nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒10‒21
sixteen papers chosen by
J. David Brown
United States Census Bureau

  1. Fundamental Analysis in China: An Empirical Study of the Relationship between Financial Ratios and Stock Prices By Lijuan Ma; Marcel Ausloos; Christophe Schinckus; H. L. Felicia Chong
  2. Social Capital Inequality and Subjective Wellbeing of Older Chinese By Appau, Samuelson; Awaworyi Churchill, Sefa; Smyth, Russell; Zhang, Quanda
  3. The financial and managerial problems of social enterprises and their optional solutions By Sándor Bozsik; Judit Szemán; Zoltán Musinszki
  4. Tax Policy and Lumpy Investment Behavior: Evidence from China's VAT Reform By Zhao Chen; Xian Jiang; Zhikuo Liu; Juan Carlos Suárez Serrato; Daniel Xu
  5. Bank financing to SMEs in the Republic of North Macedonia: Evidence from Survey Data By Tanja Jakimova; Neda Popovska Kamnar
  6. On the evolution of competitiveness in Central and Eastern Europe: Is it broken? By Juan Carlos Cuestas; Merike Kukk
  8. Career or Flexible Work Arrangements? Gender Differences in Self-Employment in a Young Market Economy By Buttler, Dominik; Sierminska, Eva
  9. Модели зависимости реального курса рубля от цены и стоимости экспорта нефти: сравнительный анализ By Shumilov, Andrei
  10. Determinants of real exchange rate movements in 15 emerging market economies By Goda, Thomas; Priewe, Jan
  11. Are there asymmetries in the interaction between housing prices and housing credit? Evidence from a country with rapid credit accumulation By Juan Carlos Cuestas; Merike Kukk
  12. The determiants of non-performing loans: Do institutions matter? A comparative analysis of the MENA and CEE countries By RACHID, RACHID,Semia
  13. Forecasting the Albanian short-term inflation through a Bayesian VAR model By Meri Papavangjeli
  14. A link between innovation performance and inward foreign direct investments: A case of Slovakia By Aneta Bobeni? Hinto?ová; Michaela Bruothová
  15. Does inward foreign direct investment influence macroeconomic performance? A case of Slovakia By Aneta Bobeni? Hinto?ová
  16. Scientific Competition between Countries: Did China Get What It Paid for? By Pierre Courtioux; François Métivier; Antoine Reberioux

  1. By: Lijuan Ma; Marcel Ausloos; Christophe Schinckus; H. L. Felicia Chong
    Abstract: The informational context is regularly questioned in a transitional economic regime like the one implemented in China or Vietnam. This article investigates this issue and the predictive power of fundamental analysis in such context and more precisely in a Chinese context with an analysis of 3 different industries (media, power, and steel). Through 3 different kinds of correlation, we examine 25 financial determinants for 60 Chinese listed companies between 2011 and 2015. Our results show that fundamental analysis can effectively be used as an investment tool in transitional economic context. Contrasting with the EMH for which the accounting information is instantaneously integrated into the financial information (stock prices), our study suggests that these two levels of information are not synchronized in China opening therefore a door for a fundamental analysis based prediction. Furthermore, our results also indicate that accounting information illustrates quite well the economic reality since financial reports in each industry can disclose a part of stock value information in line with the economic situation of the industry under consideration.
    Date: 2019–10
  2. By: Appau, Samuelson; Awaworyi Churchill, Sefa; Smyth, Russell; Zhang, Quanda
    Abstract: Using longitudinal data from the China Family Panel Studies (CFPS), this study provides insights on comparative wellbeing outcomes for older people who are institutionally segregated into clusters that produce uneven social capital. We present the first study that examines how institutionalized social capital inequality, measured by the social capital gap generated by hukou (household registration) status in China, affects the wellbeing of older people. Our results show that high levels of social capital inequality are associated with lower subjective wellbeing, measured by life satisfaction. This general conclusion is robust to a number of sensitivity checks including alternative ways of measuring subjective wellbeing and inequality. We also find that the negative relationship between social capital inequality and subjective wellbeing is strongest for people with a non-urban hukou living in urban areas. Our findings highlight the need for policies aimed at narrowing the social capital gap and the dismantling of institutional structures that hinder upward social capital mobility.
    Keywords: social capital, social networks, trust, social capital inequality, hukou, China
    JEL: I31 J14 O18
    Date: 2019–10–08
  3. By: Sándor Bozsik (Institute of Accounting and Finance, University of Miskolc); Judit Szemán (Institute of Accounting and Finance, University of Miskolc); Zoltán Musinszki (Institute of Accounting and Finance, University of Miskolc)
    Abstract: The main problems in the social cooperative management are caused by the quality of available human resource and the marketability of products and services. The root of the problems can be found in the quality of labour force and the improper marketing. External specialists are required mostly for administrative duties (in field of book-keeping, taxation and application-writing). The assessment for improving the competitiveness has got less importance. Our questionnaire targeted the economic and financial problems of social enterprises. Based on the result of this survey we created the financing pecking order model for social cooperatives in Hungary. We adapted the traditional pecking order theory invented by Myers (1984) to the financing mix of Hungarian social enterprises. We found that public funds play a dominant role in the external financing of social enterprises (focusing on social cooperatives). State subsidies are most important, but the financial and managerial contribution of local governments is also essential for successful operation. To improve the marketing of products we recommend social cooperatives to use a managerial income statement to determine the most profitable products and markets.
    Keywords: social co-operatives, social enterprises, pecking order theory, controlling, financial management
    JEL: L31
    Date: 2019–10
  4. By: Zhao Chen; Xian Jiang; Zhikuo Liu; Juan Carlos Suárez Serrato; Daniel Xu
    Abstract: A universal fact of firm-level data is that investment is lumpy: firms either replace a considerable fraction of their existing capital (spike) or do not invest at all (inaction). This paper incorporates the lumpy nature of investment into the study of how tax policy affects investment behavior. We show that tax policy can directly impact the lumpiness of investment and that the effectiveness of tax incentives in stimulating investment depends crucially on interactions with investment frictions. We illustrate these results by studying one of the largest tax incentives for investment in recent history: China's 2009 VAT reform. Using administrative tax data and a difference-in-differences design, we document that the reform increased investment by 36% and that this effect is driven by additional investment spikes. We then simulate the fiscal cost of stimulating investment through different tax policies using a dynamic investment model that is consistent with the reduced-form effects of the reform. Policies that directly reduce the likelihood of firm inaction (e.g., investment tax credits) are more effective at stimulating investment than policies that only reduce the tax cost of investment (e.g., corporate income tax cuts).
    JEL: E22 H25
    Date: 2019–10
  5. By: Tanja Jakimova (National Bank of the Republic of North Macedonia); Neda Popovska Kamnar (National Bank of the Republic of North Macedonia)
    Abstract: This paper presents the main findings of the Survey for bank financing to small and medium enterprises (SMEs). The key objective was to capture the main features of the “supply side” of SMEs financing in the Republic of North Macedonia and to identify institutional and policy constraints of banks involvement with SMEs. The findings reveals that banks considered SMEs lending market as large, competitive, not very saturated, but with very positive outlook. While the main driver for bank involvement with SMEs sector is profitability and the good prospects of the SME segment, a number of obstacles are present, including SME-related factors, macroeconomic factors, legal and contractual environment and some bank-specific factors. The overall conclusion is that SMEs access to finance should be further supported and encouraged in order to increase their contribution to growth of the economy.
    Keywords: small and medium enterprises, bank finance, survey data
    JEL: G20
    Date: 2019
  6. By: Juan Carlos Cuestas (Department of Economics, Universitat Jaume I, Castellón, Spain); Merike Kukk (Department of Economics and Finance, Tallinn University of Technology, Estonia)
    Abstract: In this paper we aim to analyse the evolution of the real exchange rate (RER) as a measure of competitiveness for a group of Central and Eastern European countries. To do so, we apply unit root tests with breaks and estimate equations with structural breaks. The results show that even though RERs have become flatter, which means less competitiveness is lost against main trading partners, they have become less mean reverting, meaning that shocks now tend to have longer effects. Policy conclusions are derived from this analysis.
    Keywords: real exchange rates, Central and Eastern Europe, structural breaks, European integration
    JEL: C22 F15
    Date: 2019
  7. By: Abdula Azizi (South East European University, Tetovo); Lindita Neziri-Ceka (SEEU, Tetovo)
    Abstract: Since children are an important part of any society, there should be no lack of institutions, mechanisms and activities responsible for building public policies for children without parental care. Positive laws in the North Macedonia have also included some of the international standards (reflected in relevant international conventions); and there is also a care system for children without parents; while there are also missing "symbolic" budgetary tools foreseen to develop activities in this area. However, the Republic of Northern Macedonia, as well as other transition countries, continues to have problems in sound structuring of social policies in general and in particular faces difficulties with the care of children without parents. This study aims through the analysis of official data to highlight the problems faced by children without parental care; the level of realization of children's rights in the respective institutions; and make recommendations regarding the improvement of the social care system. Through an analysis of the fundamental problems faced by relevant institutions in the practical implementation of social services for children without parental care, I claim to encourage improvements in government policies for sound institutional, professional and financial support for a worthy human parental care treatment; as well as to provide the reader and the academic community with information on the current state of play in this sector of social care.In this paper, statistical data have been analyzed by the State Statistical Office and interviews were conducted with the authorities of the institutions responsible for the care of children without parents. The methodology used in this study is: review of data from reports - statistics, documents, strategies, budget, positive laws review, and interviews with officials in the framework of care institutions.It is concluded that current policies are not suitable for the proper treatment of children without parents, therefore a more proactive and inclusive approach is required from relevant political and institutional actors in this area.
    Keywords: Children, Parental Care, North Macedonia
    Date: 2019–10
  8. By: Buttler, Dominik (Poznan University of Economics); Sierminska, Eva (LISER (CEPS/INSTEAD))
    Abstract: We examine supply-side determinants of transition from the wage and salary sector to self-employment of women and men living Poland. The empirical analysis is made possible due to a unique and under explored longitudinal survey -- Social Diagnosis – that contains rare indicators such as job preferences and work events. The empirical results in the 2007-2015 period indicate that women and men transitioning into self-employment are differently motivated. In terms of job attributes, women find independence at work and for those in professional occupations a job matching their competences as a desirable job attribute, while for men the lack of stress, a good salary and independence is key. The analysis of work events and its influence on self-employment weakly confirms the glass-ceiling hypothesis. In line with other research, our analysis indicates that financial constraints strongly determine the entry into self-employment. A key human capital determinant is past entrepreneurial experience indicating a slow, cautious transition process into self-employment.
    Keywords: risk, self-employment, work conditions, gender, Poland
    JEL: D31 G11 J61
    Date: 2019–09
  9. By: Shumilov, Andrei
    Abstract: The study compares the explanatory power of two alternative long-term determinants of the real effective exchange rate of the Russian ruble, oil prices and oil export revenues, in three variants of the error correction model. The linear model shows that during the period of managed nominal exchange rate from January 1999 to October 2014 explanatory properties of oil prices and oil export revenues are identical. In the model with structural break-in short-run parameters in November 2014 (when the Central Bank of Russia switched to a floating exchange rate and inflation-targeting policy) and in the Markov regime-switching model with two states, the oil price has higher explanatory power. This result could be explained, first, by the fact that since November 2014 oil revenue changes were mainly due to oil price movements rather than fluctuations in the volume of oil exports. In addition, information channel played an important role in the exchange rate dynamics. In this channel, with the non-instant adjustment of oil export price contracts, increase or decrease in the world price of oil forms expectations about the future rise (drop) of contract prices of exported oil, leading to an instant appreciation (depreciation) of the nominal and real exchange rates.
    Keywords: real effective exchange rate; Russia; oil export revenues; error correction model; Markov regime switching; impulse response functions
    JEL: C22 C51 E58 F31 F41
    Date: 2019
  10. By: Goda, Thomas; Priewe, Jan
    Abstract: Previous work has established that an appreciation of the real exchange rate (REER) contributes to premature deindustrialization, less productive investment and dependence on commodity booms and busts in emerging markets economies (EME). From the previous literature, it is less clear however what the most important drivers for the cyclical REER movements in EME are. The main aim of this study is to provide empirical evidence about the determinants of the REER movements of 15 emerging markets during the last two decades, using statistical analysis and a dynamic panel fixed effects model approach. Our analysis shows that although "commodity" and "industrial" EME are heterogeneous, REER volatility tends to be higher among the former. Yet, REER volatility between emerging and advanced countries does not differ very much, apart from a few EME countries. Countries that had more stable REER trend fared better than those that had a depreciating or appreciating trend (with the notable exception of China). As theoretically expected, commodity prices are an important structural driver of REER movements in "commodity EME". Moreover, the results confirm the existence of the Harrod-Balassa-Samuelson effect, and show the importance of financial inflows. Further, exchange rate regimes and the intervention of central banks were partially successful to avoid more substantial appreciations (depreciations). Finally, we find that lower country risk and, at least in some periods, growing broad money has led to REER appreciations.
    Keywords: Real Exchange Rate,Foreign Exchange Rate Policy,Commodity Prices,CapitalInflows,Global Risk
    JEL: F6 F31 F41 O11 O57 P52
    Date: 2019
  11. By: Juan Carlos Cuestas (Department of Economics, Universitat Jaume I, Castellón, Spain); Merike Kukk (Department of Economics and Finance, Tallinn University of Technology, Estonia)
    Abstract: This paper investigates the mutual dependence between housing prices and housing credit in Estonia, a country which experienced rapid debt accumulation during the 2000s and big swings in house prices during that period. We use Bayesian econometric methods on data spanning 2000–2015. The estimations show the interdependence between house prices and housing credit. More importantly, negative housing credit innovations had a stronger effect on house prices than positive ones. The asymmetry in the linkage between housing credit and house prices highlights important policy implications, in that if central banks increase capital buffers during good times, they can release credit conditions during hard times to alleviate the negative spillover into house prices and the real economy.
    Keywords: house prices, housing credit, credit cycle, asymmetries, Bayesian
    JEL: E32 E44 E51 G21 R21 R31
    Date: 2019
  12. By: RACHID, RACHID,Semia
    Abstract: This paper tries to study the determinants of non-performing loans (NPL) in the Middle East and North Africa (MENA) and Central and Eastern European (CEE) countries during the 1997/2016 period. Our analysis, which is based on different panel data estimation approaches, shows that institutions have different effects on the level of NPL in the MENA and the CEE countries. We found that institutions (rule of law) increase the level of NPL in the MENA countries but they decrease these loans in the CEE countries. This result is attributed to the existence of an institutional difference between both samples of countries. In fact, the rise of NPL in the CEE countries is attributed to financial development. On the other hand, the global financial crisis (GFC) has an important effect on the accumulation of NPL in the MENA countries. However, the relationship between the GFC and the NPL is not significant for the CEE countries.
    Keywords: Non-performing loans. Institutional quality. GMM estimator. Comparative analysis
    JEL: G2 G21
    Date: 2019
  13. By: Meri Papavangjeli
    Abstract: In the context of the Bank of Albania’s primary objective of achieving and maintaining price stability, generating accurate and reliable forecasts for the future rate of inflation is a necessity for its successful realization. This paper aims to enrich the Bank’s portfolio of short-term inflation forecasting tools through the construction of a Bayesian vector autoregressive (BVAR) model, which unlike standard autoregressive vector (VAR) models, addresses the overparameterization problem, allowing for the inclusion of more endogenous variables, and in this way enabling a more comprehensive explanation of inflation. Several univariate models are estimated to forecast short-term inflation, such as: unconditional mean, random walk, autoregressive integrated moving average (ARIMA) models, and the best performing among them is used as a benchmark to evaluate the forecast performance of the BVAR model. In addition, an unrestricted VAR - the most commonly used tool to obtain projections of the main economic indicators - is constructed as an additional benchmark, based solely on the information that the data series provides. The results show that the BVAR approach, which incorporates more economic information, outperforms the benchmark univariate and the unrestricted VAR models in the different time horizons of the forecast sample, but the differences between models in terms of their forecast performance are not statistically significant.
    Keywords: Bayesian estimation, vector autoregressive, forecasting performance
    JEL: C30 C52 C53 C80
    Date: 2019–10–09
  14. By: Aneta Bobeni? Hinto?ová (Faculty of Business Economics in Ko?ice, University of Economics in Bratislava); Michaela Bruothová (Faculty of Business Economics in Ko?ice, University of Economics in Bratislava)
    Abstract: There are plenty of studies analysing foreign direct investment flows in connection with other factors, however not so many of them take into consideration also effects on innovation performance of a particular country. The present study investigates a link between macro-level innovation performance and inward foreign direct investments in conditions of Slovakia. The results of regression analysis covering the period between 2003-2017 showed that innovation performance measured by gross expenditures on research and development is negatively influenced by foreign direct investment inflows, especially by greenfield investment projects allocated in Slovakia. This negative effect is even more significant on lagged level, namely one year after the investment allocation.
    Keywords: innovation performance, inward foreign direct investment, greenfield investment, mergers and acquisitions
    JEL: F21 F41 O30
    Date: 2019–10
  15. By: Aneta Bobeni? Hinto?ová (Faculty of Business Economics in Ko?ice, University of Economics in Bratislava)
    Abstract: Foreign direct investments (FDI) are generally considered as key drivers of economic development of the country. However, studies confirming significant effects of inward FDI on macroeconomic performance especially in conditions of the Central European countries are rather scare. The present paper investigates effects of different types of inward FDI, namely cross-border mergers and acquisitions and greenfield investment projects on the macroeconomic performance measured by GDP per capita in conditions of Slovakia. The results of regression analysis for the period of 2003-2018 show rather negative impact of greenfield investments allocated in Slovakia as well as cross border sales of local companies on the level of GDP per capita of the host country.
    Keywords: foreign direct investment, macroeconomic performance, mergers and acquisitions, greenfield projects
    JEL: F21 F23 F43
    Date: 2019–10
  16. By: Pierre Courtioux (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); François Métivier (IPGP - Institut de Physique du Globe de Paris - UPMC - Université Pierre et Marie Curie - Paris 6 - INSU - CNRS - Institut national des sciences de l'Univers - IPG PARIS - UPD7 - Université Paris Diderot - Paris 7 - UR - Université de La Réunion - CNRS - Centre National de la Recherche Scientifique); Antoine Reberioux (LADYSS - Laboratoire dynamiques sociales et recomposition des espaces - UP1 - Université Panthéon-Sorbonne - UP8 - Université Paris 8 Vincennes-Saint-Denis - UPN - Université Paris Nanterre - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper examines the rise of China's relative standing in the global academic science marketplace. We first develop a simple theoretical model, based on the aggregation of individual knowledge production functions. This model predicts the existence of a stable power (scaling) law, relating the world share of countries' scientific production to their world share of public investment in scientific research. We test and confirm this prediction, using bibliometric crosscountry longitudinal data for OECD and non-OECD countries, over the 1996-2015 period. This analysis allows for China's impressive catch-up, and for the West's decline to be accounted for, in the science marketplace, over the last two decades.
    Abstract: Cet article analyse la montée en puissance de la Chine et l'évolution de sa place relative sur le marché scientifique mondial. Tout d'abord, nous développons un modèle théorique simple basé sur l'agrégation de fonctions de production de savoir individuelles. Ce modèle prédit l'existence d'une loi de puissance stable entre la part d'un pays dans les publications scientifiques mondiales et sa part dans les investissements de recherche publique mondiaux. Nous testons et confirmons ces prédictions en utilisant des données bibliométriques et des bases de données de l'OCDE sur l'investissement des pays dans la recherche publique. Ces données portent sur la période 1996-2015. Cette analyse permet de rendre compte de l'impressionnant rattrapage de la Chine et du déclin relatif des pays occidentaux sur le marché scientifique mondial, survenus durant les deux dernières décennies.
    Keywords: Economics of science,knowledge production function,international ranking,classements internationaux,Economie de la science,fonction de production de savoir
    Date: 2019–09

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