nep-tra New Economics Papers
on Transition Economics
Issue of 2016‒12‒11
24 papers chosen by
J. David Brown
United States Census Bureau

  1. The Economic Impact of East‐West Migration on the European Union By Kahanec, Martin; Pytlikova, Mariola
  2. Growth with Equity: Income Inequality in Vietnam, 2002–14 By McCaig, Brian; Benjamin, Dwayne; Brandt, Loren
  3. Export Tax and Tariff Evasion: Evidence of Misinvoicing in China-New Zealand Trade By Kuntal K. Das; Laura Meriluoto; Amy Rice
  4. OECD Anti-Bribery Policy and Structural Differences Inside the EU By Michal Paulus; Eva Michalikova
  5. The Determinants of self-medication: evidence from urban Vietnam By Hoai, Nguyen Trong; Dang, Thang
  6. The impact of LEADER Programme on entrepreneurship and employment in the context of multifunctionality of rural areas. A case study of UE peripheral region (Lublin voivodeship, Poland) By Guzal-Dec, Danuta; Zwolińska-Ligaj, Magdalena
  7. The Role of the Common Agricultural Policy in Stimulating Rural Jobs in Poland By Nurzyńska, Iwona
  8. Impact of EU subsidies on the of rural areas in Hungary By Fertő, Imre; Bakucs, Zoltán; Varga, Ágnes
  9. Labour in Polish farms from the perspective of agricultural cooperatives By Matyja, Małgorzata
  10. Long-run estimates of interfuel and interfactor elasticities By Ma, Chunbo; Stern, David I.
  11. Measurement Properties of Non-cognitive scales in the Polish Follow-up Study on PIAAC (POSTPIAAC) By OECD
  12. Geographic Politics, Loss Aversion, and Trade Policy: The Case of Cotton and China By Wenshou Yan
  13. Massive Migration and its Effect on Human Capital and Growth: The Case of Western Balkan and Central and Eastern European Countries By Michael Landesmann; Isilda Mara
  14. Estimating the Costs of International Corporate Tax Avoidance: The Case of the Czech Republic By Petr Jansky
  15. Regional Concentration of Industry in China: decentralised choices or a central plan? By Stephen Sheppard; Dan Zhao
  16. The labour market as a determinant of economic and social situation of the rural population. By Chmielewska, Barbara
  17. Empirical evidence on renewable electricity, greenhouse gas emissions and feed-in tariffs in Czech Republic and Germany By Janda, Karel; Tyuleubekov, Sabyrzhan
  18. Economic growth and particulate pollution concentrations in China By Stern, David I.; Zha, Donglan
  19. Environmental Kuznets Curve in Bulgaria By Kalchev, Georgi
  20. Under Cover: Estimating the Existence of Profit-Shifting by MNCs in China By Xuefeng Qian; Bifei Tian; W. Robert Reed; Zirou Chen
  21. China’s pursuit of environmentally sustainable development: Harnessing the new engine of technological innovation By Jin, Wei; Zhang, ZhongXiang
  22. Effects of Fiscal Policy in the DSGE-VAR Framework: The Case of the Czech Republic By Jan Babecky; Michal Franta; Jakub Rysanek
  23. Overview of Czech and German Renewable Energy Policies By Janda, Karel; Tyuleubekov, Sabyrzhan
  24. Exchange Rate Pass-Through to Domestic Prices in the European Transition Economies By Rajmund Mirdala

  1. By: Kahanec, Martin (Central European University); Pytlikova, Mariola (CERGE-EI)
    Abstract: This study contributes to the literature on destination‐country consequences of international migration with investigations on the effects of immigration from new EU member states and Eastern Partnership countries on the economies of old EU member states over the years 1995‐2010. Using a rich international migration dataset and an empirical model accounting for the endogeneity of migration flows we find positive and significant effects of post‐enlargement migration flows from new EU member states on old member states' GDP, GDP per capita, and employment rate and a negative effect on output per worker. We also find small, but statistically significant negative effects of migration from Eastern Partnership countries on receiving countries' GDP, GDP per capita, employment rate, and capital stock, but a positive significant effect on capital‐to‐labor ratio. These results mark an economic success of the EU enlargements and EU's free movement of workers.
    Keywords: EU enlargement, free mobility of workers, migration impacts, European Single Market, east‐west migration, Eastern Partnership
    JEL: J15 J61 J68
    Date: 2016–11
  2. By: McCaig, Brian (Wilfrid Laurier University); Benjamin, Dwayne (University of Toronto); Brandt, Loren (University of Toronto)
    Abstract: We use the 2002 through 2014 Vietnam Household Living Standards Surveys to construct comparable measures of household income and estimates of income inequality over this high-growth period. We focus on two questions: How have benefits from growth been distributed; and do changes in the structure of the economy map into changes in inequality? We explore dimensions in which inequality may vary, notably urban versus rural, and by ethnic status. We also decompose inequality by income source to highlight key factors underlying the relatively low levels of inequality during this period. We find that agricultural opportunities played an important role in dampening inequality, but more important has been the steady development of wage-labor markets in both urban and rural areas. An important caveat to the generally rosy picture we paint is the deteriorating position of ethnic minorities. Finally, we draw comparisons with China and document key differences in their growth-inequality experience.
    Keywords: income inequality, Vietnam, decomposition
    JEL: D31 D63 O53
    Date: 2016–11
  3. By: Kuntal K. Das (University of Canterbury); Laura Meriluoto (University of Canterbury); Amy Rice
    Abstract: The trade between New Zealand and China has grown rapidly after the signing of their free trade agreement, but it is difficult to gauge the exact growth in trade due to gross inconsistencies in the trade data provided by the two countries. We investigate the roles that tax and tariff evasion play in systematically explaining this discrepancy. We find that exports and imports are heavily underreported at the Chinese border to avoid having to pay China's value-added tax and import tariffs. We also find some evidence of underreporting of imports at the New Zealand border to avoid import tariffs.
    Keywords: Trade misinvoicing, Export VAT rebate, Tax evasion, Tariff evasion
    JEL: F14 F38
    Date: 2016–12–02
  4. By: Michal Paulus (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Eva Michalikova (Brno University of Technology, Brno, Czech Republic; Anglo-American Univesity, Prague, Czech Republic)
    Abstract: We propose a novel application of a gravity model of trade as a policy preference mapping tool that reveals areas of potential interest groups formation. We examine a hypothesis that the EU’s inability of the coordinated anti-corruption effort is caused by its internal heterogeneity in preferences towards the anti-corruption policy. We focus only on anti-corruption effort against bribery in foreign transaction which is reflected in the effectiveness of the enforcement of the OECD anti-bribery convention. Using the gravity model, we estimate and compare preferences of western, eastern and Mediterranean EU members towards the enforcement of the convention. In addition to aggregate exports we estimate the model on disaggregated data and examine preferences across trading sectors and identify those industries which would support or oppose the anti-corruption policy. To analyse the hypothesis, we estimate a micro-founded augmented gravity model for bilateral exports of 131 countries within period 1995-2013. The results reveal significant differences between western and eastern EU members when the eastern countries are much more motivated to oppose the policy and to form a strong interest group also on the EU level. However, there are specific sectors which have potential to form a coalition towards the policy across all country groups. We have found out that the country origin (country group to which it belongs) is much better predictor of the policy preferences than exporting sector.
    Keywords: gravity model; OECD anti-bribery convention; international conflict; policy preference mapping; EU heterogeneity
    JEL: F14 F42 F51 F53 F55 O17
    Date: 2016–11
  5. By: Hoai, Nguyen Trong; Dang, Thang
    Abstract: This study examines the primary determinants of self-medications among urban citizens in Ho Chi Minh City, Vietnam. To achieve the research objective, the questionnaire is designed to elicit the respondents’ necessary information using in-depth personal interviews. Employing logistic models the paper finds that the probability of self-medication is positively associated with the respondents’ high school degree or vocational certificate, married status, and income while it is negatively related to employed status, the number of children, the geographical distance from home to the nearest hospital, doing exercise, and living in a central region. Meanwhile, using Poisson models the paper finds that the frequency of self-medication is positively associated with the respondents’ high school and vocational, married, income, and chronic disease while the frequency of self-medication is adversely related to male, employed, children number, distance, being close to health professional and central areas.
    Keywords: Self-medication; Ho Chi Minh City; Vietnam
    JEL: I11 I18
    Date: 2016–06–01
  6. By: Guzal-Dec, Danuta; Zwolińska-Ligaj, Magdalena
    Abstract: The aim of the study is to describe the role of the LEADER program in creating entrepreneurship and employment in the Lublin voivodship. In order to achieve this, the following hypothesis was used: local action groups (LAG) operating in rural areas of the Lublin Region contribute to the creation of social activity, but create insufficient jobs and entrepreneurial incentives. The study used document analysis and diagnostic surveys with an interview questionnaire addressed to representatives of the offices of all 22 LAGs from the studied region. The results revealed the small scale of projects aimed at the development of non-agricultural functions in rural areas, and an insufficient involvement in the implementation of projects in the bio-economy sector, which is the key smart specialization of the region. We conclude that the examined LAGs’ overall role in creating jobs should be assessed as average, but that they create an important local platform focused on stimulating social activity.
    Keywords: LAGs, LDSs, social activity, multifunctional development, Community/Rural/Urban Development, Political Economy, Public Economics,
    Date: 2016
  7. By: Nurzyńska, Iwona
    Abstract: The creation of non-farm jobs in rural areas is one of the key challenges of rural development policy of Poland. Socio-economic processes in the Polish rural areas result in shaping the rural economy in which the role of agriculture diminishes in terms of share in both GDP and employment. New economic functions do not replace the “fading” agriculture as the main source of income in rural areas to the extent that is satisfactory economically and socially. Low diversification of local economy and limited taxable economic base are serious growth handicaps, hitting remote rural areas the most. In the view of the above-mentioned phenomena, this paper tackles the problem of quality of rural labor analyzing its characteristics and the possibility to deploy it in non-farm sectors of the economy. The objective of the paper is to explore the effectiveness of the Common Agricultural Policy instruments in stimulating off-farm job creation in rural areas over the last 12 years of Poland’s membership in the European Union versus the country’s needs in this area. In this context the paper argues for strategic re-orientation of the CAP objectives enabling more effective job creation in rural areas.
    Keywords: the Common Agricultural Policy, rural labor, human capital, non-farm jobs, rural entrepreneurship, policy instruments, Community/Rural/Urban Development, Labor and Human Capital, Political Economy, Public Economics,
    Date: 2016
  8. By: Fertő, Imre; Bakucs, Zoltán; Varga, Ágnes
    Abstract: In recent years, we experienced a growing interest in the evaluation of EU co-funded programmes. The paper is a first attempt to analyse the impacts of such support on the wellbeing of Hungarian rural areas between 2002 and 2008, employing a two stages approach. In the first step, we construct a multi-dimensional RDI (Rural Development Index) measuring the overall level of regional development and quality of life in Hungarian small regions. In the second step we apply propensity score matching approach to evaluate the impact of the regional subsidies on the RDI. Estimations reveal four main findings. First, calculations suggest that concentration in the EU support grows with increasing amount of subsidies. Second, the convergence of support can be also observed. Third, we find considerable mobility in terms of the level of subsidies during analysed period. This indicates that there has been chance for poorly subsidised regions to improve their relative position and vice versa. Finally, our results imply that it is very difficult to identify any impacts of subsidies, because estimations are highly sensitive to the chosen indicators. The size of identified effects is rather small and its direction may equally be positive or negative. However, we can conclude that irrespective to the sign of estimated coefficients the size of impact of regional subsidies is negligible. Consequently, further research is needed to explore impacts mechanisms of subsidies.
    Keywords: EU supports, impact evaluation, sub-region, Community/Rural/Urban Development, Labor and Human Capital, Political Economy, Public Economics, Research Methods/ Statistical Methods,
    Date: 2016
  9. By: Matyja, Małgorzata
    Abstract: The purpose of the paper is to analyze the differences between Polish agricultural production cooperatives and other farming entities in the context of the employment. The conclusions are made on the basics of the analysis of the “List of the 300 best agricultural enterprises” pre-pared by the Institute of Agricultural and Food Economics. The time range of this research covers the years 2009 – 2013. The main finding is that there are no clear, significant differences between agricultural pro-duction cooperatives and other farming entities in terms of employment. However, some of them are able to create a lot of workplaces. Moreover, they can increase the return on sales by increasing the level of employment and maintain existing jobs even in the time of the global crisis.
    Keywords: agricultural production cooperatives, farming entities, employment, profitability, Agribusiness, Farm Management, Industrial Organization, Labor and Human Capital, Production Economics, Productivity Analysis,
    Date: 2016
  10. By: Ma, Chunbo; Stern, David I.
    Abstract: Meta-analyses of interfuel and capital-energy elasticities of substitution show that elasticity estimates are dependent on the type of data – time series, panel, or crosssection – and the estimators used. Econometric theory suggests that the between estimator might generate the best estimates of long-run elasticities but no existing estimates of elasticities of substitution have used it. Alternatively, Chirinko et al. argued in favor of estimating long-run elasticities of substitution using a long-run difference estimator. We provide estimates of China’s interfuel and interfactor elasticities of substitution using the between and long-run difference estimators. To address potential omitted variables bias, we add province level inefficiency and national technological change terms to our regression model. The results show that demand for coal and electricity in China is very inelastic, while demand for diesel and gasoline is elastic. With the exception of gasoline and diesel, there are limited substitution possibilities among the fuels. Substitution possibilities are greater between energy and labor than between energy and capital. The results are quite different to some previous studies for China but coincide well with the patterns found in meta-analyses for long-run estimates of elasticities of substitution.
    Keywords: Energy, substitution, elasticity, demand, China, Demand and Price Analysis, Resource /Energy Economics and Policy, D24, Q40,
    Date: 2016–01
  11. By: OECD
    Abstract: There is a growing literature providing evidence that not only cognitive skills but also non-cognitive skills are important for economic and social outcomes. This paper assesses the measurement properties of the Big Five and Grit scales in a large representative sample of adults in Poland. The data from the Polish Follow-up Study on the Programme for International Assessment of Adult Competencies (postPIAAC) include longitudinal information on PIAAC respondents in Poland and additional background information not available in the international study. The results presented in this paper show that not all the criteria concerning the reliability, validity and comparability of these scales have been satisfied, though the personality measures significantly contribute to explaining the variability in policy-relevant outcomes. Most of the questions discriminate well between people possessing a high and a low level of a given trait, though reverse-worded items perform weaker. The Big Five theoretical five-factor structure was not replicated; however, a six-factor model with an additional factor loading reverse-worded items fits the data. In case of Grit, a bi-factor model, which has an equivalent interpretation to the second-order theoretical structure, holds. The scales are not fully measurement invariant. The results confirm earlier findings from the literature that differences in personality traits are clearly associated with differences in life outcomes. For most of the outcomes, the Big Five traits outperform cognitive skills in predictive power. Only educational attainment is more strongly related to cognitive skills, while for wages, the predictive power of personality and cognitive skills is similar. The paper provides recommendations for incorporating measures of personality traits into competence surveys.
    Date: 2016–12–08
  12. By: Wenshou Yan (School of Economics, University of Adelaide)
    Abstract: This paper seeks to explain how governments respond to world market price fluctuations. It develops a theoretical model of trade policy incorporating loss aversion and reference dependence. Like Freund and Özden (2008), this paper assumes only trade policy instruments are available to the government, but it goes beyond their model by adding a spatial dimension to interest-group politics. The model suggests that: (1) politically sensitive products receive more trade protection; (2) the governmentÂ’s changing trade distortions insulate the domestic market from international price fluctuations by setting trade protection lower (higher) when the world price is higher (lower) than a targeted domestic reference price; and (3) variations in market intervention help producers at the expense of consumers in periods when the international price is well below trend, and help consumers at the expense of producers in high-price periods. These predictions from theory are shown to still hold when the model is extended to a large country case involving terms of trade effects. The model is tested empirically and found to offer a plausible explanation of the puzzling changes in cotton protection in China.
    Keywords: Political economy, Geographic politics, Loss aversion, Reference dependency, Political sensitive product, Price volatility
    JEL: F13 F14 F59 Q17 Q18
    Date: 2016–11
  13. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract We analyse the effect of massive migration particularly from the Western Balkans and the Central and Eastern European countries on human capital and growth. In our analysis, we use a system of three equations to estimate simultaneously the effect of migration on human capital and on growth. An important driver of migration is chain migration, as well as the unemployment and income differentials between developing and developed countries. Overall, our findings suggest that migration of highly skilled from the Western Balkan and Central Eastern European countries has been beneficial to economic growth and income convergence of these countries. Our analysis supports the positive impact of low-skilled migration on the composition of human capital in the source countries.
    Keywords: migration, brain drain, brain gain, economic growth, human capital
    JEL: F22 J24 O15 O40
    Date: 2016–08
  14. By: Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)
    Abstract: International corporate tax avoidance by multinational enterprises likely lowers the Czech Republic's corporate income tax revenue, but it is not clear by how much. To clarify this I first review existing estimates of the costs of international corporate tax avoidance to government revenue worldwide. I then discuss research and revenue estimates relevant for the Czech Republic and develop a few new ones, albeit only illustrative. None of the existing research focused on the Czech Republic nor the five recent international studies I examine provide reliable estimates for the Czech Republic. The extrapolations from these studies result into a range from 6 to 57 billion CZK (4-38 % of current corporate income tax revenue) with a median of 15 billion CZK (10 %) in annual corporate income tax revenue loss. This scale is comparable with the responses of 35 Czech experts with a median of 20 billion CZK (13 %). I conclude with a discussion of these rough estimates as well as questions for further research and policy recommendations.
    Keywords: corporate income tax; international taxation; tax avoidance; BEPS; Czech Republic
    JEL: F23 H25 H26 O19
    Date: 2016–11
  15. By: Stephen Sheppard (Williams College); Dan Zhao (Williams College)
    Abstract: The economic growth and development of China during the past 35 years has been associated with profound impacts on the well-being of the Chinese people, on patterns of global trade and prices of manufactured goods, and on industrial location within China itself. Many would view China’s government and its policies as the dominant, perhaps exclusive, force in determining location and concentration of Chinese industry. This raises the question: can a theoretical approach based on decentralised optimization and location choice provide insights concerning the ongoing changes in industrial concentration in China? We address this question, putting forward a simple model and testing it using Chinese data.
    Keywords: Industrial location, China, location quotient
    JEL: R12 R30 P25 O18
    Date: 2016–12
  16. By: Chmielewska, Barbara
    Abstract: Most rural, mainly farming, families, apart from agricultural holding income also gain income from paid employment, pensions and annuities and self-employment. The budget of the rural population is more and more dependent on the situation in the non-agricultural labour market and thus on the level of salaries in the national economy. Agriculture loses its dominant position in the rural labour market as a source of income. The amount of non-agricultural income, of both urban and rural residents, is reflected in the shaping of their demand for goods and services produced and offered by farmers’ holdings. In the post-accession period, the economic and social situation of the rural population improved. The overall level of income rose and the size and structure of meeting the needs improved. This took place thanks to positive changes in the labour market, such as, inter alia, growth of salaries in the national economy, higher employment rate, lower unemployment rate. An unfavourable trend, especially in social terms, is the persistence of the advantage of salaries offered to men when compared to women employed in the same positions.
    Keywords: countryside, labour market, income, expenses, Community/Rural/Urban Development, Labor and Human Capital,
    Date: 2016
  17. By: Janda, Karel; Tyuleubekov, Sabyrzhan
    Abstract: In this paper we estimated relation between greenhouse gas abatement and share of renewable energy resources in Germany and Czech Republic. We also analysed the dependence between annual installed capacities of RES and respective feed-in tariffs. We took the empirical data of annual installed capacities and regressed it on respective feed-in tariffs (FIT) and/or their polynomials. The analysis resulted in optimum intervals for some types of RES, which are summarised in our paper. We could not collect most of the data for the Czech Republic, since the Energy Regulatory Office of the Czech Republic does not publish the time series for RES, unlike Germany, which publishes a comprehensive database regarding RES. Optimum intervals in our paper indicate at which values of FIT the biggest amount of installed capacities is anticipated. Thus, if FIT scheme to be continued after 2017, FITs should be set inside these intervals. These intervals assume that there are not any caps and restrictions.
    Keywords: Renewable energy, feed-in tariff, Czech renewables, German Renewables
    JEL: G32 L94 Q28
    Date: 2016–12–05
  18. By: Stern, David I.; Zha, Donglan
    Abstract: Though the environmental Kuznets curve (EKC) was originally developed to model the ambient concentrations of pollutants, most subsequent applications have focused on pollution emissions. Yet, it seems more likely that economic growth could eventually reduce the concentrations of local pollutants than emissions. We examine the role of income, convergence, and time related factors in explaining recent changes in PM 2.5 and PM 10 particulate pollution in 50 Chinese cities using new measures of ambient air quality that the Chinese government has published only since the beginning of 2013. We use a recently developed model that relates the rate of change of pollution to the growth of the economy and other factors as well as the traditional environmental Kuznets curve model. Pollution fell sharply from 2013 to 2014. We show that economic growth, convergence, and time effects all served to lower the level of pollution. The results also demonstrate the relationship between the two modeling approaches.
    Keywords: Air pollution, economic growth, environmental Kuznets curve, China, Environmental Economics and Policy, O44, P28, Q53, Q56,
    Date: 2016–02
  19. By: Kalchev, Georgi
    Abstract: This paper carries out an empirical test of the Environmental Kuznets Curve hypothesis with Bulgarian data on pollution and GDP per capita for the years 1970-2008. The existence of such a curve is confirmed in most cases.
    Keywords: Environmental Kuznest Curve,pollution
    Date: 2016
  20. By: Xuefeng Qian; Bifei Tian; W. Robert Reed (University of Canterbury); Zirou Chen
    Abstract: This paper investigates profit-shifting behaviour among a large sample of multinational corporations (MNCs) in China. While profit-shifting behaviour is difficult to observe directly, it can be inferred from the behaviour of firms. That is the approach taken by Egger, Merlo, & Wamser (2014, henceforth EM&W) in their seminal analysis of tax elasticity of German MNCs. They developed a two-component mixture model that categorized MNCs into tax “avoiders” and “non-avoiders” based upon the estimated elasticities of investment to taxes. We apply their approach to our sample of MNCs in China. Like EM&W we find evidence of two distinct groups of MNCs. One group is responsive to changes in taxes, reducing investment when taxes increase. The other group is unresponsive to taxes, so that investment is not significantly associated with changes in tax rates. We show that the characteristics of these groups closely match the “avoiders” and “non-avoiders” of EM&W’s sample. Even so, our estimated tax elasticities are much smaller than EM&W. This suggests that the extent of profit-shifting was relatively small during China’s period of preferential tax treatment for foreign investors.
    Keywords: Multinational Corporations (MNCs); Profit shifting; Tax elasticity of investment; Finite mixture model
    JEL: C33 F23 H32
    Date: 2016–12–05
  21. By: Jin, Wei; Zhang, ZhongXiang
    Abstract: Whether China continues its business-as-usual investment-driven, environment-polluting growth pattern or adopts an investment and innovation-driven, environmentally sustainable development holds important implications for both national and global environmental governance. Building on a Ramsey-Cass-Koopmans growth model that features endogenous technological change induced by R&D and knowledge stock accumulation, this paper presents an exposition, both analytically and numerically, of the mechanism underlining China’s economic transition from an investment-driven, pollution-intensive to an investment and innovation-driven, environmentally sustainable growth path. We show that if R&D technological innovation is incorporated into China’s growth mechanism, then at some tipping point in time when marginal welfare gain of R&D for knowledge accumulation becomes equalized with that of investment for physical asset deployment, China’s economy will launch capital investment and R&D simultaneously and make a transition to a sustainable growth path along which consumption, capital investment, and R&D have a balanced share of 5: 4: 1, consumption, capital stock, and knowledge stock all grow at a rate of 4.9%, and environmental quality improves at a rate of 2.5%. In contrast, if R&D technological innovation is not harnessed as a new growth engine, then China’s economy will follow its business-as-usual investment-driven growth path along which standalone accumulation of dirty physical capital stock will lead to a more than 200-fold increase in environmental pollution.
    Keywords: Endogenous technological change, sustainable development, economic growth model, China’s economic transition, Research and Development/Tech Change/Emerging Technologies, Q55, Q58, Q43, Q48, O13, O31, O33, O44, F18,
    Date: 2016–01
  22. By: Jan Babecky; Michal Franta; Jakub Rysanek
    Abstract: In this paper we explore the potential of the DSGE-VAR modelling approach for examining the effects of fiscal policy. The combination of the VAR and DSGE frameworks leads theoretically to more accurate estimates of impulse responses and consequently of fiscal multipliers. Moreover, the framework allows for discussion about the differences of the effects of fiscal shocks in DSGE and VAR models and to some extent discussion about misspecification in fiscal DSGE models. The DSGE-VAR model is estimated on Czech data covering the period from 1996 to 2011 at quarterly frequency. The government consumption multiplier attains a value close to 0.4 at the horizon of four years. The public investment multiplier is about 0.4 higher, which confirms findings in the literature. On the other hand, the DSGE model alone implies a similar government consumption multiplier but a much lower public investment multiplier, suggesting misspecification of the fiscal DSGE model.
    Keywords: DSGE-VAR model, fiscal multipliers, fiscal shocks, identification, model misspecification
    JEL: C11 E62 F41 H30
    Date: 2016–11
  23. By: Janda, Karel; Tyuleubekov, Sabyrzhan
    Abstract: This paper provides an overview of the renewable energy policies in Germany and Czech Republic. The description of major renewable policies in both countries is complemented with the description of financial support schemes for these policies. National renewable energy plans in both countries are discussed. The emphasis is on renewable electricity energy.
    Keywords: Renewable energy, feed-in tariff, Czech renewables, German Renewables
    JEL: Q28
    Date: 2016–12–05
  24. By: Rajmund Mirdala (Department of Economics at the Faculty of Economics, Technical University of Kosice, Slovak Republic)
    Abstract: Vulnerability of exchange rates to the external price shocks as well as their absorption capabilities represents one of the most discussed area in the fixed versus flexible exchange rate dilemma. Ability of exchange rates to serve as a traditional vehicle for a transmission of external shocks to domestic prices is affected by exchange rate arrangement adopted by monetary authorities. As a result, exchange rate volatility determines the overall dynamics of pass-through effects and associated absorption capability of exchange rate. Ability of exchange rates to transmit external (price) shocks to the national economy represents one of the most discussed areas relating to the current stage of the monetary integration in the European single market. The problem is even more crucial when examining crisis related redistributive effects. In the paper we analyze exchange rate pass-through to domestic prices in the European transition economies. We estimate VAR model to investigate (1) responsiveness of exchange rate to the exogenous price shock to examine the dynamics (volatility) in the exchange rate leading path followed by the unexpected oil price shock and (2) effect of the unexpected exchange rate shift to domestic price indexes to examine its distribution along the internal pricing chain. Our results indicate that there are different patterns of exchange rate passthrough to domestic prices according to the baseline period as well as the exchange rate regime diversity.
    Keywords: exchange rate pass-through, inflation, VAR, Cholesky decomposition, impulse-response function
    JEL: C32 E31 F41
    Date: 2016–10

This nep-tra issue is ©2016 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.