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on Transition Economics |
| By: | Frankel, Jeffrey (Harvard University) |
| Abstract: | Two big questions look somewhat different than they did 10 or 20 years ago. First: would the long-term trend of globalization continue? Contrary to all predictions, trade growth has slowed markedly since the Global Financial Crisis of 2008-09. But the feared increase in protectionism did not materialize, so one must look elsewhere for explanations. Two likely factors behind the slowdown in trade are a maturing of global supply chains and a slowdown in trade-intensive physical investment. Second, would the rapid growth of emerging market economies (EMEs) continue, and which ones? Most EMEs recovered strongly in 2010-11, but now seem to be slowing down in a more long-lasting way. For both these issues the role of China is crucial, since it now carries so much weight in the global economy. Breathless reports in 2014 that the Chinese economy had overtaken the US economy as the world?s largest (measured by Purchasing Power Parity) were followed rapidly in 2015 by breathless reports that its economy was failing. That China has slowed down from past growth rates of 10% to a more moderate rate of 7% or lower should not have come as a surprise. It is part of a natural process of long-term convergence and involves a "rebalancing" of the economy from manufacturing into services that is desirable, even if it means a loss of export markets for some others. The open question is whether the Chinese transition to a more moderate and sustainable growth path will take the form of a hard landing or a soft landing. |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:16-029&r=tra |
| By: | Chen, Kaiji (Emory University); Waggoner, Daniel F. (Federal Reserve Bank of Atlanta); Higgins, Patrick C. (Federal Reserve Bank of Atlanta); Zha, Tao (Federal Reserve Bank of Atlanta) |
| Abstract: | China monetary policy, as well as its transmission, is yet to be understood by researchers and policymakers. In the spirit of Taylor (1993, 2000), we develop a tractable framework that approximates practical monetary policy of China. The framework, grounded in relevant institutional elements, allows us to quantify the policy effects on output and prices. We find strong evidence that monetary policy is designed to support real GDP growth mandated by the central government while resisting inflation pressures and that contributions of monetary policy shocks to the GDP fluctuation are asymmetric across different states of the economy. These findings highlight the role of M2 growth as a primary instrument and the bank lending channel to investment as a key transmission mechanism for monetary policy. Our analysis sheds light on institutional constraints on a gradual transition from M2 growth to the nominal policy interest rate as a primary instrument for monetary policy. |
| Keywords: | monetary transmission; endogenous switching; central government; institutional rigidities; GDP growth target; lower growth bound; nonlinear VAR; systematic monetary policy; policy shocks; heavy industries; investment; bank loans; lending channel |
| JEL: | C13 C3 E02 E5 |
| Date: | 2016–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2016-09&r=tra |
| By: | Fabio Indeo (Center for Energy Governance and Security, EGS Korea, Hanyang University, Seoul, South Korea) |
| Abstract: | In the last years, Russia and China are engaged to implement two geopolitical strategies which involves the Eurasia region, with the aim to develop the economic cooperation between East and West by means of trade and energy routes crossing Central Asia. At present, the implementation of the Eurasian Economic Union represents one of the most influent attempt to promote cooperation in the region, potentially including the creation of a supranational framework in order to upgrade the cooperation also in the political dimension (starting from the coordination of the respective national foreign policies), even if this option is strongly feared by Central Asian countries. At the same time the Chinese strategy of the Silk Road Economic Belt is an attractive project involving all Central Asian countries in a profitable energy and economic network, following the Chinese huge investments aimed to boost infrastructures and to develop national economies. Since 1991 post soviet Central Asian republics have had a different approach towards initiatives and projects of regional cooperation in the economic, political and security fields: Kazakhstan, Kyrgyzstan and Tajikistan have always supported and participated in regional cooperation initiatives, while Turkmenistan and Uzbekistan appear reluctant to be involved. It is evident that the implementation of these two projects - which apparently seems in competition but they could potentially merge - will have interesting repercussions on the economic relations with the EU, widening the opportunities for a lucrative East-West business, opening new trade routes and consolidating the interdependence between Eurasia region and the EU member states. Furthermore, these two geopolitical strategies will influence the political and economic evolution of Central Asian countries as well as their foreign policies. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2016/5&r=tra |
| By: | M. Královičová (University of Economics in Bratislava, Slovakia); M. Žatko (University of Economics in Bratislava, Slovakia) |
| Abstract: | At the end of 2013, the Chinese government announced its intention to create the new strategic initiative called “One Belt One Road“, which includes a significant amount of countries from the Asia, the Middle East, the Africa and the Europe, and aims at the deepening of economic and security cooperation among participating countries. Furthermore, it covers the cooperation in the infrastructure. The initiative is now gaining its real shape, with the negotiations between potential participants being held between their highest political representatives. The total number of participating countries in not yet known, however, Belarus, Kazakhstan, Turkey, Thailand, Hungary, Spain and Russia are among many other countries, which have already confirmed their participation in the initiative. If successfully carried out, the project has a huge potential to influence international business flows, not only in Asia but also within the global economy. Numerous projects that are already well under way include China's most important trading partners, namely Central Asian countries and Russia. Especially in case of Russia that is currently facing serious economic problems, it is quite uncertain whether this initiative would have positive or negative impact on its own competitiveness. While planned logistic platforms and transport corridors built in Central Asia could possibly lead to increase of mutual trade, construction of energy infrastructure projects in the same area could possibly harm Russian economy. The aim of this paper is to critically assess consequences of currently implemented projects on the Russian economy, and to look at perspectives of their further development. |
| Keywords: | China, competitiveness, Russia, Trade Complementarity Index, Central Asia |
| JEL: | F63 F42 F53 F21 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2016/9&r=tra |
| By: | Blagica Petreski; Jorge Davalos; Despina Tumanoska |
| Abstract: | Macedonia receives at least 4% of GDP as cash remittances per year while a third of the population faces poverty. The study has two objectives: first, to investigate if and to what extent remittances improve individual social indicators; and ii) to devise and ex-ante simulate the effects of Remittances’ Voucher policy for transforming their potentially sheltering role into a formal mechanism for social protection. To that end, we rely on the DotM 2008 Remittances’ Survey and a conditional mixed process estimator. We devise the Remittances’ Voucher providing each remittance receiver who obtains the money through financial institution the right to a health protection equal to the average health expenditure if he/she sets 6% of the remitted money on a pension account. We find that remittances have a significant effect onto consumption and, hence, contribute to reducing poverty. This finding lends support to the claim that remittances serve an informal social protection in the country. We also find that the Remittances’ Voucher policy may play a crucially positive impact on remittance receivers, as it improves poverty and the health condition, especially for females, rural dwellers and Macedonian recipients of remittances. The bold recommendation is for the government to introduce this policy into the array of social policies as means of framing remittances into more formal social protection. |
| Keywords: | remittances, social protection, Remittances’ Voucher policy, Macedonia |
| JEL: | F24 J21 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2016-15&r=tra |
| By: | International Monetary Fund. |
| Abstract: | Financial stability oversight responsibilities are currently shared between the Central Bank of Russia (CBR) and a high-level inter-agency National Council on Ensuring Financial Stability (FSC). Given its role as the single financial regulator and supervisor since September 2013, CBR has naturally become a macroprudential authority. Following the creation of the Financial Stability Department in March 2011, CBR established an internal Financial Stability Committee (FSCom) in November 2014 to play a key coordinating role in macroprudential oversight, crisis management, and other financial stability issues, with policy decisions still being made by CBR’s Board of Directors (CBR Board). The government created the FSC in July 2013 as an advisory body that can make recommendations on measures to restore financial stability based on an assessment of systemic risk. In February 2015, the FSC was strengthened and has served as an effective platform for inter-agency coordination. |
| Date: | 2016–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/307&r=tra |
| By: | Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal) |
| Abstract: | Set in the context of the neoclassical growth model this study revisits the discussion of economic convergence in the context of the Russian Federation. Compared to previous similar studies, here a larger more comprehensive data set is implemented (1994-2013) allowing in particular to check for differences in convergence during different time periods. Using a panel approach more reliable results are achieved which point to absolute convergence occurring across the regions of the Russian Federation. The stability of these results is strengthened by estimating Kernel density to test for the presence of potential groups of regions with different steady states, on the one hand, and Markov transition matrices to test for the temporal stability of the regions on the other. Finally, a quantile regression approach is used to assure overall stability of the convergence speed. All results show that Russia reports absolute convergence up to Vladimir Putin's the second term as president and occurring again during his third term in office and conditional convergence in all time periods. All results remain stable even when including spatial effects or when testing for temporal stability. Quantile regression analysis also reports a more or less stable speed of convergence across the whole time horizon which is significantly higher than comparable results for the US or the regions of the European Union. |
| Keywords: | Russian Federation, USA, Innovation System, Knowledge Production Function, Knowledge Generation, Quantile Regression, Regional Economics |
| JEL: | C21 P25 O47 R11 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp16004&r=tra |
| By: | Chernina, Eugenia M. (Centre for Labour Market Studies (CLMS) at Higher School of Economics, Moscow) |
| Abstract: | This paper studies how the previous destination choices by household members might affect current choice by labor migrants from Tajikistan in Russia. We use 2007 and 2009 waves of Tajikistan Living Standards Survey combined with Rosstat regional statistics to analyze the effect of 2007 household migration experience and receiving regions’ characteristics on 2008-2009 migrants’ location choice within Russia. Our results suggest that there exists inertia in migrants’ choices: previously chosen destinations largely define future ones. This inertia results in quickly weakening effect of labor market conditions on migrants’ choice with migration experience. |
| Keywords: | labor migration, international migration, destination choice, location choice, Tajikistan, Russia |
| JEL: | J61 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2016/3&r=tra |
| By: | Meine Pieter van Dijk (Senior Project Consultant, Maastricht School of Management); Patrick Martens (Senior Project Consultant / lecturer, Maastricht School of Management) |
| Abstract: | There was never one Silk Road and there will never be one road in the one belt as suggested by the name, One Belt One Road (OBOR) initiative, chosen by the Chinese government. There will be several railroad connections between Beijing and Europe, different water ways connecting the East and the West and also different highways can be used if one would like to drive from Maastricht to Shanghai. For gas, oil, electricity and possibly in the future water, the options are still open, although a gas pipeline has almost reached Baku and an oil pipeline Atyrau, while a power line is planned to Aktau. In this contribution we focus on railways and roads between East and West and in specific what this means for one country, Georgia. We use this case study to show how large economic and political interests interfere in China's attempt to boast its economy by investing in infrastructure and improved linkages with Europe and the Middle East. It has been noted that this is an example of a Game changer. Instead of trying to compete with the US Navy in the East China Sea China opts to go West. Instead of building up the Chinese navy to be capable of surveillance in the East China Sea, the straits of Malacca and around Somalia, the East-West corridors will eventually be shorter and cheaper and achieve the same results of assuring China's supplies and selling Chinese products, without a costly trip via the Suez Canal to Europe and the Western Hemisphere. We conclude that China bets on several alternative Silk Roads and can play off countries in that game. At the same time it will be mainly Chinese industries, which would benefit from better trade regimes exporting to Europe or the United States, if they invest in countries along the Silk Road. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2016/12&r=tra |
| By: | International Monetary Fund. |
| Abstract: | The economy is contracting, hurt by external shocks and domestic structural weaknesses and rigidities. The authorities have taken some positive steps, including policies supporting macroeconomic stabilization and structural and institutional reforms such as a shift to a more flexible exchange rate. However, external sector weaknesses and negative macrofinancial feedback loops centered around the deteriorating performance of state owned enterprises (SOEs) are pushing up public and external debt, weakening the financial sector, and threatening stability. |
| Date: | 2016–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/298&r=tra |
| By: | Gamberoni, Elisa; Gartner, Christine; Giordano, Claire; Lopez-Garcia, Paloma |
| Abstract: | We investigate the role of corruption in the business environment in explaining the efficiency of within-sector production factor allocation across firms in nine Central and Eastern European countries in the period 2003-2012. Using a conditional convergence model, we find evidence of a positive relationship between corruption growth and both labour and capital misallocation dynamics, once country framework conditions are controlled for: the link between corruption and input misallocation dynamics is larger the smaller the country, the lower the degree of political stability and of civil liberties, and the weaker the quality of its regulations. As input misallocation is one of the determinants of productivity growth, we further show that the relationship between changes in corruption and TFP growth is indeed negative. Our results hold when we tackle a possible omitted variable bias by instrumenting corruption with two instrumental variables (the percentage of women in Parliament and freedom of the press). JEL Classification: D24, D73, O47 |
| Keywords: | bribes, capital misallocation, labour misallocation, total factor productivity |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20161950&r=tra |
| By: | International Monetary Fund. |
| Abstract: | The state-dominated financial sector confronts several critical challenges. Deep and long standing structural problems and negative external spillovers are creating distortions affecting the credit channel and overall financial stability. Financial sector contingent liabilities are on the rise accentuating an already weak fiscal situation. The government is directing a large proportion of loans from state-owned banks to unhedged state-owned corporates. A Development Bank (DB), created in 2011 to centralize such directed lending, has grown rapidly to assume systemic significance. External imbalances, combined with low international reserves and significant negative spillovers from Russia—the main trade and financial partner, have weakened corporates’ ability to service foreign-currency obligations. |
| Date: | 2016–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/299&r=tra |
| By: | Claudia Curi (Free University of Bolzano‐Bozen, Faculty of Economics and Management); Justas Gedvilas; Ana Lozano-Vivas (University of Malaga) |
| Abstract: | This paper investigates whether and to what extent corporate governance mechanisms affect the efficiency of State Owned Enterprises (SOEs) operating in transition economies. Furthermore, it examines the relationship between corporate governance practice and its impact on both wholly state run SOEs and majority state run SOEs. We employed a unique dataset of corporate governance ratings (related to quality of transparency, quality of board, and quality of strategic planning, implementation and control) of commercial Lithuanian SOEs relating to the period following the introduction of the corporate governance reforms in the years 2012-2013. In order to investigate our research hypotheses, we set-up a two stage empirical research strategy that combined a non-parametric efficiency estimator (i.e., Data Envelopment Analysis) with a bootstrapped truncated regression. We built two aggregate indexes of corporate governance ratings to represent one dimension of corporate governance quality. We then ran a battery of regressions using both the aggregated and the single corporate governance indexes as independent variables. First, the paper finds that the wholly state ownership model of SOEs is positively correlated to efficiency (i.e., wholly SOEs are more efficient than majority SOEs). Moreover, overall corporate governance practices are efficiency-enhancing; more specifically, board quality and strategic planning seem to be effective internal governance mechanisms in promoting overall organizational efficiency. Interestingly, we uncovered that there exists a relationship between concentration of ownership and corporate governance practices, but this mitigated efficiency enhancement in wholly state run SOEs compared to majority state run SOEs. This effect was driven by the lower quality of the board. Overall, our findings illustrate that corporate governance reforms have enhanced efficiency, but wholly SOEs require a better implementation in order to achieve full efficiency gains. |
| JEL: | C14 D24 G34 L32 P31 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps36&r=tra |
| By: | International Monetary Fund. |
| Abstract: | This note presents the methodology and results of stress tests of the financial sector carried out as part of the 2016 Financial Sector Assessment Program (FSAP) for the Russian Federation. 1 To provide a comprehensive assessment of the banking system, the stress testing exercise comprised several different tests: a top-down stress test performed by the Central Bank of Russia (CBR), a bottom-up stress test performed by banks, a separate top-down exercise that included asset quality adjustments performed by staff, single-factor tests performed by CBR, and liquidity tests performed by CBR. |
| Date: | 2016–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/306&r=tra |
| By: | Kamalbek Karymshakov; Burulcha Sulaimanova; Kadyrbek Sultakeev; Raziiakhan Abdieva |
| Abstract: | This research aims to investigate the impact of remittances from international migration on leftbehind youth occupational choice. Labour supply choice of youth is grouped as employee, family contributing worker, own-account worker and unemployment. Labour supply is analysed both at the extensive margin – participation of youth labour across these occupational choices, and at the intensive margins – working hours within each occupational choices. The analysis use “Life in Kyrgyz Republic” survey cross-sectional data for 2011. To overcome endogeneity concerns instrumental variable approach is used. Given the multinomial dependent variable and discrete endogenous variable “conditional mixed process” estimation technique is applied. Empirical results show that remittances impact on left-behind youth in Kyrgyzstan is mainly reflected as labour substitution effect. Unlike findings of some previous studies, we did not find any strong evidence of remittance-dependency behavior of left behind youth. However, increase of likelihood for youth as family contributing worker does not necessarily imply increase of productivity of labour force. There is no sufficient evidence of the fact that return from migration as the job creating activities and efficient utilization of remittances for own-account works exist. Moreover, female youth are more inclined to family contributing works both at the extensive and intensive margins. Results are robust to inclusion of other variables on individual characteristics. Given these empirical evidences, priority for the youth employment policy should be a channeling remittances into productive use. Moreover, educational programs with the emphasis on female youth and special programs on youth entrepreneurship and access to financial resources will be important for youth self-employment activities. |
| Keywords: | youth, employment, remittances, migration, labour supply, Kyrgyzstan. |
| JEL: | E24 F24 F22 J21 O53 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2016-05&r=tra |
| By: | Cuong Viet Nguyen |
| Abstract: | Recently, there is a call for replication research to validate empirical findings, especially findings important for development policies. Thus, this study tried to replicate estimation results from Mu and van de Walle ("Rural Roads and Local Market Development in Vietnam" published in Journal of Development Studies 2011). Overall, the author is able to replicate the most estimates from Mu and van de Walle. He finds the positive effect of rural road on local market development. In addition to the pure replication, the author also estimates the effect of the road project on additional outcomes including access to credit and migration, but do not find significant effects on these outcomes. |
| Keywords: | replication,impact,evaluation,propensity,score,matching,rural,road,Vietnam |
| JEL: | H43 O12 C14 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201640&r=tra |
| By: | International Monetary Fund. |
| Abstract: | The Central Bank of the Russian Federation (CBR) has recently completed a two-year process of assuming the powers and functions of the previous “standalone†regulator of the securities markets and the insurance industry. This has included absorbing 1,300 new staff and inducting them into the organizational structures of the central bank. In addition to its new supervisory functions covering a disparate group of markets and professional market participants, it has also assumed a developmental role for nonbank financial markets with an emphasis on developing proportionate regulation and optimizing the regulatory burden on market participants. This is a challenging medium to long-term role while also seeking to ensure that standards are raised and that undesirable elements are removed from the market as rapidly as possible. |
| Date: | 2016–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/304&r=tra |
| By: | International Monetary Fund. |
| Abstract: | Russian Federation: Financial Sector Assessment Program: Detailed Assessment of Observance Basel Core Principles for Effective Banking Supervision (BCP) |
| Date: | 2016–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/303&r=tra |
| By: | International Monetary Fund. |
| Abstract: | The experiences of past financial crises have strengthened the Russian bank resolution framework. In December 2014, the framework was updated by consolidating existing resolution regimes, including making permanent the temporary measures introduced in 2008 to deal with the failure of large banks. Key changes included enhancing powers to exchange information with foreign resolution authorities and sanctioning managers of failed banks. |
| Date: | 2016–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:16/308&r=tra |