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on Transition Economics |
| By: | Zaman, Gheorghe; Georgescu, George |
| Abstract: | The paper focuses on the evolution of the capital in Romania, in three extremely different periods during the last century, under the changes of internal / international context and political regimes, with special emphasis on the relationship with the country economic development. In the years 1918-1945, the share of foreign capital in the capital of joint-stock companies was higher compared to domestic capital, which is explained by the interest of foreign investors to seek relatively cheap resources and production factors in Romania. A certain role of foreign investments in this period to the development of several industrial sectors is broadly recognized in the special literature. In the socialist period, 1948-1989, characterized by the insignificant size of foreign capital in Romania (excepting some few failed joint venture companies), the accelerated accumulation of capital and the fast increase of fixed assets led to an excessive development of production overcapacities, with relatively low efficiency, energy-intensive and polluting, what created severe economic and financial imbalances, ended with the collapse of the system. During the transition period to the market economy, 1990-2018, marked, in the first decade, by a certain degradation of the domestic capital due to the bankruptcy and/or unsuccesful privatization of state-owned companies, after the year 2000, at the same time with the gradual integration in the euro-atlantic structures, the foreign investors have increased significantly their presence in Romania, entering in a competitive relationship with the domestic capital and production. |
| Keywords: | foreign and domestic capital; financial crisis; capital accumulation; privatization; economic integration; NIIP; FDI |
| JEL: | E22 N14 N24 O16 O52 P33 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92316&r=all |
| By: | Marlene Amstad; Zhiguo He |
| Abstract: | Over the past twenty years, especially the past decade, China has taken enormous strides to develop its bond market as an integral step of financial reform. This paper aims to provide the most up-to-date overview of Chinese bond markets, by highlighting two distinct and largely segmented markets: Over-the-Counter based interbank market, and centralized exchange market. We explain various bond instruments traded in these two markets, highlighting their inherent connection with the banking system, and many multi-layer regulatory bodies who are interacting with each other in an intricate way. We also covers the credit ratings and rating agencies in Chinese market, and offer an account of ever-rising default incidents in China starting 2014. Finally, we discuss the recent regulatory tightening of shadow banking since late 2017 and its impact on bond investors, and the forces behind the internalization of Chinese bond markets in the near future. |
| JEL: | F4 G2 O16 O2 O53 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25549&r=all |
| By: | Rodríguez-Pose, Andrés; Zhang, Min |
| Abstract: | Economic growth in China in recent decades has largely rested on the dynamism of its cities. High economic growth has coincided with measures aimed at improving the efficiency of local governments and with a mounting political drive to curb corruption. Yet the connection between government institutions and urban growth in China remains poorly understood. This paper is the first to look into the connection between government efficiency and corruption, on the one hand, and urban growth in China, on the other and to assess what is the role of institutions relative to more traditional factors for economic growth in Chinese cities. Using panel data for 283 cities over the period between 2003 and 2014, the results show that urban growth in China is a consequence of a combination of favourable human capital, innovation, density, local conditions, foreign direct investment (FDI), and, city-level government institutions. Both government quality - especially for those cities with the best governments - and the fight against corruption at the city level have a direct effect on urban growth. Measures to tackle corruption at the provincial level matter in a more indirect way, by raising or lowering the returns of other growth-inducing factors. |
| Keywords: | China; cities; Corruption; Economic Growth; government efficiency |
| JEL: | O43 R11 R58 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13505&r=all |
| By: | Combes, Pierre-Philippe; Démurger, Sylvie; Li, Shi; Wang, Jianguo |
| Abstract: | We assess the role of internal migration and urbanisation in China on the nominal earnings of three groups of workers (rural migrants, low-skilled natives, and high-skilled natives). We estimate the impact of many city and city-industry characteristics that shape agglomeration economies, as well as migrant and human capital externalities and substitution effects. We also account for spatial sorting and reverse causality. Location matters for individual earnings, but urban gains are unequally distributed. High-skilled natives enjoy large gains from agglomeration and migrants at the city level. Both conclusions also hold, to a lesser extent, for low-skilled natives, who are only marginally negatively affected by migrants within their industry. By contrast, rural migrants slightly lose from migrants within their industry while otherwise gaining from migration and agglomeration, although less than natives. The different returns from migration and urbanisation are responsible for a large share of wage disparities in China. |
| Keywords: | agglomeration economies; China; human capital externalities; migrants; urban development; wage disparities |
| JEL: | J31 O18 O53 R12 R23 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13487&r=all |
| By: | Wang, Luxia; Chong, Terence Tai Leung; He, Yiyao; Liu, Yuchen |
| Abstract: | This paper measures the influence of venture capital (VC) on IPO valuations in China. It is found that the authentication effect is dominated by the grandstanding effect, suggesting that VC firms in China greatly value their reputations. It is also shown that the market-specific characteristics of non-VC-backed firms are more closely related to their initial returns, compared to those of VC-backed firms. In addition, corporate fundamentals play a more important role in the valuation for VC-backed firms than for non-VC-backed firms. |
| Keywords: | Venture Capital, IPO, Price Volatility. |
| JEL: | G24 |
| Date: | 2018–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92079&r=all |
| By: | Lodge, David; Soudan, Michel |
| Abstract: | This paper presents empirical evidence of the role of financial conditions in China’s business cycle. We estimate a Bayesian-VAR for the Chinese economy, incorporating a financial conditions index for China that captures movements across a range of financial variables, including interest rates and interbank spreads, bond returns, and credit and equity flows. We impose sign restrictions on the impulse response functions to identify shocks to financial conditions and shocks to monetary policy. The model suggests that monetary policy, credit and financial conditions have played an important role in shaping China’s business cycle. Using conditional scenarios, we examine the role of credit in shaping economic outcomes in China over the past decade. Those scenarios underscore the important role of credit growth in supporting activity during the past decade, particularly the surge in credit following the global financial crisis in 2008. The financial tightening since the end of 2016 has contributed to a modest slowing of credit growth and activity. JEL Classification: E32, E44, E51, E17 |
| Keywords: | Bayesian VAR, credit conditions, financial conditions index, monetary policy |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20192244&r=all |
| By: | Kamil Galuscak; Jan Solc; Pawel Strzelecki |
| Abstract: | We investigate the cyclical properties of labour market flows in the Czech Republic and Poland. We find that the role of flows from and into inactivity in explaining the cyclical properties of unemployment and employment rates is smaller than that of flows between employment and unemployment, but is not negligible. The participation rate is weakly countercyclical in both countries, driven by the countercyclical net flow from inactivity to unemployment. This could be explained by fewer employment opportunities in recessions, so that more inactive individuals go to unemployment than directly to employment. Our results are very similar for the two countries, the only noticeable difference being that flows between employment and inactivity have a bigger impact on the participation and employment rates in Poland than those in the Czech Republic. |
| Keywords: | Employment, labour market flows, participation, unemployment, vector autoregression |
| JEL: | E17 E24 E32 J21 J64 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2018/17&r=all |
| By: | Asali, Muhammad (ISET, Tbilisi State University); Gurashvili, Rusudan (National Bank of Georgia) |
| Abstract: | Using Integrated Household Survey data from Georgia, we measure the observable and discriminatory ethnic wage gap, among male and female workers, and the gender wage gap, among Georgians and non-Georgians. The gender wage discrimination is larger than the ethnic wage discrimination. In the second estimation stage, these wage discrimination estimates are used in a general-to-specific vector autoregression framework to test for the Granger causality between discrimination and growth. A general, negative, bidirectional Granger causality is found between these two variables: in the long-run, discrimination reduces economic growth, and economic growth lowers discrimination. Also, we find that higher unemployment rates are associated with increased ethnic wage discrimination–in line with the predictions of Becker's theory of discrimination. |
| Keywords: | labor market discrimination, transition economies, growth, granger causality |
| JEL: | J71 O43 J15 J16 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12101&r=all |
| By: | Bhattarai, Keshab; Nguyen, Dung T.K.; Nguyen, Chan V |
| Abstract: | The study applies a multi-sector multi-household static general equilibrium tax model to assess economy-wide impacts of taxes in Vietnam. It examines two tax reform scenarios based on the tax reform plan proposed by the Vietnam Ministry of Finance. The first scenario is increasing 20% from the current Value-Added Tax (VAT) rate. The second scenario relates to setting a competitive Corporate Income Tax (CIT) rate to the lowest rate in ASEAN countries. In general correction of current tax distortions will have positive impacts on labour supply, utility, consumption, output and welfare of households as they reallocate resources from more to less productive sectors of the economy. The CGE model allows to find the impacts on microeconomic and macroeconomic variables including employments, output, prices and capital stock as well as on welfare of households of an increase in the standard VAT rate from 10 to 12% and reduction in the CIT rate from 20 to 17% as considered by the current government. This study contributes to the literature on the CGE model for Vietnam economy, it is also a small step towards finding the optimal tax structure in Vietnam. |
| Keywords: | Tax reform; general equilibrium; tax analysis; Vietnam |
| JEL: | C68 D58 E62 H3 |
| Date: | 2018–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92068&r=all |
| By: | Huang, Xiaobei; Li, Xi; Tse, Senyo; Tucker, Jennifer Wu |
| Abstract: | Chinese regulators mandate management earnings forecasts when managers’ earnings expectations meet bright-line thresholds and allow voluntary forecasts in other circumstances. We examine the effects of this mixed approach. We find that Chinese mandatory forecasts have significant information content. Moreover, we observe a learning effect: mandatory forecasts appear to stimulate voluntary forecasts in subsequent periods as managers become familiar with the forecasting and disclosing procedures through forced experience. We find one negative consequence of the mixed approach, however: managers appear to manipulate earnings to avoid the forecast threshold of large earnings decreases. Overall, we document the pros and cons of a mixed approach toward management earnings forecasts in a major emerging market. |
| Keywords: | China; forecast mandate; management earnings forecast; voluntary disclosure |
| JEL: | F3 G3 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87113&r=all |
| By: | Kai Li; Cheryl Long; Wei Wan |
| Abstract: | The study is motivated by two seemingly contradictory patterns observed in China’s airline industry with prevalent airfare caps. On the one hand, airfares tend to be higher and thus airfare caps are more likely to be binding in routes operated by fewer airlines; but on the other hand, it is in these same routes where airfare caps are more likely to be deregulated. To explain this apparent paradox, we build a simple theoretical model, which derives distinctive predictions from the public interest theory versus the capture theory of regulation. When empirically testing the model, we find more support for the public interest theory. In particular, Chinese regulators seem to genuinely care about public interests when making deregulation decisions, and their concern with market exit and the consequent failure to serve certain markets is the main reason for removing airfare caps in routes served by fewer airlines. In contrast to most studies that investigate consequences of deregulation in the airline industry, we explore the motivation for deregulation. We also contribute to the literature by emphasizing the role of universal service obligations in understanding regulatory reforms in developing countries. |
| Keywords: | Regulatory Capture; Public Interest; Airfare Cap; Airline Deregulation |
| JEL: | D7 L5 L9 |
| Date: | 2019–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002399&r=all |
| By: | Chong, Terence Tai Leung; Kwok, Stanley |
| Abstract: | Launched in 2014, the Shanghai-Hong Kong Stock Connect (SHSC) is the first mutual access channel between the Chinese and Hong Kong equity markets. The scheme allows Hong Kong and international investors to purchase eligible Shanghai-listed shares, while at the same time permitting eligible Chinese investors to purchase eligible Hong Kong-listed shares. This paper aims to examine the impact of the scheme on the effectiveness of the price limit rule, which is only imposed in China but not in Hong Kong. Results show that the scheme alleviates the delayed price discovery problem caused by price limits but has no significant effect on the problems of volatility spillover and trading interference. |
| Keywords: | Stock Connect; Price Limits; Price Discovery |
| JEL: | G14 G15 G18 |
| Date: | 2019–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92185&r=all |
| By: | Francesco D'Acunto; Michael Weber; Jin Xie |
| Abstract: | Direct experience of a peer’s punishment might make non-punished peers reassess the probability and consequences of facing punishment and hence induce a change in their behavior. We test this mechanism in a setting, China, in which we observe the reactions to the same peer’s punishment by listed firms with different incentives to react - state-owned enterprises (SOEs) and non-SOEs. After observing peers punished for wrongdoing in loan guarantees to related parties, SOEs - which are less disciplined by traditional governance mechanisms than non-SOEs - cut their loan guarantees. SOEs whose CEOs have stronger career concerns react more than other SOEs to the same punishment events, a result that systematic differences between SOEs and non-SOEs cannot drive. SOEs react more to events with higher press coverage even if information about all events is publicly available. After peers' punishments, SOEs also increase their board independence, reduce inefficient investment, increase total factor productivity, and experience positive cumulative abnormal returns. The bank debt and investment of related parties that benefited from tunneling drop after listed peers’ punishments. Strategic punishments could be a cost-effective governance mechanism when other forms of governance are ineffective. |
| Keywords: | corporate governance, cultural finance, reputational sanctions, related party transactions, minority shareholders, emerging markets, corporate fraud, government ownership |
| JEL: | D91 D72 G32 K42 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7512&r=all |
| By: | Bachev, Hrabrin; Koteva, Nina; Mitova, Dilyana; Ivanov, Bojidar; Chopeva, Minka; Toteva, Dessislava; Sarov, Angel; Sokolova, Emilia; Todorova, Kristina; Mitov, Anton; Vanev, Dimitar |
| Abstract: | This paper assesses the integral, governance, economic, social and environmental sustainability of Bulgarian agriculture. On the base official aggravate (statistical, etc.) and survey data approbation is made of elaborated holistic framework and evaluated sustainability level at different levels - national, sub sector, region, (agro)ecosystems, and farm. Website of the project: https://zem.alle.bg |
| Keywords: | agrarian sustainability, governance, economic, social, environmental aspects, Bulgaria |
| JEL: | Q1 Q13 Q15 Q5 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92001&r=all |
| By: | Polterovich, Victor; Panchuk, Daria |
| Abstract: | Basing on the ideas of indicative planning, we propose an approach to the diversification of the Russian economy by deepening the hydrocarbon processing. We justify the expediency of forming a system of interrelated projects that ensure the improvement of technology and expansion of output in a set of productions, and analyze promising areas of development of such projects. The connection of the proposed approach with the concept of value chains is considered. The options of institutional organization of the processes of formation and implementation of a system of projects are discussed. |
| Keywords: | indicative planning, value chain, synergistic effect, oil refining, petrochemistry, polymers |
| JEL: | B52 N40 O10 Z10 |
| Date: | 2019–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92291&r=all |
| By: | Chong, Terence Tai Leung; Wu, Yueer |
| Abstract: | This study examines the empirical relationship between unusual trading volume and earnings surprises in China's A-share market. We provide evidence that an unusually low trading volume contains negative information about firm fundamentals. Moreover, unusual trading volumes could predict abnormal returns close to the earnings announcement date. The degree of and changes in the divergence of opinion could explain this result. Our study provides an insight into China's market, where short sales are strictly forbidden. We report a strong relationship that is quite different from that described in most studies on the United States market. The differences in the findings are likely due to differences in the nature of the market, which is consistent with Miller (1977). |
| Keywords: | Unusual trading volume; earnings surprises; divergence of opinion; stock return; China's market |
| JEL: | G1 G12 G14 |
| Date: | 2018–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92162&r=all |