nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒03‒22
twelve papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Two Dimensions of Political Trust in Russia By Konstantin A. Kholodilin; Vyacheslav N. Ovchinnikov; Marina Yu. Malkina; Igor A. Moiseev
  2. Digital Finance and Financial Literacy: An Empirical Investigation of Chinese Households By Yang, Junhong; Wu, Yu; Huang, Bihong
  3. Doing Business in China: Parental Background and Government Intervention Determine Who Owns Businesses By Ruixue Jia; Xiaohuan Lan; Gerard Padró I Miquel
  4. The importance of Russia’s agricultural sector in the MENA geopolitics By Ballatore, Benedetto Francesco
  5. The Impact of Business Environment Reforms on Firms’ Performance in Transition Economies By Berulava, George; Gogokhia, Teimuraz
  6. Does Robots´Reach Exceed Their Grasp? Differential Impacts of Robot Adoption and Spillover Effects on Workers in the Czech Republic By Matej Belin
  7. Are firing costs important for business cycles? Lessons from Bulgaria (1999-2018) By Aleksandar Vasilev
  8. Opportunities for bioeconomy in Central and Eastern European By Voicilas, Dan Marius
  9. Reverse Political Coattails under a Technocratic Government: New Evidence on the National Electoral Benefits of Local Party Incumbency By Savu, A.
  10. Relation between emitted CO2, asset expenditures, produced energy from renewables and energy consumption. Evidence from Bulgaria By Metodieva, Tsvetana Harizanova; Bartos, Hristina Harizanova
  11. Wine complex of the Republic of Moldova and some aspects of the covid-19 pandemic By Fedorchukova, Svetlana; Boris, Boris; Gobirman, Galina
  12. Introducing Policy Analysis Croatian MAcroecoNometric Model (PACMAN) By Ozana Nadoveza Jelić; Rafael Ravnik

  1. By: Konstantin A. Kholodilin; Vyacheslav N. Ovchinnikov; Marina Yu. Malkina; Igor A. Moiseev
    Abstract: This paper analyzes two dimensions of factors of political trust in Russia. The first dimension is the target dimension (sociotropic vs. egocentric), the second dimension is the time dimension (retrospective vs. perspective). The study is based on the microdata of 2016 Life in Transition Survey (LiTS) of the European Bank for Reconstruction and Development. We find a robust evidence in favor of the dominant sociotropic channel of political trust. Thus, individuals, when deciding whether to trust or not trust into the Russian government, are primarily guided by the improvements in the external environment. Moreover, we find that the impact of sociotropic factors on political trust depends on the level of government. The improvements in political performance are the most important determinant of trust in the Russian president, while the institutional change and the economic development are the most important determinants in the models of trust in other government levels. Finally, we find that individuals who have lost their wealth show more trust than those who have preserved or increased it. However, this effect only works, if individuals are optimistic toward the future.
    Keywords: Political trust, sociotropic channel, egocentric channel Russia, microdata, Life in Transition Survey
    JEL: P26 P27 P37
    Date: 2021
  2. By: Yang, Junhong (Asian Development Bank Institute); Wu, Yu (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute)
    Abstract: Using the 2015 and 2017 waves of the China Household Finance Survey, we measured financial literacy and study its relationship to households’ demand for digital finance. We found that a majority of households in the People’s Republic of China possess limited financial literacy. The low level of financial sophistication is responsible for the low usage of digital finance among Chinese households. Further, the positive impact of financial literacy on digital finance is more pronounced for wealthy, high-income, and young households, women, and households in urban and coastal areas. Our results are robust to using a variety of specifications and controlling for endogeneity, peer effects, cognition, and voluntary self-exclusion.
    Keywords: financial literacy; digital finance; household finance; CHFS; People’s Republic of China
    JEL: D10 D83 D91 G11
    Date: 2020–12–25
  3. By: Ruixue Jia; Xiaohuan Lan; Gerard Padró I Miquel
    Abstract: While intergenerational transmission of entrepreneurship is a well-known regularity, we hypothesize that in a transition economy where the state retains an important role, those whose parents are government workers may also be more likely to become business owners. We test the hypothesis in China and show that (1) on average, both entrepreneurs and government workers have a higher likelihood of having children who own incorporated businesses and (2) In provinces where government involvement is higher, the likelihood that children of government workers (entrepreneurs) own incorporated businesses is significantly higher (lower). Our study demonstrates that the local economic business environment shapes the influence of parental background on business ownership.
    JEL: D02 D72 O12 O38 O53
    Date: 2021–03
  4. By: Ballatore, Benedetto Francesco
    Abstract: Abstract. After 1990, at the close of the communist era, Russia’s agriculture embraced an ample process of transformation. The transition from centralized agriculture to a modern, competitive and sustainable agriculture was marked by several reform failures. Nonetheless, the Eurasian country's agro-food sector and in particular the grain industry thrived remarkably after 2014 in the wake of the Western countries-imposed sanctions on Russia in response to Moscow’s annexation of Crimea. In fact, Russia's policymakers recognized Kremlin's decision to impose complete food imports ban on the EU, US and some other Western countries as an opportunity to re-launch the agro-food sector. At present, the government seizes the sector's economic potential also as a strategy for economic diversification of the country, which is too much tied up to the oil and gas industry performances. In fact, in the Putin era the establishment of integrated agricultural holdings was supported by well-balanced agricultural reforms that had an important role for the modernization of Russia’s grain industry. In this regard, the main purpose of this paper is to analyse the agro-food policies developed by the Russian government, the reasons behind the success of Russia’s grain industry in the Middle East and North Africa regions (the so-called MENA countries) and the weaknesses it still confronts, both internal and external.
    Keywords: KEYWORDS: MENA countries; Russia
    JEL: F5 Q17 Q18
    Date: 2021–03–01
  5. By: Berulava, George; Gogokhia, Teimuraz
    Abstract: The study investigates the impact of business environment on export performance of individual firms in transition economies. For these goals, the study utilizes the firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS V round) across 28 transition economies. Applying the modified CDM model the paper examines the structural link between the business environment reforms, firm R&D, innovation, labor productivity, and export performance. The model was estimated sequentially, step-by-step. The estimates of the structural model, generally, proved our hypothesis about the impact of business environment reforms on the relationships between R&D investments, innovation, labor productivity and export performance. This study also supports the early findings that R&D is an important determinant of innovation, that innovation is a driver of labor productivity and that labor productivity, in turn, substantially increases the probability of firm’s participation at export markets.
    Keywords: Business environment reforms, R&D, Innovation, Productivity, Export, Transition economies
    JEL: D22 O12 O31 O38 P31
    Date: 2021
  6. By: Matej Belin
    Abstract: This paper uses a quasi-differences-in-differences approach to identify impacts of robotisation and exposure to robots owned by foreign competitors on labour market outcomes of Czech workers. Utilising employee-level data allows for identification of differential impacts on workers of different skill levels. We find that while robot adoption substantially increases demand for college-educated labour, demand for employees with an elementary and/or high school diploma decreases slightly. Exposure to robots owned by foreign competitors also seems to drive up the demand for college graduates and to suppress the demand for workers with lower qualifications.
    Keywords: automation; differences-in-differences;
    JEL: F61 J29
    Date: 2021–03
  7. By: Aleksandar Vasilev (Lincoln International Business School, UK.)
    Abstract: We introduce firing costs into a real-business-cycle setup augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). We investigate the importance of such labor market frictions for cyclical fluctuations in Bulgaria. Firing costs decrease employment volatility and pro-cyclicality, where both effects come at odds with data. Besides those, we do not find other important effects of firing costs for business cycle fluctuations in Bulgaria.
    Keywords: business cycle fluctuations, labor markets, firing costs, Bulgaria.
    JEL: E24 E32
    Date: 2021–03
  8. By: Voicilas, Dan Marius
    Abstract: During the last years, the strategies and policies in the world have moved to bioeconomy concept. However we define the bioeconomy, the future of humanity will have to focus on this concept and what derives from it. For European countries, whether EU states or non-EU countries, the bioeconomy will play an important role in their national economy, by policies and strategies promoted. The goals of this paper are to present the bioeconomy concept, the EU bioeconomy strategic agenda, the state of the national bioeconomy strategies creation and implementation at EU level, and the main opportunities and challenges for CEE countries. To carry out this work, data available from different European bodies with responsibilities in this field were used. A text analysis of these documents, a comparative analysis of the implementation stages, as well as forecasts on the chances of approval and implementation of these strategies in the next period were performed. Part of the results of this study is based on the analyses carried out within the Horizon 2020 project "Advancing Sustainable Circular Bioeconomy in Central and Eastern European countries" (BIOEASTsUP). Through the results of this research we consider that, we can offer a broad perspective on the bioeconomy at the level of the EU, CEE countries, as well as Romania, with their own characteristics, opportunities and challenges for the near future.
    Keywords: Bioeconomy, EU Strategic Agenda, National strategies, CEE countries
    JEL: Q57
    Date: 2020–11–19
  9. By: Savu, A.
    Abstract: Does the control of local offices benefit parties in national elections when local incumbents are not strategically supported by the central government? To address this question, I study the national electoral effects of local party incumbency in the context of a technocratic central government instituted following an unexpected tragic event that forced the resignation of the previous government. Using a regression discontinuity method applied to mayoral races in Romania, I document that the control of local offices causally generated significant vote share premia in the 2016 parliamentary ballot - estimated at 10-11 percentage points, or roughly one fourth of the dependent variable’s mean. My results show that the affiliation of local incumbents can be consequential for parliamentary power absent a contemporaneous party alignment linking local and central governmental forces.
    Keywords: Central and Local Governments, Reverse Coattails, Local Incumbency, Clientelism, Political Parties, Elections
    JEL: D72 D73 H50 H72 H77
    Date: 2021–01–06
  10. By: Metodieva, Tsvetana Harizanova; Bartos, Hristina Harizanova
    Abstract: The paper explores the relation between emitted CO2 in the atmosphere, asset expenditure, produced energy from renewables and energy consumption. ARDL model was developed on the basis of data for Bulgaria (2000 – 2018). As a whole the increase in asset expenditures leads to increase in emitted carbon dioxide in the short-run and in the long-run. The increase in the produced energy from renewables leads to decrease in the emitted carbon dioxide in a long-run, while in the short-run the relation is insignificant. In a short-run the energy consumption and emitted carbon dioxide are in a positive relation: the increase in energy consumption leads to increase in the emitted pollutant.
    Keywords: ARDL model, emitted CO2, asset expenditures, produced energy from renewables, energy consumption.
    JEL: C32 Q50
    Date: 2020–11–19
  11. By: Fedorchukova, Svetlana; Boris, Boris; Gobirman, Galina
    Abstract: The coronavirus pandemic has made its own adjustments in all sectors of the national economy and in the social sphere. This year's drought has also negatively impacted the agricultural sector. Viticulture and winemaking, being strategic sectors of the national economy, suffered heavy losses. The aim of this work is to study the changes in the wine-making complex of the Republic of Moldova under the influence of the pandemic and other related factors. As information sources we used the information obtained from the National Office of Vine and Wine, Ministry of Agriculture, Regional Development and Environment, National Statistics Center of the Republic of Moldova, Academy of Sciences of Moldova , the daily “Logos press”. As working methods were used: systemic data analysis; their mathematical-statistical processing; determining the multiple socio-economic indices that characterize the actuality of the wine complex of RM. The main results of the researches: The COVID-19 pandemic has closed practically all social entities, which sell tangible quantities of domestic wines and spirits on the domestic market; The reserves-stocks of 18 million dal of quality wines from the 2019 harvest, currently existing in the country, will satisfy the export demand in the amount of 100%; Among the existing reserves in the increase of sales of high quality wines, remarkable is the online trade, both on the domestic market, but especially on the international one.
    Keywords: wine, vine, harvest, consumption, winery, local market, profit.
    JEL: Q13
    Date: 2020–11–19
  12. By: Ozana Nadoveza Jelić (The Croatian National Bank, Croatia, Faculty of Economics and Business, University of Zagreb, Croatia); Rafael Ravnik (Macrodea, Croatia)
    Abstract: This paper describes the latest version of the semi-structural macro model of Croatia – the PACMAN (Policy Analysis Croatian MAcroecoNometric) model. PACMAN is a medium-sized macroeconometric model with a high level of aggregation, which accounts for the relationships among key macroeconomic variables in a systematic manner. Although highly aggregated the model is sufficiently detailed to be able to describe the most important characteristics of the Croatian economy. The model follows the approach of many central banks in the EU (e.g. Austria, France, Poland, Italy and ECB etc.). PACMAN is designed in a way as to be usable for: (i) forecasting, (ii) scenario and (iii) policy simulation exercises at the CNB. PACMAN is also used in the context of financial sector stress testing. The model’s core equations adhere to economic theory but are also modified so as to have a good empirical fit. Due to its theoretical consistency and numerous transmission channels, PACMAN can provide a narrative for sources and consequences of economic developments.
    Keywords: semi-structural model, Croatia, simulations, forecasting
    JEL: C32 C51 C53 E2 E3
    Date: 2021–02

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