nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒11‒30
eight papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Rural-Urban Migration and House Prices in China By Carlos Garriga; Aaron Hedlund; Yang Tang; Ping Wang
  2. Network topography and default contagion in China's financial system By Fittje, Jens; Wagner, Helmut
  3. China's Missing Pigs: Correcting China's Hog Inventory Data Using a Machine Learning Approach By Shao, Yongtong; Xiong, Tao; Li, Minghao; Hayes, Dermot; Zhang, Wendong; Xie, Wei
  5. Long-run relationship between real consumption and real income in the Russian Federation: An ARDL bounds testing approach By Polbin, Andrey; Kuroedova, Anastasiia
  6. Explaining the political gridlock behind international Circular Economy: Chinese and European perspectives on the Waste Ban By Luo, Anran; Rodríguez, Fabricio; Leipold, Sina
  7. Monetary Policy Rule and Taylor Principle by GMM and DSGE Approaches: The Case of Mongolia By Taguchi, Hiroyuki
  8. Input-Output Tables And Foreign Inputs Dependency: Methodological Note By Sarah Guillou

  1. By: Carlos Garriga; Aaron Hedlund; Yang Tang; Ping Wang
    Abstract: This paper uses a dynamic competitive spatial equilibrium framework to evaluate the contribution of rural-urban migration induced by structural transformation to the behavior of Chinese housing markets. In the model, technological progress drives workers facing heterogeneous mobility costs to migrate from the rural agricultural sector to the higher paying urban manufacturing sector. Upon arrival to the city, workers purchase housing using long-term mortgages. Quantitatively, the model fits cross-sectional house price behavior across a representative sample of Chinese cities between 2003 and 2015. The model is then used to evaluate how changes to city migration policies and land supply regulations affect the speed of urbanization and house price appreciation. The analysis indicates that making migration policy more egalitarian or land policy more uniform would promote urbanization but also would contribute to larger house price dispersion.
    JEL: O11 R21 R23 R31
    Date: 2020–10
  2. By: Fittje, Jens; Wagner, Helmut
    Abstract: The topography of China's financial network is unique. Is it also uniquely robust to contagion? We explore this question using network theory. We find that networks that are more concentrated are less fragile when connectivity is low. However, they remain vulnerable to the occurrence of large-scale default cascades at higher levels of connectivity than a decentralized network. We implement Chinese characteristics into our model and simulate it numerically. The simulations show, that the large state-controlled banks act as effective stopgaps for contagion, which makes the Chinese network relatively robust. This robustness persists even when a medium sized bank defaults.
    Keywords: Interbank Network,Financial Contagion,China's interbank market,Financial market stability,Complex networks,Network topography
    JEL: E44
    Date: 2020
  3. By: Shao, Yongtong; Xiong, Tao; Li, Minghao; Hayes, Dermot; Zhang, Wendong; Xie, Wei
    Abstract: Small sample size often limits forecasting tasks such as the prediction of production, yield, and consumption of agricultural products. Machine learning offers an appealing alternative to traditional forecasting methods. In particular, Support Vector Regression has superior forecasting performance in small sample applications. In this article, we introduce Support Vector Regression via an application to China’s hog market. Since 2014, China’s hog inventory data has experienced an abnormal decline that contradicts price and consumption trends. We use Support Vector Regression to predict the true inventory based on the price-inventory relationship before 2014. We show that, in this application with a small sample size, Support Vector Regression out-performs neural networks, random forest, and linear regression. Predicted hog inventory decreased by 3.9% from November 2013 to September 2017, instead of the 25.4% decrease in the reported data.
    Date: 2020–01–01
  4. By: Yu, David (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: As global macroeconomic uncertainties grow, there are notable shifts and oscillations in Chinese outbound investment and cross-border investment flows. This study shows China’s key investment characteristics including geographical preferences, investment compositions, and structural changes in industrial and foreign policies, such as Made in China 2025, financial liberalization, and OBOR. While these trends seem contradictory at times, opportunities are available for nimble and creative players who could capitalize on China’s increasing demand in the new economy (“xin jing ji”), with adequate consideration of regulatory scrutinies.
    Keywords: cross-border; China; outbound; investments; regulations
    JEL: F21 F68 K23 O53
    Date: 2020–01
  5. By: Polbin, Andrey; Kuroedova, Anastasiia
    Abstract: This paper considers an application of the ARDL model and bounds testing approach to the analysis of the long-run relationship between household consumption and aggregate income. We have explored the presence of a long-run relationship between real household consumption and indicators characterizing real income, such as: real gross domestic product (GDP), real gross domestic income (GDI), and GDP at constant household consumption prices. We provide statistical evidence of the lack of a long-run relationship in the first and second cases and its presence in the third case. We have concluded that the nominal GDP deflated by the price index of aggregated consumption is the most applicable indicator for describing the dynamics of real consumption in the Russian Federation.
    Keywords: consumption: GDP; real income; ARDL; co-integration; bounds test
    JEL: C22 E21
    Date: 2020
  6. By: Luo, Anran; Rodríguez, Fabricio; Leipold, Sina
    Abstract: China and the EU recently established an agreement to develop a Circular Economy (CE), a (re)emerging socio-economic framework to address growing challenges of global environmental change. Up to now, there is limited research addressing the implications of a joint CE framework following the China-EU agreement. Based on 72 expert interviews, 52 documents and participant observation, we study political narratives around the Chinese Waste Ban (WB) to understand China and EU’s visions for a global CE. Our results reveal a political gridlock in China-EU coordination regarding the WB as the two political actors are not yet synchronized regarding their waste management visions and are mentally unprepared to cooperate on international CE development. Both rely on old development and trade discourses, have diverging CE visions and conflicting perceptions of their respective waste governance roles, as well as prioritize differing scales for international CE development. Based on these results, we suggest CE stakeholders to reevaluate the EU and China’s mutual narratives and related agencies. Most importantly, we argue that decision-makers need to reimagine their roles beyond a linear development model, and to focus on waste prevention instead of waste diversion.
    Date: 2020–11–10
  7. By: Taguchi, Hiroyuki
    Abstract: This article aims to examine the monetary policy rule under inflation targeting in Mongolia with a focus on its conformity to the Taylor principle, through the two kinds of approaches: a monetary policy reaction function by the generalized-method-of-moments (GMM) estimation and the New Keynesian dynamic stochastic general equilibrium (DSGE) model with a small open economy version by the Bayesian estimation. The main findings are summarized as follows. First, the GMM estimation identified the inflation-responsive rule fulfilling the Taylor principle in the recent phase of the Mongolian inflation targeting. Second, the DSGE-model estimation endorsed the GMM estimation by producing a consistent outcome on the Mongolian monetary policy rule. Third, the Mongolian rule was estimated to have a weaker response to inflation than the rules of the other emerging Asian adopters of inflation targeting.
    Keywords: Monetary policy rule, Taylor Principle, Mongolia, Inflation targeting, monetary policy reaction function, GMM, the New Keynesian DSGE model
    JEL: E52 E58 O53
    Date: 2020–11
  8. By: Sarah Guillou (Observatoire français des conjonctures économiques)
    Abstract: The note presents the computation of industry foreign inputs dependency using input-output tables. It gives details on each level of dependency and finish with the infinite computation using the Leontief inverse matrix. It ends with some evidence by using WIOT data from 2000 to 2014 which shows the high growth of the technical dependency to Chinese inputs over the past 15 years. Construction, Telecommunications and Chemicals are Chinese-dependent sectors among the 20 first which also contribute a lot to the French economy. Nevertheless, for France and European countries, the dependency to Chinese inputs is well behind the dependency to European inputs.
    Keywords: Input-output tables; Leontief matrix; Inputs dependency; Chinese inputs
    JEL: F14
    Date: 2020–05–20

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