nep-tra New Economics Papers
on Transition Economics
Issue of 2017‒03‒05
nine papers chosen by
J. David Brown
United States Census Bureau

  1. The impact of state-controlled banks on the Russian banking sector By Vernikov, Andrei
  2. The Exchange Rate Pass-Through to CPI and its components in Oil-Exporting CIS Countries By Vugar Rahimov; Nigar Jafarova; Fuad Ganbarov
  3. Russian Perspectives on the Third Offset Strategy and Its Implications for Russian-Chinese Defense TechnologicalCooperation By KASHIN, Vasily
  4. The Drivers of Economic Growth in China and India: Globalization or Financial Development? By Shahbaz, Muhammad; Kandil, Magda; Kumar, Mantu; Nguyen, Duc Khuong
  5. Time series momentum and contrarian effects in the Chinese stock market By Huai-Long Shi; Wei-Xing Zhou
  6. The impact of China's WTO accession on internal migration By Giovanni Facchini; Maggie Y. Liu; Anna Maria Mayda; Minghai Zhou
  7. Group-based inequalities: The case of Viet Nam By Dang Thi Thu Hoai
  8. China's Gradualistic Economic Approach and Financial Markets By Markus K. Brunnermeier; Michael Sockin; Wei Xiong
  9. Chinese Defense Industry Reforms and Their Implications for US-China Military Technological Competition By CHEUNG, Tai Ming; ANDERSON, Eric; YANG, Fan

  1. By: Vernikov, Andrei
    Abstract: This paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country’s banking system in early 2011. The author offers a credible estimate of the size of the country’s state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author’s interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country’s banking sector.
    Keywords: Russia, Russian banks, government control, state-owned banks, public sector, bank assets, bank deposits, bank loans, Chinese banks, private banks
    JEL: G21 G28 H82 L80 P52
    Date: 2017–02–27
  2. By: Vugar Rahimov (Central Bank of the Republic of Azerbaijan); Nigar Jafarova (Central Bank of the Republic of Azerbaijan); Fuad Ganbarov (Azerbaijan National Academy of Sciences, Institute of Economics)
    Abstract: In this study, we explore the pass-through of exchange rate fluctuations to domestic CPI and its components for Azerbaijan, Kazakhstan and Russia. Using the data of 2003:Q1-2016:Q2, we estimate a VAR model and find significant but incomplete pass-through in all sample countries. The accumulated pass-through to aggregate CPI within one year is 28 percent for both Azerbaijan and Kazakhstan; however the equivalent figure for Russia is 32 percent. According to our empirical findings the largest pass-through (ERPT) is observed in the non-food CPI in Azerbaijan and Kazakhstan, whereas in Russia the food prices demonstrate the greatest ERPT. Since the ERPT is an essential ingredient of price developments in sample countries, it should be assessed precisely and taken into account in monetary policy decisions and inflation forecasting.
    Keywords: Exchange rate pass-through, VAR model, disaggregated CPI, oil exporting countries
    JEL: F31 E31 E52 C51 C52
    Date: 2017–02
  3. By: KASHIN, Vasily
    Abstract: The development of the US Third Offset Strategy has been closely watched by the Russian Ministry of Defense, the Russian defense industry, and Russian academics and government agencies. Although Russia has active technology development programs comparable to those associated with the Third Offset Strategy, the Russian authorities are paying close attention to what effects US breakthroughs might have on strategic, especially nuclear, stability. In light of worsening relations with the West, Russia seems to be reconsidering its previous model of defense industry cooperation with China. Joining efforts at this stage may be seen by the two countries as the only way to prevent the United States from gaining a decisive military and technological advantage.
    Keywords: Social and Behavioral Sciences, China, United States, Russia, military technology, strategic competition, Third Offset Strategy
    Date: 2017–02–28
  4. By: Shahbaz, Muhammad; Kandil, Magda; Kumar, Mantu; Nguyen, Duc Khuong
    Abstract: Using annual data from 1970-2013 for China and India, this study examines the impact of globalization and financial development on economic growth by endogenizing capital and inflation and drawing comparisons between the two fastest growing emerging market economies. In the long-run, co-integration test results indicate that financial development increases economic growth in China and India. The results also reveal that globalization accelerates economic growth in India but, surprisingly, impairs economic growth in China as it increases competition for exports. The results furthermore disclose that acceleration in capitalization and inflation, as a proxy for aggregate demand, are positively linked to economic growth in China and India. Causality test results indicate that both financial development and economic growth are interdependent. In contrast, causality runs from higher economic growth to increased globalization in India, while the results do not support long-term causality between globalization and economic growth in China.
    Keywords: Economic Growth, Globalization, Financial Development, China, India
    JEL: A1
    Date: 2017–02–02
  5. By: Huai-Long Shi (ECUST); Wei-Xing Zhou (ECUST)
    Abstract: This paper concentrates on the time series momentum or contrarian effects in the Chinese stock market. We evaluate the performance of the time series momentum strategy applied to major stock indices in mainland China and explore the relation between the performance of time series momentum strategies and some firm-specific characteristics. Our findings indicate that there is a time series momentum effect in the short run and a contrarian effect in the long run in the Chinese stock market. The performances of the time series momentum and contrarian strategies are highly dependent on the look-back and holding periods and firm-specific characteristics.
    Date: 2017–02
  6. By: Giovanni Facchini (University of Nottingham, CEPR, CES-Ifo, CReAM, GEP, and LdA); Maggie Y. Liu (Georgetown University); Anna Maria Mayda (Georgetown University, CEPR, IZA and LdA); Minghai Zhou (University of Nottingham, Ningbo China)
    Abstract: In this paper we focus on the changes in internal migration flows triggered by China’s 2001 entry into the World Trade Organization (WTO). We use a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We relate changes in internal migration rates to the reduction in trade policy uncertainty faced by Chinese exporters to the U.S., as measured by the normal-trade relations (NTR) gap (Handley and Limao 2013, Pierce and Schott 2015). We find that Chinese prefectures facing a larger decline in their average NTR-gap experience a greater increase in internal migration. Our results also show that the impact on skilled and unskilled internal migration rates is consistent with the average skill intensity of export industries of a prefecture.
    Keywords: Immigration Policy, Trade Policy, Political
    JEL: F22 J61
    Date: 2017–02–24
  7. By: Dang Thi Thu Hoai
    Abstract: This paper examines the issue of horizontal inequalities in Viet Nam over the past 20 years. Using data from three recent Viet Nam population censuses (1989, 1999, and 2009) and three Viet Nam Household Living Standard Surveys (1998, 2008, 2012), we estimated numerous measures on inequalities between different ‘ethnic’ groups against several welfare indicators. Our results show that horizontal inequality matters in Viet Nam, in particular for ethnicity, region, and rural/urban groups. While there has been an improvement in horizontal inequality in education, this paper shows little change in other welfare indicators, in particular poverty. We also found that horizontal inequality does matter for poverty reduction in Viet Nam and it needs more attention when designing poverty policies in the future.
    Date: 2017
  8. By: Markus K. Brunnermeier; Michael Sockin; Wei Xiong
    Abstract: China’s gradualistic approach allowed the government to learn how the economy reacts to small policy changes, and to adjust its reforms before implementing them in full. With fully developed financial markets, however, private actors’ may front-run future policy changes making it impossible for the implement policies gradually. With financial markets the government faces a time-inconsistency problem. The government would like to commit to a gradualistic approach, but after it observes the economy’s quick reaction, it has no incentive to implement its policies in small steps.
    JEL: E5 G10
    Date: 2017–02
  9. By: CHEUNG, Tai Ming; ANDERSON, Eric; YANG, Fan
    Abstract: Critical reforms are taking place in China’s defense industry. New long-term plans and institutional arrangements, an emphasis on turnkey technologies and civil-military integration (CMI), research institute system reforms, and capital market access will help the Chinese defense industry move to higher-endinnovation and away from reliance on foreign technology transfers. Themain implication for the United States is an increased ability for China to forge an independent development path that will be more resistant to US competitive strategies. The pace and intensity of Chinese defense industry development represents a long-term challenge to US superiority in military technology.
    Keywords: Social and Behavioral Sciences, China, United States, military technology, strategic competition, civil-military integration
    Date: 2017–02–28

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