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on Transition Economics |
| By: | Andrey G. Shulgin (National Research University Higher School of Economics) |
| Abstract: | This paper constructs a theoretical general equilibrium model for exchange rate determination in a small open commodity exporting economy based on an imperfect capital market a la Gabaix-Maggiori and appropriate for estimation on high frequency data and could be used for the evaluation of sterilized intervention effectiveness. To find empirical confirmation of the theoretical setup validity I use Russian daily statistics to estimate the model and investigate the reaction of the Russian ruble-US dollar exchange rate to sterilized interventions in the form of foreign currency repo auctions conducted by the Bank of Russia in the period of 2014-2017. I also estimate a vector error correction model on the same dataset and use it as important empirical benchmark for the theoretical model. The empirical analysis revealed a temporary statistically significant effect of sterilized intervention on exchange rate level, which peaked eight working days after the auction day. The combination of theoretical and empirical approaches demonstrates the effectiveness of the portfolio and the ineffectiveness of signalling channels in the transmission mechanism of the sterilized intervention instrument in Russian case |
| Keywords: | sterilized interventions; intervention effectiveness; repo auctions; commodity export; imperfect capital market; Russia. |
| JEL: | E58 F32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:170/ec/2017&r=tra |
| By: | Sergey V. Smirnov (National Research University Higher School of Economics); Nikolay V. Kondrashov (National Research University Higher School of Economics) |
| Abstract: | Regional statistics published by the Russian Federal State Statistics Service (Rosstat) are reviewed in terms of quality, and radical disagreement between “month-on-month” and “year-on-year” monthly statistics is identified. In view of this, an original method is proposed for estimating the level of Regional Economic Activity (REA), based on monthly official regional statistics in five key sectors of the Russian economy: industry, construction, retail trade, wholesale trade, and paid services for the population. This method transforms current “year-on-year” growth rates into specially constructed dichotomous variables, which eliminate the excessive volatility and inaccuracy of the initial time series. On these grounds, REA indices are estimated for all Russian constituent entities for the period from January 2005 to May 2017. Composite REA indices for all five economic sectors, eight federal districts, and Russia as a whole are then calculated. Methods for visualising multidimensional regional data are also proposed. They allow us to track the regional peculiarities of the Russian economy and to discern the current phase of the business cycle more accurately and without any additional lag. Several illustrative examples for the possible application of these indices in real time monitoring and analyses are provided |
| Keywords: | business cycles, economic activity, regions, federal districts of Russia. |
| JEL: | E32 R11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:169/ec/2017&r=tra |
| By: | Yang, Guangliang; Li, Lixing; Fu, Shihe |
| Abstract: | We combine the 2005 China Inter-Census Population Survey data and the 2004 China Manufacturing Census to test whether workers, particularly rural migrants, benefit from labor market Marshallian externalities. We find that workers in general, and rural migrants in particular, benefit from labor market pooling effect (measured by total employment in a city-industry cell) and human capital externalities (measured by share of workers with a college degree or above in a city-industry cell). These findings are robust to various sorting bias tests. However, rural migrants benefit much less than do local or urban workers, possibly because rural migrants lack social networks and are discriminated doubly in terms of being both “rural” and “migrants.” Our findings have policy implications on how Chinese cities can become skilled during the rapid urbanization process coupled with global competition. |
| Keywords: | Rural migrants; labor market agglomeration economies; Marshallian externalities; labor market pooling; human capital externalities |
| JEL: | J30 J61 J71 O15 O18 R23 |
| Date: | 2017–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80713&r=tra |
| By: | Sheng, Liugang (Chinese University of Hong Kong); Yang, Dennis T. (University of Virginia) |
| Abstract: | We present a global production sharing model that integrates the organizational choices of offshoring into the determination of relative wages in developing countries. The model shows that offshoring through foreign direct investment contributes more prominently than arm's length outsourcing to the demand for skill in the South, thereby increasing the relative wage of skilled workers. We incorporate these theoretical results into an augmented Mincer earnings function and test the model based on a natural experiment in which China lifted its restrictions on foreign ownership for multinational companies upon its accession to the World Trade Organization in 2001. Empirical findings based on detailed Urban Household Surveys and trade data from Chinese customs provide support to our proposed theory, thus shedding light on the changes in firm ownership structure, the skill upgrading in exports, and the evolution of wage inequality from 1992 to 2008 in China's manufacturing sector. |
| Keywords: | offshoring, ownership structure, processing trade, wage inequality, China |
| JEL: | F16 J31 D23 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10924&r=tra |
| By: | International Monetary Fund |
| Abstract: | The near-term growth momentum remains strong, supported by accommodative monetary and fiscal policies and sizable EU transfers. The economy is operating above potential, with the unemployment rate at a historical low. But long-term growth will be more subdued, unless adverse demographics and structural constraints on investment and total factor productivity (TFP) growth are addressed. Some recent policies, notably the reversal of the 2013 retirement age increase, will likely exacerbate the decline in the working-age population and require additional fiscal consolidation efforts. While the external environment has improved, both global and domestic policy uncertainties continue to weigh on sentiment. |
| Keywords: | Poland;Europe; |
| Date: | 2017–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/220&r=tra |
| By: | Liu, Ling; Wan, Qian |
| Abstract: | Using the data from Chinese Household Income Project, we study the effect of education expansion on intergenerational mobility of education measured with intergenerational transmission of education (ITE) through an exogenous shock, higher education expansion in 1999. Measuring ITE with years of schooling, higher education expansion (HEE) significantly decreases ITE, meaning that the gap of years of schooling between the children from different family educational background is narrowed by HEE and intergeneration mobility of education is promoted by HEE. However, when we take school quality into account and measure ITE with score of college entrance examination (CEE), HEE insignificantly decreases ITE measured with score of CEE, indicating that HEE fails to reduce the gap of higher education quality between the children from different family educational background and the inequality of higher education still maintains in some way even after HEE. We also find that ITE measured with years of schooling has an inverted-U relationship with college admission rate and ITE measured with score of CEE seems not correlate with college admission rate, which directly demonstrate the theories of MMI and EMI in the field of sociology. We further investigate the internal mechanism of the effects and we consider that the original of the inequality of higher education is the inequality of basic education. At last, we investigate the heterogeneity in the effect of HEE on ITE by gender, type of Hukou and category of CEE. |
| Keywords: | Higher Education Expansion; Intergenerational Transmission of Education; Inequality of Opportunity |
| JEL: | I28 J62 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80616&r=tra |
| By: | Ilya B. Voskoboynikov (National Research University Higher School of Economics) |
| Abstract: | Recent decades have been years of intensive growth, structural change and expanding informality for many developing and emerging economies. However, in exploring the relationship between structural change and productivity growth, most empirical studies ignored informality. This paper explores how structural change in the Russian economy 1995–2012 affects aggregate labour productivity growth, taking into account the informal sector. Using a newly developed dataset for 34 industries and applying three alternative approaches aggregate labour productivity growth is decomposed into intra-industry and inter-industry contributions. All three approaches show that the overall contribution of structural change is growth enhancing, significant, and dumped in time. In turn, labour reallocation between the formal and informal sectors is growth reducing because of the extension of informal activities with low productivity levels. At the same time, sectoral labour reallocation effects are found to be highly sensitive to the methods. |
| Keywords: | labour productivity, structural change, informal economy, Russia |
| JEL: | O11 O17 C82 N14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:168/ec/2017&r=tra |
| By: | Battaglia, Marianna (Universidad de Alicante); Chabé-Ferret, Bastien (Université catholique de Louvain); Lebedinski, Lara (Foundation for the Advancement of Economics (FREN)) |
| Abstract: | We study the effect of residential segregation on fertility for the socially excluded and marginalized Roma ethnic minority. Using original survey data we collected in Serbia, we investigate whether fertility differs between ethnically homogeneous and mixed neighbor- hoods. Our results show that Roma in less segregated areas tend to have significantly fewer children (around 0.9). Most of the difference arises from Roma in less segregated areas waiting substantially more after having a boy than their counterparts in more segregated areas. We account for the endogeneity of the level of segregation using (il)legal possibility to build in the area at the time of its creation as an instrument. We find that the true gap due to segregation is actually larger than that estimated by OLS (around 1.4). We finally provide evidence that exposure to the Serbian majority culture is the main mechanism at play, as opposed to differences in opportunity cost of time, migration patterns, family arrangements and returns to education. |
| Keywords: | fertility, residential segregation, ethnic minority, culture |
| JEL: | J13 J15 R23 Z10 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10929&r=tra |
| By: | Nataliya Kochkina (Research Group for Applied Markets and Enterprises Studies, National Research University Higher School of Economics); Evgeniya Popova (Research Group for Applied Markets and Enterprises Studies, National Research University Higher School of Economics) |
| Abstract: | In the times of Soviet Union books were a luxury good. This paper examines whether books are still a luxury good in Russia. For this purpose data from one of the Russian book retail chains is used to empirically estimate a general book demand and separate demand models for genres. We focus on estimating income elasticity. For this reason we construct a covariate on the basis of monthly wages of working individuals that reveals consumer income. Moreover, this paper is one of the few which addresses in detail the influence of books content quality on book demand. The main result is that books on average are not luxury goods anymore in Russia. However two genres: foreign prose and poetry are exceptions and can be called luxury goods. We also conclude that quality control covariates (book rating and number of people who rated the book) are important determinants of book demand as they influence significantly the general book demand and the demand models for different genres as well. |
| Keywords: | Russian book market, demand function, income elasticity, luxury goods, price elasticity |
| JEL: | L21 L23 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cue:wpaper:awp-06-2017&r=tra |
| By: | International Monetary Fund |
| Abstract: | Since its independence, Armenia has made significant strides in enhancing macroeconomic stability. Growth has been satisfactory with inflation under control and the fiscal situation broadly well managed. Lately, adverse external developments have led to significant falls in remittances and the price of copper, Armenia’s main export. Following subdued growth in 2016, the economy is expected to gradually recover in 2017, but the outlook is clouded by downside risks and tough challenges remain: growth continues to be volatile and narrowly based, trade opportunities remain limited, and public debt has increased sharply. Following important reforms in the energy sector and the tax code, the government is determined to tackle corruption, improve competition, and promote sustainable growth. |
| Keywords: | Middle East;Armenia; |
| Date: | 2017–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/226&r=tra |
| By: | Baltagi, Badi H. (Syracuse University); Deng, Ying (School of International Trade and Economics, Beijing); Ma, Xiangjun (School of International Trade and Economics, Beijing) |
| Abstract: | This paper studies the fact that 37 percent of the internal migrants in China do not sign a labor contract with their employers, as revealed in a nationwide survey. These contract-free jobs pay lower hourly wages, require longer weekly work hours, and provide less insurance or on-the-job training than regular jobs with contracts. We find that the co-villager networks play an important role in a migrant's decision on whether to accept such insecure and irregular jobs. By employing a comprehensive nationwide survey in 2011 in the spatial autoregressive logit model, we show that the common behavior of not signing contracts in the co-villager network increases the probability that a migrant accepts a contract-free job. We provide three possible explanations on how networks influence migrants' contract decisions: job referral mechanism, limited information on contract benefits, and the "mini labor union" formed among co-villagers, which substitutes for a formal contract. In the sub-sample analysis, we also find that the effects are larger for migrants whose jobs were introduced by their co-villagers, male migrants, migrants with rural Hukou, short-term migrants, and less educated migrants. The heterogeneous effects for migrants of different employer types, industries, and home provinces provide policy implications. |
| Keywords: | contract, co-villager network, spatial autoregressive logit model, internal migrants |
| JEL: | O15 R12 J41 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10926&r=tra |
| By: | Mite Miteski (National Bank of the Republic of Macedonia); Dijana Janevska Stefanova (National Bank of the Republic of Macedonia) |
| Abstract: | This paper investigates the effects of foreign direct investment inflows in the industrial, construction and services sectors on economic growth in a panel of sixteen Central, Eastern and Southeastern European CESEE countries using data of different time spans within the 1998-2013 period. The empirical results show that total FDI contributes positively to the growth in the analyzed countries. With regards to our main focus, the analysis of the decomposition of FDI finds that FDI in the industrial and services sectors has a positive and significant effect on economic growth, whereas FDI in the construction sector does not exert statistically significant growth-promoting effects. |
| Keywords: | Foreign direct investment, economic growth, industrial sector, construction sector, services sector: |
| JEL: | F21 F43 C23 O47 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:mae:wpaper:2017-01&r=tra |
| By: | Liu, Zheng (Federal Reserve Bank of San Francisco); Wang, Pengfei (Hong Kong University of Sciences and Technology); Xu, Zhiwei (Shanghai Jiao Tong University) |
| Abstract: | We study the consequences of interest-rate liberalization in a two-sector general equilibrium model of China. The model captures a key feature of China's distorted financial system: state-owned enterprises (SOEs) have greater incentive to expand production and easier access to credit than private firms. In this second-best environment, liberalizing interest rate controls improves capital allocations within each sector, but exacerbates misallocations across sectors. Under calibrated parameters, interest-rate liberalization may reduce aggregate productivity and welfare, unless other policy reforms are also implemented to alleviate SOEs' distorted incentives or improve private firms' credit access. |
| JEL: | E44 G18 O41 |
| Date: | 2017–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2017-15&r=tra |
| By: | Maria D. Tito; Ruoying Wang |
| Abstract: | This paper investigates the impact of international trade on input market distortions. We focus on a specific friction, binding borrowing constraints in capital markets. We propose a theoretical model where a firm's demand for capital is constrained by an initial asset allocation and past sales. While the initial distribution of assets induces misallocation if the asset endowment at more productive firms does not fully cover their demand for capital, the dependence of the borrowing constraint from past sales proxies for cross-firm differences in the cost of default, which is empirically higher at larger firms. Overtime, an increase in sales relaxes the borrowing constraint; similarly, shocks to market access--such as opening to trade--contribute to easing the financial constraints, thus accelerating the convergence toward the frictionless allocation. To analyze the empirical relationship between market access and credit frictions, we draw on the annual surveys conducted by the Chinese National Bureau of Statistics (NBS) for 1998 to 2007, and we construct firm-level measures of distortions that control for firm heterogeneity. We find smaller labor and capital distortions across exporting firms; such distortions are even smaller in sectors where firms face lower tariffs or are more dependent on external financing, a proxy for the presence of binding financial constraints. Our empirical analysis also shows that export shocks significantly reduce the dispersion across input returns over time, with the effect mostly occurring at constrained firms. Our findings point to within-sector input reallocation as an important channel to overcome misallocation in open economies. |
| Keywords: | Financial Frictions ; Heterogeneous Firms ; International Trade ; Misallocation |
| JEL: | F12 F14 |
| Date: | 2017–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2017-77&r=tra |
| By: | Jianxin Wang (School of Business, Central South University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Hui Xu (Department of Economics, Beijing Normal University) |
| Abstract: | Is it universal across cultures that females generate smaller bubbles than males? We conduct classic bubble experiments in China and the U.S. using groups of exclusively females, exclusively males and mixed gender participants. We find that female groups in China generate a similar level of bubbles as found in exclusively males groups in China and the U.S., which in turn is significantly larger than bubbles generated by exclusively female groups in the U.S. Our results imply that gender differences in financial markets may be sensitive to culture. |
| Keywords: | gender differences, bubbles, experimental asset markets, culture differences |
| JEL: | G01 G11 J16 Z13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1063&r=tra |
| By: | International Monetary Fund |
| Abstract: | Stress Test (ST) results reveal that the Bulgarian banking system is vulnerable to the extreme realization of internal and external risks coupled with the need to clean the balance sheets from nonperforming loans (NPLs). In the baseline scenario, characterized by a modest economic growth and decline in unemployment, as well as stable and low interest rates, two banks—including a systemic one—exhibit weakness in terms of capital buffers to cope with accumulated losses in the past. These banks experience substantial increase in their NPLs as a result of the asset quality review (AQR) adjustment. As the IMF ST approach excludes interest income from NPLs in both the baseline and adverse scenarios, the increase in NPLs leads to the reduction in the number of assets that generate cash-based interest income. With a significantly smaller base of performing loans, two banks do not generate enough recurring income to cover their interest expense and credit costs in the baseline scenario, which results in negative profits and declining capital levels. |
| Keywords: | Bulgaria;Europe; |
| Date: | 2017–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/200&r=tra |
| By: | UMEJIMA Osamu |
| Abstract: | This paper discusses the effects of, and countermeasures against, the expiration of Article 15(a)(ii) of China's World Trade Organization (WTO) Accession Protocol. China agreed in the Article that importing Members may apply non-market economy methodologies in calculating antidumping duties against Chinese products. WTO Members have imposed substantially higher antidumping duties on a wider range of Chinese products than products from the market economy, applying non-market economy methodologies pursuant to Article 15. The expiration of subparagraph (ii) thereof on 11 December 2016 has attracted a variety of arguments. I believe that a Member may continue applying the methodology if it establishes pursuant to the criteria in its national law that Chinese producers operate the subject merchandise business under the non-market economy conditions, provided that the criteria were established before China's WTO accession date. China brought this issue to the WTO Dispute Settlement. Its reports must carefully be reviewed, once issued. Irrespective of its reports, however, Members may be able to adjust certain cost elements in the constructed value of Chinese products in a manner similar to the non-market economy methodology under certain conditions. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:17041&r=tra |
| By: | Nino Kokashvili, Irakli Barbakadze, Ketevani Kapanadze |
| Abstract: | This paper examines the relationship between the growth of Latvian firms and their involvement in the shadow economy in 2015. When up to 10% of the overall economic activity of firms is in the shadow economy, this had a growth-enhancing effect on firms that recorded non-positive growth during the last five years. Using the perceptions of corruption and interview languages as instruments of measuring the shadow economy participation rate, the authors conclude that there is a positive relationship between perceptions of corruption and the shadow economy participation rate. |
| Keywords: | Shadow Economy, Firm Growth, Company Managers, Latvia |
| JEL: | O17 E26 E24 J28 D22 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:101&r=tra |
| By: | Mamatzakis, Emmanuel; Zhang, Xiaoxiang; Wang, Chaoke |
| Abstract: | This study investigates whether ownership type does matter for bank performance in an emerging market. By tracing the identity of top owners, I group large shareholder of China’s commercial banks into government, state owned enterprises (SOEs), domestic private investors and foreign investors. These distinct types of shareholders have multiple motivations and incentives, in turn, this will affect how they perform their control rights and monitor over the invested banks. The main findings regarding the impact of ownership structure on bank performance suggest that banks with high state shareholding tend to have poorer performance and low profitability, consistent with much of the literature. In addition, banks with higher domestic privately shareholders are generally operated more profitably. Furthermore, higher foreign ownership may negatively affect bank performance. Moreover, ownership type diversity is positively associated with bank performance, and banks with concentrated ownership are worse performing. My findings are robustness under the different measures of bank performance. |
| Keywords: | Banks, Ownership structure, Corporate governance |
| JEL: | G21 G28 G32 |
| Date: | 2017–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80653&r=tra |
| By: | International Monetary Fund |
| Abstract: | Republic of Poland: Selected Issues |
| Keywords: | Europe;Poland; |
| Date: | 2017–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/221&r=tra |
| By: | Kantorowicz, Jarosław; Köppl-Turyna, Monika |
| Abstract: | We apply the difference-in-discontinuities design to disentangle the fiscal effects of the governance system conditional on electoral systems. We take advantage of a natural experiment, which involves two institutional reforms at the local level in Poland. The first reform introduced two electoral rules, which change along an exogenous population threshold: smaller municipalities use majoritarian elections, larger municipalities use proportional elections. The second reform changed the governance system in Polish municipalities from “parliamentary” to “presidential”. Our results indicate that a change from parliamentary to presidential form led to lower vertical fiscal imbalance predominantly in the jurisdictions with majoritarian elections and to a lesser extent in municipalities governed by proportional elections. This therefore confirms an interaction effect between the forms of government and electoral rules. |
| Keywords: | electoral rules,vertical fiscal imbalance,constitutions |
| JEL: | D72 D78 H72 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:agawps:06&r=tra |
| By: | International Monetary Fund |
| Abstract: | This technical note (TN) provides a stocktaking of the current state of the implementation of the key recommendations made by the IMF and the World Bank in their 2015 assessment report on the observance of Basel Core Principles (BCPs) for effective banking supervision in Bulgaria. It provides an overview of the most recent initiatives taken by the Bulgarian National Bank (BNB) to address the shortcomings found in the domestic supervisory regime. It also reflects the regulatory and supervisory framework in place as of the date of the completion of this review. |
| Keywords: | Europe;Bulgaria; |
| Date: | 2017–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/199&r=tra |
| By: | Marinov, Eduard |
| Abstract: | The diversification of international markets and the direction towards regions which were neglected and evaded as risky could be a powerful factor in the search for growth acceleration and overcoming recession. The paper aims at summarizing the potential of trade with one such region – Sub-Saharan Africa, by providing an EU comparison of Bulgarian and Romanian trade relations with it. The studies the dynamics of both countries trade with the region for the 2003-2015 period, the place of Sub-Saharan Africa in Bulgarian and Romanian extra-EU trade, the commodity structure and the direction of trade. |
| Keywords: | Sub-Saharan Africa, SSA, Bulgarian International Trade, Romanian International Trade, EU comparison |
| JEL: | F14 F50 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80716&r=tra |