nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒05‒04
eleven papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Chinese dialects, revolutionary war & economic performance By Zhu, Junbing; Grigoriadis, Theocharis
  2. A myth of soft budget constraints in socialist economies By Popov, Vladimir
  3. Regional Determinants of Housing Prices in the Czech Republic By Roman Kalabiska; Michal Hlavacek
  4. Modern Challenges of Monetary Policy Strategies: Inflation and Devaluation Influence on Economic Development of the Country By Abuselidze, George
  5. Trade Induced Technological Change: Did Chinese Competition Increase Innovation in Europe? By Douglas L. Campbell; Karsten Mau
  6. Short-Run and Long-Run Effects of Sizable Child Subsidy: Evidence from Russia By Ilia Sorvachev; Evgeny Yakovlev
  7. Agricultural production cooperatives and agricultural development: Is there a niche after all? Findings from an exploratory survey in China By Axel WOLZ; Shemei ZHANG; Ya DING
  8. Overview of social economy development in Slovakia and its promoting as the employment solution for long-term unemployed and disabled ones By Lenka PÄŒOLINSKÃ
  9. Impacts of enterprise zones on local households in Vietnam By Vu, Tien Manh; Yamada, Hiroyuki
  10. A Glimpse of Freedom: Allied Occupation and Political Resistance in East Germany By Luis R. Martinez; Jonas Jessen; Guo Xu
  11. International Economic Sanctions: Multipurpose Index Modelling in the Ukrainian Crisis Case By Nady Rapelanoro; BALI Morad

  1. By: Zhu, Junbing; Grigoriadis, Theocharis
    Abstract: In this paper, we explore the effects of dialectal diversity on economic performance by drawing evidence from Chinese prefecture-level cities. Our dataset is a panel of 5-year average data over the period from 2001 to 2015 including 274 cities. We compute five indices of Chinese dialectal diversity: 1. Dialectal fractionalization; 2. Adjusted dialectal fractionalization; 3. Dialectal polarization; 4. Adjusted dialectal polarization and 5. Periphery heterogeneity. We find that dialectal fractionalization and dialectal polarization as well as periphery heterogeneity have a positive effect on both income per capita and economic growth. Adjusted dialectal fractionalization exhibits a positive effect only on the change in economic growth over time. However, adjusted dialectal polarization does not show any robust effects. Furthermore, the experience of being governed by the Chinese Communist Party during the revolutionary war inhibits the negative effects of dialectal diversity in eastern China, while it has persistent negative effects in central and north-eastern regions of the country.
    Keywords: dialectal diversity,local economic performance,communist governance
    JEL: O10 O40 P51 Z19
    Date: 2020
  2. By: Popov, Vladimir
    Abstract: Most of the time the budget constraints in the socialist economies were harder than in developing countries and no less hard than in developed countries. The soft budget constraints (SBC) in socialist economies were not pervasive, as most authors believe, but selective, i.e. involved subsidization of some enterprises/industries at the expense of the other. This type of selective subsidization is a classic case of industrial policy: it may be good or bad, leading to success (China, Vietnam) or failure (USSR, Eastern Europe), but cannot be regarded as an intrinsic feature of the socialist centrally planned economy and an example of pervasive SBC. Pervasive SBC should be associated with permanent government budget deficit, debt accumulation, high inflation and other forms of macroeconomic populism. In the Soviet Union in the post-war period (after the monetary reform of 1947 and until the Gorbachev financial and monetary expansion that started in 1987) budget deficit and debt were very low, open and hidden inflation was less than several percent a year – a better record than in most Western countries. But in the 1990s in Russia, other former Soviet republics and most East European countries budget constraints were weakened dramatically and inflation increased to hundreds and thousands percent a year. SBC is just one type of this populist macroeconomic policy that was rare in socialist countries, but is found in abundance in many developing countries (especially Latin America and Sub-Sahara Africa) and transition economies (especially FSU states).
    Keywords: Soft budget constraints, socialist economies, industrial policy
    JEL: H60 O25 P34 P35 P40 P43
    Date: 2020–04–21
  3. By: Roman Kalabiska (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic); Michal Hlavacek (Institute of Economic Studies, Faculty of Social Sciences, Charles University Opletalova 26, 110 00, Prague, Czech Republic; Office of the Czech Fiscal Council, Holeckova 103/31, 15000 Prague 5, Czech Republic)
    Abstract: This paper examines the behaviour of housing prices and identifies their determinants across Czech regions from 2000 to 2017. The effect of a wide range of variables on apartment prices is analyzed on quarterly data for all regions of the Czech Republic using panel dynamic OLS estimator. Furthermore, an error correction model is employed to verify the existence of long-term equilibrium of apartment prices and the speed of price adjustment in the short run. The regression reveales that apartment prices are driven mainly by wages, unemployment rate and building plot prices. In order to check robustness of selected model, several regions with unique characteristics are excluded from the sample and analyzed separately. Our results show that building plot prices have an unexpected negative effect in low-income regions and labour force factors are less important in Prague, caused by a number of unique features of the capital city.
    Keywords: Apartment prices, regional analysis, residential real estate, panel regression
    JEL: C23 O18 R11 R13 R31
    Date: 2020–04
  4. By: Abuselidze, George
    Abstract: The article discusses causes and socio-economic peculiarities of one of the most difficult and undesirable condition for the economy-inflation and devaluation. The purpose of the research is to analyze the socio-economic results of inflation and devaluation in Georgia and to determine the main directions to overcome it. Due to study purposes was investigated the causes of inflation and devaluation, as well as was examined its influence on economic development of the country and its influence on welfare of each citizen. In the article are discussed main models of anti-inflation regulation, as well as foreign experience of monetary regulation of inflationary processes and is an evaluated possibility of their use in Georgia. The National Bank monetary regulation effectiveness is assessed and recommendations have been developed.
    Keywords: Inflation; Devaluation; Monetary Policy; Welfare; Economical Activity; Economic Development; Georgia.
    JEL: E42 E52 E58 I31 O11
    Date: 2018–05–10
  5. By: Douglas L. Campbell (New Economic School); Karsten Mau (Maastricht University)
    Abstract: Bloom, Draca, and Van Reenen (2016) find that Chinese competition induced a rise in patenting, IT adoption, and TFP by 30% of the total increase in Europe in the early 2000s. We find that the average patents per firm fell by 94% for the most Chinacompeting firms in their sample, but also by 94% for non-competing firms (starting from an initially higher level), and that various intuitive controls, such as controls for sectoral trends, renders the impact on patents-per-firm insignificant. We also find that while TFP appears to be positively correlated with the rise in Chinese competition, IV estimates are inconclusive, and other measures of productivity, such as value-added per worker and profits, are not correlated. Various instrumental and proxy variable approaches also do not support a positive impact of the rise of China on European patents.
    Keywords: Patents, China, Europe, Textiles, Trade Shocks, Manufacturing
    JEL: F14 F13 L25 L60
    Date: 2019–05
  6. By: Ilia Sorvachev (Department of Economics, University of Wisconsin-Madison); Evgeny Yakovlev (New Economic School)
    Abstract: This paper utilizes a large-scale natural experiment aimed to increase fertility in Russia. Motivated by a decade-long decrease in fertility and population, the Russian government introduced a sequence of sizable child subsidies (called Maternity Capitals) in 2007 and 2012. We find that the Maternity Capital resulted in a significant increase in fertility both in the short run (by 8%) and in the long run (by 20%), and has already resulted in an increase in completed cohort fertility for a large cohort of Russian women. The subsidy is conditional and can be used mainly to buy housing. We find that fertility grew faster in regions with a shortage of housing and with a higher ratio of subsidy to housing prices. We also find that the subsidy has a substantial general equilibrium effect. It affected the housing market and family stability. Finally, we show that this government intervention comes at substantial costs: the government’s willingness to pay for an additional birth induced by the program equals approximately 50,000 dollars.
    Date: 2019–07–08
  7. By: Axel WOLZ (Leibniz Institute of Agricultural Development in Transition Economies, Department of External Environment for Agriculture and Policy Analysis, IAMO, Halle (Germany)); Shemei ZHANG (Sichuan Agricultural University, School of Management, Yaan, Sichuan (China)); Ya DING (University of Electronic Science and Technology of China, Chengdu (China))
    Abstract: Agricultural production cooperatives used to be the “stepchild†of the cooperative movement. Although they stem from a similar long tradition of agricultural service cooperatives, researchers such as Oppenheimer (1896) and Schiller (1969) observed early on that they were not attractive for farmers in villages characterised by family agriculture. In general, it was argued that they were not competitive at all with family farms, but also not corporate farms, thus having no role in agricultural development. Historically, agricultural production cooperatives were formed under specific conditions only. Most prominent were collective farms under the socialist regimes, which were often labelled “agricultural production cooperatives†, although these were by no means of a voluntary nature. However, in recent years, agricultural production cooperatives have been observed in villages characterised by family agriculture. In Chongzhou County (Sichuan Province, China) they cover more than half of the total utilized agricultural area. This research analyses the conditions under which farmers voluntarily join such production cooperatives and how they assess their membership in them. We suggest that agricultural production cooperatives have a role to play in agricultural development after all.
    Keywords: : agricultural production cooperatives, agricultural service cooperatives, agricultural development, empirical research, China
    JEL: Q13 O13 P13 Q15 Q18
    Date: 2020–04
  8. By: Lenka PÄŒOLINSKÃ (Department of Economics and Management of Public Administration, Faculty of Public Administration, Pavol Jozef Å afárik University in Košice (Slovakia))
    Abstract: The aim of the article is to provide an overview of the social economy development over three decades in Slovakia (between the years 1989 - 2019) and to point out the natural environment of shaping this phenomenon as well as the current state and possibilities for further development. The essential features of the social economy development in Slovakia are: regional development in terms of reduction of unemployment and long-term unemployment, integration of disadvantaged groups of people into the labour market, new law on social economy and social enterprises, activities of self-governing bodies and implementation of common good activities that serve the community, the group of disadvantaged but also the region, while contributing to rural sustainability. As chosen methods, we especially used a theoretically-analytical approach appropriate to describe the present situation about unemployment and potential of social economy (using secondary data of official statistics). The paper aims at clearing the main problems of the social economy development in Slovakia, also reflecting the historical roots, and it points to the social economy potential future development.
    Keywords: social economy, long-term unemployment, civil society, municipal social enterprises
    JEL: A13 J64 L31
    Date: 2019
  9. By: Vu, Tien Manh; Yamada, Hiroyuki
    Abstract: Based on the “winner-loser” scheme, we examine the possible impacts of enterprise zones (EZs) on local Vietnamese households between 2002 and 2008, using differences-indifferences approach and a panel-event study. We layer four waves of household surveys using a census of EZs in 2007, based on the same commune identity for our household and individual analyses. Within five years of EZ establishment, we find they are associated with higher household incomes, an increase in private property prices, and an increase in working hours.However, we do not find a significant impact on household living expenditure or school attendance/working probabilities among members aged between 7 and 17 years. Neither do we find a significant impact on health outcomes.
    Keywords: Enterprise zone, Health, Household, Income, School Attendance, Vietnam, O12, O18, D1, P36
    Date: 2020–04
  10. By: Luis R. Martinez; Jonas Jessen; Guo Xu
    Abstract: This paper studies costly political resistance in a non-democracy. When Nazi Germany surrendered in May 1945, 40% of the designated Soviet occupation zone was initially captured by the western Allied Expeditionary Force. This occupation was short-lived: Soviet forces took over after less than two months and installed an authoritarian regime in what became the German Democratic Republic (GDR). We exploit the idiosyncratic line of contact separating Allied and Soviet troops within the GDR to show that areas briefly under Allied occupation had higher incidence of protests during the only major episode of political unrest in the GDR before its demise in 1989 - the East German Uprising of 1953. These areas also exhibited lower regime support during the last free elections in 1946. We argue that even a “glimpse of freedom” can foster civilian opposition to dictatorship.
    Keywords: East Germany, political resistance, protest, autocracy, spatial RDD, World War II
    JEL: F51 H10 N44 P20
    Date: 2020
  11. By: Nady Rapelanoro; BALI Morad
    Abstract: This short paper’s goal is to create a sanction index to simulate international economic sanctions. To do so, it has been decided to focus on the Ukrainian crisis case, and on international sanctions against the Russian Federation. The first part of this paper treats the methodology and mathematical formalization used to build our index. After the mathematical formalization comes an empirical part that is demonstrating improvements brought by our work. To assess these improvements, our index is compared to a previously developed index from Kholodilin and Netšunajev (2016). Four country SVAR models are used in two main sections, two initials and two extended. Results of this section reveal that our new sanction index has a stronger explanatory power. In addition, it seems that our index affects short-term Russian production variations more sharply than its predecessor. The explanatory power improvements are confirmed by extended models, confirming our index relevance.
    Keywords: Russian economy, European economies, Ukrainian crisis, economic sanctions, sanctions shock, trade relations, international crisis, structural vector autoregressive models
    JEL: F4 C5
    Date: 2020

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