nep-tra New Economics Papers
on Transition Economics
Issue of 2017‒07‒16
fourteen papers chosen by
J. David Brown
United States Census Bureau

  1. Credit Market Development and Firm Innovation: Evidence from the People’s Republic of China By Shang, Hua; Song, Quanyun; Wu, Yu
  2. Does Daughter Deficit Promote Parental Substance Use? Longitudinal Evidence on Smoking from Rural China By Chen, Xi
  3. The Sinuous Dragon: Economic Freedom and Economic Growth in China By Joshua Hall; Yang Zhou
  4. The Impact of Migration and Remittance on Household Welfare: Evidence from Vietnam By Nguyen, Cuong; Vu, Linh
  5. Upstreamness of employment and global financial crisis in Poland: the role of position in the global value chains By Jan Hagemejer; Joanna Tyrowicz
  6. Impact of socioeconomic factors on nutritional diet in Vietnam from 2004 to 2014: new insights using compositional data analysis By Morais, Joanna; Thi, Huong Trinh
  7. What is Driving Inflation and GDP in a Small European Economy: The Case of Croatia By Goran Jovičić; Davor Kunovac
  9. Does Migrating with Children Influence Migrants’ Occupation Choice and Income? By Xing, Chunbing; Wei, Yinheng
  10. The influence of the concentration on the performance of firms in retail industry in the Republic of Croatia By Ivan Kristek; Mladen Pancić; Hrvoje Serdarušić
  11. Calorie intake and income in China: New evidence using semiparametric modelling with generalized additive models By Simioni, Michel; Thomas-Agnan, Christine; Trinh, Thi Huong
  12. Georgia's post-accession structural reform challenges By Arveladze, G.; Smeets, Maarten
  13. Challenges of DCFTAs: How can Georgia, Moldova and Ukraine succeed? By Amat Adarov; Peter Havlik
  14. Earnings Management to Avoid Losses and Earnings Declines in Croatia By Degiannakis, Stavros; Giannopoulos, George; Ibrahim, Salma; Rozic, Ivana

  1. By: Shang, Hua (Asian Development Bank Institute); Song, Quanyun (Asian Development Bank Institute); Wu, Yu (Asian Development Bank Institute)
    Abstract: From the perspective of credit allocation, this paper analyzes the effects of credit market development on the innovative capacities of industrial firms in the People’s Republic of China. Using a large dataset of industrial firms in 31 provinces in the People’s Republic of China, we find that credit market development enhances firms’ product innovation incentives and outcomes. We further show that firms’ credit constraints and firms’ performances are two channels through which credit market development affects innovative capacities of firms. Our results are neither driven by the increase in the quantity of credit, nor by the increase in the number of firms in a province. The results are robust to different samples, different estimation methods, and alternative measures of credit market development.
    Keywords: credit market development; credit allocation; firm innovation; product innovation; innovation incentives; innovation outcomes
    JEL: G15 O31 R11
    Date: 2017–01–27
  2. By: Chen, Xi (Yale University)
    Abstract: China and some other Asian countries have experienced skewed sex ratios, triggering intense competition and pressure in the marriage market. Meanwhile, China has more smokers than any other country, with half of men smoke while few women smoke. Men are the major income earners in most Chinese families and thus bear much of the financial burden in preparation for children's marriage. This paper investigates how a demographic factor – a large number of surplus men in the marriage market in China – affects their fathers' smoking behavior. We utilize two household longitudinal surveys as well as a random subsample of the China Population Census to examine fathers' smoking in response to skewed sex ratios. Strikingly, fathers smoke more for families with a son living in communities with higher sex ratios. In contrast, those with a daughter do not demonstrate this pattern. Coping with the marriage market pressure is a more plausible pathway linking the observed skewed sex ratios among children and intense smoking among fathers. Considering worsening sex ratios and highly competitive marriage market in the coming decade as well as lasting health impacts due to smoking, policies suppressing unbalanced sex ratios could lead to welfare gains.
    Keywords: sex ratios, marriage market, paternal smoking, stress
    JEL: J13 D12 I19
    Date: 2017–06
  3. By: Joshua Hall (West Virginia University, Department of Economics); Yang Zhou (West Virginia University, Department of Economics)
    Abstract: With sinuous reforms and economic openness over the last four decades, China has enjoyed substantial economic development. Though still a developing country, its GDP per capita has grown over 10% annually, from $183(US) in 1977 to $7,590 (US) in 2014. This miracle in economic growth is attributed by some to a series of pro-market policies and reforms. Although the general trend is greater economic freedom, China has experienced brief periods of decreasing or stagnant economic freedom that correspond with slowdowns in the growth rate. In this paper we trace these changes in economic freedom in China and discuss prospects for future improvement.
    Keywords: China, economic freedom, economic growth
    Date: 2017–07
  4. By: Nguyen, Cuong; Vu, Linh
    Abstract: This paper examines the pattern and the impact of migration and remittances on household welfare in Vietnam using fixed-effects regressions and panel data from Vietnam Household Living Standard Surveys 2010 and 2012. Overall, the effect of migration as well as remittances on employment of remaining members on home households is small. People in households with migration and remittances tend to work less than people in other households. There is no evidence that migration and remittances can help household members to work more on non-farm activities. Remittances, especially international remittances help receiving households increase per capita income and per capita expenditure. Although migration leads to an increase in remittances, it also leads to a reduction in income earned by migrants if they had not migrated. However, per capita consumption expenditure of migrant-sending households increases because of a reduction in household size
    Keywords: Migration, remittances, impact evaluation, household welfare, poverty, Vietnam.
    JEL: I3 O15 R23
    Date: 2017–03–10
  5. By: Jan Hagemejer (Narodowy Bank Polski; University of Warsaw; Group for Research in Applied Economics (GRAPE)); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw)
    Abstract: The emergence of global value chains leads to fragmentation of the production processes and reallocation of those processes across countries. With increasing number of production stages, the manufacturing process is located increasingly further away from the consumer. Literature suggests that fragmentation of production increases the international transmission of shocks. The global financial crisis is believed to lead to consolidation and shortening of global value chains and amplification of demand shocks along the global value chains, the so-called bullwhip effect. In this paper we study the effects of global financial crisis on employment, focusing specifically on the role of the distance from final demand (upstreamness) in this adjustment. We find that upstreamness matters for both labor demand and adjustment in employment during the periods of crisis, but this relationship is heterogeneous across countries. While the reaction to the crisis is indeed amplified further away from final demand, contrary to our expectations it is mostly channeled through lower job creation rates rather than faster job destruction. Moreover, the adverse effects of the crisis are lower in foreign firms, this difference does not depend on the distance from final demand.
    Keywords: upstreamness, global value chains, employment, global financial crisis
    JEL: F16 F62 F66
    Date: 2017
  6. By: Morais, Joanna; Thi, Huong Trinh
    Abstract: This paper contributes to the analysis of the impact of socioeconomic factors, like food expenditure level and urbanization, on diet patterns in Vietnam, from 2004 to 2014. Contrary to the existing literature, we focus on the diet balance in terms of macronutrients consumption (protein, fat and carbohydrate) and we take into account the fact that the volumes of each macronutrient are not independent. In other words, we are interested in the shares of each macronutrient in the total calorie intake. We use the compositional data analysis (CODA) to describe the evolution of diet patterns over time, and to model the impact of household characteristics on the macronutrient shares vector. We compute food expenditure elasticities of macronutrient shares, and we compare them to classical elasticities for macronutrient volumes and total calorie intake. The compositional model highlights the important role of food expenditure, size of the household and dwelling region in the determination of diet choices. Our results are consistent with the rest of the literature, but they have the advantage to highlight the substitution effects between macronutrients in the context of nutrition transition.
    Keywords: Macronutrient shares; diet pattern; compositional regression models; expenditure elasticity; Vietnam.
    JEL: C02 C21 C51 P46
    Date: 2017–06
  7. By: Goran Jovičić (The Croatian National Bank, Croatia); Davor Kunovac (The Croatian National Bank, Croatia)
    Abstract: In this paper we estimate and identify a small open economy Bayesian VAR model in order to disentangle the contribution of individual domestic, euro area-specific and global shocks to domestic macroeconomic developments. Our identification suggests that foreign (global and euro area - specific) shocks have a large impact on the variability of domestic variables - they account for approximately 40% of variation in GDP growth and around 50% of variation in inflation. Looking at the contribution of individual structural shocks our results emphasize two particular findings. First, low oil prices have played an important role for muted inflation in Croatia during the last two years while, at the same time, domestic real activity has not benefited much. We show how this finding depends crucially on the specific mix of economic shocks underlying the movements in oil prices (demand vs supply shocks). Second, our results suggest that the large-scale asset purchase programme launched by the ECB at the beginning of 2015 resulted in favourable, albeit limited, spillover effects on domestic economy.
    Keywords: Small open economy, BVAR with sign and zero restrictions, Oil prices, ECB monetary policy
    JEL: E30 E10 E50 Q43
    Date: 2017–04
  8. By: RAWSKI, Thomas G.
    Abstract: China’s electricity industry has recorded immense achievements in many areas: growth, technical upgrading and innovation, improved reliability, and universal service. This record of excellence coexists with massive inefficiency. Despite China’s multiple cost advantages, the unit cost of producing, transmitting and delivering electricity is at least 30 percent higher in China than in the United States. Latent potential for cost reduction clusters in coal-fired generation that supplies about two-thirds of total output. New reforms that deepen the influence of market forces will strengthen financial pressures and thus increase the likelihood of achieving potential cost reductions, perhaps increasing the output and share of coal-fired thermal plants.
    Keywords: China, electricity, reform, upgrading, coverage, cost, inefficiency
    JEL: L2 L6 O14 O25 O32
    Date: 2017–07
  9. By: Xing, Chunbing (Asian Development Bank Institute); Wei, Yinheng (Asian Development Bank Institute)
    Abstract: We study the impact of migrant children on their parents’ occupation choice and wage income using a dataset from a household survey conducted in 2011. We find that the heads of migrant households with school-age children earn significantly less than those who left them at their place of hukou registration. This result holds when we control for personal characteristics, migration duration, origin location, and family structure. Households migrating with school-age children have a higher probability of doing so within the prefecture/province of their hukou registration and are less likely to target coastal regions. After controlling for migration scope and destination location, the presence of children does not influence wages of migrant household heads. We also find that the presence of children below the age of six has no impact on the income of migrant household heads. Our results suggest that the hukou system still impedes labor mobility.
    Keywords: migrants; migration; occupation choice; education; hukou system
    JEL: I28 J12 J13 J18
    Date: 2017–01–26
  10. By: Ivan Kristek (Sveučilište Josipa Jurja Strossmayera u Osijeku, Ekonomski fakultet u Osijeku); Mladen Pancić (Sveučilište Josipa Jurja Strossmayera u Osijeku, Ekonomski fakultet u Osijeku); Hrvoje Serdarušić (Sveučilište Josipa Jurja Strossmayera u Osijeku, Ekonomski fakultet u Osijeku)
    Abstract: According to SCP paradigm (Structure-Conduct-Performance paradigm) the industry structure affects the behavior of firms in the industry, which affects their performance. The paradigm is consistent with the Neoclassical Theory of the Firm which assumes that there is a direct link between the industry structure, entrepreneurial conduct and performance. The basic principle of this paradigm might be the ability of entrepreneurs to exercise market power in a concentrated industry. High industry concentration is correlated with high profits, especially if the concentration level exceeds a certain critical level under the condition that there are some barriers to entry of new entrepreneurs in the industry. Economic theory supports the view that the industry concentration is in a positive relationship with efficiency, and it can be argued that the growth of industry concentration will increase the efficiency of industry. Current approaches in economic theory and recent empirical studies do not follow the SCP theory, they suggest that the above-average profits, which occur in most concentrated industry’s, are results of economic efficiency and effectiveness, and not a consequence of non-competitive behavior. In this paper we will try to give an answer to the above-mentioned issue present in economic theory. The study will try to demonstrate a statistically significant link between the measure of concentration and measure of efficiency in retail industry in the Republic of Croatia.
    Keywords: SCP, concentration, efficiency, retail industry
    JEL: D22 L11 L25 L81
    Date: 2017–04–05
  11. By: Simioni, Michel; Thomas-Agnan, Christine; Trinh, Thi Huong
    Abstract: Recent research on calorie intake and income relationship abounds with parametric models but usually gives inconclusive results. Our paper aims at contributing to this literature by using recent advances in the estimation of generalized additive models with penalized spline regression smoothing (GAM). These semi-parametric models enable mixing parametric and nonparametric functions of explanatory variables and enlarge the distribution of the response variable. The revealed performance test (Racine and Parmeter, 2014), supported by simulation data, shows that GAM models outperform the parametric models. Using data from CHNS in 2006, 2009 and 2011, we find a positive and statistically significant relationship between household calorie intake and household income for the poor. Then the impact of increasing income on calorie consumption slows down for the middle class and the rich. In addition, we find that income-calorie elasticities are generally small, ranging from 0.07 to 0.12.
    Keywords: Calorie intake and income; generalized additive models; CHNS data; revealed performance test; cross validation procedure.
    Date: 2017–07
  12. By: Arveladze, G.; Smeets, Maarten
    Abstract: The process leading to WTO accession is complex, requires solid domestic coordination mechanisms in the acceding country, a rethinking of its economic and trade policies and significant domestic structural reforms. It often implies the creation of new institutions designed to coordinate and implement the policies at the national level, as was the case in Georgia. The analysis offered in this working paper addresses some of the challenges that Georgia faced during its WTO accession and the many economic reforms that were undertaken after it became a full member of the WTO in 2000. Today, Georgia has one of the most liberal trade regimes and largely benefits from the new trade opportunities that WTO accession has offered. Even though Georgia has been a WTO member for long, it continues its domestic economic reforms in order to further strengthen its international competitiveness for goods and services. This working paper discusses the various measures taken by Georgia and how it uses and implements some of the main WTO provisions to that effect. This includes the ratification of the TFA by Georgia as part of its commitment to reduce transaction costs, enhance efficiency and reduce lengthy and costly administrative processes at the border. Trade capacity building at the technical level has also contributed to human and institutional capacity building in Georgia and developing a better understanding of the rights and obligations of WTO membership thus facilitating Georgia's fuller integration into the multilateral trading system.
    Keywords: trade policy,negotiations,structural adjustment,post-accession,policy coherence
    JEL: F13 F15 F53
    Date: 2017
  13. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The imbalance between the costs and benefits of DCFTAs is a call to the EU to display greater thoughtfulness and pragmatism if it does not want to lose support for reforms in its neighbourhood. What has to happen so that their potential can be more beneficial? The Policy Brief written by Amat Adarov and Peter Havlik in cooperation with Bertelsmann Stiftung discusses the policy implications of the agreements.
    Keywords: DCFTA; Association Agreement; EU Neighbourhood Policy; Georgia, Moldova, Ukraine; economic integration; policy impact evaluation
    Date: 2017–06
  14. By: Degiannakis, Stavros; Giannopoulos, George; Ibrahim, Salma; Rozic, Ivana
    Abstract: This paper provides empirical evidence that Croatian companies manage reported earnings to avoid losses and earnings declines. Specifically, we find that the cross-sectional distribution of scaled earnings and changes in earnings show high frequencies of small positive earnings and small increases in earnings while the frequencies of small losses and small decreases in earnings are less frequent. Furthermore, we demonstrate that these discontinuities are likely due to discretionary accruals. We examine the frequency distribution of reported earnings after removing discretionary accruals and find that the cross sectional distributions of non-discretionary scaled earnings shows lower frequencies of small positive earnings and higher frequencies of small negative earnings. Additionally, the cross sectional distribution of non-discretionary change in earnings demonstrates mixed frequencies of non-discretionary changes in earnings. Overall, this paper adds new empirical evidence to the benchmark-beating literature by demonstrating international evidence of earnings management around zero earnings and zero earnings changes benchmarks.
    Keywords: Earnings management; Earnings Declines; Earnings Losses; Discretionary Accruals; Earnings frequency distribution.
    JEL: C18 F30 G14 G15 G39 M41
    Date: 2017

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