nep-tra New Economics Papers
on Transition Economics
Issue of 2017‒01‒29
twenty-six papers chosen by
J. David Brown
United States Census Bureau

  1. Depositor discipline in Russian regions: Flight to familiarity or trust in local authorities? By Schoors, Koen; Semenova, Maria; Zubanov, Andrey
  2. Land tenure policy and women’s off-farm employment in rural China By Hongqin Chang; Jing Liu; Yanyun Gao
  3. Local Financial Development and constraints on private firms' exports: EvACidence from City Commercial Banks in China By Zhao Chen; Sandra Poncet; Ruixiang Xiong
  4. Ownership Dynamics and Firm Performance in an Emerging Economy: A Meta-Analysis of the Russian Literature By Iwasaki, Ichiro; Mizobata, Satoshi; Muravyev, Alexander A.
  5. Consumption over the life cycle in Poland By Arkadiusz Florczak; Janusz Jabłonowski
  6. Why Geographic Dispersion Before Its Time: Industrial Policy and Economic Geography in the People’s Republic of China By Wu, Yiyun; Zhu, Xiwei
  7. Labour market segmentation and the financial situation of the pension system in Poland By Piotr Lewandowski; Jakub Sawulski; Kamil Stronski
  8. Budgetary Institutions in the Context of Budget Reform in Russia By Kudryashova, Ekaterina
  9. Long-tarm Monetary Statistics for Russia By Nakamura, Yasushi
  10. Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China By Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
  11. The cyclical character of fiscal policy in transition countries By Rilind Kabashi
  13. Is the People’s Republic of China’s Current Slowdown a Cyclical Downturn or a Long-term Trend? A Productivity-Based Analysis By Bai, Chong–En; Zhang, Qiong
  14. Republic of Poland; Arrangement Under the Flexible Credit Line and Cancellation of the Current Arrangement-Press Release; Staff Report; and Statement by the Executive Director and Alternate Executive Director for the Republic of Poland By International Monetary Fund.
  15. Subsidizing Fuel Efficient Cars: Evidence from China's Automobile Industry By Chia-Wen Chen; Wei-Min Hu; Christopher R. Knittel
  16. Along the Giant’s Footprints: Bama China By Wang, H. Holly; Li, Yi'an
  17. The impact of research collaboration on academic performance: An empirical analysis for Russian Universities By Aldieri, Luigi; Kotsemir, Maxim; Vinci, Concetto Paolo
  18. Debt Overhang and the Macroeconomics of Carry Trade By Jakucionyte, Egle; van Wijnbergen, Sweder
  19. Fostering Productivity for Income Convergence in the Czech Republic By Falilou Fall; Christine Lewis
  20. Can Russia's Military Expansion be Impossible Mission Force for its V-Shaped Growth Recovery under Declining Oil Prices? By Kuboniwa, Masaaki
  21. Republic of Estonia; 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Estonia By International Monetary Fund.
  22. Infrastructure and Urbanization in the People’s Republic of China By Li, Zhigang
  23. Republic of Estonia; Selected Issues By International Monetary Fund.
  24. Russian Crisis and its Impact on Agriculture and the Food Industry in Latvia By Pilvere, Irina; Nipers, Aleksejs
  25. Local Poverty and Inequality in Albania By Gianni Betti; Ruzhdie Bici; Laura Neri; Thomas Pave Sohnesen; Ledia Thomo
  26. A small scale forecasting and simulation model for Azerbaijan (FORSAZ) By Huseynov, Salman; Mammadov, Fuad

  1. By: Schoors, Koen; Semenova, Maria; Zubanov, Andrey
    Abstract: We analyze whether a depositor’s familiarity with a bank affects depositor behavior during a financial crisis. Familiarity is measured by the presence of regional or local cues in the bank’s name, while depositor behavior is considered in terms of depositor sensitivity to observable bank risk (market discipline exerted by depositors). Using the 2001–2010 bank-level and region-level data for Russia, we show the evidence that depositors use quantity-based discipline on all banks in the sample. The evidence of a price-based discipline mechanism, however, is virtually absent. We find that depositors of familiar banks were less sensitive to bank risk after a financial crisis than depositors at unfamiliar banks. To assure the results are driven by familiarity bias and not implicit support of regional governments to banks with regional cues in their names, we interact the variables with measures of trust in local governments and regional affinity. We find a “flight to familiarity” effect strongly present in regions with strong regional affinity, while the effect is rejected in regions with greater trust in regional and local governments. This suggests that the results are driven by familiarity rather than implicit protection from trusted regional or local governments.
    JEL: G21 G01 P2
    Date: 2017–01–19
  2. By: Hongqin Chang; Jing Liu; Yanyun Gao
    Abstract: Using the data from three waves (1995, 2002 and 2008) of the Chinese Household Income Project (CHIP), which covers nine provinces in China, this paper investigates the impact of land tenure security on farmers’ labor market outcomes in rural China, especially for women’ s labor market behavior. To identify the effect of land tenure security, this paper used difference-in-differences strategy to control for time invariant heterogeneity, and a number of observed time-varying economic characteristics for its validity. The paper finds that in response to more security land rights, both women and men increase their probability of wage employment participation and individual income.
    Keywords: Land Tenure, off-farm, rural China
    JEL: O15 J61 Q15 R23
    Date: 2017
  3. By: Zhao Chen; Sandra Poncet; Ruixiang Xiong
    Abstract: We provide evidence that the development of city commercial banks (CCBs) across China has alleviated the restraining effect of China's domestic financial market inefficiency on the export activity of domestic private firms. Looking at the export behavior of 260 cities between 1997 and 2012 we confirm the well-established under-performance of domestic private firms in financially more vulnerable sectors compared to foreign affiliates in China. We show that a larger number of city commercial banks' branches raises domestic private firms' export disproportionately more in financially dependent sectors, so as to reduce the systematic disadvantage of domestic private firms over foreign-owned firms in export markets related to their greater financial exclusion. We however find that the private firms export performance has deteriorated relative to that of state-owned firms casting doubt on the capacity of development of CCBs to put an end to the systematic bias of lending in favor of the state sector.
    Keywords: City Commercial Banks;Local Fnancial Development;China;Financial Constraints;Export Performance
    JEL: F10 F14 F36 G32
    Date: 2016–12
  4. By: Iwasaki, Ichiro; Mizobata, Satoshi; Muravyev, Alexander A.
    Abstract: This paper provides a meta-analysis of studies on the effect of ownership on the performance of Russian firms over 20 years of rapid institutional and economic changes. We review 29 studies extracted from the EconLit and Web of Science databases with a total of 877 relevant estimates. We find that the government negatively affects company management regardless of its administrative level. In contrast, private ownership is positively associated with firm performance. The effect size and statistical significance are notably varied among different types of private ownership. While the effect of insider (employee and management) ownership is comparable to that of foreign investors, the effect of domestic outsider investors is considerably smaller. Our assessment of publication selection bias reveals that the existing literature does not contain genuine evidence for a series of ownership types and, therefore, some of the findings have certain limitations.
    Keywords: Privatization, Corporate Ownership, Firm Performance, Meta-analysis, Publication Selection Bias, Russia
    JEL: D22 G32 H32 P26 P31
    Date: 2017–01
  5. By: Arkadiusz Florczak; Janusz Jabłonowski
    Abstract: The article attempts to verify the existence and strength of the buffer stock and precautionary savings’ behaviours of households in Poland, with the use of the dynamic stochastic model of permanent income with life cycle hypothesis (PILCH). The theoretical part of the model relies heavily on Gourinchas & Parker [14], while numerical solutions are based on Carroll [3]. The model includes partial insurance of households against idiosyncratic risk. The data relies on two household surveys: on budgets (HBS) and wealth (HWS), with parametrisation based on the 1% sample from the social insurance administrative data. The results generally seem to confirm the initial presumption on doubtful reflection of the dynamic economic reality of the fast converging market economy in the applied version of the model. The reason may stem from the lack of sufficiently stable economic environment through at least one full working career path of the household generation. Polish households, in general, are not (yet) patient enough to create buffer stock behaviour based on financial means, so precautionary behaviour prevails. The detailed results for decomposed types of households show proof for buffer stock behaviour for high school graduates from richer regions, and specific professions.
    Keywords: consumption over life cycle, precautionary savings, household wealth survey, household budget survey, simulated method of moments, data matching, endogenous gridpoints.
    JEL: C49 C61 D91
    Date: 2016
  6. By: Wu, Yiyun (Asian Development Bank Institute); Zhu, Xiwei (Asian Development Bank Institute)
    Abstract: We investigate the trends and determinants of geographic concentration and industrial specialization in the People’s Republic of China (PRC) using interprovincial panel data for the period from 1999 to 2010. It shows that, after 2005, both geographic concentration and industrial specialization began to decrease, resulting in an increased similarity of provincial industrial structure. Industrial policies of provincial governments cause geographic dispersion and inverse specialization. The result is robust when using instrumental variables to deal with possible reverse causality and omitted variable problems. The mechanism behind this is that central government industrial policy, which tends to last for several years, is an important reference document for each provincial planner. This causes the less-developed regions to deviate from their comparative advantages, resulting in a combination of insufficient geographic concentration and inverse specialization in the PRC.
    Keywords: geographic concentration; dispersal; industrial policy; specialization; local government; provincial government; economic geography
    JEL: L59 L60 R12
    Date: 2017–01–18
  7. By: Piotr Lewandowski; Jakub Sawulski; Kamil Stronski
    Abstract: Since 2014 Poland is the country with the highest share of temporary workers in the EU. Civil law contracts, a type of temporary contracts, allow payment of lower retirement pension contributions than implied by employment contracts. We use a cohort pension model to quantify the impact of civil law contract use on revenue from contributions and spending on pensions in Poland. Between 2005 and 2015, the rising incidence of civil law contracts reduced the revenue from contributions in the general pension system by PLN 2.4 billion per year on average. This widened the pension fund deficit by approx. 5%. In the future (2016-2050), the impact of civil law contracts on the revenue from contributions will wane because of demographic changes and rising educational attainment of the workforce. However, its impact on pension spending will increase with time, although it will be weaker than the effect on revenue from contributions. Hence, labour market segmentation will deteriorate the pension system balance. The obligation to pay contributions on all contracts of mandate from at least the minimum wage level, introduced in 2016, is not sufficient to balance out the impact of segmentation on the pension system balance.
    Keywords: labour market, pensions, public finance
    JEL: H55 H60 J26 J41 J42
    Date: 2016–12
  8. By: Kudryashova, Ekaterina
    Abstract: The article is devoted to the problem of current stage of budgetary reform in Russian Federation – reform of budgetary institutions. The author gives the understanding of the essence of the budgetary institutions reform and analyses it’s context. The delay of the third stage of budgetary reform was caused by crisis of 2008. The financial crisis has negative influence on the implementation of budgetary institutions initiatives.
    Keywords: budget, budgetary reform, public services, strategic planning and budgeting, result oriented budget allocation
    JEL: H3 H61 K23
    Date: 2016
  9. By: Nakamura, Yasushi
    Abstract: Monetary statistics in the Russian Empire, the Soviet Union, and the Russian Federation were reviewed. The result showed that it is difficult to construct some historical time series of monetary indicators consistent for the entire period of 150 years, because the financial systems in these three periods were very different from each other and that in a market economy. We need to understand the characteristics of each monetary and financial system to use the monetary and financial statistics. The financial system in the Russian Empire developed slower than that of West Europe and was characterized by strong government influence. This characteristic seemed to be carried over to the Soviet Union. The state budget was the main pillar of the Soviet financial system; bank financing merely had a minor and subsidiary role, and its main source of finance was government funds. This pattern of Soviet finance changed in the mid-1960s. Bank financing expanded rapidly using increasing household deposits as its source of finance, while the government sector became a net absorber of financial resources. This financial system was unsustainable and eventually collapsed. After the collapse of the Soviet Union, the Russian financial system returned to a standard financial system for a market economy; however, a sound financial system is still under construction.
    Date: 2016–11
  10. By: Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
    Abstract: We use household-level panel data from China and a quantitative framework to document the extent and consequences of factor misallocation in agriculture. We find that there are substantial frictions in both the land and capital markets linked to land institutions in rural China that disproportionately constrain the more productive farmers. These frictions reduce aggregate agricultural productivity in China by affecting two key margins: (1) the allocation of resources across farmers (misallocation) and (2) the allocation of workers across sectors, in particular the type of farmers who operate in agriculture (selection). We show that selection can substantially amplify the static misallocation effect of distortionary policies by affecting occupational choices that worsen the distribution of productive units in agriculture.
    JEL: O11 O14 O4
    Date: 2017–01
  11. By: Rilind Kabashi (National Bank of the Republic of Macedonia)
    Abstract: This study investigates the cyclical character of fiscal policy in transition countries in Central, Eastern and Southeastern Europe (CESEE) in the period from 1995 to 2011, using system GMM as the preferred estimation method for the underlying sample and model specification. The study finds discretionary policy in the CESEE EU Member States and in the Western Balkan countries to have been procyclical, thus aggravating economic fluctuations, whereas automatic stabilizers moved overall policy to an acyclical stance. In addition, the analysis indicates considerable differences in the cyclical character of fiscal policy between transition countries and the Western European EU Member States, where both overall fiscal policy and discretionary policy were acyclical. Finally, the study also offers several recommendations for policymakers, particularly in transition countries.
    Keywords: fiscal policy, transition countries, European Union, system GMM
    JEL: H62 E32 C33
    Date: 2016–08
  12. By: Mendis, Sachintha; Hovhannisyan, Vardges
    Abstract: Food consumers in China have undergone significant changes in their food consumption patterns and have become more dependent on animal products for protein, while substituting fine grains for coarse grains. Considerable research effort has been devoted to this topic. A majority of these studies rely on the AIDS model, which has linear Engel and ignores unobserved consumer heterogeneity. We study food demand in China using the Exact Affine Stone Index (EASI) system. The EASI model not only shares all of the desirable properties of the AIDS model but also provides additional benefits. Specifically, it is not subject to the rank three limitation of Gorman (1981) and allows the Engel curves to take arbitrary shapes. Further, the EASI accounts for unobserved consumer heterogeneity. This is especially important in welfare studies conducted on consumer-level since much of the demand variation is left unexplained. Previous studies focus on changes in quantities, however we reveal that quality is also very important. Further, results confirm the prevalence of unobserved heterogeneity in consumer food preferences across provinces in China. By enhancing the findings of previous studies, this study elicits more realistic food preferences in China for agricultural policy, trade, and foreign direct investment decisions.
    Keywords: Demand for food quality, EASI demand model, food demand in China, Demand and Price Analysis, D11, D12,
    Date: 2017–01–18
  13. By: Bai, Chong–En (Asian Development Bank Institute); Zhang, Qiong (Asian Development Bank Institute)
    Abstract: Whether the People’s Republic of China’s (PRC) economic slowdown since the 2008 financial crisis is a cyclical downturn or a long-run trend has important policy implications. Based on provincial panel data, we identify the determinants of productivity and uses counter-factual analysis to decompose the causes of the PRC’s post-crisis slowdown. We find that economic openness has a significantly positive impact on the technical efficiency of production, whereas the income level has a significantly negative effect. Second, a significantly negative correlation is observed between the stock of inventory and productivity, while the opposite is observed between employment involvement rate and productivity. Third, government size and investment rates both have significantly negative effects on productivity. Lastly, the diminishing late-mover advantage and the growth in investment rate are both major contributors to the current decline in the PRC’s productivity. Although the stimulus-induced investment surge has effectively offset the negative effects of the crisis on the PRC’s growth, it is not conducive to the growth of productivity and consumption. The current economic slowdown does not seem to be a cyclical downturn. Indeed, further reforms are needed to stabilize the PRC’s growth.
    Keywords: productivity; technical efficiency; utilization efficiency; allocative efficiency; counter-factual analysis
    JEL: E20 O47
    Date: 2017–01–19
  14. By: International Monetary Fund.
    Abstract: Poland’s economic growth remains robust, despite some weakening this year, and deflation has dissipated. The external buffers have increased, and the current account is close to balance. However, external risks remain elevated, with the key risks including a faster-than-expected pace of monetary policy normalization in the U.S., possible dislocations in emerging markets leading to bouts of financial market volatility, as well as a possible banking sector stress and growth slowdown in the euro area. The upcoming Brexit negotiations and Europe's heavy election calendar add to uncertainties.
    Date: 2017–01–18
  15. By: Chia-Wen Chen; Wei-Min Hu; Christopher R. Knittel
    Abstract: The Chinese automobile market is the largest in the world with annual sales exceeding 20 million vehicles. The tremendous growth in sales---over 200 percent from 2008 to 2015---and concerns over local air quality have prompted China's policy makers to incentivize the adoption of more fuel efficient vehicles. We examine the response of vehicle purchase behavior to China's largest national subsidy program for fuel efficient vehicles during 2010 and 2011. Using variation from the program's eligibility cutoffs, we find that the program boosted sales for subsidized vehicle models, but that the program also created a substitution effect within highly fuel efficient vehicles and most subsidies went to inframarginal consumers. This substitution effect greatly reduces the cost effectiveness of the program. We calculate that the average cost per ton of carbon dioxide saved is over 82 USD, well above the social cost of carbon used in U.S. regulatory filings. Using the framework in Boomhower and Davis (2014) and accounting for local pollution benefits, we show that ignoring the substitution effect would lead one to conclude that the program is welfare enhancing, whereas in fact the marginal cost of the program exceeds the marginal benefit by almost as much as 300 percent. We also show that the program was not well-targeted; the effect of the subsidy on sales of fuel efficient vehicles was smaller in areas where consumers were more likely to purchase fuel inefficient models or were lower educated.
    JEL: L5 L91 Q4 Q5
    Date: 2017–01
  16. By: Wang, H. Holly; Li, Yi'an
    Abstract: When McDonald’s entered Chinese market in 1989, Bama Company, a key supplier of McDonald’s deserts, followed to explore this potential high-volume bakery goods kingdom in Asia. Having been influenced by western culture since the economic reform in the 1980s, Chinese people, especially the young generation, love to enrich their daily diet with western food. Along with American fast food booming in China, bakery products, such as cakes, cookies, and other deserts are also well accepted by consumers. This case introduces how Bama grows its international market by following its giant client. While maintaining its long term partnership with McDonald’s, Bama also develops other clients in the fast food chain in this unfamiliar yet exciting world. Bama China further seeks more expansion and explores larger growth in the Asian-Pacific region to develop bakery markets. This case study discusses several options for the future of Bama China.
    Keywords: Chinese bakery industry, B2B, fast food, dessert, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Development,
    Date: 2016–07
  17. By: Aldieri, Luigi; Kotsemir, Maxim; Vinci, Concetto Paolo
    Abstract: The aim of this paper is to investigate the impact of external research collaborations on the scientific performance of academic institutions. Data are derived from the international SCOPUS database. We consider the number of citations of publications to evaluate university performance in Russia. To this end, we develop a non-overlapping generations model to evidence the theoretical idea of research externalities between academic institutions. Moreover, we implement different empirical models to test for the effect of external scientific collaborations on the institutional research quality. The results confirm an important positive impact of co-authoring process
    Keywords: Academic institutions; Productivity; Research externalities
    JEL: D20 I21
    Date: 2017–01
  18. By: Jakucionyte, Egle; van Wijnbergen, Sweder
    Abstract: Abstract The depreciation of the Hungarian forint in 2009 left Hungarian borrowers with a skyrocketing value of foreign currency debt. The resulting losses worsened debt overhang in to debt-ridden firms and eroded bank capital. Therefore, although Hungarian banks had partially isolated their balance sheets from exchange rate risk by extending FX-denominated loans, the ensuing debt overhang in borrowing firms exposed the banks to elevated credit risk. Firms, households and banks had run up the open FX-positions hoping to profit from low foreign rates in the run-up to Euro adoption. This example of carry trade in emerging Europe motivates our analysis of currency mismatch losses in different sectors in the economy, and the macroconsequences of reallocating losses from the corporate to the banking sector ex post. We develop a small open economy New Keynesian DSGE model that accounts for the implications of domestic currency depreciation for corporate debt overhang and incorporates an active banking sector with financial frictions. The model, calibrated to the Hungarian economy, shows that, in periods of unanticipated depreciation, allocating currency mismatch losses to the banking sector generates a milder recession than if currency mismatch is placed at credit constrained firms. The government can intervene to reduce aggregate losses even further by recapitalizing banks and thus mitigating the effects of currency mismatch losses on credit supply.
    Keywords: Debt overhang; foreign currency debt; Hungary; leveraged banks; small open economy
    JEL: E44 F41 P2
    Date: 2017–01
  19. By: Falilou Fall; Christine Lewis
    Abstract: Over the past two decades, the income level of the Czech Republic has converged considerably towards the OECD average. However, after the 2008 global crisis, the convergence process stalled. Shortfalls in labour productivity have developed and are mainly structural. Policies are needed to foster domestic sources of productivity growth. Better targeting of government R&D support and more focused innovation policies that would be aided by a streamlining of policy institutions and interventions are necessary. In particular, tailored policies to increase knowledge-based capital (skills, management capacity, collaboration, etc.) are necessary to increase Czech firms’ productivity. Also, resource reallocation should be facilitated by reforming framework conditions. In particular, bankruptcy rules, competition and regulation policies, access to finance and SME taxation need to be improved to boost SMEs' growth and productivity. Stimuler la productivité pour favoriser la convergence des revenus dans la République tchèque Au cours des deux dernières décennies, le niveau de revenu de la République tchèque s’est nettement rapproché de la moyenne de l’OCDE. Toutefois, après la crise mondiale de 2008, ce processus de convergence a marqué un coup d’arrêt. La productivité n’a pas progressé autant qu’attendu, principalement pour des raisons structurelles. Il est dès lors nécessaire de mettre en place des politiques publiques pour stimuler les sources internes de hausse de la productivité. Rationaliser les institutions chargées de l’élaboration de ces politiques aiderait à mieux cibler le soutien public à la R D et à affiner les politiques de l’innovation. En particulier, des politiques spécifiquement conçues pour développer le capital intellectuel (compétences, capacité de direction, collaboration, etc.) s’imposent pour accroître la productivité des entreprises tchèques. Par ailleurs, il conviendrait de faciliter la réaffectation des ressources en réformant les conditions-cadres en vigueur. En particulier, les règles en matière de faillite, les politiques en matière de concurrence et de réglementation, l’accès aux financement et la fiscalité des PME doivent être améliorés pour accélérer la croissance des petites et moyennes entreprises et doper leur productivité.
    Keywords: innovation, labour productivity, R&D tax incentives, skill mismatch
    JEL: H25 J24 O38 O47 O52
    Date: 2017–01–25
  20. By: Kuboniwa, Masaaki
    Abstract: This paper investigates whether Russia's expansion of military goods can be Impossible Mission Force (IMF) for its V-Shaped growth recovery under declining oil prices. Looking at long-run relationships between domestic outputs and international oil prices for 1995–2016, we focus on the impact of the military output expansion on growth of GDP and manufacturing for 2011–2016. We demonstrate that the military output expansion checked further growth retardation for 2012–2014 as a counter power against deteriorating oil prices or economic sanctions, while the military output expansion would not be likely to bolster up Russia's growth from 2015 onward without next oil windfalls.
    Keywords: military goods, international oil price, Impossible Mission Force, growth
    JEL: F51 F52 H56 L64
    Date: 2016–11
  21. By: International Monetary Fund.
    Abstract: Effectively addressing low productivity growth and risks to competitiveness requires a three-pronged approach: (i) making growth promotion more effective through oversight of programs by a dedicated productivity unit in the Prime Ministry, better calibrating programs to company’s needs, incentivizing take-up, and scaling-up selected programs; (ii) re-anchoring wage developments in fundamentals by moderating government and minimum wage policies and mobilizing additional labor resources for the private sector, including through faster reduction of government employment; and (iii) social security contribution cuts to provide relief from pressures on profitability.
    Keywords: Article IV consultation reports;Economic conditions;Economic growth;Wage increases;Global competitiveness;Fiscal policy;Financial sector;Banks;Economic indicators;Social indicators;Balance of payments statistics;Staff Reports;Press releases;Estonia;
    Date: 2017–01–13
  22. By: Li, Zhigang (Asian Development Bank Institute)
    Abstract: The recent experience of infrastructure investment in PRC suggests an intertwined relationship between investment, urbanization, and economic growth. In one mechanism, urbanization generates demand for infrastructure investment, which then drives economic growth via various channels including reducing transaction costs and raising productivity. Another mechanism emphasized in this paper is that infrastructure investment can promote urbanization through facilitating economic agglomeration toward hub cities. This agglomeration process also raises productivity in the economy. The lessons from the PRC have implications for infrastructure financing. On the one hand, recent reforms have allowed the market to play an increasingly important role in funding infrastructure investment, helping improve the efficiency of infrastructure investment and the productivity of the economy. On the other hand, evidence in the PRC suggests a cross-province spillover effect of road infrastructure, supporting the central government’s role in infrastructure financing. Although the current infrastructure investment system is still distorted by local governments’ incentives and decisions, there is no evidence of over-investment in infrastructure at the aggregate level. Nevertheless, there is strong evidence that the marginal return to infrastructure investment in the PRC has been rapidly declining. Hence, it is urgent for policy makers to reform the existing system to base their investment decisions on the economic returns to infrastructure. The interregional flow of goods and production factors (labor and capital) is a fundamental force that drives urbanization, but the market may not be efficient in financing and infrastructure construction. This paper analyzes infrastructure-related institutions and the interrelation between infrastructure and urbanization. It addresses the following issues: What is the relationship between infrastructure, growth, and urbanization? How efficient have investment and financing been for infrastructure construction? How can we evaluate the performance of infrastructure development? How and to what extent should the government be involved in infrastructure construction?
    Keywords: infrastructure; urbanization; infrastructure financing; development; construction; investment; economic growth
    JEL: H54 O18 R42
    Date: 2017–01–12
  23. By: International Monetary Fund.
    Abstract: Republic of Estonia: Selected Issues
    Keywords: Economic growth;Wage increases;Labor productivity;Global competitiveness;Selected Issues Papers;Estonia;
    Date: 2017–01–13
  24. By: Pilvere, Irina; Nipers, Aleksejs
    Abstract: The selected paper presented at the IAMO Samarkand Conference
    Keywords: International Development, International Relations/Trade,
    Date: 2016–11–02
  25. By: Gianni Betti; Ruzhdie Bici; Laura Neri; Thomas Pave Sohnesen; Ledia Thomo
    Abstract: This paper presents the results of the latest poverty mapping update using the most recent LSMS survey of 2012 and the most recent Census 2011. This poverty map still builds on the methodology outlined in Elbers et al. (2003), but also innovates by including a number of new methodological developments, the most important described by Elbers and Van der Weide (2014). The results presented here can be a powerful tool for policymakers, as they allow better understanding and addressing spatial inequalities in welfare across Albania; this is particularly needed since in the last decade the internal movements led to large-scale urbanization in some areas and drastic depopulation in others. While internal movements are multifaceted, it is apparent that the large majority of internal migration flows is in the direction of Tirana.
    Keywords: Poverty Mapping; LSMS; Census; Albania
    JEL: I32 C21 R58
    Date: 2017–01
  26. By: Huseynov, Salman; Mammadov, Fuad
    Abstract: In our study, we model both steady state and short-run dynamics of the important aspects of the national economy using quarterly data for the period 1999Q1-2016Q2. We explicitly model government, money market and external sector, but omit household sector, labor market, wage dynamics and volume of the physical capital specifications due to serious data quality issues. Using Fully Modified OLS (FMOLS) co-integration methodology we explore co-integration relations among the variables. Coefficient estimates of short-run dynamics are in compliance with our ex-ante expectations. Stability tests indicate that the system seems to exhibit stability around its steady state values and model variables converges to their steady state values approximately within 140 periods (2016Q3-2050Q4). Impulse-response analysis also show stable convergence of the model and predict economically consistent results. The results of in-sample and out-of-sample simulation exercises for the inflation, the government consumption and the imports are satisfactory. However, it seems that the model cannot adequately capture ex-post dynamics of NFA and reserve money. In general the results indicate that model can be used for the specific policy analysis and forecasting of main macroeconomic variables of Azerbaijan.
    Keywords: general equilibrium; co-integration analysis; forecast evaluation
    JEL: C32 C51 C52 E17
    Date: 2016–11–30

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