nep-tra New Economics Papers
on Transition Economics
Issue of 2018‒04‒30
25 papers chosen by
J. David Brown
United States Census Bureau

  1. Comparing China's urban systems in high-speed railway and airline networks By Haoran Yang; Frédéric Dobruszkes; Jiaoe Wang; Martin Dijst; Patrick Wiik
  2. Towards increased complexity in Russian regions : networks, diversification and growth By Lyubimov, Ivan; Gvozdeva, Margarita; Lysyuk, Maria
  3. Spatial Integration of Siberian Regional Markets By Gluschenko, Konstantin
  4. The impact of China’s electricity deregulation on coal and power industries: Two-stage game modeling approach By HuiHui Liu; ZhongXiang Zhang; ZhanMing Chen; DeSheng Dou
  5. How Do Households Adjust to Trade Liberalization? Evidence from China's WTO Accession By Dai, Mi; Huang, Wei; Zhang, Yifan
  6. Evaluation of the sophistication of Chinese industries using the information-geometric decomposition approach By Takanori Minamikawa
  7. RIO Country Report 2017: Slovak Republic By Vladimir Balaz; Karol Frank; Tauno Ojala
  8. Impacts of shifting China¡¯s final energy consumption to electricity on CO2 emission reduction By Weigang Zhao; Yunfei Cao; Bo Miao; Ke Wang; Yi-Ming Wei
  9. Institutions and sustainability – insights from Bulgarian agriculture By Bachev, Hrabrin
  10. Corporate Foreign Bond Issuance and Interfirm Loans in China By Yi Huang; Ugo Panizza; Richard Portes
  11. Social Interactions and Stigmatized Behavior: "Donating" Blood Plasma in Rural China By Chen, Xi; Sahn, David E.; Zhang, Xiaobo
  12. The labour demand effects of residential building retrofits in Poland By Piotr Lewandowski; Katarzyna Salach; Konstancja Ziolkowska
  13. Economists in Ukraine: who are they and where do they publish? By Maksym Obrizan
  14. Примена индекса Линда у истраживању концентрације и конкуренције у банковном сектору Србије By Bukvić, Rajko
  15. Sugar market in the European Union and Romania. Study on price developments By Surca, Daniela - Elena
  16. Institutions and Determinants of Firm Survival in European Emerging Markets By Baumöhl, Eduard; Iwasaki, Ichiro; Kočenda, Evžen
  17. Decoupling of Emissions and GDP: Evidence from Aggregate and Provincial Chinese Data By Gail Cohen; João Tovar Jalles; Prakash Loungani; Ricardo Marto; Gewei Wang
  18. Structural Change and Aggregate Employment Fluctuations in China and the US By Wen Yao; Xiaodong Zhu
  19. Inequality in Poland: Estimating the whole distribution by g-percentile 1983-2015 By Pawel Bukowski; Filip Novokmet
  20. The demand for global and local environmental protection: Experimental evidence from climate change mitigation in Beijing By Loeschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Wang, Ran; Buchholz, Wolfgang; Zhao, Zhongxiu
  21. Cooperation programs regarding the development of turnover in rural area By Dănilă, Daniela Ileana
  22. Stabilizing China’s Housing Market By Richard Koss; Xinrui Shi
  23. Private Information, Institutional Distance, and the Failure of Cross-Border Acquisitions: Evidence from the Banking Sector in Central and Eastern Europe By Bhaumik, Sumon K.; Owolabi, Oluwarotimi; Pal, Sarmistha
  24. Intergovernmental Fiscal Reform in China By Philippe Wingender
  25. Monetary policy rule under inflation targeting: the case of Mongolia By Taguchi, Hiroyuki

  1. By: Haoran Yang; Frédéric Dobruszkes; Jiaoe Wang; Martin Dijst; Patrick Wiik
    Abstract: Although the Chinese high-speed railway (HSR) entered the transportation market at a late stage in 2003, its networks have become the world's largest and are currently even growing faster than airline networks. Using the 2013 origin/destination (O/D) passenger flow data instead of commonly used scheduled data, we compare the spatial configurations of the Chinese national urban system in both high-speed railway and airline networks. The results show that HSR-dominant cities and links are located mainly in the middle and eastern parts of China, offering regional connections, whereas air-dominant cities and links are evenly distributed across the whole of China and predominantly offer interregional connections. This is mainly because HSR networks are more focused on connections to cities with high socio-economic performance and are more restricted by the geographical distance between linked cities than the airline networks. Furthermore, HSR networks promote agglomeration economies within cities located along the trunk lines in specific regions, whereas airline networks contribute to more balanced urban development in China. These dimensions indicate that the configuration of urban systems in HSR networks differ largely from that of air networks when measured in terms of passenger flows.
    Keywords: High-speed railways (HSR); Airlines; Passenger flows; China; Urban systems
    Date: 2018
  2. By: Lyubimov, Ivan; Gvozdeva, Margarita; Lysyuk, Maria
    Abstract: Following Hausmann et al. (2011), we apply a network approach to measure the level of economic complexity and diversification opportunities of Russian regions. Using Russian and international export data, we find that the complexity of Russian regional economies varies substantially: rela-tively high in western and central regions, lower in southern and northern Russia and lowest in eastern regions. While Russian regions, on average, have poor diversification opportunities, regions can still diversify their exports by participating in international value-added chains or cooperating in developing group strategies. Our results are highly consistent with two well-established rankings of Russian regional R&D development based on numerous regional indicators, and imply that our network-based measure of complexity captures important features such as the level of regional R&D.
    JEL: O14 O25 R11
    Date: 2018–04–16
  3. By: Gluschenko, Konstantin
    Abstract: This paper studies market integration of 13 regions constituting Siberia with one another and all other Russian regions. The law of one price serves as a criterion of market integration. The data analyzed are time series of the regional costs of a basket of basic foods (staples basket) over 2001–2015. Pairs of regional markets are divided into four groups: perfectly integrated, conditionally integrated, not integrated but tending towards integration (converging), and neither integrated nor converging. Nonlinear time series models with asymptotically decaying trends describe price convergence. Integration of Siberian regional markets is found to be fairly strong; they are integrated and converging with about 70% of country’s regions (including Siberian regions themselves).
    Keywords: market integration law of one price price convergence nonlinear trend Russian regions
    JEL: C32 L81 P22 R15
    Date: 2018–04–02
  4. By: HuiHui Liu (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing); ZhongXiang Zhang (Ma Yinchu School of Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University, Tianjin); ZhanMing Chen (Department of Energy Economics, School of Economics, Renmin University of China, Beijing); DeSheng Dou (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing)
    Abstract: The regulated price mechanism in China’s power industry has attracted much criticism because of its incapability to optimize the allocation of resources. To build an “open, orderly, competitive and complete” power market system, the Chinese government launched an unprecedented marketization reform in 2015 to deregulate the electricity price. This paper examines the impact of the electricity price deregulation in the industry level. We first construct two-stage dynamic game models by taking the coal and coal-fired power industries as the players. Using the models, we compare analytically the equilibriums with and without electricity regulation, and examine the changes in electricity price, electricity generation, coal price and coal traded quantity. The theoretical analyses show that there are three intervals of the regulated electricity sales prices which influence the impact of electricity price deregulation. Next, we collect empirical data to estimate the parameters in the game models, and simulate the influence of electricity deregulation on the two industries in terms of market outcome and industrial profitability. Our results suggest that the actual regulated electricity price falls within the medium interval of the theoretical results, which means the price deregulation will result in higher electricity sales price but lower coal price, less coal traded amount and less electricity generation amount. The robustness analysis shows that our results hold with respect to the electricity generation efficiency and price elasticity of electricity demand.
    Keywords: China, electricity deregulation, reform, coal industry, power industry
    JEL: Q41 Q43 Q48 L94 L98
    Date: 2018–04
  5. By: Dai, Mi (Beijing Normal University); Huang, Wei (National University of Singapore); Zhang, Yifan (Chinese University of Hong Kong)
    Abstract: We investigate the impacts of trade liberalization on household behaviors and outcomes in urban China, exploiting regional variation in the exposure to tariff cuts resulting from WTO entry. Regions that initially specialized in industries facing larger tariff cuts experienced relative declines in wages. Households responded to this income shock in several ways. First, household members worked more, especially in the non-tradable sector. Second, more young adults co-resided with their parents, and thus household size increased. Third, households saved less. These behaviors significantly buffered the negative wage shock induced by trade liberalization.
    Keywords: household adjustments, trade liberalization, WTO
    JEL: F14 F16 J20 R23
    Date: 2018–03
  6. By: Takanori Minamikawa (Economic Research Institute for Northeast Asia (ERINA))
    Abstract: Since the Open Door Policy was implemented in 1978, China economy has maintained a high economic growth. During this period, although the reform of state-owned enterprises and the introduction of foreign direct investments might cause the change of the industrial structure, the common recognition, about how those factor has changed Chinese industrial structure, has not been obtained. This paper applied information geometric decomposition to Input-Output tables of China in the period 1981 to 2010, and extracted the factors of the technological changes in the whole industry in China. This paper examines the different of evaluation of industrial structure between input coefficient index and information geometry approach. Furthermore based on the factors, two industrial sophistication indicators, which are about degree of Mechanization and degree of ICT introducing, respectively are constructed. The empirical results suggests that the degree of mechanization and included ICT has different characteristics for each other. Regarding mechanization, the mechanized manufacturing sectors showed increases in sophistication in the 1980s and 2000s; however, mechanized tertiary sectors showed increases in sophistication in the 1990s. Regarding ICT input, while manufacturing sectors showed a high level of sophistication in ICT input in the 2000s, tertiary sectors showed a high level of sophistication in ICT input in the 1990s.
    Keywords: Input-Output tables, Industrial structure, RAS method, Foreign Direct Investment, Innovation
  7. By: Vladimir Balaz (Slovak Academy of Sciences); Karol Frank (Slovak Academy of Sciences); Tauno Ojala (European Commission - JRC)
    Abstract: The R&I Observatory country report 2017 provides a brief analysis of the R&I system covering the economic context, main actors, funding trends & human resources, policies to address R&I challenges, and R&I in national and regional smart specialisation strategies. Data is from Eurostat, unless otherwise referenced and is correct as at January 2018. Data used from other international sources is also correct to that date. The report provides a state-of-play and analysis of the national level R&I system and its challenges, to support the European Semester.
    Keywords: Research and Innovation, Slovak Republic, Slovakia, Innovation System
    Date: 2018–03
  8. By: Weigang Zhao; Yunfei Cao; Bo Miao; Ke Wang; Yi-Ming Wei
    Abstract: Electrification is advocated by both academics and the Chinese government to control air pollution and promote productivity. However, the problem remains to be solved of how to achieve the trade-off between reducing CO2 emissions and maintaining economic growth when switching from various fuels to electricity under the policy support. In view of this, after analyzing the effects of exogenous shocks in various fuel demands based on impulse response functions of several vector autoregression models, this paper measures the current and long-term impacts of electrification on GDP and CO2 emissions. Finally, some typical cases of replacement of fossil-fueled appliances by electrical counterparts encouraged by the government are assessed. The main findings are: (1) Almost all of the exogenous shocks in fuel demands have positive effects on both GDP and CO2 emissions, while the gas shock has a slightly negative effect on GDP; (2) Carbon intensity decreases and even CO2 emission reductions with increased GDP are potentially achieved, in both current and permanent periods, for coal-electricity and oil-electricity switching, while gas-electricity switching is not a wise choice in view of CO2 emission reduction in the long run; (3) The alternative electric appliances for electrification have very different impacts on CO2 emission reduction.
    Keywords: Fuel-switching; Inter-fuel substitution; Electrification; CO2 emissions; Economic growth
    JEL: Q54 Q40
    Date: 2018–04–10
  9. By: Bachev, Hrabrin
    Abstract: The specific system of governance is a critical factor, which to a great extent (pre)determines the type and speed of development in different countries, industries, regions, communities, etc. This article tries to fill the gap and assesses the impact of institutional environment on agrarian sustainability in Bulgaria. The interdisciplinary New Institutional Economics framework is applied and assessment made on specific effects of major components of the “external” institutional environment on agrarian sustainability level in different administrative, geographical and ecological regions, subsectors of agriculture, and farms of various juridical type and size. Our study has found out that individual elements of external institutional, market and natural environment affect quite unequally farms of different types, individual subsectors of agriculture, and specific ecological and geographical regions. This type of studies is to be expended and their precision and representation increased. The latter however, requires a close cooperation between all interested parties, and participation of the farmers, agrarian organisations, local and central authorities, interest groups, research institutes and experts, etc.
    Keywords: institutional, market, natural environment, governance, agrarian sustainability, Bulgaria
    JEL: D2 D21 D23 K0 O1 Q12 Q13 Q15 Q18 Q5
    Date: 2018–04
  10. By: Yi Huang; Ugo Panizza; Richard Portes
    Abstract: This paper uses firm-level data to document and analyze international bond issuance by Chinese non-financial corporations and the use of the proceeds of issuance. We find that dollar issuance is positively correlated with the differential between domestic and foreign interest rates. This interest rate differential increases the likelihood of dollar bond issuance by risky firms and decreases the likelihood of dollar bond issuance of exporters and profitable firms. Moreover, and most strikingly, we find that risky firms do more inter-firm lending than non-risky firms and that this lending rose significantly after the regulatory shock of 2008-09, when the authorities sought to restrict the financial activities of risky firms. Risky firms try to boost profitability by engaging in speculative activities that mimic the behavior of financial institutions while escaping prudential regulation that limits risk-taking by financial firms.
    JEL: F32 F34 G15 G30
    Date: 2018–04
  11. By: Chen, Xi (Yale University); Sahn, David E. (Cornell University); Zhang, Xiaobo (Peking University)
    Abstract: Despite the resultant disutility, some people, in particular, the poor, are engaged in behaviors that carry social stigma. Empirical studies on stigmatized behavior are rare, largely due to the formidable challenges of collecting data on stigmatized goods and services. In this paper, we add to this limited empirical evidence by examining the behavior of "donating" blood plasma in exchange for cash rewards in China. We do so using two primary data sets: the first is a three-wave, census‐type household survey that enables us to examine the evolving patterns and determinants of "donating" plasma. The second is data on detailed gift exchange records of all households. The data allow us to define reference groups, measure the intensity of social interactions, and identify peer effects using a novel network structure‐based instrumental variable strategy. We find that peer effects influence decisions to "donate" plasma. For example, a one‐standard‐deviation increase in income from "donating" plasma in the peer group increases the value of own plasma "donation" by 0.15 standard deviations. Families with sons have more incentives to "donate" plasma to offset the escalated costs of getting their sons married in a tight marriage market that favors girls.
    Keywords: social stigma, social networks, peer influence, plasma "donation", China
    JEL: O1 Z1 R2 D8
    Date: 2018–03
  12. By: Piotr Lewandowski; Katarzyna Salach; Konstancja Ziolkowska
    Abstract: This paper analyses the potential direct impact of intensifying residential energy retrofitting on the Polish labour market. We distinguish eight building classes, for which we quantify the labour intensity of improvements to building insulation and heating systems. We account for work performed by low-, medium- and high-skilled workers. We define the baseline scenario of maintaining the current rate of retrofitting and three scenarios of its acceleration (up to two times) and increased comprehensiveness. We estimate the resulting additional labour demand and changes to the unemployment rate at the country and NUTS2 region level. Our results show that the most ambitious scenario of increased energy retrofitting would see the creation of approx. 100,000 additional jobs nationwide per year, with the majority of this added demand concerning low-skilled persons. This effect is predominantly caused by energy retrofits to single-family buildings. The effect of building insulation retrofits on the labour demand is 3-4 times greater than the effect of heating and hot water system upgrades.
    Keywords: residential energy retrofitting, energy efficiency, green jobs
    JEL: Q52 L74
    Date: 2018–04
  13. By: Maksym Obrizan (Kyiv School of Economics)
    Abstract: This paper analyses 1,672 articles published in English by economists working in Ukraine over 1991-2017 using SCOPUS database and bibliometrix package in R. Between 2011 and 2012 when the number of published papers increased more than ten times with Actual Problems of Economics and Economic Annals-XXI being the two most important outlets accounting for more than 70 percent of all publications. Despite this increased visibility the citation counts show rather modest contribution of economists in Ukraine. Regression analysis of citations indicates that articles with a foreign co-author and Digital Object Identifier are more likely to receive citations.
    Keywords: Economists, Ukraine, SCOPUS, bibliometrics, ranking
    JEL: A1
    Date: 2018–03
  14. By: Bukvić, Rajko
    Abstract: Serbian. У раду се анализирају степен концентрације и конкуренција у банковном сектору Србије. За основу анализе послужили су финансијски извештаји банака за 2016. годину. Као показатељи концентрације коришћени су најпре традиционални индекси концентрације (CRn, и то CR3, CR4 и CR8, као и HH индекси), које користи у својим анализама и Народна банка Србије. Поред тога, концентрација је оцењивана и помоћу релативно ретко коришћених индекса Линда, који су у нашој литератури готово непознати. Степен концентрације је обрачунат на основу пет променљивих, односно билансних величина: укупна актива, депозити, капитал, оперативни (пословни) приходи и кредити. Показано је да је уз постојање релативно великог броја банака у Србији постојећи степен концентрације низак, и поред генералног раста концентрације у текућој деценији. То представља добру основу за развој здраве конкуренције међу банкама. Међутим, указује се и на повећање вредности показатеља концентрације за све билансне величине. То је упозоравајуће кретање, и структуру на банковном тржишту Србије приближава средњеконцентрисаној. Као упозорење истичу се и вредности индекса Линда, обрачунате за капитал банака, које сугеришу сумњу на постојање лабавог олигопола. English. The paper analyzes the degree of concentration and competition in Serbian banking sector on the basis of bank financial statements for year 2016. It uses the traditional concentration indicators (CRn, among them CR3, CR4, and CR8, as well as HH indices), which are used by the National Bank of Serbia. In addition to these, the degree of concentration is measured by the relatively rarely used Linda indices, which are not present in Serbian literature. The concentration degree is calculated based on five variables: total assets, deposits, capital, bank operating income and loans. It was demonstrated that in the case of the relatively large number of banks in Serbia, the existing concentration degree is low, in spite of a general upward trend present in this decad. This provides suitable conditions for the development of healthy competition among different banks. However, this paper also warns of an increase in concentration degree in all the observed variables. This is a worrying tendency since it brings the structure of the Serbian banking to a moderately concentrated one. Another alarming trend are the values of Linda indices for bank capital, which suggest the presence of a loose oligopoly.
    Keywords: концентрација, конкуренција, банковни сектор, Србија, индекси Линда, Херфиндал-Хиршманов индекс, коефицијенти концентрације, олигопол, concentration, competition, banking sector, Serbia, indices Linda, Herfindahl-Hirschman index, concentration ratio, oligopoly
    JEL: C38 G21 L10
    Date: 2017–12
  15. By: Surca, Daniela - Elena
    Abstract: This paper is based on analysis of the sugar market at national and European level on the development of prices for the sugar market which will analyse the problems leading to stagnation and imbalance national sugar production, try solving the problems identified at national level taking as examples beet farms in Europe for analysing prices. Through sugar market perspectives we have identified the proposed strategy for market development, her objectives and factors affecting the price of sugar in Romania, evolution of prices and consumer price indices.
    Keywords: demand, production cost, supply, consumer price, the sugar market
    JEL: Q10 Q13 Q18
    Date: 2017–11–16
  16. By: Baumöhl, Eduard; Iwasaki, Ichiro; Kočenda, Evžen
    Abstract: We analyze the impact of institutional quality on firm survival in 15 Central and Eastern European (CEE) countries. We employ the Cox proportional hazards model with a large dataset of firms from 2006–2015 and control for firm-specific determinants and country differences. Our results show that institutional quality (IQ) is a significant preventive factor for firm survival, and the result is robust to different measures of IQ and industry sectors. Furthermore, we document the existence of diminishing productivity of IQ, as the economic effect upon institutions is largest for low-level IQ countries and smallest for high-level IQ countries. In terms of firm-specific controls, ownership structure plays a vital role in strengthening the probability of firm survival. Notably, foreign ownership helps firms survive in all three country groups, and the effect is again larger for countries with low- and mid-level IQs. ROA, profit margin, solvency ratio, and firm age represent additional significant preventive factors, albeit with smaller economic effects.
    Keywords: firm survival, CEE countries, survival and exit determinants, hazards model
    JEL: D22 G01 G33 G34 P34
    Date: 2018–04
  17. By: Gail Cohen; João Tovar Jalles; Prakash Loungani; Ricardo Marto; Gewei Wang
    Abstract: We provide a comprehensive analysis of the relationship between greenhouse gas (GHG) emissions and GDP in China using both aggregate and provincial data. The Kuznets elasticity is about 0.6 for China, higher than that in advanced countries but below that of major emerging markets. The elasticity is somewhat lower for consumption-based emissions than for production-based emissions, providing mild evidence consistent with the “pollution haven” hypothesis. The Kuznets elasticity is much lower for the last three decades than for the three previous decades, suggesting a longer-term trend toward decoupling as China has become richer. Further evidence of this comes from provincial data: richer provinces tend to have smaller Kuznets elasticities than poorer ones. In addition to the trend relationship, we find that the Environmental Okun's Law holds in China.
    Date: 2018–04–11
  18. By: Wen Yao; Xiaodong Zhu
    Abstract: The correlation between the cyclical components of aggregate employment and GDP is highly positive in the US, but close to zero in China. We argue that the difference in the size of the agricultural sector is the reason for the difference in employment-output correlation. We construct a simple two-sector growth model with productivity shocks and non-homothetic preferences and show that the model can simultaneously account for the long-run structural change and short-run employment fluctuations at sector level and in the aggregate for both economies.
    Keywords: Structural Change, Non-homothetic Preferences, Labor Reallocation, Aggregate Fluctuations
    JEL: E24 E32 O41
    Date: 2018–04–14
  19. By: Pawel Bukowski; Filip Novokmet
    Abstract: This paper combines national accounts, survey and tax data to provide consistent series on income distribution in Poland over the 1983-2015 period. We find that official survey-based inequality estimates substantially underestimate the rise of inequality since the end of Communism. The top 10% income share increased from 23% to 40% and the top 1% income share from 4% to 14% between 1989 and 2015. Frequently quoted Poland’s transition success has largely benefited top income groups. Over this period, top 1% has captured almost twice as large portion of the total income growth than the bottom 50% (24% versus 13%). We also find that inequality has continued to grow after the initial upward adjustment during the transition in the 1990s, especially since the early 2000s, and today has reached levels found in more unequal European countries. However, the transition from communism to capitalism has led to lower income concentration in Poland than in Russia. We relate this to different transition policies, institutions and natural resources endowments.
    Date: 2018–02
  20. By: Loeschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Wang, Ran; Buchholz, Wolfgang; Zhao, Zhongxiu
    Abstract: In this study, the real demand for global and local environmental protection in Beijing, China, is elicited and investigated. Participants from Beijing were offered the opportunity to contribute to voluntary climate change mitigation by purchasing permits from two Chinese CO2 emissions trading schemes (ETS). Purchased permits were withdrawn from the ETS. Since CO2 emissions mitigation is inevitably linked to other local benefits like the reduction in emissions of air pollutants, the aim of our study is to establish the demand for local and global environmental protection. To this end, Beijing and Shenzhen ETS permits were offered. The result is that at low prices the demand for Beijing ETS permits is significantly higher than for Shenzhen ETS permits indicating that a substantial part of the revealed demand for voluntary climate change mitigation in Beijing is driven by concerns for local co-benefits of CO2 emissions reduction. Our research identifies the important role of private benefits in the voluntary provision of the global public good climate change mitigation and provides first experimental evidence for China.
    Date: 2018
  21. By: Dănilă, Daniela Ileana
    Abstract: This paper aims to analyze the data regarding the cooperation programs supporting the development of agro-tourism of Romania. The data were taken from the Ministry of Agriculture and Rural Development and were processed according to the objectives of the paper, namely the allocation of European funds for the period 2007-2013 for Measure 3.1.3. - "Encouraging tourism activities. To achieve this it was necessary to analyze the projects submitted, the projects selected and contracted. The aim of the paper is to develop tourism activities in rural areas that will help to increase the number of jobs and alternative incomes, as well as to increase the attractiveness of the rural area. This measure aimed at investing in rural areas, namely: investing in infrastructure in areas with tourism potential, investing in recreational activities, investing in infrastructure, investing in information centers, investing in tourist marking development, development and marketing of tourist services as a part an integral part of rural tourism.
    Keywords: agritourism, cooperation programs, investments
    JEL: O11 Q13
    Date: 2017–11–16
  22. By: Richard Koss; Xinrui Shi
    Abstract: The sharp rise of house prices in China’s Tier-1 cities has fostered a great deal of commentary about the possibility of bubbles forming there. However, China’s unique housing market characteristics make it difficult to assess the macroeconomic severity of bursting bubbles, even if they exist. These include the setting of land supply and prices by the government, among many others. The presence of overbuilt “ghost cities” greatly complicates the ability of traditional macroeconomic policies to address these concerns. This paper looks at proposals to shore up the mortgage underwriting and legal infrastructure to help China withstand the impact of falling prices, should this occur.
    Date: 2018–04–13
  23. By: Bhaumik, Sumon K. (University of Sheffield); Owolabi, Oluwarotimi (Covenant University); Pal, Sarmistha (University of Surrey)
    Abstract: In this paper, we develop an information theory-based framework about cross-border acquisitions in the financial intermediation industry. We argue that even though "soft" information embedded in customer relationships of local banks can, in principle, help multinational banks (MNBs) overcome informational disadvantage in host countries, the cost of verification of this private information may, paradoxically, make local banks with significant customer relationships unattractive for cross-border acquisition. Further, we propose that the relationship between the amount of customer information embedded in an incumbent bank and the likelihood of its acquisition by a MNB is modified by the institutional distance between the home and host countries of the MNB. Specifically, the strength of the negative relationship increases with institutional distance between home and host countries because it increases the verification cost of private information with institutional distance. Our hypotheses find support in the context of Central and Eastern Europe.
    Keywords: multinational bank, cross-border acquisition, customer relationship, private information, verification cost, institutional distance, Central and Eastern Europe
    JEL: F23 G21 P33
    Date: 2018–03
  24. By: Philippe Wingender
    Abstract: China is the most decentralized country in the world in terms of expenditures shares, with subnational governments responsible for 85 percent of government spending. Limited revenue autonomy and insufficient intergovernmental transfers have led to large unfunded mandates and a build-up of debt outside the budget. The government has recently announced an ambitious intergovernmental fiscal reform, which will increase the role of the central government. Comprehensive reform is needed to improve public service delivery, increase overall social spending levels and reduce regional disparities. Revenue reforms are also necessary to improve efficiency and reduce vulnerabilities from excessive subnational borrowing. These reforms are challenging, but are crucial so that the government can support China’s continued development and prosperity.
    Date: 2018–04–13
  25. By: Taguchi, Hiroyuki
    Abstract: This article aims to review the monetary policy rule under inflation targeting framework focusing on Mongolia. The empirical analysis estimates the policy reaction function to see if the inflation targeting has been linked with a monetary policy rule emphasizing on inflation stabilization since its adoption in 2007. The study contributes to the literature by examining the linkage between Mongolian monetary policy rule and inflation targeting directly and thoroughly for the first time and also by taking into account a recent progress in the inflation targeting framework toward forward-looking mode. The main findings were: the Mongolian current monetary policy rule under inflation targeting is characterized as inflation-responsive rule with forward-looking manner (one quarter ahead); the inflation responsiveness is, however, weak enough to be pro-cyclical to inflation pressure; and the rule is also responsive to exchange rate due to the “fear of floating”, which weakens the policy reaction to inflation and output gap.
    Keywords: Monetary policy rule, Inflation targeting, The Bank of Mongolia, Policy reaction function, and Fear of floating
    JEL: E52 E58 O53
    Date: 2018–04

This nep-tra issue is ©2018 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.