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on Transition Economics |
| By: | Damien Azzopardi; Patrick Lenain; Margit Molnar; Natia Mosiashvili; Jon Pareliussen |
| Abstract: | Technologies such as cloud computing, software to automate supplier- and customer relations, online platforms and artificial intelligence seem to offer a vast potential to boost productivity and living standards. However, aggregate productivity growth has declined sharply across the OECD over the past decades. Estonia is no exception, though it is well placed to gain from digital technology diffusion, with strong digital foundations, including advanced and secure physical and digital infrastructure and world-leading e-government services. Turning this potential into a productivity boost necessitates speeding up digital take-up also outside of the ICT sector and fostering the complementarities between digital technologies, skills and policies. Skills are high in general, and the supply of ICT specialists is picking up. There is still potential to improve digital user skills, and notably to put skills to better use by improving management skills and practices. Business-friendly regulations in general and pioneering attempts in some areas will likely spur the adoption of digital technologies. However, insolvencies are too slow and costly, command-and-control regulations relatively frequent and public ownership in network industries is high. Strengthening collaboration between industry associations, labour unions and industry clusters within technology investments, internationalisation, skill supply and management practices could help the country better realise complementarities between technologies, skills and policies, and thereby tap deeper into the productivity potential offered by digital technologies. |
| Keywords: | automation, Digitalisation, productivity, skills |
| JEL: | D24 D47 E22 J24 O33 O38 |
| Date: | 2020–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1639-en&r=all |
| By: | Golubev, Artem (Голубев, Артем) (Russian Presidential Academy of National Economy and Public Administration, North-West Institute of Management); Rodionov, Aleksandr (Родионов, Александр) (Russian Presidential Academy of National Economy and Public Administration, North-West Institute of Management); Ryabov, Oleg (Рябов, Олег) (Russian Presidential Academy of National Economy and Public Administration, North-West Institute of Management) |
| Abstract: | The paper analyzes the development of the modern Russian banking system in the conditions of the trend of digital transformation. The aim of the work was to analyze the rehabilitation policy of the Central Bank in the field of banking sector regulation. The working hypothesis was that the reorganization of the financial system leads to an increase in monopolistic trends in the banking sector, while solving the key problems of the Russian banking system: a more objective reflection of problem assets in the balance of the banking system is achieved; the economic role of the “schematic” capital formation of the Russian banking system is declining, with the simultaneous growth of state ownership in the Russian banking system; a business model based on private business lending to its owners becomes inefficient. The paper conducts a qualitative and quantitative analysis of the development of the modern Russian banking system. A critical model of the activity of the Central Bank has been proposed, which allows a system analysis of the development of the Russian banking system at the transformation stage. The study clearly showed that monopolization of the banking sector leads to a decrease in the riskiness of the market strategy of individual banks, however, there is an increase in the probability of systemic shocks of the banking system as a whole. |
| Keywords: | Digital transformation, Russian banking system |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:ppaper:szf112001&r=all |
| By: | Li, Honghui; Hiwatari, Masato |
| Abstract: | In China, the population policy has been a major item on the political agenda since the early 1970s. Given the importance of human capital as an engine for economic growth, the question of how changes in birth rates affect human capital is particularly important for macroeconomic policy. Extant studies have presented contrasting views on the relationship between the number of children and educational investment in households. Some suggest a negative relationship due to the quantity/quality trade-off occasioned by limited resources within the family, while other studies point out a positive relationship caused by economies of scale. This study empirically analyzes the relationship between the number of children and educational attainment in households in China. More specifically, we estimate the effect of the number of siblings on the number of education years among individuals born since 1970, using the China General Social Survey (CGSS) and the Chinese Household Income Project Survey (CHIP). We estimate the causal impact of the number of siblings by exploiting exogenous variation in the number of siblings caused by family planning policies (“Later, Longer, Fewer”) that started in the early the 1970s. The results support the assertion that the number of siblings has a negative effect on educational attainment in China. |
| Keywords: | Quantity-quality trade-off, Demographic Economics, Education, Fertility, Family Planning, China, |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:hok:dpaper:353&r=all |
| By: | Tamim Bayoumi; Yunhui Zhao |
| Abstract: | Housing is by far the most important asset in Chinese households’ balance sheets. However, despite forceful and frequent government interventions, the rise in Chinese housing prices has not been contained as much as intended, a trend that has not been reversed by the COVID-19 shock. In this paper, we first provide some stylized facts and then a DSGE model (encompassing both demand and supply channels) to highlight the impact of a “slow-moving” structural vulnerability—financial market incompleteness—on China’s housing prices. The model implies that to eradicate the root causes of the rising housing price, policymakers need to go beyond the housing market itself; instead, it would be desirable to deepen financial markets because these markets would help channel financial resources to productive sectors rather than to housing speculation. This is particularly important in the COVID era because without addressing this structural vulnerability, the higher household savings and the government stimulus may fuel the housing bubble and sow seeds for a future crisis. The paper can also shed light on the housing markets in other economies that face similar vulnerabilities. |
| Date: | 2020–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2020/265&r=all |
| By: | Patrick Grüning (Bank of Lithuania & Vilnius University); Ginters Buss (Latvijas Banka) |
| Abstract: | We develop a fiscal dynamic stochastic general equilibrium (DSGE) model for policy simulation and scenario analysis purposes tailored to Latvia, a small open economy in a monetary union. The fiscal sector elements comprise government investment, government consumption, government transfers that are asymmetrically directed to both optimizing and hand-to-mouth households, cyclical unemployment benefits, foreign ownership of government debt, import content in public consumption and investment, and fiscal rules for each fiscal instrument. The model features a search-and-matching labour market friction with pro-cyclical labour costs, a financial accelerator mechanism, and import content in final goods. We estimate the model using Latvian data, study the new channels in the model, and provide a comprehensive analysis on the macroeconomic effects of the fiscal elements. A particular finding is that having foreign ownership of government debt generally breaks the Ricardian equivalence paradigm. |
| Keywords: | Small open economy, Fiscal policy, Fiscal rules, Bayesian estimation |
| JEL: | E0 E2 E3 F4 H2 H3 H6 |
| Date: | 2020–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:lie:wpaper:81&r=all |
| By: | Ludmila Fadejeva (Bank of Latvia); Anete Migale (Bank of Latvia); Mikelis Zondaks (Bank of Latvia) |
| Abstract: | This paper presents Latvia's results from the third wave of the Eurosystem's Household Finance and Consumption Survey (HFCS) conducted in 2017. The paper focuses on the wealth components of the household balance sheet – real and financial assets, liabilities, as well as income and consumption. The HFCS questionnaire includes an extensive list of quantitative and qualitative questions; therefore, our paper presents changes in the household balance sheet taking into account both numeric and self-assessment aspects. The results are compared to the HFCS 2014 results in Latvia and the HFCS 2014 and the HFCS 2017 results in the euro area. |
| Keywords: | household finance and consumption survey, Latvia, assets, liabilities, net wealth, financial vulnerability, income, consumption |
| JEL: | D14 D31 E21 |
| Date: | 2020–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:dpaper:202001&r=all |
| By: | KUMO, Kazuhiro |
| Abstract: | This paper employs microdata of the Russia Longitudinal Monitoring Survey (RLMSHSE) to discuss the impact on childbirth probability in Russia, which, following a continuous decline in the birth rate throughout the 1990s, began to increase in the 2000s, and rose thereafter almost continuously, of economic factors such as household income and female wages and subjective well-being such as life satisfaction and health condition. The following results were obtained: Higher household incomes serve to encourage childbirth, while female wages are seen to act to curtail childbirth, and when indicators such as life satisfaction and health condition are high, the likelihood of childbirth is increased significantly. Most previous research concerning determinants of the birth rate in Russia has shown that household income has no effect at all, but the findings in this paper suggest that this may have been due to the special circumstances that existed at the beginning of the economic transformation period in the 1990s. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2020-8&r=all |
| By: | Natia Mosiashvili; Jon Pareliussen |
| Abstract: | With a newly constructed firm-level dataset combining various survey- and registry data from Statistics Estonia, this paper sheds new light on the labour productivity premium from adopting digital technologies and boosting digital skill use. The productivity premium is decomposed into a direct effect benefitting the firms actually increasing their digital intensity, and an indirect effect of belonging to a sector with high digital intensity. The firm-level productivity premium of being an adopting firm is consistently positive and sizeable across different digital technologies and measures of skill intensity. The evidence also suggests positive spill-over effects in manufacturing sectors and sectors with a high routine task content and thus a high automation potential. |
| Keywords: | Digitalisation, productivity, skills, training |
| JEL: | D24 E22 J24 M53 O33 |
| Date: | 2020–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1638-en&r=all |
| By: | Matej Bule (Croatian National Bank); Andrijana Cudina (Croatian National Bank) |
| Abstract: | This paper analyses the structure of foreign direct equity investments in Croatia and econometrically tests the existence of a foreign ownership premium among Croatian non-financial corporations. With the use of a novel dataset generated by the merger of two firm-level databases, it is found that in the 2002-2017 period foreign equity investments in non-financial corporations were relatively modest and that the motivation of most of the investments was to expand into the local market (market-seeking FDI), and only partly to increase the efficiency of the investor's business group. As for the mode of entry, most investments were greenfield projects, although brownfield investments were also significant, reflecting the large scale privatization of state-owned enterprises. However, it is found that the industry structure of investments was unfavourable as only a smaller part went into tradable sectors and high-tech industries. Compared to domestically-owned companies, regression analysis has firmly established the existence of an organizational, technological and financial premium of foreign ownership among Croatian non-financial corporations, which differs depending on the size of the company, industrial and regional affiliations, business orientation on local or foreign markets, type of foreign ownership, mode of entry, as well as the origin of the foreign investor. Actually, the foreign ownership premium is higher in small and medium-sized enterprises and those that are oriented towards the local market, and when the concentration of foreign ownership is higher. Also, the premium is higher when the foreign investor originates from a more developed country. |
| Keywords: | foreign direct equity investments, foreign ownership premium |
| JEL: | F21 F23 L20 C21 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:hnb:wpaper:58&r=all |
| By: | Mate Rosan (Croatian National Bank); Krunoslav Zauder (Croatian National Bank) |
| Abstract: | This paper uses a new data set in order to explore micro-level patterns of household borrowing in Croatia. By analyzing cross-section data from the Household Finance and Consumption Survey, conducted for the first time in Croatia in 2017, we present the structure of household debt holdings and identify several household characteristics associated with debt participation in three types of debt: secured debt, non-collateralized loans as well as overdrafts and/or credit card debt. Our results indicate that: a) households with middle aged heads tend to participate more and hold larger amounts of all three debt types, b) households with perceived credit constraints are more likely to take non-collateralized loans, and c) inability to finance consumption and willingness to take risks when making saving and investment decisions contribute to participation in overdrafts and/or credit card debt. |
| Keywords: | household debt, secured vs. unsecured debt, age profiles of borrowing, credit constraints, Household Finance and Consumption Survey |
| JEL: | G51 D15 G21 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:hnb:wpaper:61&r=all |
| By: | Hansjörg Blöchliger; Roland Tusz |
| Abstract: | Regional differences in GDP per capita, productivity, employment and poverty in Lithuania are among the largest in the OECD, and they have increased over the last decade. The country still recovers from the legacy of the Soviet planning system which aimed at balanced geographical distribution of industrial activity and left many unviable firms and jobs particularly in rural areas. Unemployment is high in many regions, while mobility of excess labour towards economically stronger areas remains insufficient. Some regions feature "surplus infrastructure", while others lack investment. This paper looks at potential reasons for persisting disparities and assesses recent policy initiatives to reduce them. Stark gaps in education outcomes between rural and urban areas should be addressed, mainly by reorganising the municipal school network and by fostering firm-based learning, i.e. apprenticeships. The digital infrastructure is weak in rural regions and should be strengthened to allow access to high-quality jobs in all parts of the country, including through teleworking. Housing supply in economically strong areas should be increased, while urban sprawl should be avoided. Finally, municipal governments should be given more fiscal power, while the planned functional regions should help foster inter-municipal coordination. |
| Keywords: | education, fiscal decentralisation, labour mobility, Lithuania, regional development, regional infrastructure, regional productivity |
| JEL: | D24 H70 I24 J24 J61 O31 J65 |
| Date: | 2020–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1650-en&r=all |
| By: | Costa-Font, Joan (London School of Economics); Garcia-Hombrados, Jorge (affiliation not available); Nicinska, Anna (Warsaw University) |
| Abstract: | Education can serve skill formation and socialisation goals both of which are conducive to desirable economic outcomes. However, the political manipulation of the school curricula can give rise to indoctrination effects with counterproductive welfare consequences on its pupils. This paper studies the effects of communist indoctrination on human capital accumulation and labour market outcomes in Poland. We document that the reduction of Marxist-Leninist indoctrination in school curriculum after 1954 exerted long-lasting beneficial effects. Unlike in East Germany, the school reform after the fall of communism in Poland had negligible effects on human capital and labour market outcomes. Our results are in contrast, explained by the ideological content of the school curriculum in the Polish education system. |
| Keywords: | human capital attainment, later life outcomes, school curriculum, education reforms, communist education, education systems, labour market participation |
| JEL: | I28 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13944&r=all |
| By: | Kubinec, Robert (Princeton University); Lee, Haillie Na-Kyung; Tomashevskiy, Andrey |
| Abstract: | While the aim of COVID-19 policies is to suppress the pandemic, many fear that the burden of the restrictions will fall more heavily on less privileged groups. We show one potential mechanism for COVID-19 responses to increase inequality by examining the intersection of business restrictions and business political connections. Using an online survey of 2,735 business employees and managers in Ukraine, Egypt and Venezuela over the summer of 2020, we show that businesses with political connections to government officials were significantly less likely to shut down as a result of COVID-19 policies. This finding suggests that measures designed to mitigate COVID-19 are less effective in countries with a weak rule of law if politically connected firms are able to circumvent restrictions by leveraging political connections to receive preferential treatment. In addition, politically-connected firms are no more likely--and sometimes even less likely--to engage in social-distancing policies to mitigate the pandemic despite the fact that they are more likely to remain open. |
| Date: | 2020–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:68fpr&r=all |
| By: | Erlan Konebayev (NAC Analytica, Nazarbayev University) |
| Abstract: | This paper adapts the DSGE (dynamic stochastic general equilibrium) model of Medina and Soto (2007) in the context of Kazakhstani economy, and fully estimates it using Bayesian methods. The main goal of the paper is to contribute to the scarce macroeconomic modeling literature on Kazakhstan. Overall, we find that the oil price shock is key in explaining the variance of virtually all the variables of interest - in particular, it accounts for more than 40% of variance in real exchange rate over the long-term horizon. Furthermore, while the oil price and commodity (oil) production shocks contributed positively to the country's GDP growth in real terms before the Great Recession, their effects have been primarily negative during the two major economic crises of 2007 and 2015, and the fiscal policy has had mixed success in counteracting them. |
| Keywords: | DSGE; Bayesian analysis; small open economy |
| JEL: | C11 E30 E32 E37 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ajx:wpaper:6&r=all |
| By: | Priscilla Fialho; Jens Høj |
| Abstract: | Population ageing will lead to a smaller and older workforce. Looking forward, this means that growth will increasingly depend on ensuring the best use of Slovenian workers. This implies keeping older and experience workers longer in employment and better support difficult-to-employ low-skilled job-seekers. In addition, better labour allocation will enable workers to realise their productivity and wage potential. This requires a greater role for social partners in securing individual wages that better reflect efforts. |
| Keywords: | Labour Allocation, Labour Participation, Population Ageing |
| JEL: | J08 J14 J21 J31 J60 |
| Date: | 2020–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1648-en&r=all |
| By: | Ainsworth, Robert (University of Florida); Dehejia, Rajeev (New York University); Pop-Eleches, Cristian (Columbia University); Urquiola, Miguel (Columbia University) |
| Abstract: | This paper examines the roles that information and preferences play in determining whether households choose schools with high value added. We study Romanian school markets using administrative data, a survey, and an experiment. The administrative data show that, on average, households could select schools with 1 s.d. worth of additional value added. This may reflect that households have incorrect beliefs about schools' value added, or that their preferences lead them to prioritize other school traits. We elicit households' beliefs and find that they explain less than a fifth of the variation in value added. We then inform randomly selected households about the value added of the schools in their towns. This improves the accuracy of households' beliefs and leads low-achieving students to attend higher-value added schools. We next estimate households' preferences and predict their choices under the counterfactual of fully accurate beliefs. We find that beliefs account for 18 (11) percent of the value added that households with low- (high-) achieving children leave unexploited. Interestingly, for households with low-achieving children, the experiment seems to have affected both beliefs and preferences. This generates larger effects on choices than would be predicted via impacts on beliefs alone. |
| Keywords: | value added, information intervention, preferences |
| JEL: | I2 C93 D8 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13980&r=all |