nep-tra New Economics Papers
on Transition Economics
Issue of 2016‒01‒03
twenty-one papers chosen by
J. David Brown
United States Census Bureau

  1. Environmental Kuznets Curve: The Case of Russia By Sergei Mihalischev; Yulia Raskina
  2. The Integration of Energy, Environment and Health Policies in China: A Review By Huijie Yan
  3. Urban Systems and Urban Development in the People’s Republic of China By Chen, Zhao; Lu, Ming
  4. It's cold inside – energy poverty in Poland By Agata Miazga; Dominik Owczarek
  5. The Competitive Saving Motive: Concept, Evidence, and Implications By Wei , Shang-Jin; Zhang, Xiaobo
  6. What Accounts for the Growth of Carbon Dioxide Emissions in Advanced and Emerging Economies? The Role of Consumption, Technology, and Global Supply Chain Trade By Ferrarini , Benno; de Vries , Gaaitzen J.
  7. Local economic strategies for ageing labour markets: Marijampolė's Third Age University in Lithuania By Simonas Gausas; Lina Vosyliūtė
  8. International Spillovers of ECB’s Unconventional Monetary Policy: The Effect on Central and Eastern Europe By Klara Halova; Roman Horvath
  9. Changes in nominal rigidities in Poland – a regime switching DSGE perspective By Pawel Baranowski; Zbigniew Kuchta
  10. China’s Debt: Structure, Determinants and Sustainability By Sun, Lixin
  11. A Darwinian Perspective on “Exchange Rate Undervaluation” By Du , Qingyuan; Wei , Shang-Jin
  12. The relation between sovereign credit default swap premium and banking sector risk in Poland By Åukasz GÄ…tarek; Marcin Wojtowicz
  13. The Effect of Unemployment Benefit Generosity on Unemployment Duration: Quasi-Experimental Evidence from Slovenia By Vodopivec, Matija; Laporsek, Suzana; Dolenc, Primož; Vodopivec, Milan
  14. Misallocation of Resources in Latvia: Did Anything Change During the Crisis? By Konstantins Benkovskis
  15. Efficiency in the highly market-segmented Chinese banking sector: A meta-frontier non-radial directional distance function approach By Dong Xiang; Ning Zhang; Andrew C Worthington
  16. The determinants of wheat yields: the role of sustainable innovation, policies and risks in France and Hungary By Mauro Vigani; Manuel Gomez-Barbero; Emilio Rodríguez-Cerezo
  17. Diversity of firm sizes, complexity, and industry structure in the Chinese economy By Heinrich, Torsten; Dai, Shuanping
  18. Characteristics of farming systems in Albania By Fatmir Guri; Ilir Kapaj; Bahri Musabelliu; Maksim Meço; Eneida Topulli; Remzi Keco; Natasha Hodaj; Shpresim Domi; Gentjan Mehmeti; Sergio Gomez y Paloma
  19. Age Features of a Happy Life in Russia and Europe: An Econometric Analysis of Socio-Economic Determinants By Elena Kopnova; Lilia Rodionova
  20. Markets and long-term contracts: The case of Russian gas supplies to Europe By Chi-Kong Chyong
  21. Fighting Corruption in Education: What Works and Who Benefits? By Borcan, Oana; Lindahl, Mikael; Mitrut, Andreea

  1. By: Sergei Mihalischev; Yulia Raskina
    Abstract: This paper investigates the relationship between economic development and environmental pollution among Russian regions based on the concept of Environmental Kuznets Curve. It shows how income inequality, growth of GRP and structure of regional economy affect emissions of three pollutants: carbon monoxide, nitrogen dioxide and sulfur dioxide. We estimate a panel data model using the Russian Statistical Agency's data for Russian regions in the period 2000–2013. It is shown that the majority of regions in Russia have not reached a turning point when economic growth leads to decrease in pollution. Growth of the non-manufacturing sector of GRP has either no statistically significant effect on the change in emissions or its impact is ambiguous. The increase in the level of economic inequality in the region is characterized by the decrease in emissions.
    Keywords: Environmental Kuznets Curve, regional development, pollution, structural changes in the economy
    JEL: Q56 P28 C23
    Date: 2015–11–28
  2. By: Huijie Yan (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)
    Abstract: The goal of sustainable development is far from being achieved in China. In this context, this paper aims to provide an overview of China’s energy, environment and health policies over the past 30 years and discuss whether the previous policies have fully integrated the energy, environment and health issues in its sustainable development agenda. From the overview, we observe that the energy policies accelerating energy industrial upgrading, stimulating development of new energy sources, deregulating energy pricing mechanism, promoting energy saving and seizing the opportunity of green growth are conducive to an improvement of environmental conditions and public health in China. However, the environmental policies are not effectively implemented and subsequently they could not succeed in reducing environmental risks on public health and putting pressure on enterprises to efficiently use energy. The health policies have not taken real actions to focus with any specificity on energy-induced or pollution-induced health problems.
    Keywords: energy,environment,health,China
    Date: 2015–12
  3. By: Chen, Zhao (Asian Development Bank Institute); Lu, Ming (Asian Development Bank Institute)
    Abstract: The People’s Republic of China (PRC) is experiencing a trend toward population concentration in its large coastal cities. However, at the same time, there is also a distortion of city size toward small cities in the country. That is to say, the urban population in the PRC should further concentrate in large cities rather than be more equally spread out. Cross-country analysis indicates that the population size of the primary city in the PRC is smaller than its predicted value. This paper suggests that the PRC government should adjust its policies on future urbanization for fewer restrictions on the further growth of megacities.
    Keywords: urbanization; megacities; population concentration
    JEL: O18 P25 R12
    Date: 2015–12–28
  4. By: Agata Miazga; Dominik Owczarek
    Abstract: The aim of this paper is to present a statistical measure of energy poverty in Poland. This is the first research for Poland which is strictly based on the methodology applied in the United Kingdom - the only country with a statutory definition of energy poverty. We calculate three measures: absolute – 10% of income, modified absolute – 13% of income and relative - Low Income High Costs (LIHC). The results are compared with a subjective energy situation assessment made by households. Moreover, we answer the question to what extent energy poverty coincides with income poverty. After examining the different variants of the definition, we recommend using the relative LIHC definition in Poland. According to this measure, 17% of the Polish population (6.44 million people) are exposed to energy poverty, especially occupants of detached houses, inhabitants of rural areas, households living on non-earned sources, single parents and married couples with at least 2 children.
    Keywords: energy poverty, income poverty, energy expenditure
    JEL: I32 Q40
    Date: 2015–11
  5. By: Wei , Shang-Jin (Asian Development Bank); Zhang, Xiaobo (Peking University)
    Abstract: This short essay surveys recent literature on the competitive saving motive and its broader economic implications. The competitive saving motive is defined as saving to improve one's status relative to other competitors for dating and marriage partners. Here are some of the key results of the recent literature: (i) cross-country evidence show that greater gender imbalances tend to correspond with higher savings rates; (ii) household-level evidence suggest that: (a) families with unmarried sons in rural regions with more skewed sex ratios tend to have higher savings rates, while savings rates of families with unmarried daughters appear uncorrelated with gender imbalances; and (b) savings rates of families in cities tend to rise with the local sex ratio; (iii) rising sex ratios contribute nearly half of the rise in housing prices in the People’s Republic of China; and (iv) families with sons in regions of greater sex ratios are more likely to become entrepreneurs and take risky jobs to earn more income.
    Keywords: competition; current account; saving; sex ratio
    JEL: D14 E21 F30 I10 J12 J20
    Date: 2015–11–26
  6. By: Ferrarini , Benno (Asian Development Bank); de Vries , Gaaitzen J. (University of Groningen, the Netherlands)
    Abstract: Climate policy pledges and negotiations involve commitments about the reduction of emissions within national borders. However, the rise of global value chains has changed the nature of production and international trade, blurring the attribution of ultimate responsibility for emissions. This paper applies a novel method that examines the change in territorial emissions due to changes in energy intensity, supply chain participation, and domestic and foreign consumption. Our findings suggest that rising levels of domestic consumption are related to increased carbon dioxide emissions in both advanced and emerging economies. A substantial share of emissions growth in emerging economies is accounted for by higher participation in global production networks that serve expanding foreign consumption. However, even for economies that most rapidly integrated in global production networks, such as the People’s Republic of China, rising domestic consumption accounts for the bulk of territorial emissions. Improved energy efficiency partially stemmed the spike in emissions from higher consumer demand.
    Keywords: global multiregional input–output model; global value chains; structural decomposition analysis; World Input–Output Database
    JEL: D57 E01 F18 Q56
    Date: 2015–10–14
  7. By: Simonas Gausas; Lina Vosyliūtė
    Abstract: This paper analyses local employment strategies for shrinking and ageing labour markets through the case study of two local initiatives in Marijampolé, Lithuania. Drawing from desk research, quantitative analysis and primary interviews, the paper determines the effectiveness of Marijampolé’s Third Age University and the Petras Kriaučiūnas Public Library in re-training older workers to improve professionalism, entrepreneurialism and skills development, particularly in information and communication technologies. The analysis also draws synergies between national, regional and local strategies to reskill the Lithuanian labour market to outline appropriate strategy and implementation recommendations for policy makers.
    Date: 2015–12–23
  8. By: Klara Halova; Roman Horvath
    Abstract: We examine how unconventional monetary policy of the European Central Bank influences macroeconomic stability in Central and Eastern European economies. We estimate various panel vector autoregressions using monthly data from 2008-2014. Using the shadow policy rate and central bank assets as measures of unconventional policies, we find that output and prices in Central and Eastern Europe temporarily increase following an expansionary unconventional monetary policy shock by the European Central Bank. Using both impulse responses and variance decompositions, we find that the effect of unconventional policies on output is much stronger than the effect on inflation. In addition, our results provide evidence that unconventional policy tends to reduce market uncertainty and domestic interest rates but that the effect on the real exchange rate is not significant.
    Keywords: Unconventional Monetary Policy, ECB, Central and Eastern Europe, Panel Vector Autoregression
    JEL: E52 E58
    Date: 2015–10
  9. By: Pawel Baranowski (Faculty of Economics and Sociology, University of Lodz); Zbigniew Kuchta (Faculty of Economics and Sociology, University of Lodz)
    Abstract: In this paper, we estimate Erceg, Henderson and Levin’s [2000] sticky price and sticky wage dynamic stochastic general equilibrium (DSGE) model while allowing for wage or price Calvo parameters regime switching and compare this with the constant parameters model. Our results suggest that the model with price and wage rigidity switching is strongly favored by the data. However, we do not find significant evidence in support of independent Markov chains. Moreover, we identify historical periods when price and wage stickiness were low and show that during such periods, the economy reacts more strongly to structural shocks.
    Keywords: nominal rigidities, Markov-switching DSGE models, Bayesian model comparison, regime switching.
    JEL: C11 E31 E32 J30 P22
    Date: 2015–12
  10. By: Sun, Lixin
    Abstract: In this paper, we analyse the evolution of China’s debt structure in terms of a new comprehensive debt dataset and then identify the determinants of China’s debt structure using stepwise multivariate regression; furthermore, employing a fiscal space framework and DSR approach, we assess the sustainability of China’s domestic and external debt. The empirical results suggest that first, China’s GDP growth rate, the borrowing costs and the financial markets’ development are key common determining factors for China’s debt structure; second, the highly indebted local governments and non-financial corporations could lead to potential risks for China’s financial stability. Nevertheless, China’s debt by sector is sound and sustainable in the near and medium term.
    Keywords: Debt Structure; Debt Sustainability; Public and Private Debt; China’s Economy
    JEL: E62 H63 H74
    Date: 2015–08
  11. By: Du , Qingyuan (Monash University); Wei , Shang-Jin (Asian Development Bank)
    Abstract: This paper studies how status competition for marriage partners can generate surprising effects on the real exchange rate (RER). In theory, a rise in the sex ratio(increasing relative surplus of men) can generate a decline in the RER. The effect can be quantitatively large if the biological desire for a marriage partner is strong. We also provide within-the People’s Republic of China and cross country empirical evidence to support the theory. As an application, our cross-country estimation suggests that sex ratio as well as other factors in the existing literature can account for the recent evolution in Chinese RER almost completely.
    Keywords: currency manipulation; equilibrium real exchange rate; surplus men
    JEL: F31 F42 J10 J70
    Date: 2015–10–07
  12. By: Åukasz GÄ…tarek; Marcin Wojtowicz
    Abstract: We investigate causality between returns on sovereign CDSs and bank equities for Poland between 2004 and 2014 to provide evidence on contagion between sovereign and banking sector risk pricing. We find some evidence of contagion from Polish sovereign CDS returns to bank equity returns during the crisis period. We benchmark the results for Poland against a sample ofWestern European countries. We document strong negative correlation between sovereign CDS and bank equity returns for individual countries as well as strong commonality of both sovereign and banking sector risks across different countries. We do not however find a clear pattern of contagion between these two markets across European countries. To further investigate drivers of CDS and bank equity returns, we conduct principal component analysis and we find that first three principal components explain as much as 97% of variation with the third principal component mostly associated with Polandspecific risk.
    Keywords: Contagion, sovereign CDS, bank equity returns, financial crisis.
    JEL: G01 G12 G14 G19 G21
    Date: 2015
  13. By: Vodopivec, Matija (International School for Social and Business Studies, Celje, Slovenia); Laporsek, Suzana (University of Primorska); Dolenc, Primož (University of Primorska); Vodopivec, Milan (International School for Social and Business Studies, Celje, Slovenia)
    Abstract: The paper analyses the effects of a 2011 increase in the unemployment benefit replacement rate on the job-finding rate of Slovenian benefit recipients. Using registry data on the universe of Slovenian unemployment benefit recipients, we exploit legislative changes that selectively increased the replacement rates for certain groups of workers while leaving them unchanged for others. Applying this quasi-experimental approach, we find that increasing the replacement rate significantly decreased the hazard rate of the transition from unemployment to employment, with an implied elasticity of the hazard rate with respect to benefit replacement rate being 0.7 to 0.9. The results also show that the increase of the unemployment benefit replacement rate does not affect the job-finding probability of jobseekers whose reason for unemployment is employer exit, and that the effects of the increase of replacement rate are present only upon exit to employment and not to inactivity.
    Keywords: unemployment insurance, unemployment benefit replacement rate, job-finding rate
    JEL: J64 J65
    Date: 2015–12
  14. By: Konstantins Benkovskis (Bank of Latvia)
    Abstract: This paper evaluates misallocation of resources in Latvia during 2007–2013 using firm-level data. I found that allocation of resources worsened before 2010 and improved afterwards. Initially, misallocation of intermediate inputs was the major source of aggregate TFP losses, while the importance of capital misallocation increased after the financial crisis. Determinants of changes in allocation efficiency may include growing competition in domestic markets, tighter credit supply and legal issues. However, I show that fragmentation of production induces bias to the estimates of firm-specific distortions. Thus, in the absence of inter-firm trade data, the conclusions on misallocation should be treated with some caution.
    Keywords: misallocation, TFP, productivity, firm-level data, Latvia
    JEL: D24 L11 O11 O41 O47
    Date: 2015–12–15
  15. By: Dong Xiang; Ning Zhang; Andrew C Worthington
    Keywords: Meta-frontier analysis, Non-radial directional distance function, Chinese banks, Efficiency determinants
    JEL: G21 D24 C23
    Date: 2015–11
  16. By: Mauro Vigani (European Commission – JRC - IPTS); Manuel Gomez-Barbero (European Commission – JRC - IPTS); Emilio Rodríguez-Cerezo (European Commission – JRC - IPTS)
    Abstract: The report presents the results of a survey conducted on 700 wheat farmers in France and Hungary. The survey aimed to single out the most critical elements at the base of wheat productivity, collecting information for the growing seasons 2010/2011, 2011/2012 and 2012/2013. Two types of data are obtained: farmers’ opinions on the determinants of wheat productivity; quantitative data on wheat output, production factors, marketing strategies, damages, and field and risk management practices. Through descriptive statistics, the report revealed important and significant differences between the countries. According to French farmers' opinion, the most important wheat yield determinants at national level are seasonal weather and soil quality; while Hungarians addressed climate change and seasonal weather. At the farm level, the high prices of inputs and the low wheat market prices are considered the most constraining factors in both countries. Wheat yields are positively correlated to higher agro-chemicals use in Hungary and to additional days of labour in France. The adoption of precision farming provides 7-12% higher yields in both countries, while yield gains from conservation agriculture and IPM are found in partial adopters. In both countries, the most frequently adopted innovation to increase wheat yields and grains' quality are new wheat varieties, however farmers’ willingness to adopt genetically modified wheat varieties is opposite: positive in France and negative in Hungary. Finally, both farmers perceive market risks as more detrimental than natural disasters. While crop insurance is the most adopted tool to deal with natural risks in both countries, French farmers adopt diversification strategies more frequently than Hungarians to deal with market risks.
    Keywords: Wheat, Productivity, Yield, Innovation, Risk management, Sustainability, European Union, Agricultural policies.
    JEL: G22 G32 Q12 Q16 Q18 Q54 Q56
    Date: 2015–12
  17. By: Heinrich, Torsten; Dai, Shuanping
    Abstract: Among the phenomena in economics that are not yet well-understood is the fat-tailed (power-law) distribution of firm sizes in the world´s economies. Different mechanisms suggested in the literature to explain this distribution of firm sizes are discussed in the present paper. The paper uses the China Industrial Enterprises Database to study the distribution (firm size in terms of the number of employees, capital, and gross profit) for the provinces of China for the years 1998-2008. We estimate the power-law distribution and confirm its plausibility using the KS test and the log-likelihood ratio vs. lognormal and exponential distributions. The analysis on regional levels allows an assessment of regional effects on differences in the distribution; we discuss possible explanations for the observed patterns in the light of the recent regional economic development in the PRC.
    Keywords: firm size distribution,evolutionary industry dynamics,power-law distribution,China
    Date: 2015
  18. By: Fatmir Guri (European Commission – JRC - IPTS); Ilir Kapaj (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Bahri Musabelliu (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Maksim Meço (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Eneida Topulli (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Remzi Keco (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Natasha Hodaj (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Shpresim Domi (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Gentjan Mehmeti (Agricultural University of Tirana, Faculty of Economics and Agro-business, Tirana, Albania); Sergio Gomez y Paloma (European Commission – JRC - IPTS)
    Abstract: This report is based on information collected from a face-to-face survey of more than 1 000 farmers from three regions of Albania (namely Berat, Elbasan and Lezhë To identify a representative sample of Albanian farming systems, a three-step sample design was used. A group of 11 variables dealing with the socio-economic characteristics of farms was selected to build up the farming system typology. Two typologies are used: one for the whole sample (three regions) and a second one for each region. The differences between the two typologies are considered to be a proxy indicator of different characteristics of farming systems in each region. The farm types identified are (1) poly-culture, mainly for the market; (2) leisure farms; (3) arable crops; (4) fruit trees; (5) self-sufficient; and (6) livestock. The farm typology is slightly different for the regions of Berat and Lezhë. The farm types’ strategies are constructed according to the land, infrastructure facilities and the investment availability of farms. Non-agricultural incomes (remittances, income from the construction, trade, pensions, etc.) appear to provide an important economic support for the farm household. Farming structures in rural areas are characterised by the use of more labour and lower inputs. The farm types that tend to specialise in one activity are not always those that make the best use of labour and land. Farming does not provide enough income to repay the work put in at the official minimum wage level. Non-agricultural work is better paid. Albanian farms provide at least a minimal income that is enough to keep the household members above the threshold of extreme poverty. The farm types that base their incomes on agricultural activities are poorer than those that base their income on non-agricultural activities. Income structures and the low incomes generated by work in agriculture suggests that rural migration towards urban areas and abroad is a phenomenon that will persist into the future
    Keywords: Albania, face-to-face interviews, farming systems typology, Agricultural incomes, non-agricultural incomes, rural areas.
    Date: 2015–12
  19. By: Elena Kopnova (National Research University Higher School of Economics); Lilia Rodionova (National Research University Higher School of Economics)
    Abstract: A comparative analysis of the age impact on happiness in Russia and European countries was conducted. The European Social Survey data in 2012 for 29 countries were used. On the basis of an ordered logistic regression, a U-shape relationship between age and happiness was obtained for some of the analysed countries. By using cluster analysis, the countries were divided into 3 groups, in which the age effect varies greatly. In the counties of group 1 (for example, Iceland and Norway) happiness did not change at any age or increase smoothly in old age. Group 2 (Germany and France) had a clear U-shaped age-happiness form. Russia and some counties of former Soviet Union: Ukraine, Lithuania and Estonia were analysed in group 3, where the level of happiness decreased significantly in old age (over 60). In some countries (Belgium, Switzerland, Cyprus, Denmark, Finland, Israel, Italy, Sweden) all people were happy, regardless of age and the assumption of age-happiness U-shape relation was not found.The socio-economic determinants of happiness were also analysed in different age groups. Income satisfaction and subjective health were the more significant characteristics.
    Keywords: satisfaction, happiness, econometric modelling, age groups.
    JEL: C35 C38 I31
    Date: 2015
  20. By: Chi-Kong Chyong
    Abstract: Abstract Different hydrocarbon producer sales strategies have widely divergent implications for the value of Gazprom’s gas exports to Europe. In particular, hydrocarbon producers have commonly pursued two alternative sales strategies: (i) pure commodity production (border sales) and (ii) integrated supply, trading and marketing (ISTM). The impact of these two strategies on Gazprom’s export profits are examined under three sets of scenarios: (a) the possible entry of low-cost producers, (b) oil price dynamics and (c) the future of LTCs (pricing and volume structure). We also analysed how Statoil shifted its sales strategy in light of structural changes in European gas markets and conclude that the company began employing an ISTM strategy when the market in North-west Europe became liquid. Thus, when a market is mature, with an increasing number of buyers, the best sales strategy for a large hydrocarbon producer should be based on flexibility and increasing its use of market trading to maximise the value of its commodity. We conclude that an optimal export strategy for Gazprom should involve both a substantial and increasing portion of uncommitted volumes that can be traded in markets (gas hubs) and, if needed, some form of bilateral forward contract with a minimum take-or-pay level to secure infrastructure finance.
    Keywords: Long-term contracts, vertical integration, market trading, gas, Gazprom, Statoil, gas pricing, equilibrium energy modelling
    JEL: L14 L13 Q47 Q48 Q41 P28 O13
    Date: 2015–12–21
  21. By: Borcan, Oana (University of Gothenburg); Lindahl, Mikael (University of Gothenburg); Mitrut, Andreea (University of Gothenburg)
    Abstract: We investigate the distributional consequences of a corruption-fighting initiative in Romania targeting the endemic fraud in a high-stakes high school exit exam, which introduced CCTV monitoring of the exam and credible punishment threats for teachers and students. We find that the campaign was effective in reducing corruption and, in particular, that monitoring increased the effectiveness of the punishment threats. Estimating the heterogeneous impact for students of different poverty status we show that curbing corruption led to a worrisome score gap increase between poor and non-poor students. Consequently, the poor students have reduced chances to enter an elite university.
    Keywords: corruption, high-stakes exam, bribes, monitoring and punishment
    JEL: I21 I24 K42
    Date: 2015–12

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