nep-tra New Economics Papers
on Transition Economics
Issue of 2018‒09‒03
fifty papers chosen by
J. David Brown
United States Census Bureau

  1. Does Market Competition Dampen Environmental Performance? Evidence from China By Duanmu, Jing-Lin; Bu, Maoliang; Pittman, Russell
  2. Romania; 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Romania By International Monetary Fund
  3. EDB ECONOMIES: IN SEARCH OF NEW GROWTH DRIVERS By Lissovolik, Yaroslav; Kuznetsov, Aleksei; Berdigulova, Aigul
  4. Financial Markets and Financial Institutions in Russia in 2017 By Abramov Alexander
  5. Household willingness to pay for green electricity in Poland By Anna Kowalska-Pyzalska; David Ramsey
  6. EDB ECONOMIES: POSITIVE TRENDS IN MUTUAL TRADE By Lissovolik, Yaroslav; Kuznetsov, Aleksei; Berdigulova, Aigul
  7. The Effect of Labour Cost Reduction on Employment of Vulnerable Groups — Evaluation of the Hungarian Job Protection Act By Svraka, András
  8. Russian oil and gas sector in 2017 By Bobylev Yuri
  9. An empirical analysis of green energy adoption among residential consumers in Poland By Anna Kowalska-Pyzalska
  10. Unintended Consequences of China's New Labor Contract Law on Unemployment and Welfare Loss of the Workers By Randall Akee; Liqiu Zhao; Zhong Zhao
  11. Slovak Republic; 2018 Article IV Consultation-Press Release; Staff Report and Statement by the Executive Director for the Slovak Republic By International Monetary Fund
  12. The state of education in the Russian Federation in 2017 By Klyachko Tatiana; Tokareva Galina; Semenova Elena
  13. The public sector of the Russian economy: it’s size and dynamics By Radygin Alexandr; Abramov Alexander; Aksenov Ivan; Chernova Maria
  14. Social Sphere in Russia in 2017 By Avraamova Elena; Loginov Dmitry; Grishina Elena; Florinskaya Yulia; Mkrtchian Nikita; Lyashok Viktor; Burdyak Alexandra; Maleva Tatiana; Poliakova Aleksandra; Eliseeva Marina
  15. Russia’s Fiscal Policy in 2017 By Deryugin Alexander; Mamedov Arseny; Belev Sergey; Sokolov Ilya; Tishchenko Tatiana; Arlashkin Igor; Barbashova Natalia; Deshko Maria
  16. The transmission of international shocks to CIS economies : A Global VAR approach By Faryna, Oleksandr; Simola, Heli
  17. Russia’s Monetary Policy in 2017 By Bozhechkova Alexandra; Trunin Pavel; Knobel Alexander; Kiyutsevskaya Anna
  18. Szerepel-e az áfacsökkentés az étlapon? A 2016-2017-es magyarországi áfacsökkentések árhatásai By Ván, Bálint; Olah, Daniel
  20. Domestic quality certification and growth of Vietnamese MSMEs By Calza, Elisa; Goedhuys, Micheline
  21. Fixed investment in Russia in 2017 By Izryadnova Olga
  22. People’s Republic of China; 2018 Article IV Consultation-Press Release; Staff Report; Staff Statement and Statement by the Executive Director for the People's Republic of China By International Monetary Fund
  23. Slovak Republic; Selected Issues By International Monetary Fund
  24. Russian industrial enterprises in 2017 (on business surveys’ findings) By Tsukhlo Sergey
  25. HEADING FOR LOW DOLLARIZATION By Lissovolik, Yaroslav; Kuznetsov, Aleksei; Berdigulova, Aigul
  26. What Drives the Private Provision of Security: Evidence from Russian Regions By Natalia Vasilenok
  27. Science and innovations By Dezhina Irina
  28. Russia’s participation in the WTO trade dispute settlement system By Knobel Alexander; Baeva Marina
  29. Russian food and agricultural import ban: The impact on the domestic market for cattle, pork and poultry By Perekhozhuk, Oleksandr; Glauben, Thomas
  30. Restructuring the Chinese Freight Railway: Two Scenarios By Cui, Shana; Pittman, Russell; Zhao, Jian
  31. Do Farmers Adopt Fewer Conservation Practices on Rented Land? Evidence from Straw Retention in China By Li Gao; Wendong Zhang; Yingdan Mei; Abdoul G Sam; Yu Song; Shuqin Jin
  32. Republic of Serbia; Request for a 30-Month Policy Coordination Instrument-Press Release; Staff Report; and Statement by the Executive Director for Serbia By International Monetary Fund
  33. Regional Inequality in China allowing for Spatial Cost-of-Living Differences: Evidence from a Hedonic Analysis of Apartment Prices By Chao Li; John Gibson
  34. Air pollution and health - A provincial level analysis of China By Wei Zheng; Patrick Paul Walsh
  35. The North Caucasus in 2017: major development trends By Kazenin Konstantin
  36. The housing market in Russia's cities in 2017 By Malginov Georgiy; Sternik Sergey
  37. Growth factors in the agriculture of Russia By Uzun Vasily; Shagaida Natalia; Gataulina Ekaterina; Yanbykh Renata
  38. Russia’s Foreign trade in 2017 By Volovik Nadezhda; Balandina Galina
  39. Structural Change and Aggregate Employment Fluctuations in China and the US By Wen Yao; Xiaodong Zhu
  40. Do Farmers Gain Internet Dividends from E-commerce Adoption? Evidence from China By Guo, Hongdong; Li, Xiaokang; Zeng, Yiwu; Jin, Songqing
  41. Domestic value creation in the involvement in global value chains: Evidence of China By Taguchi, Hiroyuki
  42. Synergistic Effects of Environmental Regulations on Carbon Productivity Growth in China's Major Industrial Sectors By Ge Gao; Ke Wang; Chi Zhang; Yi-Ming Wei
  43. Military economy and military reform in Russia By Zatsepin Vasily; Tsymbal Vitaly
  44. The macrostructure of production in 2017 By Izryadnova Olga
  45. Can the Greater Fool Theory Explain Bubbles? Evidence from China By Xuan Zou
  46. Russia’s banking sector in 2017 By Khromov Mikhail
  47. Federal property and privatization policy By Radygin Alexandr; Malginov Georgiy
  48. Barriers to Entry and Regional Economic Growth in China By Loren Brandt; Gueorgui Kambourov; Kjetil Storesletten
  49. What Drives the Distributional Dynamics of Client Interest Rates on Consumer Loans in the Czech Republic? A Bank-level Analysis By Vaclav Broz; Michal Hlavacek
  50. The Effects of Large Universal Child Benefits on Female Labour Supply By Magda, Iga; Kiełczewska, Aneta; Brandt, Nicola

  1. By: Duanmu, Jing-Lin; Bu, Maoliang; Pittman, Russell
    Abstract: Departing from the extant literature which assumes that firms pursue strong environmental performance as a differentiation strategy, we analyse the general relationship between firms’ competitive strategy and their response to heightened market competition. We find that, using a large sample of Chinese manufacturing firms between 2000 and 2005, intensified market competition has an overall negative impact on firms’ environmental performance. The negative impact is exacerbated in firms adopting a cost-leadership strategy, but attenuated in those adopting a differentiation strategy. The results emphasize the importance of including an examination of the particular competitive strategies chosen by firms in seeking to understand the impact of intensified market competition.
    Keywords: Market competition, environmental performance, China, corporate social responsibility, cost leadership, differentiation, market concentration
    JEL: L11 L13 L21 L25 M14 M31 Q52 Q56
    Date: 2018–04–18
  2. By: International Monetary Fund
    Abstract: Romania posted one of the highest growth rates in the EU in 2017, with record-low unemployment and an improving financial sector. Domestic consumption supported by fiscal stimulus led the strong growth, while investment lagged and structural reforms slowed. Economic growth is expected to again exceed potential in 2018 with elevated inflation, but slow down over the medium term assuming the fiscal stimulus wanes. With signs of overheating, however, there is a risk that the current policy trajectory increases macroeconomic volatility, wears down buffers, and ultimately slows down convergence toward the advanced EU countries. Investor confidence in Romania could be disrupted by further deterioration in fiscal and external balances, weakening of institutions, or global financial volatility.
    Keywords: Romania;Europe;
    Date: 2018–06–06
  3. By: Lissovolik, Yaroslav (Eurasian Development Bank); Kuznetsov, Aleksei (Eurasian Development Bank); Berdigulova, Aigul (Eurasian Development Bank)
    Abstract: The extent of global protectionism risks became obvious in the first half of 2018. The US’s escalating trade dispute with the EU and China creates considerable risks to global economic growth, which brings additional risks of an energy price correction for the EDB countries. Apart from external economic risks, weakening existing growth drivers and the need for new sources to boost economic development become new and growing challenges facing the EDB countries. One of the possible steps under the present conditions can be some softening in fiscal policy. Prospects of a fiscal stimulus emerged this year with the Russian President’s executive orders issued in May to provide additional financing to high-priority sectors. Additional expenditures can amount to up to RUB 8 trillion by 2020. Amid growing energy prices, there was an increase in spending in Kazakhstan in 1Q 2018, by 13.5% YoY, compared to almost zero growth in the same period of the previous year. At the same time, social expenditures (+20% YoY), particularly on healthcare (+23.6% YoY), outpace overall expenditure growth. However, using the budget mechanism to stimulate economic activity has some limitations, including budget rules established in oil exporting countries, such as the RF. On the other hand, some countries, like Belarus and Armenia, need to reduce government debt. An increase in spending amid a rise in commodity prices may also increase EDB countries’ dependence on global economic conditions. Thus, in order to find additional growth drivers, the EDB countries have to take measures to increase efficiency and labor productivity in their economies and to improve the investment climate. Diminishing the share of the shadow economy can be a potential economic growth driver for the EDB countries. According to the IMF, the shadow economy in the EDB countries constitutes 32.8% of Kazakhstan’s GDP, 30.1% of Kyrgyzstan’s GDP, 32.4% of Belarus’s GDP, 37.8% of Tajikistan’s GDP, 36% of Armenia’s GDP, and 33.7% of Russia’s GDP. These estimates do not correspond to the countries’ official data due to differences in assessment methods applied. According to the Kazakhstan Statistics Committee, the shadow economy amounted to 25.8% of Kazakhstan’s GDP in 2016 and 23.8% of Kyrgyzstan’s GDP. However, all conditions currently exist to decrease it. By decreasing the shadow economy, it will be possible to increase budget revenues, distribute revenues more equally, and improve the business climate and economy in general.
    Keywords: Macroeconomy; Forecasting; Eurasia; EAEU Countries; Economic Growth; Monetary Policy
    JEL: E17 E52 E66 O11
    Date: 2018–06–21
  4. By: Abramov Alexander (RANEPA)
    Abstract: In 2017, the Russian stock market once again reaffirmed its reputation of being one of the most volatile in the world. In contrast to the situation in 2016, when Russia's stock market, in terms of its rates of return, set a world record among the other 36 stock markets included in the analysis, in 2017 it joined the group of outsiders. Over that year, the RTS Index gained only 0.1 percent vs. 52.3 percent in 2016, and the MICEX Index (MOEX Russia Index)[1] at year-end demonstrated a negative rate of return of 5.5 percent, while over the previous year it had gained 26.8 percent (Fig. 1). The different movement patterns of the two Russian indexes with the same issuer portfolio can be explained by the higher rate of return of the RTS Index (which is denominated in foreign currencies) relative to the (ruble-denominated) MOEX Russia Index that it displays in response to the weakening USD-to-RUB exchange rate.
    Keywords: Russian economy, stock market, share market, bond market, derivatives market
    JEL: G01 G12 G18 G21 G24 G28 G32 G33
    Date: 2018
  5. By: Anna Kowalska-Pyzalska; David Ramsey
    Abstract: This paper analyses the willingness to pay (WTP) for green electricity among residential consumers in Poland. The current share of renewable energy sources (RES) in energy consumption is around 13.5% and is expected to increase. Data were collected through a telephone survey of a representative sample of Poles. The results obtained indicate that - above all - age, income, environmental attitudes, peer support, but also, education and knowledge about RES play the most important role in explaining consumers' WTP for green electricity. Statistical analyses indicate that the mean WTP of Polish consumers is currently very low (around 0.5 USD), which is due to the relatively low GDP per capita, the lack of knowledge about green energy and no past experience with green electricity tariffs.
    Keywords: Green energy; Green electricity tariffs; Willingness to pay; Telephone survey; Contingent valuation method (CVM); Logit regression
    JEL: D12 D90 Q20 Q42 Q48 Q56
    Date: 2018–07–12
  6. By: Lissovolik, Yaroslav (Eurasian Development Bank); Kuznetsov, Aleksei (Eurasian Development Bank); Berdigulova, Aigul (Eurasian Development Bank)
    Abstract: World economic growth in 2017 was driven by an increase in business activity in both developed and key developing economies. In the context of falling deflation risk, as well as an improvement in unemployment – an important macroeconomic parameter – there has been a trend towards normalization of the US Federal Reserve System's monetary policy. The European Central Bank is also moving in the direction of reducing its quantitative easing program. Thus, monetary policy's supporting effect is gradually ending, but the system retains a lot of fiscal incentives to help accelerate economic growth. The rise in investment and the recovery of world trade in developed economies was the third component driving higher than expected growth in 2017. The world's positive economic growth trend drove a return to favorable conditions on world commodity markets. The average price for Brent crude in 2017 grew by 23.5% YoY. Prices for precious metals rose by 0.4% on average for the year, and non-precious metals grew by an average of 24.4%. Monetary policy in the main global economies will cease to be the main factor in supporting growth, but in Russia and other EDB countries, given current conditions, there is a chance to stimulate economic growth due to unprecedented low inflation and the possibility of a further lowering of the key rate. A softening of monetary policy in most of the region's countries will support investment activity. If a favorable external environment is maintained, positive trends can be expected to develop, including the restoration of foreign investment and growth of mutual trade between EDB countries. The increase in labor migrants' remittances will stimulate domestic demand in the region's economies, whose balance of payments largely depends on these transfers.
    Keywords: Macroeconomy; Forecasting; Eurasia; EAEU Countries; Economic Growth; Monetary Policy
    JEL: E17 E52 E66 O11
    Date: 2018–02–15
  7. By: Svraka, András
    Abstract: In 2013 Hungary introduced large scale targeted employers' social security contribution cuts for the young, old, low-skilled, and other marginally attached workforce, called the Job Protection Act (JPA). In this paper I estimate the employment effects of the programme for the main target groups using the discontinuities in the JPA's design in a differences in differences framework on administrative datasources. My estimates show robust and economically significant employment effects for the JPA, a total 1.2% point increase in employment rate three years after the introduction. The JPA was highly effective in the young and low-skilled target groups, with high self-financing ratios, while it was only marginally effective in the old target group. The results suggests that targeted tax incentives can be a cost-efficient way of increasing employment in vulnerable groups.
    Keywords: Job Protection Act, targeted tax incentives, differences in differences
    JEL: H24 J21 J23
    Date: 2018–08–02
  8. By: Bobylev Yuri (Gaidar Institute for Economic Policy)
    Abstract: The oil and gas sector is playing an important role in the income generation for the state budget and Russia’s trade balance. In 2017, the volumes of crude oil production somewhat fell owing to Russia’s commitments to curb production as a result of the oil output cut agreement between some OPEC and non-OPEC countries. Under the so-called tax maneuver in force in the oil industry, refining depth went up, production and export of fuel oil moved down and export of crude oil, a highly lucrative source of state budget revenues, increased. In 2017, natural gas production and export hit an all-time peak. Despite the plunge of oil and gas world prices, the oil and gas sector continues to constitute over a half of Russian exports.
    Keywords: Russian economy, oil and gas sector, oil production, oil prices, oil and gas export
    JEL: L71 L72
    Date: 2018
  9. By: Anna Kowalska-Pyzalska
    Abstract: This paper investigates the acceptance of green electricity among Polish residential consumers. Our focus was on the socio-economic and environmental attributes of consumers in terms of their willingness to adopt renewable energy sources (RES) and green electricity tariffs. In particular, this study explores the determinants of adoption by examining consumers' willingness to pay (WTP) for green electricity, willingness to switch to green electricity tariffs, and willingness to install small-scale generators in the household. The hypotheses were tested empirically with data collected by means of a standardized telephone survey of 502 household electricity consumers in Poland. Most Polish people accept and support the development of RES, but they do not know how to contribute to this process. Their WTP increases with income, education, pro-environmental attitudes, and knowledge. They also care about social influence. To increase the adoption rate of RES among residential consumers, stable legal regulations, clear procedures, subsidies, social campaigns, and educational trainings are needed. We believe that the findings from this study may be valuable for those involved in marketing green electricity offers and for politicians responsible for the increase of the share of renewables in the Polish power system.
    Keywords: Renewable energy sources; Green electricity tariffs; Consumer adoption; WTP; Prosumers; Social influence; Environmental attitudes; Questionnaire survey
    JEL: D12 D90 Q20 Q42 Q48 Q56
    Date: 2018–04–27
  10. By: Randall Akee (University of California, Los Angeles); Liqiu Zhao (Renmin University of China); Zhong Zhao (Renmin University of China)
    Abstract: China's new Labor Contract Law, which intended to strengthen the labor protection for workers, went into effect on January 1, 2008. The law stipulated that the maximum cumulative duration of successive fixed-term (temporary) labor contracts is 10 years, and employees working for the same employer for more than 10 consecutive years are able to secure an open-ended (permanent) labor contract under the new law, which is highly desirable to employees. However, in order to circumvent the new Labor Contract Law, some employers may have dismissed workers, after the passage of the new law, who had worked in the same firm for more than 10 years. Using data from the 2008 China General Social Survey, we find strong evidence that firms did in fact dismiss their formal-contract employees who have been employed for more than 10 years. Additionally, using a regression discontinuity design based on this exogenous change in unemployment status for this particular group of workers, we show that the dismissed workers suffered significant welfare loss in terms of happiness. Our results are robust to various specifications and placebo tests.
    Keywords: labor contract law, unemployment, happiness, regression discontinuity design, China
    JEL: J41 J64 I31
    Date: 2018–08
  11. By: International Monetary Fund
    Abstract: The Slovak economy is enjoying consecutive years of favorable performance marked by robust real per capita GDP growth, record-low unemployment and sustained improvement in fiscal balances. However, shortages of skilled labor, and gaps in education and institutional quality pose risks to an already declining productivity growth. A decade-long double-digit mortgage lending growth has more than doubled household indebtedness relative to GDP, posing financial stability risks.
    Date: 2018–07–26
  12. By: Klyachko Tatiana (Gaidar Institute for Economic Policy); Tokareva Galina (Gaidar Institute for Economic Policy); Semenova Elena (Gaidar Institute for Economic Policy)
    Abstract: Recently the Russian education system went through significant qualitative and quantitative changes, which were both meaningful and institutional. At the same time, the system of education has been developing both extensively and rigorously. Preschool education has reached greater number of children. Extended learning activities of children have achieved new heights. Secondary vocational education included training of skilled workers and mid-tier specialists. Over eighty percent of high school graduates enter universities now. The unified state exam (USE) which was widely introduced in 2009 has become an important regulator for high school graduates flows to universities, which significantly increased educational migration of the young people. For example, in 2016, over 7.6 percent of high school graduates from other subjects of the Russian Federation strived to enter Moscow and St. Petersburg universities. Meanwhile before the introduction of USE that number did not exceed 1.5 percent of applicants, and the number of those wishing to enter universities in other regions has gone up from 3.5 percent to 16.5 percent.
    Keywords: Russian economy, higher education, vocational education, job skills
    JEL: I21 I23 I25
    Date: 2018
  13. By: Radygin Alexandr (Gaidar Institute for Economic Policy); Abramov Alexander (Gaidar Institute for Economic Policy); Aksenov Ivan (RANEPA); Chernova Maria (RANEPA)
    Abstract: Two main channels can be pointed out whereby the state participates in value added chains: through the operation of companies with state stakes, and through the services (in a broader sense of the work) produced by enterprises with state stakes and budget-funded organizations. Consequently, the assessment of the state sector scope inside the national economy consists, as a rule, of two components: an analysis of the relative share of biggest companies with state stakes – state-owned enterprises (SOE) in a country's aggregate economic statistics (the scope of state ownership); and an estimation of the input of the general government sector (GGS) in GDP.
    Keywords: Russian economy, public sector, privatization
    JEL: K11 H82 L32 L33
    Date: 2018
  14. By: Avraamova Elena (RANEPA); Loginov Dmitry (RANEPA); Grishina Elena (RANEPA); Florinskaya Yulia (RANEPA); Mkrtchian Nikita (RANEPA); Lyashok Viktor (RANEPA); Burdyak Alexandra (RANEPA); Maleva Tatiana (RANEPA); Poliakova Aleksandra (RANEPA); Eliseeva Marina (RANEPA)
    Abstract: The positive economic trends of 2017 – GDP growth, record-low inflation rate, revival of consumption and other – were estimated by most experts and analysts as evidence of the country’s embarking on a positive economic trajectory and the year 2017 was generally regarded as the year of economic revival. However, such a conclusion would not be complete without assessment of households’ well-being and other parameters which serve as indicators of the state of things in the social sphere. Economic processes have a decisive effect on the ongoing main social processes. In the past three years, an unstable and inconsistent economic situation in Russia could not but give rise to substantial changes in households’ social and economic situation. At the same time, the entire number of factors which were not related to the macroeconomic and volatile dynamics, but justified by other processes preset by lengthy previous periods affected much the social sphere.
    Keywords: Russian economy, households, labor market, social sentiment, internal migration, long-term migration, external labor migration
    JEL: D14 J01 J61 J62 F22 J11
    Date: 2018
  15. By: Deryugin Alexander (Gaidar Institute for Economic Policy); Mamedov Arseny (Gaidar Institute for Economic Policy); Belev Sergey (Gaidar Institute for Economic Policy); Sokolov Ilya (Gaidar Institute for Economic Policy); Tishchenko Tatiana (Gaidar Institute for Economic Policy); Arlashkin Igor (Gaidar Institute for Economic Policy); Barbashova Natalia (Gaidar Institute for Economic Policy); Deshko Maria (Gaidar Institute for Economic Policy)
    Abstract: The year 2017 saw some notable changes in the main parameters of the execution of the general government budget of the Russian Federation: the budgetary system’s revenue gained nearly 1 percentage point of GDP, while expenditure, on the contrary, lost 1.2 percentage points of GDP. Thus, the revenue volume amounted to 32.6 percent of GDP, and that of expenditure – to 34.1 percent of GDP. As a result, the budgetary system’s deficit shrank by 2.2 percentage points of GDP, to 1.5 percent of GDP.
    Keywords: Russian economy, intergovernmental relations
    JEL: H77
    Date: 2018
  16. By: Faryna, Oleksandr; Simola, Heli
    Abstract: This paper employs a Global Vector Auto Regressive (GVAR) model to study the evolution of the response of the Commonwealth of Independent States (CIS) to foreign output and oil price shocks. During a two-decade observation period, cross-country trade and financial linkages experience no-table changes. We find CIS countries highly sensitive to global and regional shocks, with that sensitivity increasing after the global financial crisis. CIS countries show strongest responses to output shocks originating in the US, Russia and within the region itself, but their sensitivity to euro area shocks also increases substantially. Despite growing trade relations with China, the responses of CIS countries to output shocks originating in China are still relatively moderate.
    JEL: C32 F42 F43 E32
    Date: 2018–08–30
  17. By: Bozhechkova Alexandra (Gaidar Institute for Economic Policy); Trunin Pavel (Gaidar Institute for Economic Policy); Knobel Alexander (Gaidar Institute for Economic Policy); Kiyutsevskaya Anna (Gaidar Institute for Economic Policy)
    Abstract: The Bank of Russia eased at slow enough pace its monetary policy in 2017 despite substantial deceleration in inflation, holding that ongoing inflation risks were high, including a possible decline in crude oil prices and capital outflow, upturn in consumer demand, fiscal policy uncertainty, as well as a relatively high and unstable degree of inflation expectations. In 2017, the monetary policy rate was cut by 2.25 percentage points to 7.75 percent per annum as the inflation rate over the same period (same-month-year-ago comparison) was down 2.6 percentage points to 2.5 percent. The Russian central bank cut the key interest rate six times: by 0.25 percentage points on March 27, by 0.5 percentage points on May 2, by 0.25 percentage points on June 19, by 0.5 percentage points on September 18, by 0.25 percentage points on October 30, and by 0.5 percentage points on December 15.
    Keywords: Russian economy, monetary policy, money market, exchange rate, inflation, balance of payments
    JEL: E31 E43 E44 E51 E52 E58
    Date: 2018
  18. By: Ván, Bálint; Olah, Daniel
    Abstract: To understand the economic impacts of VAT changes the passthrough to consumer prices should be analyzed. The main objective of the study is to examine the passthrough with the rarely used method of synthetic controls for Hungarian VAT changes in 2016-2017. Synthetic price indices are created from the price indices of the same consumer expenditure categories of different European countries. The study finds almost full passthrough in case of pork and chicken while the passthrough is only partial for fresh milk and eggs. The primarily analyzed Hungarian VAT changes of 2016-2017 have not been reflected in the consumer prices of the restaurant sector. The price impacts for food items are in line with the experiences of the Romanian decrease of VAT in 2015. Analyzing the earlier Hungarian and international passthrough rates of the restaurant sector with the synthetic control method we can state that this sector is characterized by strong asymmetric passthrough. VAT increases are fully transferred to consumer prices while this is not the case for VAT decreases.
    Keywords: VAT, passthrough, synthetic control, taxation
    JEL: H2 H20
    Date: 2018–07–09
  19. By: Milogolov Nikolai (Gaidar Institute for Economic Policy)
    Abstract: In this paper author compares Russian international tax rules with international “best practice” (incorporated in BEPS deliverables and other OECD and academic reports) with the aim of finding out ways of their improving and development. Main findings include: high level of uncertainty due to existence of distance in applying and interpretation typical international tax concepts (including permanent establishment, VAT place of supply and e-commerce related rules, beneficial owner, transfer pricing and others) between Russia and developed states. Second, some indicators of base erosion were estimated and they showed existence of BEPS behavior in Russia. Third, Russian treaty policy based on concluding OECD-Model treaties and participating in BEPS and implementing new complex anti-abuse rules and recommendations (such as LOB, PPT, CbC, for example) in combination with current court and fiscal practice can harm investment climate and lead to defeat in tax competition game in favor of more developed states
    Keywords: base erosion, profit shifting, distortion of competition, multinational corporations, tax competition, developing country, transitional country, tax policy, transfer pricing, permanent establishment, VAT, e-commerce, OECD, BEPS
    JEL: F23 H25 H26
    Date: 2018
  20. By: Calza, Elisa (UNU-MERIT); Goedhuys, Micheline (UNU-MERIT)
    Abstract: Using two waves of the Mirco, Small and Medium sized Enterprises (MSMEs) survey of Vietnamese manufacturing firms, this paper first explores what drives firms' decision to have a domestically recognized certificate, taking into account a rich number of factors related to the cost and expected benefits of certification as well as institutional factors. It further explores the presence of a positive and significant effect of domestic certificates on firm growth, these serving as signaling devices for desirable attributes under information asymmetry and thus leading to an increase in legitimacy and reputation. Evidence is indeed found for a signaling effect of certification, this being stronger for more recently adopted certificates, for advertising firms and for women entrepreneurs.
    Keywords: Certification, Firm growth, Transaction costs, Signaling Emerging economies, Viet Nam
    JEL: D22 D23 L25 O12
    Date: 2018–06–21
  21. By: Izryadnova Olga (Gaidar Institute for Economic Policy)
    Abstract: The macroeconomic aspect of the investment model is determined by dynamics and structure of major indexes of the real sector and by monetary and financial markets as well as by characteristics of reproduction and usage of principal factors of production economy wide by types of economic activity. This allows not only to assess the investment potential of the economy from the point of view of mobilization of internal development reserves but also to reveal constraints and possibilities for raising the investment attractiveness for the Russian and foreign capital. Institutional environment, norms and rules of regulation the investment activity, development of financial and credit system, risks of changes in social and political, economic, infrastructure and organization and managerial factors represent another feature of the investment model. The investment model being a complex system includes a third aspect – mechanism of interaction of different subjects of the investment process (state sector, corporate sector, households, foreign investors) and investment decision making by economic entities. One should also take into consideration specific features of the investment model depending on time-frame. In short-term perspective, economic growth can be determined by a system of non-capital intensive development factors, in particular, decline in inflation, reduction of costs, and shutdown of inefficient products. In medium- and long-term perspective, the role of investments notably increases due to the need to resolve deep structural issues of modernization of production and raising competitiveness of the economy.
    Keywords: Russian economy, fixed investment
    JEL: E20 E21 E22 E60
    Date: 2018
  22. By: International Monetary Fund
    Abstract: China is at an historic juncture. After decades of high-speed growth, the authorities are now focusing on high-quality growth. Whether and how this shift is carried through will determine China’s development path for decades to come. Recent strong growth momentum and significant financial de-risking progress reduce the probability of a near-term abrupt adjustment. Rebalancing accelerated in some dimensions, especially as the current account surplus continued to fall and growth became less dependent on credit, but progress slowed in many other dimensions as exports drove the growth pick up, rather than consumption. And while credit growth has slowed, it remains excessive.
    Date: 2018–07–26
  23. By: International Monetary Fund
    Abstract: Selected Issues
    Date: 2018–07–26
  24. By: Tsukhlo Sergey (Gaidar Institute for Economic Policy)
    Abstract: This Chapter has been prepared on the results of business surveys of industrial enterprises which have been conducted by the Gaidar Institute using a European harmonized method in monthly cycles since September 1992, covering the entire territory of the Russian Federation. The panel size is around 1,000 enterprises employing over 13 percent of industrial employees. The panel is shifted towards large enterprises for each of the segregated sub-industries. The ratio of returned questionnaires is in the range of 70-75 percent
    Keywords: Russian economy, industrial sector
    JEL: C53 E37 L21 L52
    Date: 2018
  25. By: Lissovolik, Yaroslav (Eurasian Development Bank); Kuznetsov, Aleksei (Eurasian Development Bank); Berdigulova, Aigul (Eurasian Development Bank)
    Abstract: The global background for the economic recovery of EDB member states has improved this year, in many ways due to rising oil prices and an improved economic growth outlook in the major centers of the global economy. Against the backdrop of improving regional trends in economic growth and mutual trade, we have revised our GDP growth forecasts for the EDB member states in 2017-2019. The appreciable acceleration of GDP growth in Russia beginning in the 2nd quarter of 2017 along with improvements in both foreign and domestic macroeconomic conditions have prompted an upgrade of our GDP growth forecast for 2017, from 1.4% to 1.7%. The preservation and continued improvement of external conditions for the Russian economy is shifting the balance of risks toward higher growth rates. Improvements in the Russian economic performance have delivered a boost to the economies of other EDB countries: the GDP growth forecasts for 2017 have been upgraded for Belarus, from 1.4% to 1.8%, Kyrgyzstan, from 3.7% to 4.0%, Tajikistan, from 6.2% to 7.2%, and Kazakhstan, from 3.4% to 3.7%. In the longer term, the biggest challenge for the global economy consists of the lingering imbalances that have contributed to crises over the past decade. They primarily include the high levels of inequality both within and among countries. The continuing paradox in the global economy is that the majority of countries that most need economic integration (such as the poorest nations or developing countries without access to the sea) are the most disadvantaged in terms of participation in regional or global economic unions or “clubs”. We focus particular attention on the dedollarization of the economies of EDB member states as yet another factor contributing to improvements in the regional economic environment. The level of dollarization has been declining this year in all EDB member states, in many ways due to the stabilization of exchange rates, lower inflation, improved economic activity and regained trust in the national currencies. Among the EDB member states, the most noticeable reductions in the level of dollarization (measured as the share of foreign currency deposits within the structure of the broad money supply) have been recorded in Belarus, Kazakhstan, and Kyrgyzstan (the level of dollarization was close to 30% by mid-2017 in Kyrgyzstan, Kazakhstan, and Russia). Such positive trends will contribute to a more effective monetary policy in the regional economies, more conducive conditions to support lower inflation, as well as conditions aiding stronger financial stability.
    Keywords: Macroeconomy; Forecasting; Eurasia; EAEU Countries; Economic Growth; Monetary Policy
    JEL: E17 E52 E66 O11
    Date: 2017–12–07
  26. By: Natalia Vasilenok (National Research University Higher School of Economics)
    Abstract: This paper studies the influence of institutional quality and income inequality on the private provision of security. It is argued that the effects of both factors are far from straightforward and should be thoroughly examined when variation in institutional quality and income inequality is high. To conduct empirical analysis, data on the regions of Russia between 2009 and 2016 are used. It is hypothesized and empirically supported that institutional quality affects the relationship between the private and public provision of security. Weak institutions make the private provision of security a substitute for the public provision of security, whereas strong institutions promote complementarity between the two. It is also shown that income inequality increases the private provision of security when inequality is low and decreases it when inequality is high. This result can be attributed to economies of scale.
    Keywords: public goods, security, quality of institutions, income inequality.
    JEL: D60 H44 K42
    Date: 2018
  27. By: Dezhina Irina (Gaidar Institute for Economic Policy)
    Abstract: The year of 2017 can be described as a year of making plans, rather than assessing outputs, in the Russian scientific and technological sector. Preference was given to the development of a plan for the implementation of Scientific and Technological Development Strategy of the Russian Federation, including its integration with polices in progress as part of the National Technological Initiative of Russia (NTI), and to the endorsement of the state program for the development of a digital economy in the Russian Federation, including its synchronization with the NTI for the development of scientific and educational and technological competences. Finally, the 2017 full-year consideration of a new science legislation still continued at the end of year.
    Keywords: Russian economy, R&D, science, technology
    JEL: O31 O32 O3 I28 I2
    Date: 2018
  28. By: Knobel Alexander (Gaidar Institute for Economic Policy); Baeva Marina (Gaidar Institute for Economic Policy)
    Abstract: The Russian Federation acceded to the World Trade Organization (WTO) on August 22, 2012, and was therefore authorized to participate in the WTO trade dispute settlement system. The WTO dispute settlement system is in place pursuant to the Dispute Settlement Understanding (DSU)[1]. Hence the Russian Federation has been entitled since August 2012 to resort to the system to uphold its trade interests.
    Keywords: Russian economy, foreign trade, WTO, trade disputes
    JEL: F10 F13 F19
    Date: 2018
  29. By: Perekhozhuk, Oleksandr; Glauben, Thomas
    Abstract: This study analyses the impact of the Russian food and agricultural import ban on import of meat, the structural changes of trade pattern and reallocation of import flows of meat and meat products, and the price development in the import market and its impact on producers and consumers market for cattle, pork and poultry meat in the Russian Federation (RF). There is empirical evidence that the collapse of meat exports to Russia and, hence, the increase of meat prices happened even long before the import ban was introduced. The structure of Russian import market for meat has significantly changed. Brazil became the largest meat exporter in the Russian meat import market achieving market share in the total meat import of the RF almost 50% in 2015-2016. The structural changes of the Russian import market suggests that the beef and pork exporters are not price-takers on the one hand. On the other hand, they may be able to discriminate prices in the Russian import markets.
    Keywords: Demand and Price Analysis, International Relations/Trade
    Date: 2017–12–01
  30. By: Cui, Shana; Pittman, Russell; Zhao, Jian
    Abstract: Twenty years of debate regarding the restructuring of the Chinese freight railway have failed to yield a consensus. Early policy statements favoring the creation of above-the-rail competition over a monopoly infrastructure – the “European” model of rail restructuring – have broadened into a lively policy and scholarly debate that includes as an alternative the division of the system into competing vertically integrated railways – the “Americas” model of restructuring. To date, however, there have been no tangible reform steps beyond organizational restructuring, the construction of new coal railroads, some with private-sector participation, and the introduction of scheduled service, especially for containers, between China and Europe. In this paper we argue in favor of the Americas model as a basis for restructuring and offer two alternative scenarios for the creation of multiple vertically integrated freight railways. Both plans enable competition between independent firms and routes for import/export traffic, one a southern, One Belt/One Road path, the other a northern path via the Trans-Siberian Railway.
    Keywords: Freight railway, restructuring, competition, vertical separation, horizontal separation, China
    JEL: L14 L33 L43 L92 O18 R42
    Date: 2018–06–25
  31. By: Li Gao; Wendong Zhang (Center for Agricultural and Rural Development (CARD)); Yingdan Mei; Abdoul G Sam; Yu Song; Shuqin Jin
    Abstract: We examine how land tenure arrangements affect Chinese crop farmers’ adoption of straw retention, a key conservation practice promoted by the Chinese government in part to curb rising air pollution. Using data from a 2016 farmer household survey covering 1,659 crop plots in Henan Province in central China, we analyze whether farmers are less likely to adopt straw retention on rented plots compared to own-contracted plots. To address the potential endogeneity of the choice of renting from others, we use an instrument exploiting the role of remittance income from household members migrated to cities in a bivariate probit model and a control function approach, respectively. Our main results reveal that the Chinese crop farmers’ likelihood of adopting straw retention were almost cut in half on rented plots compared to their owned plots, assuming the assumptions for biprobit or control functions hold. This suggests greater attention is needed to examine the spillovers across agricultural and environmental policies as China pushes for both a nationwide land rental market and more sustainable agricultural practices.
    Date: 2018–08
  32. By: International Monetary Fund
    Abstract: Serbia succeeded in addressing macroeconomic imbalances and restoring confidence and growth under the precautionary SBA which expired in February 2018. Fiscal sustainability has been restored by placing public debt on a firm downward path and the external position has been realigned with fundamentals. Monetary policy has kept inflation under firm control, while supporting economic recovery. The resilience of the financial sector has improved. Progress has also been made on structural and institutional reforms, including in rationalizing the size of public sector employment, addressing fiscal risks from SOEs, and improving the business environment. However, challenges remain for achieving robust, inclusive, and sustainable growth, which Serbia needs for faster income convergence with its EU peers. The authorities requested a 30-month Policy Coordination Instrument (PCI) to provide a framework for continued macroeconomic stability and reforms, and maintain close policy dialogue with staff.
    Date: 2018–07–24
  33. By: Chao Li (University of Waikato); John Gibson (University of Waikato)
    Abstract: Studies of inequality in China typically ignore cost-of-living differences between areas. Under the Balassa-Samuelson effect, non-tradeables cost more in richer areas, so nominal inequality exceeds real inequality. This especially matters in China, where spatial cost-of-living differences should have increased with recent development of urban housing markets. We use new data on apartment prices in 104 major cities in China to develop housing-related spatial deflators. The level of spatial inequality in 2016 is overstated 27 percent if cost-of-living differences are ignored. A hedonic analysis of 41,000 individual apartment sales shows most price variation is between areas, rather than from features of individual apartments. The dominant trend in the reform era is for regional inequality in China to decline, contrary to common perceptions. In nominal terms, the Theil Index for inter-provincial inequality in 2016 is just 46 percent of its 1978 level, and in real terms the fall in inequality would be even greater.
    Keywords: China; housing; population; regional inequality; spatial deflators
    JEL: O47 Q56 R11
    Date: 2018–08–23
  34. By: Wei Zheng (School of Economics and Development, Wuhan University, China; School of Politics and International Relations, University College Dublin, Dublin, Ireland); Patrick Paul Walsh (School of Politics and International Relations, University College Dublin, Dublin, Ireland)
    Abstract: During the past 30 years, China has experienced high growth, and its economic expansion has been one of the strongest in world history. The rapid economic growth has accompanied by rapid increases in energy consumption, which has led to considerable air pollution and significantly affected mortality rate. In this study, Grossman Health Function was applied together with satellite-retrieved PM2.5 pollution data to estimate mortality rate caused by PM2.5 from 2001 to 2012. The results show some new evidence of the impact of sociological, economic and environmental factors on mortality rate of the population of China using the fixed effect (FE) and system generalized method of moments (GMM-sys) estimation methods. The PM2.5 has long-term positive significant effects on mortality. China is now experiencing a substantial mortality burden associated with current air pollution. Health care system and people’s education level are important in lowering mortality.
    Keywords: PM2.5, Mortality rate, Temperature
    Date: 2018–07–27
  35. By: Kazenin Konstantin (Gaidar Institute for Economic Policy)
    Abstract: In 2017, the social and economic development of the North Caucasian regions was proceeding amid introduction by the federal center of some new forms of regional economic support. A change in economic policy priorities in the North Caucasus was taking place amid sluggishness of the health resort sector, growing debt accruals for gas- and power supply and prevailing land-related conflicts.
    Keywords: Russian economy, North Caucasus
    JEL: H11 H70 H77
    Date: 2018
  36. By: Malginov Georgiy (Gaidar Institute for Economic Policy); Sternik Sergey (Gaidar Institute for Economic Policy)
    Abstract: The actual development pattern displayed by the Russian economy in 2017 only in part answered the expectations voiced by the expert community in late 2016. First of all, last year there was no sustainable recovery at the macroeconomic level. Although the year-end GDP growth rate amounted to 1.5 percent, it still demonstrated rather strong volatility of its index over the course of the year. However, the professional participants of the real estate market, as well as Russian businesses in general, usually look not at GDP or industrial output indices, but at the exchange rate of the national currency, the movement of wages and salaries, and consumer demand, because the latter better describe the existing risks, while the movement pattern of GDP serves only as a background indicator.
    Keywords: Russian economy, residential property prices, housing market, housing construction
    JEL: K11 H82 L32 L33
    Date: 2018
  37. By: Uzun Vasily (RANEPA); Shagaida Natalia (Gaidar Institute for Economic Policy); Gataulina Ekaterina (Gaidar Institute for Economic Policy); Yanbykh Renata (Gaidar Institute for Economic Policy)
    Abstract: In 2017, the harvest of cereals, including wheat, Russia’s top agricultural export commodity, hit its record high. This happened mostly due to a significant rise in wheat harvest against the three previous years (Tables 34, 35). At the same time, the record-high harvest caused problems with the transportation of grain from the regions of the Siberian Federal District. Agricultural producers also note a decline in the profitability of agricultural production (on the average, by 8.4 percent, to 12-14 percent[1]) due to the accelerated growth in the prices of inputs by comparison with that of the sales price of grain, which lagged behind because of the record-high harvest.
    Keywords: Russian economy, agricultural production
    JEL: Q13 Q14 Q15 Q16 Q17 Q18
    Date: 2018
  38. By: Volovik Nadezhda (Gaidar Institute for Economic Policy); Balandina Galina (Gaidar Institute for Economic Policy)
    Abstract: In 2016, the growth rates of world economy hit the all-time low since the global financial crisis and constituted 3.2 percent. However, the global economy is experiencing a broad-based cyclical upturn started in mid-2016 is gaining momentum. In this context, international financial organizations have adjusted their short-and medium-term forecasts to the upside.
    Keywords: Russian economy, foreign trade, terms of trade, regional pattern
    JEL: F10 F13 F19
    Date: 2018
  39. By: Wen Yao (Tsinghua University); Xiaodong Zhu (University of Toronto)
    Abstract: One salient feature of business cycles in developed countries is that the aggregate employment is highly procyclical. In China, however, the correlation of the cyclical components of aggregate employment and output is close to zero. In this paper, we document three new stylized facts: (1) the business cycle properties of employment at sector level (agriculture and non-agriculture) in China are very similar to those in the US; (2) employments in the agricultural and non-agricultural sectors are negatively correlated in both China and the US; and (3) for both economies, the agriculture’s share of employment is negatively correlated with the real GDP per work in both sectors. These facts suggest that difference in sector composition could be an important reason for the difference in aggregate employment fluctuations between the two economies. We then construct a simple two-sector growth model with productivity shocks and non-homothetic preferences and show that the model can simultaneously account for the secular trend in labor reallocation away from agriculture and employment fluctuations at sector level and in the aggregate for both China and the US.
    Date: 2018
  40. By: Guo, Hongdong; Li, Xiaokang; Zeng, Yiwu; Jin, Songqing
    Abstract: The revolution of information technology and communications has drastically changed the way people conduct business. With the rapid emergence of Taobao villages and other e-trading platforms in its rural areas, China is leading the developing world in rural e-commerce. Despite the potential of e-commerce to improve agriculture profits and farmer’s income, whether and to what extent farmers really benefit from it remains a question. Using household survey data from farmers selling products through e-trading platform and those selling products through traditional market channel, we aim to rigorously assess the effects of e-commerce adoption on farmer’s income and identify the key mechanisms through which the impact comes about. Propensity score matching (PSM) methods were adopted to deal with the fact that farmers’ participation in selling products through e-commerce is not random. The PSM results show that the adoption of e-commerce has a positive effect on farmers’ income, especially in the villages with more e-commerce adoption. And the increase in the profit margin and the growth of sales are the two main channels through which e-commerce impacts farmers’ income.
    Keywords: Agricultural Finance, Research and Development/Tech Change/Emerging Technologies
    Date: 2017–12–01
  41. By: Taguchi, Hiroyuki
    Abstract: This paper examines how the Chinese economy has been involved in global value chains from the perspective of domestic value creation, by using the OECD value-added-trade data (OECD TiVA database). This study contributes to the existing literature by decomposing the domestic value creation into a direct effect from export industries and an indirect effect from the other supporting industries. The empirical estimation first identified the “smile curve” in the “indirect” domestic value creation in total manufactures as the average pattern of the Asian GVCs development paths, in which the domestic value share to exports declines at the early development stage and regains itself at the later stage with the turning point being at 1,830 US dollars as per capita GDP. Then the analysis confirmed the position of Chinese economy, which has already passed the Asian average turning point and has entered the phase of regaining the domestic value share to exports. Finally, the analysis found that the domestic value creation in China has originated from the development of supporting industries, in particular, service industries, which might reflect the progress in basic infrastructure there.
    Keywords: Domestic value creation, Global value chains, China, Value-added-trade data, Manufactures, Supporting industries
    JEL: F14 L60 O53
    Date: 2018–08
  42. By: Ge Gao; Ke Wang; Chi Zhang; Yi-Ming Wei
    Abstract: It is crucial that the implementation of environmental regulations have a positive synergistic effect on carbon productivity growth (i.e., environmentally adjusted productivity growth with the consideration of carbon emissions) for China to realize its sustainable development goals because the country is currently under tripartite pressures of economic growth, carbon emissions control, and environmental pollution reduction. This paper investigates the impact of changes in environmental regulation stringency on industrial-level carbon productivity growth in China. Through utilizing the information entropy method, a new index of environmental regulation stringency is established by taking into account the effects of both pollution reduction consequences and pollution reduction measures. In addition, based on the data envelopment analysis (DEA) method, a Malmquist carbon productivity index is proposed to estimate the industrial carbon productivity growth of 21 major industrial sectors in China¡¯s 30 provinces over 2004-2014. Finally, an econometric regression model is applied to test the synergistic effects of environmental regulations on carbon productivity in China's major industrial sectors. The results show that (i) a stringent environmental regulation is associated with an increase in overall industrial carbon productivity growth in China; (ii) there exist significant pass-through effects in China's major industrial sectors that technology can transmit effectively from leader to follower; (iii) there also exist obvious follow-up effects in China's major industrial sectors, i.e., the industrial sectors that have larger technological gaps with the leaders catch up faster than others; and (iv) the environmental regulations have different effects on industrial sectors with different polluting levels, i.e., there is a positive linear relationship between environmental regulation stringency and industrial-level carbon productivity growth in low-polluting industrial sectors, a parabolic nonlinear relationship between them in high-polluting industrial sectors, and an inverted U-shaped relationship between them in moderate-polluting industrial sectors.
    Keywords: China's industrial sector; environmental regulation; industrial heterogeneity; pollution intensity; total factor carbon productivity
    JEL: Q54 Q40
    Date: 2018–08–18
  43. By: Zatsepin Vasily (Gaidar Institute for Economic Policy); Tsymbal Vitaly (Gaidar Institute for Economic Policy)
    Abstract: The number of Russian Armed Forces (RFAF) authorized strength at year-end 2017 increased 17,387 to 1,903,758 on the back of disbandment of the Federal Special Construction Agency (Spetsstroy); therefore, the RFAF’s total authorized strength rose to 1,013,628 from 1 million.[1] That was the first time when data on RFAF’s authorized war strength (1,700,000) were published by mass media, posting a substantial decrease from 5 million reported prior to the military reform of 2008-2012.The Russian Defense Ministry did not publish 2017 year-end service personnel statistics like it did in previous years; therefore, the total accountable strength presumably decreased to 240,000 from previous year’s 270,000 as a result of a 35,000 (13 percent) decline in the number of conscript personnel. Overall, the 2017 total number of conscript personnel inflow stood at 276,000, or 31,000 (10 percent) less than in 2016 .
    Keywords: Russian economy, military-industrial complex, military reform, defense order, military procurement, defense control
    JEL: D74 F52 H56 F51
    Date: 2018
  44. By: Izryadnova Olga (Gaidar Institute for Economic Policy)
    Abstract: The economic situation in 2017 was characterized by a gradual recovery of positive dynamics. GDP in 2017 constituted RUB 92.08 trillion up 1.5 percent compared to the previous year. First signed of business revival were observed in H2 2016 driven by price growth on hydrocarbons and strengthening of the ruble affected the dynamic and structure of the external trade turnover and domestic production. However, instability of factors both stimulating and curbing economic development provoked changes of quarter-by-quarter GDP dynamics.
    Keywords: Russian economy, production, external and internal demand, GDP structure
    JEL: G28
    Date: 2018
  45. By: Xuan Zou (Rutgers University)
    Abstract: Many have noticed the phenomenon that naïve investors are attracted to the market as stock prices soar, yet few empirical studies have tested for this bubble phenomenon. This paper presents previously unused data on the aggregate number of newly opened brokerage accounts in China and tests the role of new investors in bubble formation. I find that new investors, attracted by soaring stock prices and the intensive trading activities of others, drove the Chinese stock market bubbles in 2007 and 2015, supporting the Greater Fool theory of bubbles. The inexperienced and naïve new investors appear more likely to be the "greater fools." Using the residual orthogonalization method, I build a data-driven structural model system, where shocks from the new accounts variable explain 40-55% of Chinese stock return variation.
    Keywords: bubble, individual investors, volume, Chinese stock market
    JEL: G1 G12
    Date: 2018–08–28
  46. By: Khromov Mikhail (Gaidar Institute for Economic Policy)
    Abstract: In 2017, banking sector demonstrated moderate development trends across main indicators. Asset holdings went up by 6 percent during the year somewhat below nominal growth rate of Russia’s GDP. The ratio of banks’ asset holdings and annual GDP remained at 91–92 percent for the second year in a row. The number of lending institutions decreased by 56 from 623 to 567 during the year. The process whereby some of the credit institutions were forced out of the market on the grounds of failing to meet the regulator’s requirements notably slowed down. Around fifty banking licenses were revoked in 2017 – half of what was seen in 2015 and 2016 when ninety banking licenses were revoked annually.
    Keywords: Russian economy, banking sector, profit, capital, corporate loans, retail deposits
    JEL: E41 E51 G28 G21 G24
    Date: 2018
  47. By: Radygin Alexandr (Gaidar Institute for Economic Policy); Malginov Georgiy (Gaidar Institute for Economic Policy)
    Abstract: 2016 saw first publication of data from a performance measures framework for federal property management that was adopted on January 29, 2015 by Russian Government’s executive order No. 72 in lieu of performance measures for a public sector monitoring conducted by Rosstat in the early 2000s in pursuance of the Russian Government’s executive order No. 1 dated January 4, 1999 (as further amended on December 30, 2002). The performance measures framework contains data for the number of federal state unitary enterprises (FSUEs) and joint-stock companies (JSCs) with government equity participation that were previously published in privatization programs over a 3-year period (since 2011) and one-year period (prior to 2011). A new Forecast Plan (Program) for Federal Property Privatization and Guidelines for Federal Property Privatization for 2017–2019 adopted early in 2017[1] contains data dated only as of early 2016 (Table 1). As of early 2017, according to the Report of the Federal Agency for State Property Management (hereinafter Rosimushchestvo) on the implementation of privatization program for 2017–2019, the Russian Federation owned 1108 FSUEs and held an interest of 11 and 17 percent in 1416 JSCs and LLCs, respectively, marking a decline from the previous year’s number of economic agents with the same legal form of business. However, developments and processes that took place in 2017 only can be described using data from the performance measures framework for federal property management.
    Keywords: Russian economy, public sector, privatization
    JEL: K11 H82 L32 L33
    Date: 2018
  48. By: Loren Brandt (University of Toronto); Gueorgui Kambourov (University of Toronto); Kjetil Storesletten (University of Oslo)
    Abstract: The non-state manufacturing sector has been the engine of China's economic transformation. Up through the mid-1990s, the sector exhibited large regional differences; subsequently we observe rapid convergence in terms of new firm start-up rates, productivity, and wages. To analyze the drivers of this behavior, we construct a Melitz (2003) model that incorporates location-specific capital wedges, output wedges, and a novel entry barrier. Using Chinese Industry Census data for 1995, 2004, and 2008, we estimate these wedges and examine their role in explaining differences in performance across prefectures and over time. Entry barriers turn out to be the salient friction for explaining performance differences. We investigate the empirical covariates of these entry barriers and find that barriers are causally related to the size of the state sector. Thus, the downsizing of the state sector after 1997 may be important in explaining the rapid manufacturing growth over the 1995-2008 period.
    Date: 2018
  49. By: Vaclav Broz; Michal Hlavacek
    Abstract: We study the bank-level distributional dynamics and factors of client interest rates on consumer loans in the Czech Republic. We take into account that client interest rates can have different fixation periods, focus on the consumer loans category, which exhibits multimodal client interest rate distributions, and employ an alternative measure to the mean interest rate - the mode measure. We show that in recent years, most banks in the Czech Republic have started to provide new consumer loans at unprecedentedly low client interest rates. The bank-level analysis then reveals that reduced market concentration (increased market competition) and to some extent also accommodative monetary policy and changes in the market for housing loans and mortgages have been driving this development. Our results are in line with the international literature but are novel in the Czech context.
    Keywords: Banks, client interest rates, competition, consumer loans
    JEL: C23 C46 E43 G21
    Date: 2018–06
  50. By: Magda, Iga (Warsaw School of Economics); Kiełczewska, Aneta (Institute for Structural Research (IBS)); Brandt, Nicola (OECD)
    Abstract: In 2016 the Polish government introduced a large new child benefit, called "Family 500+", with the aim to increase fertility from a low level and reduce child poverty. The benefit is universal for the second and every further child and means-tested for the first child. Increasing out-of-work income significantly, the transfer can reduce incentives to participate in the labour market. We study the impact of the new benefit on female labour supply, using Polish Labour Force Survey data. Based on a difference-in-differences methodology we find that the labour market participation rates of women with children decreased after the introduction of the benefit compared to childless women. The estimates suggest that by mid-2017 the labour force participation rate of mothers dropped by 2-3 percentage points, depending on the estimation specification, as a result of the "Family 500+" benefit. The effect was higher among women with lower levels of education and living in small towns.
    Keywords: child allowance, social transfers, family policy, labour market participation
    JEL: E24 H53 I38 J13 J21 J22
    Date: 2018–07

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