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on Transition Economics |
| By: | Fernald, John; Hsu, Eric; Spiegel, Mark M. |
| Abstract: | How reliable are China’s GDP and other data? We address this question by using trading partner exports to China as an independent measure of its economic activity from 2000–2014. We find that the information content of Chinese GDP improves markedly after 2008.We also consider a number of plausible, non-GDP indicators of economic activity that have been identified as alternative Chinese output measures. We find that activity factors based on the first principal component of sets of indicators are substantially more informative than GDP alone. The index that best matches activity in-sample uses four indicators: electricity, rail freight, an index of raw materials supply, and retail sales. Adding GDP to this group only modestly improves in-sample performance. Moreover, out of sample, a single activity factor without GDP proves the most reliable measure of economic activity. |
| Keywords: | China, GDP, principal components, structural break, forecasting |
| JEL: | C53 C82 E20 F17 |
| Date: | 2015–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:urn:nbn:fi:bof-201511031430&r=tra |
| By: | Chen Lin; Randall Morck; Bernard Yeung; Xiaofeng Zhao |
| Abstract: | Chinese share prices rose sharply on the Politburo’s Dec. 4th 2012 announcement of its Eight-point Regulation, an uncharacteristically detailed and concrete Party policy, initiating an extensive anti-corruption campaign and announced surprisingly soon after a change in leadership. The reaction is uniformly positive for state-owned enterprises (SOEs), but heterogeneous across non-SOEs. The reaction is more positive for non-SOEs in provinces with more developed market institutions and with higher prior productivity, greater external financing dependence, and greater growth potential. A non-SOE’s prior spending on entertainment and travel costs (ETC), a proxy for investment in “connections”, correlates negatively with the share price changes of firms based in provinces with weak market institutions. We posit that limiting corruption cuts the valuations of these non-SOEs by limiting their ability to utilize “connections” where these are more important. SOEs are well-connected in any case, and their ETC may reflect their top insiders’ perks consumption or self-dealing. Reforms that limit this boost SOEs’ valuations. Overall, these results are consistent with investors expecting the reforms to be meaningful and limiting corruption to be more valuable if prior reforms have strengthened market forces. |
| JEL: | D70 G34 G38 P2 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22001&r=tra |
| By: | John Knight; Deng Quheng; Li Shi |
| Abstract: | In the decade 1998-2008 China expanded enrolment in higher education almost six-fold. For the examination of its short term labour market consequences, this unprecedentedly huge and sudden policy change might be regarded as a natural experiment. After providing a theoretical framework for analysis, the paper uses urban labour market surveys to analyse how the labour market adjusted to the supply shock. Three outcomes are examined: the effect of the expansion on wages, on unemployment, and on access to ‘good jobs’. The shock is found to reduce relative wages, raise the unemployment rate, and reduce the proportion in good jobs, but only for the entry-year or entry-period cohort of graduates. The effect is fairly powerful for entrants, especially university rather than college graduates, but incumbent graduates are largely protected from the supply shock. An attempt is made to examine the labour market effects of the quantitative expansion on educational quality. The paper provides insight into the operation of China’s labour market in recent years. |
| Keywords: | China; cohort effects; graduate unemployment; higher education; labour market; returns to higher education |
| JEL: | I21 I23 J24 J31 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2016-04&r=tra |
| By: | Armenak Antinyan; Luca Corazzini |
| Abstract: | This paper empirically investigates the relationship between households’ relative deprivation and the intentions of their members to temporarily migrate abroad in three transition economies of the South Caucasus: Armenia, Azerbaijan and Georgia. Controlling for households’ absolute income and other relevant subjective dimensions, we illustrate that households’ relative position vis-à-vis their reference groups plays an important role in determining the intentions of their members to migrate abroad. Particularly, individuals are more willing to engage in temporary emigration, if they perceive themselves to be poorer than the reference group. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucec:293&r=tra |
| By: | Beblavý, Miroslav; Fabo, Brian; Lenaerts, Karolien |
| Abstract: | In a globalised world, knowledge of foreign languages is an important skill. Especially in Europe, with its 24 official languages and its countless regional and minority languages, foreign language skills are a key asset in the labour market. Earlier research shows that over half of the EU27 population is able to speak at least one foreign language, but there is substantial national variation. This study is devoted to a group of countries known as the Visegrad Four, which comprises the Czech Republic, Hungary, Poland and Slovakia. Although the supply of foreign language skills in these countries appears to be well-documented, less is known about the demand side. In this study, we therefore examine the demand for foreign language skills on the Visegrad labour markets, using information extracted from online job portals. We find that English is the most requested foreign language in the region, and the demand for English language skills appears to go up as occupations become increasingly complex. Despite the cultural, historical and economic ties with their German-speaking neighbours, German is the second-most-in-demand foreign language in the region. Interestingly, in this case there is no clear link with the complexity of an occupation. Other languages, such as French, Spanish and Russian, are hardly requested. These findings have important policy implications with regards to the education and training offered in schools, universities and job centres. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:11264&r=tra |
| By: | Laetitia Duval (Imperial College London - Imperial College London); Francois Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes, INED - Institut national d'études démographiques) |
| Abstract: | This paper focuses on the effect of remittances on per capita consumption over time in a context of conflict , war-to-peace transition and crisis. We use two household surveys from Kosovo with unique timing , one collected immediately after the civil war in 2000 and the other during the economic crisis in 2010. This territory , in which the tension among ethnic groups is the focus of international concern , is one of the top remittance-‐receiving countries in the world. We examine the effect of remittances not only at the average level of consumption , but also at various parts of the distribution of consumption using quantile regressions. We find that remittances alleviate poverty by enhancing the consumption level of the most vulnerable households , and the positive effect of remittances on consumption has remained constant between 2000 and 2010. This result may be connected with the resilience of remittances. |
| Keywords: | economic crisis,poverty,Remittances,consumption,Kosovo |
| Date: | 2016–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01278930&r=tra |
| By: | Tomasz Łyziak |
| Abstract: | This paper estimates different versions of a stylised New Keynesian model of the Polish economy, in which alternative measures of inflation expectations are used. They include: model-based (rational) expectations as well as survey measures of inflation expectations formed by consumers, enterprises and financial sector analysts. After estimating the models we verify to what extent the use of different measures of inflation expectations affects the assessment of the monetary transmission mechanism, the exchange rate pass-through and the sacrifice ratio. Simulation results show different responses in all the analysed areas. For example, the maximum reaction of CPI inflation to the interest rate impulse is almost twice bigger if the direct measures of financial sector analysts are used instead of model-consistent expectations. Also the model with survey-based measures of producer inflation expectations displays stronger response of inflation to monetary policy impulse than the model, in which rational expectations are assumed. Estimates of the exchange rate pass-through from the models with survey-based expectations are very similar to each other, but stronger than in the model with rational expectations. The sacrifice ratio seems similar in the case of all versions of the New Keynesian model except its version with consumer inflation expectations that shows significantly larger output loss resulting from a permanent reduction of the inflation target than the other models. Differences in the assessment how monetary factors affect macroeconomic variables, particularly inflation, pose the question which model should be treated as the most adequate. To answer this question we run in-sample simulations, calculating inflation forecasting errors of all the models under consideration. We conclude that the model that assumes rational inflation expectations displays the lowest forecasting accuracy, while the model using inflation expectations of enterprises is the best-performing model. It suggests that the assumption of rational inflation expectations does not match the actual data well. Inflation expectations of Polish enterprises seem the most relevant from the macroeconomic point of view – more relevant than inflation expectations of consumers and financial sector analysts. |
| Keywords: | Inflation expectations, survey, New Keynesian model, monetary transmission mechanism, Poland. |
| JEL: | C54 D84 E17 E43 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:234&r=tra |
| By: | Paweł Strzelecki; Robert Wyszyński |
| Abstract: | This paper presents the results of a survey carried out in Poland in 2014 among nearly 1500 firms, within the framework of the ECB’s Wage Dynamics Network (WDN). It aims at assessing the impact of the global economic and financial crisis on firms’ business activity, as well as analysing the way the labour market adjusted to the slowdown and the role institutional reforms played at that time. According to our analysis, the absence of real recession, together with a rapid response of wages at the beginning of the slowdown translated into a relatively mild reduction of employment and a moderate unemployment increase. The shocks in 2009 and 2012 were comparable in terms of their scale. In both cases a drop in demand gradually spilled over to lower customers’ ability to pay and to higher uncertainty. However, the shocks hit completely different parts of the economy. While the first shock was observed mainly in export-driven enterprises (industry), the second one was observed mostly in domestic market oriented companies (construction). Moreover, firms in Poland did not experience any additional, major credit constraints during the global financial crisis. The results confirm a relatively high real and nominal wage flexibility and a limited impact of labour market reforms in the period 2009-2013. |
| Keywords: | labour demand, price setting, economic crisis, labour cost adjustment, wage flexibility, enterprise survey |
| JEL: | J23 J30 J32 L11 C81 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:233&r=tra |
| By: | Gros, Daniel |
| Abstract: | Against the background of the severe turbulence that is hitting global stock markets, Daniel Gros examines the looming slowdown in the Chinese economy in this CEPS Commentary, which he attributes to an underlying ‘real’ domestic investment/savings imbalance. Given the magnitude of this imbalance, Gros thinks it is unlikely to be solved by monetary policy and that the best that can be hoped for is that the central banks will manage to ‘paper over’ some of the unavoidable symptoms in credit markets. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10861&r=tra |
| By: | Juan Carlos Suárez Serrato; Xiao Yu Wang; Shuang Zhang |
| Abstract: | We study the implementation of the One Child Policy to test whether the promotions of mayors were meritocratic. We model the incentive design of provincial governments that evaluate mayors using self-reported performance. We relate the desire to maximize output while promoting high-ability mayors to equilibrium incentives, and derive testable predictions. Our empirical comparative statics are consistent with meritocracy. We then evaluate the screening efficacy and test for misreporting using retrospective birth rates. We find that, while promotions were meritocratic, misreporting sapped the effectiveness of the meritocracy, contradicting the belief that meritocratic promotions enabled China’s development despite lacking democratic accountability. |
| JEL: | D23 D73 D86 M12 M51 O12 O15 O53 P23 P26 P48 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21963&r=tra |
| By: | Laetitia Duval (Imperial College London - Imperial College London); François-Charles Wolff (UN - Université de Nantes, INED - Institut national d'études démographiques) |
| Abstract: | The Roma constitute the largest, poorest and youngest ethnic minority group in Europe. Over the last few years, they have attracted unprecedented attention with the fear of massive waves of emigrants to Western European countries. Using unique comparative data from 12 Central and SouthEast European countries, we study the pattern and determinants of Roma emigration intentions. We find that plans to go abroad are more frequent among Roma compared to non-Roma, but the ethnic gap in emigration intentions is not explained by the more disadvantaged characteristics of Roma compared to non-Roma. Among the Roma population, potential emigrants are more educated and wealthier on average. Finally, ethnic discrimination is a very influential factor that explains the intentions to emigrate within the Roma population. |
| Keywords: | Emigration intention,Roma,ethnic discrimination,Central and South-East Europe |
| Date: | 2016–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01280578&r=tra |
| By: | Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Abstract Generally, establishments can choose among different cooperation partners for innovation. However, the choice of a particular partner is pivotal to the success of any cooperative arrangement for innovation and therefore not an easy one. The ensuing analysis uses a comprehensive firm-level dataset of Central, East and Southeast European (CESEE) and Former Soviet Union (FSU) countries to shed light on the role of different cooperative arrangements – cooperations with domestic suppliers, domestic client firms, foreign suppliers, foreign client firms and with external academic or research institutes – for a product innovators’ success, captured in terms of either annual average sales per new or significantly improved product or, alternatively, the probability of applying for a patent. It demonstrates that the choice of cooperation partner is essential Innovators profit greatly from innovation partnerships with foreign suppliers only in terms of higher sales from novel or improved products but, in turn, are less likely to apply for patents if engaged in cooperative arrangements with foreign suppliers or client firms, indicating that patenting is probably predominantly undertaken by foreign cooperation partners. Furthermore, it highlights that establishment size, ownership structure, trading status or absorptive capacity greatly matter and that the institutional environment is essential for an innovator’s commercial success, which assigns a decisive role to policy-makers in building an environment that helps innovators extract returns to innovations to the fullest extent possible. |
| Keywords: | product innovators, types of R&D cooperations, innovation success, Central, East and Southeast Europe |
| JEL: | O30 O32 O34 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:124&r=tra |
| By: | Anna Białek-Jaworska (Faculty of Economic Sciences, University of Warsaw); Natalia Nehrebecka (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland) |
| Abstract: | The paper identifies determinants of financing the purchase of tangible assets by Polish enter-prises with use of financial and operating lease. Analysis of financial lease was based on sta-tistical annual reports for the years 1995−2011 (about 50 thousands companies per year), while research of operating lease used half-year reports for the years 2007−2011, both with use of System GMM. The literature of the subject continuously pursues to explain the rela-tions between choosing a lease and other sources of capital, mainly bank loans. Therefore, the main focus of the study is on the dependence between the capital lease and the long-term bank loan, as well as on the relations between the operating lease, the short-term loan and the long-term debt-based financing with no financial lease element (net). The analyses indicate that medium-sized and large companies are more inclined to finance their assets with capital leas-es than small business and that large companies use more capital leases than small businesses do. It was found that a higher degree of the long-term loan financing results in a lower degree of capital leasing, which indicates the long-term bank loan and capital lease substitutability, similarly as reported by Marston & Harris (1988), Beattie, Goodacre & Thomson (2000), Singh (2011), as well as Lin et al. (2013). The findings for factors affecting the propensity to finance assets with operating leases proves the substitutability of an operating lease and a short-term bank loan, similarly as reported by Beattie, Goodacre & Thomson (2000), Filareto-Deghaye & Singh (2011), as well as Singh (2011). |
| Keywords: | lease, bank credit, financial lease, operating lease, substitutability, corporate finance, dynamic panel data, system GMM |
| JEL: | G32 E52 G21 C23 C33 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2016-07&r=tra |
| By: | Gros, Daniel; Mustilli, Federica |
| Abstract: | The decision process leading to the imposition of sanctions against Russia in response to its annexation of Crimea and its subsequent military intervention in Eastern Ukraine has been very difficult for the EU, with some member states claiming that they have been particularly hard hit because exports to Russia are important to their economies. This commentary shows, however, that the economic cost in terms of lost exports, and thus potentially jobs, has in reality been negligible. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:11036&r=tra |
| By: | Comunale, Mariarosaria |
| Abstract: | Using the IMF CGER methodology, we make an assessment of the current account and price competitiveness of the Central Eastern European Countries (CEEC) that joined the EU between 2004 and 2014. We present results for the "€œMacroeconomic Balance (MB)"€ approach, which provides a measure of current account equilibrium based on its determinants together with mis-alignments in real effective exchange rates. We believe that a more refined analysis of the mis-alignments may useful for the Macroeconomic Imbalance Procedure (MIP). This is especially the case for these countries, which have gone through a transition phase and boom/bust periods since their independence. Because such a history may have influenced a country’s performance, any evaluation must take account of each country'€™s particular characteristics. We use a panel setup of 11 EU new member states (incl. Croatia) for the period 1994-2012 in static and dynamic frameworks, also controlling for the presence of cross-sectional dependence and checking specifically for the role of exchange rate regimes, capital flows and global factors. We find that the estimated coefficients of the determinants meet with expectations. Moreover, the foreign capital flows, the oil balance, and relative output growth seem to play a crucial role in explaining the current account balance. Some global factors such as shocks in oil prices or supply might have played a role in worsening the current account balances of the CEECs. Having a pegged exchange rate regime (or being part of the euro zone) affects the current account positively. The real effective exchange rates behave in accord with the current account gaps, which clearly display cyclical behaviour. The CAs and REERs come close to equilibria in 2012 in most of the countries and the rebalancing is completed for some countries that were less misaligned in the past, such as Poland and Czech Republic, but also for Lithuania. When Foreign Direct Investment (FDI) is introduced as a determinant for these countries, the misalignments are larger in the boom periods (positive misalignments) whereas the negative misalignments are smaller in magnitude. |
| Keywords: | real effective exchange rate, Central Eastern European Countries, EU new member states, fundamental effective exchange rate, current account |
| JEL: | F31 F32 C23 |
| Date: | 2015–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:urn:nbn:fi:bof-201510131420&r=tra |