nep-tra New Economics Papers
on Transition Economics
Issue of 2018‒03‒26
thirty papers chosen by
J. David Brown
United States Census Bureau

  1. Will Ukraine Be Able to Establish Real Property Rights? By Anders Aslund
  2. Unconventional Fiscal Policy By Francesco D'Acunto; Daniel Hoang; Michael Weber
  3. The Financing of Local Government in the People’s Republic of China: Stimulus Loan Wanes and Shadow Banking Waxes By Chen, Zhuo; He, Zhiguo; Liu, Chun
  4. Entrepreneurship ecosystem facets: the European migrant crisis and public opinion in Slovakia By Marcel Lincényi
  5. Coming to Terms with the Authoritarian Alternative: The Implications and Motivations of China's Environmental Policies By Mark Beeson
  6. Bulgaria; 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bulgaria By International Monetary Fund
  7. Effects of Fiscal Policy Shocks on the Economy: Evidence from Selected CEE Countries By Agata Szyma?ska
  8. Bosnia and Herzegovina; 2017 Article IV Consultation, First Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Extension of the Arrangement, Rephasing of Purchases, and Waiver of Nonobservance of Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Bosnia and Herzegovina By International Monetary Fund
  9. Количественное смягчение по-русски By BLINOV, Sergey
  10. Return Migration and Self-Employment: Evidence from Kyrgyzstan By Brück, Tilman; Mahe, Clotilde; Naudé, Wim
  11. Money demand stability, monetary overhang and inflation forecast in the CEE countries By Claudiu Tiberiu Albulescu; Dominique Pépin
  12. Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015 By Thomas Piketty; Li Yang; Gabriel Zucman
  13. Shocked by Therapy? Unemployment in the First Years of the Socio-Economic Transition in Poland and its Long-Term Consequences By Myck, Michal; Oczkowska, Monika
  14. The Role of Clusters for Sustainable Development: Socially Responsible Practices, Limitations and Challenges. Case study of a Bulgarian Industrial Cluster By Irena Slavova-Georgieva; Yovka Bankova
  15. Household Fuel Use in Rural China By Christophe Muller; Huijie Yan
  16. Second Pension Pillar Participants? Behavior Over Life Cycle: Lithuanian Case By Jaroslav Me?kovski; Teodoras Medaiskis; Tadas Gudaitis
  17. Student Feedback, Parent-Teacher Communication, and Academic Performance: Experimental Evidence from Rural China By Siebert, W. Stanley; Wei, Xiangdong; Wong, Ho Lun; Zhou, Xiang
  18. Governance and Finance: Availability of Community and Social Development Infrastructures in Rural China By Jing Wang and Bingqin Li
  19. Entrepreneurial environment at regional level: the case of Polish path towards sustainable socio-economic development By Michał Pietrzak; Adam Balcerzak; Artur Gajdos; Łukasz Arendt
  20. Cyclical Behavior of Fiscal Policy in the Western Balkans By Sabaj, Ernil
  21. Does a bank levy increase frictions on the interbank market? By Aneta Hryckiewicz; Piotr Mielus; Karolina Skorulska; Malgorzata Snarska
  22. Family size, Increasing block tariff and Economies of scale of household electricity consumption in Vietnam from 2010 to 2014 By Hoai-Son Nguyen; Minh Ha-Duong
  23. Estimating the Effective Lower Bound for the Czech National Bank's Policy Rate By Kolcunova, Dominika; Havranek, Tomas
  24. The transition of China to sustainable growth – implications for the global economy and the euro area By Dieppe, Alistair; Gilhooly, Robert; Han, Jenny; Korhonen, Iikka; Lodge, David
  25. Foreign Investment and Domestic Productivity in the Czech Republic: A Quantitative Survey By Havranek, Tomas; Hampl, Mojmir
  26. China’s Financial System and Economic Imbalances By Xi Li; Yikai Wang; Tong Zhang
  27. Foreign-owned firms as agents of structural change in regions: the case of Hungary 2000-2009 By Zoltán Elekes; Ron Boschma; Balázs Lengyel
  28. Local governance and occupational choice among young people: First evidence from Vietnam By Tran, Tuyen; Tran, Anh; Pham, Thai; Vu, Huong
  29. Chinese Capital Market: An Empirical Overview By Grace Xing Hu; Jun Pan; Jiang Wang
  30. The Evaluation of Employment Policies for Older Adults in the Czech Republic, Poland, and Slovakia By Leszko, Magdalena; Bugajska, Beata

  1. By: Anders Aslund
    Abstract: Over time, the necessary economic reforms have become so obvious that they have become politically possible in most places. The great problem has become the establishment of real property rights. By and large, Central and Eastern Europe have managed to accomplish that not least thanks to support from the European Union. In the former Soviet Union, however, only Georgia succeeded in that endeavor. The big question today is whether Ukraine will manage to do so, or whether it will be caught in a low-economic-growth trap. The three main elements that are needed are independent courts, autonomous prosecutors, and a law-abiding law enforcement, while no old secret police structures should be allowed to sabotage them.
    Keywords: Ukraine, economic reforms, judicial reforms, democratic reforms, corruption, property rights, election law
    JEL: E02 E26 K11 K12 K42 P14 P26
    Date: 2018–01
  2. By: Francesco D'Acunto; Daniel Hoang; Michael Weber
    Abstract: Unconventional fiscal policy uses announcements of future increases in consumption taxes to generate inflation expectations and accelerate consumption expenditure. It is budget neutral and time consistent. We provide preliminary evidence for the effectiveness of such policies using changes in value-added tax (VAT) and household survey data for Poland. We find households increased their inflation expectations and willingness to purchase durables before the increase in VAT. Future research has to ensure income, wealth effects, or intratemporal substitution channels cannot explain these results and ideally exploit exogenous variation in VAT in a fixed nominal interest rate environment.
    JEL: D12 D84 D91 E21 E31 E32 E52 E65
    Date: 2018
  3. By: Chen, Zhuo (Asian Development Bank Institute); He, Zhiguo (Asian Development Bank Institute); Liu, Chun (Asian Development Bank Institute)
    Abstract: The People’s Republic of China (PRC)’s four-trillion-yuan stimulus package fueled by bank loans in 2009 has led to the rapid growth of shadow banking activities in the PRC after 2012. The local governments in the PRC financed the stimulus plan mainly through bank loans in 2009, and resorted to non-bank debt financing after 2012 given the mounting rollover pressure from bank debt coming due, a manifestation of the stimulus loan-hangover effect. Cross-sectionally, provinces with abnormally greater bank loan growth in 2009 experienced more Municipal Corporate Bonds issuance during 2012-2015, as well as more shadow banking activities including entrusted loans and wealth management products. We highlight the market forces behind the regulation changes on local government debt post 2012, together with the expedited reform on interest rate liberalization during that period.
    Keywords: local government financing vehicles; municipal corporate bonds; shadow banking in china
    JEL: E61 G21 H72 O17
    Date: 2018–01–25
  4. By: Marcel Lincényi (Alexander Dubček University of Trenčín)
    Abstract: The research study offers an analysis of the current Slovak public opinion on the issue of migration in the context of the current refugee crisis, while also offering prevailing opinions, attitudes, preferences and values of the Slovaks to the possible arrival of asylum seekers in Slovakia. The study also provides the Slovak citizens' opinions on possible solutions to the refugee crisis. From realized analysis public opinion of the citizens has emerged with serious stance on the issue of migration. It should be noted that a similar approach is also seen in other countries of the Visegrad Group. We think that improving public opinion on citizens' attitudes regarding migration would demand the politicians an educating campaign not only in Slovakia but across the whole European Union. The European Commission may need to promote multicultural education.
    Keywords: public opinion,research,Slovak Republic,entrepreneurship ecosystem,European migrant crisis,refugee
    Date: 2017–12–29
  5. By: Mark Beeson
    Abstract: China has assumed a crucial importance in debates about climate change mitigation. On the one hand, China is one of the largest emitters of greenhouse gasses and pollution. On the other, it has invested more in renewable energy than any other country and is making real efforts to address the consequences of rapid industrialisation. There are three key questions for students of comparative political economy that emerge from the Chinese experience: first, what is the relationship between economic development and authoritarian rule? Second, what role has China's distinct social and political system played in creating and addressing environmental problems? Third, what domestic and international implications does the ‘China model’ have? In short, will China's authoritarian leaders be able to manage the expectations of its own people and those of the so-called international community? This article considers the often paradoxical and contradictory nature of the authoritarian Chinese government's current environmental policies and suggests that while they may have some success at the domestic level, they may still be an obstacle to international cooperation.
    Keywords: China, environmental policy, authoritarianism, policy implementation
    Date: 2017–12–27
  6. By: International Monetary Fund
    Abstract: Bulgaria has made major progress since joining the European Union (EU) ten years ago despite being hit by the global and Euro-area crises. However, per capita income is still only half of the EU average and more than one in five people is at risk of poverty. The economy is recovering strongly, with the fiscal and external current account balances in surplus. The main challenge is to translate this recovery into sustained and inclusive economic growth amid unfavorable demographic trends. This will require continued efforts to improve government as well as further strengthening financial stability.
    Date: 2018–02–21
  7. By: Agata Szyma?ska (Institute of Economics, University of Lodz)
    Abstract: The impact of fiscal policy on the economy is a subject of special interest to the EU countries outside the Eurozone, mainly due to their position of ?countries with a derogation? and their future access to the Euro Area. In this context it seems appropriate to investigate the impact of fiscal policy shocks on the economy in the short-run in these countries.The aim of this study is to analyze the effectiveness of fiscal policy shocks in selected CEE countries. In accordance with the goal, the empirical fiscal SVAR models have been prepared. The study is based on a quarterly data for six CEE countries: Bulgaria, Croatia, Czech Republic, Hungary, Poland and Romania. The empirical model for each country includes three variables: GDP, government spending and net taxes. The identification scheme is based on the Blanchard and Perotti (2002) approach. According to the estimated results the impact response of GDP to government spending shock is positive (and statistically significant in most analyzed countries), whereas the response of GDP to the net tax shock is negative or positive (positive in the case of two countries: Croatia and Poland) however statistically insignificant in analyzed countries.The dynamic responses are presented by impulse response functions investigated for each country. The analysis of these functions demonstrates the effects of structural shocks on the economy over horizon considered for the fiscal IRF. The results show differences in GDP responses on structural shocks in analyzed CEE countries.
    Keywords: fiscal policy, fiscal SVAR, European Union, CEE countries, structural shocks
    JEL: E62 E60 C01
    Date: 2017–10
  8. By: International Monetary Fund
    Abstract: Macroeconomic conditions in Bosnia and Herzegovina (BiH) are stable but growth has been insufficient for lowering unemployment and achieving income convergence with EU. Internal and external imbalances have been lowered in recent years. Economic activity has begun recovering with the turnaround in Europe and is expected to pick up further over the medium term, driven by public infrastructure investment and implementation of structural reforms. Job creation is key to reducing high unemployment and achieving income convergence with the EU. Domestic politics poses downside risks while external risks are more balanced. Policies should aim to enhance growth potential and address structural weakness, while maintaining economic and financial stability: these include (i) structural reforms to boost growth potential and employment by improving investment climate; (ii) reorienting the composition of public spending from wage bill to capital investments; and (iii) improving financial regulation framework and enhancing financial stability, and (iv) strengthening the country’s single economic space.
    Date: 2018–02–13
  9. By: BLINOV, Sergey
    Abstract: In March 2018, President of Russia Vladimir Putin designated the target of increasing per capita GDP of the Russian population 1.5 times by 2024. In order to meet this target, GDP would be required to grow by 6% a year between 2018 and 2024. This is a challenging task as the last time growth rate ever reached the 6% bar was in the far off 2008. However, this can be done with the help of “quantitative easing, Russian way”. For that purpose, the commonly used “technology” of quantitative easing has to be adapted to the Russian environment. В марте 2018 года президент России Владимир Путин обозначил цель увеличить ВВП на душу населения в России в 1,5 раза к 2024 году. Для выполнения этой задачи требуется рост ВВП в 2018-2024 годах на 6% в год. Задача сложная, так как последний раз рост достигал 6% в далёком 2008 году. Но эту задачу можно решить с помощью «количественного смягчения по-русски». Для этого надо общепринятую «технологию» количественного смягчения приспособить (адаптировать) к российским условиям.
    Keywords: бюджетная политика; доходы бюджета; спрос на денежные средства; денежно-кредитная политика; количественное смягчение; методы прогнозирования; ставка процента; Central Banks; Demand for Money; Fiscal Policy; Incomes Policy; Monetary Policy; Quantitative Easing; Forecasting and Prediction Methods;
    JEL: C54 E41 E52 E58 E62 E64 E65
    Date: 2018–03–16
  10. By: Brück, Tilman (ISDC - International Security and Development Center); Mahe, Clotilde (Maastricht University); Naudé, Wim (Maastricht University)
    Abstract: A common finding of the migration literature is that migrants are more likely to choose self-employment upon return to their origin countries than non-migrants. This has led to the belief that return migration stimulates entrepreneurship in source countries and hence supports economic development. In this paper, we test these assertions, drawing on the Life in Kyrgyzstan Study, a rich longitudinal data set from a transition economy with high levels of international temporary migration. We find that for return migrants, self-employment is often a temporary occupational choice, suggesting that self-employment serves as a 'parking lot'. In addition, we find evidence that return migrants who were self-employed before migrating are less likely to opt for self-employment on their return, implying that migration disrupts self-employment trajectories. Both findings cast doubt on the common narrative of return migration stimulating entrepreneurship and therefore economic development.
    Keywords: occupational choice, entrepreneurship, migration, transition economies, Central Asia, Kyrgyzstan
    JEL: F22 J24 L26 P20
    Date: 2018–02
  11. By: Claudiu Tiberiu Albulescu; Dominique Pépin (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: This paper first shows that the long-run money demand in Central and Eastern European (CEE) countries is better described by an open-economy model (OEM), which considers a currency substitution effect, than by a closed-economy model (CEM) used in several previous studies. Second, from the estimated models we derive two different measures of monetary overhang. Then we compare the ability of the OEM-based and the CEM-based measures of monetary overhang to predict inflation in the CEE countries, namely the Czech Republic, Hungary and Poland. While we cannot detect a significant difference of forecast accuracy between the two competing models, we show that the OEM-based forecast model that reveals a stable long-run money demand encompasses the CEM-based version for the CEE countries.
    Keywords: CEE countries ,currency substitution,money demand stability,monetary overhang,inflation forecasts
    Date: 2018–03–01
  12. By: Thomas Piketty (Paris School of Economics, 48 Boulevard Jourdan, 75014 Paris, France); Li Yang (World Bank and Paris School of Economics, 48 boulevard Jourdan, 75014 Paris, France); Gabriel Zucman (Department of Economics, University of California, Berkeley, 530 Evans Hall, #3880, Berkeley, CA 94720, and NBER)
    Abstract: This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and distribution of income and wealth in China over the 1978-2015 period. We find that the aggregate national wealth-income ratio has increased from 350% in 1978 to 700% in 2015. This can be accounted for by a combination of high saving and investment rates and a gradual rise in relative asset prices, reflecting changes in the legal system of property. The share of public property in national wealth has declined from about 70% in 1978 to 30% in 2015, which is still a lot higher than in rich countries (close to 0% or negative). Next, we provide sharp upward revision of official inequality estimates. The top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%. China’s inequality levels used to be close to Nordic countries and are now approaching U.S. levels.
    Date: 2018–03
  13. By: Myck, Michal (Centre for Economic Analysis, CenEA); Oczkowska, Monika (Centre for Economic Analysis, CenEA)
    Abstract: We examine long-term implications of unemployment for material conditions and well-being using the Polish sample from the Survey of Health, Ageing and Retirement in Europe (SHARE). Retrospective data from the SHARELIFE survey are used to reconstruct labour market experiences across the threshold of the socio-economic transformation from a centrally planned to a free market economy in Poland. These individual experiences are matched with outcomes observed in the survey about 20 years later to examine their correlation with unemployment at the time of the transition. We find that becoming unemployed in the early 1990s correlates significantly with income, assets and a number of measures of well-being recorded in 2007 and 2012. Using plant closures to reflect exogenous changes to labour market status at the time of the transition, we are able to confirm the causal effect of unemployment on income and house ownership 20 years later, but find no evidence for a long-term causal relationship between unemployment and such measures of well-being as life satisfaction, depression and subjective assessment of material conditions.
    Keywords: economic transition, unemployment, life histories, long-term effects
    JEL: J21 J63 P30
    Date: 2018–02
  14. By: Irena Slavova-Georgieva (University of National and World Economy, department: Marketing and Strategic Planning); Yovka Bankova (University of National and World Economy, department: Marketing and Strategic Planning)
    Abstract: The concept of sustainable development as a global and long-term philosophy of development is directed towards achieving a balance and interconnectedness between economic activities, social aspects and the environment and offers an overall approach to solving the growing and complex global problems.This paper examines the possibilities that clusters? main characteristics ? spatial proximity, strategic collaboration and competition; interaction between stakeholders (businesses, educational institutions, non-governmental organizations) - can provide for the implementation of responsible business practices and joint corporate socially responsible activities which contribute to sustainable development.Based on publications in academic literature regarding the relationship between clusters and corporate social responsibility (CSR), known as the ?cluster? approach to CSR, as well as the results from a practical study of an industrial cluster in Bulgaria, we outline the potential of clusters to bring about not only economic benefits but also social and environmental improvements. The conditions for successful implementation of CSR actions in the cluster are studied, which for some industrial clusters can be prerequisites for improvement of their actual capacity for contribution to sustainable development and for others, they can turn into significant limitations. The results of the practical study show that in order for industrial clusters to use their potential for contribution to sustainable development, based on the main cluster characteristics (according to cluster theory), in addition to cluster activity, the social-economic and environmental context and the state of development of CSR and clusters in the respective country are also of defining importance.
    Keywords: sustainable development, cluster, corporate social responsibility, mining industry, industrial cluster Srednogorie (Bulgaria)
    JEL: M14 Q01 L72
    Date: 2017–10
  15. By: Christophe Muller (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE); Huijie Yan (CEARC, Université de Versailles Saint-Quentin-en-Yvelines et Université Paris-Saclay)
    Abstract: The household transition from dirty to clean fuels is important because of its economic, health and environment consequences, locally, nationally and globally. In order to study fuel choices, a non-separated farm household model for fuel demands is developed. Then, discrete choice equations of fuel uses, consistent with this theoretical model, are estimated using microeconomic household panel data from rural China.The estimation results support the theoretical approach that implies that the fuel demands depend not only on income, fuel prices, and demand-side socioeconomic factors, as would occur in the standard fuel demand models in the literature, but also on food prices, agricultural assets, and original household and community characteristics that shape the household responses to market failures. Finally, we present a few policy simulations that reveal the complex substitution impact of energy price policies in China.We provide the first evidence on: price sensitivity of fuel stacking, that food prices exert some pressure on the fuel transition, the role of farm work and activity specialization in fuel choices. Policies should incorporate some of the complexity of the non-separated decisions of rural households in this context of market failures. The complex cross-price effects imply that the policy pricing mechanisms should account for all energy types and food prices. Finally, market-based policies should be coupled with policy interventions aimed at increasing the opportunity cost of dirty fuels.
    Keywords: fuel use, China, consumption demand, energy
    JEL: D11 D12 Q41
    Date: 2018–03
  16. By: Jaroslav Me?kovski (Vilnius University); Teodoras Medaiskis (Vilnius University); Tadas Gudaitis (Vilnius University)
    Abstract: Defined contribution pension pillars often requires participants to take an active role in selecting pension fund during the whole accumulation period. It is expected that pension fund participant will select appropriate investment strategy and investment risk during different stages of the accumulation phase and years left till the retirement. In this paper, we have analyzed the behavior of second pillar pension funds? participants in Lithuania from the beginning of second pension pillar establishment (2004) till the 2016 Q3. The aim of the study is to evaluate how rational second pension pillar participants in decisions on selecting accumulation rate, appropriate pension fund (investment strategy and investment risk) and changing the pension fund over accumulation period and during different stages of development (peaks and bottoms) in the financial markets. The results show, that second pension pillar participants are rational on selecting participation rates. However, it also highlighted problems in second pension pillar. Majority of pension funds participants have selected inappropriate pension fund (investment strategy and investment risk) evaluating the accumulation period, which have left till the retirement. Participants are passive and tend not to change pension fund during accumulation period. Pension fund participants, which have changed pension fund, made irrational decisions and have chosen inappropriate pension fund (investment strategy and investment risk): in case of peak period in stock markets, majority of second pension pillar participant have changed pension funds, by switching from the fund which have lower proportion of equities to the fund which has higher proportion of equities or have change pension fund to the fund in the same investment risk category. Moreover, in case of bottom period in stock markets the majority of participants did vice versus ? switched from funds with higher proportion of equities to pension fund with lower proportion of equities.
    Keywords: Pension funds, Behavior finance, Life cycle investments.
    JEL: J32 D14 D91
    Date: 2017–10
  17. By: Siebert, W. Stanley (University of Birmingham); Wei, Xiangdong (Lingnan University); Wong, Ho Lun (Lingnan University); Zhou, Xiang (University of Birmingham)
    Abstract: This study reports a randomized controlled trial to improve teacher-student-parent feedback, conducted in a rural county in China with many left-behind children. Data are collected from over 4,000 primary schoolchildren (8 to 10 years old) over two school terms. We find that bi-weekly student feedbacks using our special scorecard of schoolwork and behavior improve mathematics results by 0.16 to 0.20 standard deviations, with 0.09 for language. Communicating these assessments also to parents produces further large mathematics benefits for young left-behind children, about 0.30 standard deviations. A low-cost investment in better feedback thus brings significant achievement gains especially for disadvantaged children.
    Keywords: student assessment, parent-teacher communication, academic performance, randomized controlled trial, rural China
    JEL: C93 I21 J24
    Date: 2018–02
  18. By: Jing Wang and Bingqin Li
    Abstract: This article studies the causes for unequal access to rural community and social development infrastructures in China. We use a dataset in the China Health and Retirement Longitudinal Study (2011–2012), the National Baseline Survey of Communities, to examine the availability of four types of infrastructures: public transportation, sanitation, health care and aged care. Three hundred and seven villages are included in this study. The findings suggest that the primary funder of infrastructures and the status of village governance have impacts on the unequal availability of rural infrastructures. The effects vary by the type of infrastructures under discussion. This is the first attempt to combine planning, finance and governance factors in explaining rural infrastructure availability. It has strong policy implications and shed important light on state–society relations and the urbanisation trends in China.
    Keywords: community infrastructure, social development infrastructure, governance, finance, rural China
    Date: 2018–01–14
  19. By: Michał Pietrzak (Nicolaus Copernicus University [Toruń]); Adam Balcerzak (Nicolaus Copernicus University [Toruń]); Artur Gajdos (University of Lódź); Łukasz Arendt (University of Lódź)
    Abstract: Globalization process creates fovurable conditions for dynamic development of economic centers both at national and regional level. Yet, it may be an obstacle for growth for peripheral countries and regions. In the European Union one can confirm convergence process at national level. However, in Central European countries the convergence of national economies does not support sustainable growth at regional level and regional convergence process. This situation often leads to the problem of draining up of scarce resources from peripheral regions, which negatively affects their entrepreneurship potential and sustainable socioeconomic development. In the longer run this unbalanced spatial growth can become a significant obstacle for welfare improvements. In this context, the purpose of the article is to analyze the quality of entrepreneurial environment in Poland at regional level within the context of sustainability framework. The research was done for NUTS 2 regions in the years 2010-2014. The quality of entrepreneurial environment is considered here as a multiple-criteria phenomenon that should be treated as a latent variable. Thus, in the research Structural Equation Modeling (SEM) analysis was applied. Values of the latent variable were assessed based on confirmatory factor analysis, which provided information on the socioeconomic development of Polish regions, which determinates the entrepreneurial conditions. In order to group the regions to homogenous subsets natural breaks method was used. The conducted research confirms the process of improvement of entrepreneurial conditions in most of the NUTS 2 regions in Poland. From the perspective of regional convergence process, on the one hand, one can point some positive factors such as noticeable improvements in some underdeveloped regions. However, the dominance of the central region and significant disparities between the NUTS 2 are still relatively stable and extensive. From the methodological perspective the article shows the applicability of SEM methodology to national and regional analysis with application of data from national statistics.
    Keywords: Poland,regional sustainability,entrepreneurial environment,entrepreneurship at regional level,multiple-criteria analysis,Structural Equation Modeling (SEM)
    Date: 2017–12–29
  20. By: Sabaj, Ernil
    Abstract: This paper studies the cyclical behavior of fiscal policy in the Western Balkans region, investigating empirically the fiscal policy response to business cycles for the period 2003-2016. Although there is a large empirical literature which has found that fiscal policy in developing countries is pro-cyclical, not many studies are found on the Western Balkans region, with only a few done at country level. We apply the Hodrick-Prescott (HP) filter and other filters to measure the potential output and output gap for each of the respective Western Balkans countries. By performing country regressions we find that one of the main determinants fiscal pro-cyclicality in the WB6 region is the quality of the government. We conduct a series of structural vector auto-regressions (SVAR) for each of the countries in an attempt to obtain further evidence on the reaction of fiscal policy to the business cycle.
    Keywords: Fiscal Policy, Business Cycles, Pro-cyclicality, Counter-cyclicality, Western Balkans
    JEL: E30 E32 E60 E62 H60
    Date: 2018–02–07
  21. By: Aneta Hryckiewicz; Piotr Mielus; Karolina Skorulska; Malgorzata Snarska
    Abstract: The crisis has shown that a drop in liquidity, as well as the shortened maturity of interbank transactions, has caused many problems for banks. We analyze how the introduction of a bank levy on bank assets in Poland has affected the interbank market, as well as money market pricing. Analyzing daily volume and number of interbank transactions, along with daily bank quotes, we document that the bank levy has significantly reduced trading intensity on the market, shortening the maturity of transactions. We also find that it has increased the dispersion of bank quotes for short-term transactions, while at the same time ''killing'' interbank long-term transactions, including the pricing for this market. The regulators should re-think the nature of bank levies in several countries, as they negatively affect the functioning of the interbank market and brings intoquestion the credibility of interbank benchmarks.
    Keywords: C32, G28, E43, C54
    Date: 2018–03
  22. By: Hoai-Son Nguyen (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, ABIES Doctoral School); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi)
    Abstract: Household electricity consumption potentially offers economies of scale, since lighting, cooling or cooking can be shared among household members. This idea needs to be tested empirically. Under an increasing block tariff schedule the marginal and average price of electricity increases with total consumption. Does this effect offset economies of scale in the larger families? This paper uses data from Vietnam Household Living Standard Survey (VHLSS) in 2010, 2012 and 2014 to investigate whether there are economies of scale for Vietnam household electricity consumption in that period. The data will be tested formally by an OLS model and checked robustness by visualization of local linear regressions. Estimated results and robustness check confirm that in general, economies of scale do exist for household electricity consumption in Vietnam from 2010-2014.
    Keywords: electricity use,increasing block tariffs,household economies of scale
    Date: 2018–02–22
  23. By: Kolcunova, Dominika; Havranek, Tomas
    Abstract: The paper focuses on the estimation of the effective lower bound for the Czech National Bank's policy rate. The effective lower bound is determined by the value below which holding and using cash would be more convenient than deposits with negative yields. This bound is approximated based on storage, the insurance and transportation costs of cash and the costs associated with the loss of the convenience of cashless payments and complemented with the estimate based on interest charges, which present direct costs to the profitability of the bank. Overall, the estimated value is below -1% and is approximately in the interval -1.6%, -1.1%. In addition, by means of a vector autoregression, we show that the potential of negative rates would not be sufficient to deliver monetary policy easing with effects similar to those of the exchange rate commitment.
    Keywords: effective lower bound,negative interest rates,costs of holding cash,transmission of monetary policy
    JEL: E52 E58
    Date: 2018
  24. By: Dieppe, Alistair; Gilhooly, Robert; Han, Jenny; Korhonen, Iikka; Lodge, David
    Abstract: China’s rise has been the economic success story of the past four decades but economic growth has been slowing and domestic imbalances have widened. This paper analyses the recent evolution of China’s imbalances, the risks they pose to the economic outlook and the potential impact of a transition to sustainable growth in China on the global and euro area economies. The paper documents China’s heavy reliance on investment and credit as drivers of growth, which has created vulnerabilities in a number of sectors and has been accompanied by increased complexity and leverage in the financial system. China retains some buffers, including policy space, to cushion against adverse shocks for the time being, but additional structural reforms would facilitate a shift of China’s economy onto a sustainable and strong growth trajectory in the medium term. China’s size, trade openness, dominant position as consumer of commodities and growing financial integration mean that its transition to sustainable growth is crucial for the global economic outlook. Simulation analysis using global macro models suggests that the spillovers to the euro area would be limited in the case of a modest slowdown in China’s GDP growth, but significant in the case of a sharp downturn. Sensitivity analysis underscores that the spillovers are dependent on the strengths of the various transmission channels, as well as the policy reaction by central banks and governments. JEL Classification: E21, E22, E27, F10, F47, O11, O53
    Keywords: China, economic growth, imbalances, rebalancing, spillovers
    Date: 2018–01
  25. By: Havranek, Tomas; Hampl, Mojmir
    Abstract: In this paper we take stock of the evidence concerning the effect of foreign direct investment (FDI) on the productivity of locally owned firms in the Czech Republic. To this end, we collect 332 estimates previously reported in journal articles, working papers, and PhD theses. We find that the mean reported externality arising for domestic firms due to the presence of foreign firms (the “FDI spillover”) is zero. There is no evidence of publication bias, i.e., no sign of selective reporting of results that are statistically significant and show an intuitive sign. Nevertheless, we find that the overall spillover effect is positive and large when more weight is placed on estimates that conform to best-practice methodology. Our results suggest that, as of 2018, a 10-percentage-point increase in foreign presence is likely to lift the productivity of domestic firms by 11%. The effect is even larger for joint ventures, reaching 19%.
    Keywords: Foreign direct investment,productivity,spillovers,meta-analysis
    JEL: F23
    Date: 2018
  26. By: Xi Li (Department of Accounting , The Hong Kong University of Science and Technology); Yikai Wang (Department of Economics , University of Oslo, Norway); Tong Zhang (Department of Economics, University of Zurich, Switzerland)
    Abstract: In this paper, we study how the financial market frictions in the Chinese economy, especially the interest rate policies, lead to inefficient resource allocations and economic imbalances. First, the repressed low interest rate for household savings induce them to increase saving in order to prepare for future necessary expenditures. Consequently consumption share is low and the economic imbalance of consumption and saving emerges. Second, the government provides explicit or implicit guarantees for state firms, so banks prefer to lend to state firms which are less productive. Private firms get less financial resource and operate at sub-optimal levels. The lower aggregate productivity implies the lower household income and consumption and worsen the imbalance. Due to the financial market frictions, traditional consumption stimulating policies, e.g., reducing the interest rate, may actually results in the opposite: even lower consumption and a more imbalanced economy. Reforms towards market-determined interest rates can help to rebalance the economy.
    Date: 2018–02
  27. By: Zoltán Elekes; Ron Boschma; Balázs Lengyel
    Abstract: A growing body of literature shows that related diversification in regions is more common but unrelated diversification also happens. However, we have little understanding of what types of firms induce related and unrelated diversification in regions. We investigate the extent to which foreign-owned firms induce structural change in the capability base of 67 regions in Hungary between 2000 and 2009. Doing so, we aim to connect more tightly the disparate literatures of Evolutionary Economic Geography and International Business. Using novel methodology developed by Neffke et al. (2018), we find that foreign-owned firms show a higher deviation from the region?s average capability match than domestic firms, and therefore, tend to contribute more to structural change in regions.
    Keywords: foreign-owned firms, related diversification, unrelated diversification, evolutionary economic geography, MNEs, international business studies
    JEL: F23 O18 O19 O33 P25 R11
    Date: 2018–03
  28. By: Tran, Tuyen; Tran, Anh; Pham, Thai; Vu, Huong
    Abstract: Using data from the School-to-Work Transition Surveys 2015 (SWTS 2015), the Enterprise Census data in 2014 (ECD 2014), and the Provincial Competitiveness Index 2014 (PCI 2014), this paper examines for the first time the effect of individual and family characteristics, firm agglomeration, and the quality of labour training (provided by provincial governments) on occupational choice among young people in Vietnam. Interestingly, we find that women are more likely than men to have better jobs, even after controlling for all other variables in the models. Higher levels of education were the most important factor in choosing non-manual jobs, while family background (as measured by the father’s occupation) plays a significant role in explaining young people’s occupational choice. More importantly, it was found that the quality of labour training increases young people’s chances of gaining better jobs. In addition, living in urban areas, the provincial GDP per capita, and firm agglomeration were also found to improve the probability of youth choosing better jobs.
    Keywords: youth, firm agglomeration, local government, labour training, occupational choice
    JEL: D11 D13 D7 D71 I38
    Date: 2017–09
  29. By: Grace Xing Hu; Jun Pan; Jiang Wang
    Abstract: The Chinese capital market, despite its relative short history in its modern form, has experienced a tremendous growth and is now the second largest in the world. Due to China's tight capital controls, the development of its capital market has mostly been isolated from and hence not been well understood by the rest of the world. Yet, this state of isolation is bound to change substantially as China becomes more integrated into the global financial system. In this paper, we provide an empirical overview of the Chinese capital market: its historical development and main empirical characteristics.
    JEL: G00 G1 G11 G12 G15
    Date: 2018–02
  30. By: Leszko, Magdalena; Bugajska, Beata
    Abstract: Adults aged 65 and above comprise the fastest growing sector of the world’s population. In the context of increasing numbers of older adults, employment policies have become a prominent issue. Governments recognize the importance of increasing participation in working age population and providing them with equal workplace opportunities. Yet, it appears that policies raising employment rates of older adults have become a slogan that governments use for election purposes, but the reality is different. In the groundbreaking report “Working Better with Age: Poland” prepared by the Organization for Economic Cooperation and Development (OECD) (2015), Poland, the Czech Republic, and Slovakia belong to a group of countries where the increase in the employment rate of older adults is well below the OECD average. The objective of our critical review is to evaluate current employment policies for older adults, including but not limited to healthy work conditions, age management strategies, employment services for older workers, and strategies implemented to prevent age discrimination, in these three countries. This article also discusses the reasons for the reduction in the employment of older adults, the current barriers in employing older adults that require governments’ attention, and suggests solutions for creating an age-friendly labor market that can effectively make use of older adults’ competencies. Employment rates for people of different ages are significantly affected by government policies with regard to higher education, pensions, and retirement age.
    Keywords: Age Management, Employment Policies, Protection Programs
    JEL: J08 J14
    Date: 2017

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