nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒09‒28
nine papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. What Can Be the Way out of the Impasse in Belarus? By Rumen Dobrinsky
  2. Clean Air as an Experience Good in Urban China By Matthew E. Kahn; Weizeng Sun; Siqi Zheng
  3. The One-Child Policy Amplifies Economic Inequality across Generations in China By Yu, Yewen; Fan, Yi; Yi, Junjian
  4. Holiday and Weight Gain: Evidence from the National Day Holiday in China By Luo, Hengrong; Yu, Xiaohua
  5. The Impact of Migration Controls on Urban Fiscal Policies and the Intergenerational Transmission of Human Capital in China By Holger Sieg; Chamna Yoon; Jipeng Zhang
  6. The Impact of China Exchange Rate Policy on its Trading Partners Evidence Based on the GVAR Model By ABBAS, Shah; Nguyen, V.C.; YANFU, Zhu; Nguyen, Huu Tinh
  7. Factors affecting non-performing loans of commercial banks: The role of bank performance and credit growth By Dao, Kieu Oanh; Nguyen, Thi Yen; Hussain, Sarfraz; Nguyen, V.C.
  8. Entrepreneurial Orientation of the Companies in Bosnia and Herzegovina: The Importance of Contextual Factors By Veselinović, Ljiljan; Kulenović, Mirza; Šunje, Aziz
  9. The Beneficial Impacts of COVID-19 Lockdowns on Air Pollution: Evidence from Vietnam By Dang, Hai-Anh; Trinh, Trong-Anh

  1. By: Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Public discontent with Mr. Lukashenko’s authoritarian rule had been piling up for years and came to the surface after the fraudulent presidential election held in August 2020. At present the country is in a political stalemate as the official election results are challenged by a large part of the population and by the West but recognised by Russia and China. In the present circumstances there are no straightforward ways to break the gridlock, and different scenarios are possible. At the same time the Belarusian economy is plagued with serious problems that call for radical economic reforms. Belarus’s economic and political problems are intertwined the way the political crisis will be resolved will shape the future of the Belarusian economy.
    Keywords: Belarus, elections, political stalemate, credibility and legitimacy of power, succession of power, economic reforms
    JEL: E65 P21 P30
    Date: 2020–09
  2. By: Matthew E. Kahn; Weizeng Sun; Siqi Zheng
    Abstract: The surprise economic shutdown due to COVID-19 caused a sharp improvement in urban air quality in many previously heavily polluted Chinese cities. If clean air is a valued experience good, then this short-term reduction in pollution in spring 2020 could have persistent medium-term effects on reducing urban pollution levels as cities adopt new “blue sky” regulations to maintain recent pollution progress. We document that China’s cross-city Environmental Kuznets Curve shifts as a function of a city’s demand for clean air. We rank 144 cities in China based on their population’s baseline sensitivity to air pollution and with respect to their recent air pollution gains due to the COVID shutdown. The largest experience good effect should take place for cities featuring a high pollution sensitive population and where air quality has sharply improved during the pandemic. The residents of these cities have increased their online discussions focused on environmental protection, and local officials are incorporating “green” industrial subsidies into post-COVID stimulus policies.
    JEL: Q52 Q53
    Date: 2020–09
  3. By: Yu, Yewen (Peking University); Fan, Yi (National University of Singapore); Yi, Junjian (National University of Singapore)
    Abstract: This study finds that China's one-child policy (OCP), one of the most extreme forms of birth control in recorded history, has amplified economic inequality across generations in China since its introduction in 1979. Poor Chinese families, whose fertility choices are less constrained by the OCP than rich ones, have more children but invest less in human capital per child. Since human capital is a major determinant of earnings, the income inequality persists and enlarges across generations as a consequence. Based on nationally representative longitudinal household survey data, our estimation results show that the OCP accounts for 32.7%-47.3% of the decline in intergenerational income mobility. The OCP has significant ramifications for Chinese society, not only intragenerationally but also intergenerationally.
    Keywords: One-Child Policy, differential fertility, child quantity-quality tradeoff, intergenerational mobility
    JEL: E24 J13
    Date: 2020–08
  4. By: Luo, Hengrong; Yu, Xiaohua
    Abstract: We use the regression discontinuity model and CHNS (China Health and Nutrition Survey) data, to study the body weight gain effect of the National Day holiday in China. We find that Chinese adults tend to gain 1.561 kg during the National Day holiday. The weight gain effect shrinks to 0.967 kg or even 0.491 kg, when we extend the time window from one-week level to two-week level and the one-month level. It implies that holiday weight gain could lead to the long-term body weight accumulation. Besides, the middleage group is the most fragile group to the holiday weight gain. Young and middle aged males and old females suffer more to the weight gain compared to their counterpart.
    Keywords: Food Consumption/Nutrition/Food Safety
    Date: 2020–09
  5. By: Holger Sieg; Chamna Yoon; Jipeng Zhang
    Abstract: Using newly available data, we document that internal migrants do not enjoy the same access to local public goods and services as city residents in China. We estimate a spatial overlapping generations model with heterogeneous households to quantify the impact of the Hukou system on urban fiscal policies and access to educational opportunities. We find that migrants provide large fiscal externalities to all major cities. We show the feasibility of alternative internal migration policies that offer the potential of decreasing the inequality within China while at the same time increasing the overall level of human capital in the economy.
    JEL: E6 H7 I25 J24
    Date: 2020–09
  6. By: ABBAS, Shah; Nguyen, V.C.; YANFU, Zhu; Nguyen, Huu Tinh
    Abstract: This study is designed to investigate the impact of China exchange rate policy on its trading partners by using a country multi-dataset GVAR model. Our model includes samples of 30 countries, six from high-income, six from middle-income and eighteen from low-income countries. This study used annual time series data over the period 1992 to 2017. We constructed currency misalignment index and it provided some interesting features about the currency undervaluation and overvaluation. The results of the currency misalignment shows that China’s Renminbi is structurally more undervalued over the sample period as compared to other countries, and fluctuation in major currencies effects the global trade around the world. The overall empirical results of the GVAR model indicate that RMB undervaluation affects the trade pattern and macroeconomic performance of China’s trading partners. Overall, China’s exchange rate undervaluation has mixed effects on trading partner’s GDP, exports and imports. The devaluation of China’s RMB efficiently stimulated China’s exports and reduced imports. While, in some countries, this effect is reverse, the RMB undervaluation increases the GDP of partner countries and also increases their exports to China. The results confirm the strong and leading role of the Chinese Renminbi in the global trade.
    Date: 2020–07–31
  7. By: Dao, Kieu Oanh; Nguyen, Thi Yen; Hussain, Sarfraz; Nguyen, V.C.
    Abstract: The recent crisis of non-performing loans in the banking system has hit the Vietnamese economy hard. The GDP has been fallen down, while the bad debt ratio in the banking system has risen dramatically to 17.2 percent, and it takes more time to restore the economy and banking system. This research aims to define aspects that impact non-performing commercial bank loans in Vietnam. It covers the period of 2008–2017 using 200 identified banks of Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange, and applies methods based on the regression of pooled ordinary least squares, fixed and random effects models, in particular, generalized least squares to confirm the stability of the regression model. The results show that non-performing loans this year will positively affect those in the next year. In addition, a raise in bank performance and credit growth also leads to the reduction in non-performing loans from banks. Regarding macroeconomic factors, higher interest rates would have a major and beneficial influence on failed loans in terms of macroeconomic dynamics, and, therefore, little effect on economic activity and inflation. Therefore, Vietnamese banking system should reduce the systematic risk and improve monitoring processes, drawing on the experience of global banks with extensive experience in risk management.
    Date: 2020–08–12
  8. By: Veselinović, Ljiljan; Kulenović, Mirza; Šunje, Aziz
    Abstract: Entrepreneurial orientation (EO) represents a firm-level construct that captures innovativeness, proactiveness, and risk-taking of the existing companies. The main focus of this paper is to present the EO of 477 companies in Bosnia and Herzegovina and to compare EO between companies operating within different contextual factors. We used descriptive statistics and statistical testing to draw conclusions. Our paper presents the mean values of entrepreneurial orientation for each NACE industry category. In addition, our results confirm that there are statistically significant differences in entrepreneurial orientation between (a) the companies operating in a more competitive environment and the companies operating in a less competitive environment; (b) the companies with acquired ISO certificates and high level of TQM practices and the companies without ISO certificates and low level of TQM practices; (c) the companies operating in predominantly export-oriented markets and the companies operating in predominantly local markets; and finally (d) the companies located in Federation of Bosnia and Herzegovina and the companies located in Republic of Srpska. However, there are no statistically significant differences in entrepreneurial orientation between the older companies (older than two, five and ten years) and younger companies; nor between companies of different sizes. By analyzing organizational contextual factors, this paper identifies key variables that may play an important role in designing more complex structural models. Additionally, this paper presents the current state of entrepreneurial orientation of existing companies in Bosnia and Herzegovina.
    Keywords: entrepreneurial orientation,contextual factors,firm behavior,entrepreneurship,Bosnia and Herzegovina
    JEL: L2
    Date: 2019
  9. By: Dang, Hai-Anh (World Bank); Trinh, Trong-Anh (World Bank)
    Abstract: Little evidence currently exists on the effects of COVID-19 on air quality in poorer countries, where most air pollution-linked deaths occur. We offer the first study that examines the pandemic's impacts on improving air quality in Vietnam, a lower-middle income country with worsening air pollution. Employing the Regression Discontinuity Design method to analyze a rich database that we compile from satellite air pollution data and data from various other sources, we find the concentration of NO2 to decrease by 24 to 32 percent two weeks after the COVID-19 lockdown. While this finding is robust to different measures of air quality and model specifications, the positive effects of the lockdown appear to dissipate after ten weeks. We also find that mobility restrictions are a potential channel for improved air quality. Finally, our back-of-the-envelope calculations suggest that two weeks after the lockdown, the economic gains from better air quality are roughly $0.6 billion US dollars.
    Keywords: COVID-19, air pollution, mobility restriction, RDD, Vietnam
    JEL: D00 H00 O13 Q50
    Date: 2020–09

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