, our results suggest that natural resources crowd out manufacturing sector unless the quality of domestic institutions is sufficiently high. Conversely, trade policies do not help convert the natural resource curse into a blessing.
    Keywords: natural resource curse, institutions, manufacturing, post-Soviet countries
    JEL: O11 O13 Q30
    Date: 2014–06
  20. By: Quang Tran, Tuyen; Hong Nguyen, Son; Van Vu, Huong; Quoc Nguyen, Viet
    Abstract: This paper investigates both community and household determinants of poverty among ethnic minorities in the Northwest region, Vietnam. Results of a fractional logit and a logit model show that some household factors such as fixed assets, education, land and off-farm employment have a reducing effect on both poverty intensity and incidence. Furthermore, some commune characteristics were found to be closely linked to poverty. Notably, the presence of means of transportation and post offices reduces both the poverty intensity and incidence. However, other commune and household factors affect only the poverty incidence or intensity, but not both. This suggests that previous studies that focused only on the determinants of poverty incidence using a logit/probit approach might not adequately evaluate or even ignored the impact of some factors on the poverty intensity. We draw both socio-economic household and commune level implications for poverty alleviation in the study area.
    Keywords: shortfall, poverty incidence, poverty gap, poverty intensity, logit, fractional logit, national target program.
    JEL: I32 J15 O12
    Date: 2014–09–19
  21. By: Leszczyński, Robert; Olszewski, Krzysztof
    Abstract: We analyse the determinants of house prices in the primary and secondary market of 17 largest cities in Poland during the 2002-2013 period. We find that prices are driven by economic fundamentals, such as income growth or rise in employment. Prices in the secondary market react to increases in the loan availability, that was driven by low interest rates resulting from FX denominated housing loans that were granted since 2006. This finding does not hold for the primary market, which is to a large extent financed with cash. We confirm empirically that the house appreciation in the past period has a strong effect on the current price, which confirms herding behaviour in the housing market. Another finding is that the secondary market has a stronger effect on the primary market than the other way around. This means that housing demand is satisfied in the first place from the secondary market, and if prices rise, potential buyers go to the primary market. Finally, we find that price increases in Warsaw spill over to the local markets of 16 regional cities. This finding is consistent with the contagion theory in the real estate market, according to which price increases in the centre lead to price increases in the periphery.
    Keywords: housing market, house prices, primary and secondary market, spillover effects
    JEL: E21 R21 R31
    Date: 2014
  22. By: Brie, Mircea
    Abstract: The ethnic structure of this region has been heavily influenced by the evolution of the various historico-geographical factors and policies. Most of this structure, however, is linked to the evolution of the denominational structure. Ethnicity in this case is closely related to religion. The political reality, the events with political overtones that occurred during these centuries had a direct influence regarding the conduct of processes and phenomena related to the ethno-confessional evolution of the area subject to our research. In this period the region is part of the Austrian state (before 1867), Austro-Hungarian Empire (1867 to 1918), Hungary (1940-1944) and Romania (1918-1940, 1944 - present). This space is located in the western area and it is mainly inhabited by Romanians. The continuous presence of Romanians here is documented ever since its formation. The ethnic group of Romanians has been facing a considerable demographic pressure that came from the Hungarians (the neighbouring ethnic group) or from groups or immigrants settled in this space (we refer in this case mainly to the Germans, Slovaks, Gypsies and Jews). Major geopolitical changes of the twentieth century and political decisions, especially extremist dictatorial regimes (Horthyst-Hungarian and communist-Romanian) led to significant changes in the ethnic structure of the region northwest Transylvania. Policy decisions, especially those taken during the dictatorial political and extremist regimes during the twentieth century were able to seriously affect ethno-religious realities of the Romanian space, especially in Transylvania. Be it the Hungarian or Romanian authorities during the two world wars or the communist dictatorship, decisions were taken that changed the ethnic map of the Romanian space. Suffice it to recall the drama of the Jewish community of the Second World War or the „sale†of the Germans and the Jews by the Communists in the postwar period.
    Keywords: ethnicity; Transylvania; diversity; Romanians; Hungarians; political decisions
    JEL: F5
    Date: 2014
  23. By: International Monetary Fund. Asia and Pacific Dept
    Abstract: KEY ISSUES Context. Economic performance has improved over the last year. The recovery is taking hold, although domestic activity remains weak, in part constrained by weak banks and inefficient state-owned enterprises (SOEs). Inflation has declined, the current account remains in large surplus, and international reserves have increased. The authorities place a priority on preserving macroeconomic stability, tackling banking sector vulnerabilities, and reforming SOEs, though implementation has been gradual in some key areas. Outlook and risks. Growth is projected to recover gradually over the coming years, with the current account returning to a deficit and inflation contained. On current policies, public debt is projected to reach 60 percent of GDP. Risks include weaker trading partner growth, geopolitical tensions, slow structural reforms, and delayed fiscal consolidation. Early conclusion to key trade negotiations would be growth-positive. Fiscal policy. Deficits have been sizable and rising public debt requires attention. A medium-term growth-friendly consolidation is recommended, based on enhancing revenue and rationalizing unproductive expenditures while preserving crucial social and capital spending. This would ensure public debt sustainability with space to address contingent liabilities from banking sector and SOE restructuring. Monetary and exchange rate policy. The current monetary policy stance is appropriate. Greater exchange rate flexibility would help buffer external shocks, facilitate improved reserve adequacy, and help lay the groundwork for shifting toward using inflation as a nominal anchor over the medium term. Banking sector reform. Several policy measures have been taken recently, but the overall gradual approach will likely continue constraining credit growth and keep the system susceptible to shocks and significant asset deterioration. A more expeditious recognition of nonperforming loans, bank restructuring and orderly resolution would support robust credit creation and macro-financial stability. State-owned enterprise reform. Progress is being made. Implementing restructuring plans and accelerating equitization would help ensure more efficient resource allocation, strengthen banks, and deliver higher future growth. Reform should also focus on strengthening corporate governance and ensuring a level playing field.
    Keywords: Article IV consultation reports;Economic growth;Public debt;Fiscal policy;Fiscal reforms;Public enterprises;Monetary policy;Bank restructuring;Bank reforms;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Vietnam;
    Date: 2014–10–16

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