nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒04‒12
thirteen papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Domestic Product versus Personal Income Convergence, within EU and Euro Area By OLTEANU, DAN
  2. Five Years of Inflation Targeting Without Economic Growth: What Should Be Changed The Case of Russia By Gasanov, Oscar
  3. Does digitalisation in public services reduce tax evasion? By Strango, Cristina
  4. Labor Informality and Credit Market Accessibility By Alina Malkova; Klara Sabirianova Peter; Jan Svejnar
  5. Empirical estimation of REER trend for Ukraine By Artem Vdovychenko; ;
  6. Resilience against the Pandemic: the Impact of COVID-19 on Migration and Household Welfare in Tajikistan By Satoshi Shimizutani; Eiji Yamada
  7. Analyzing social disadvantage in rural peripheries in Czechia and Eastern Germany : conceptual model and study design By Keim-Klärner, Sylvia; Bernard, Josef; Bischof, Susann; Dülmen, Christoph van; Klärner, Andreas; Steinführer, Annett
  8. The Effects of Fiscal Policy on Poverty and Inequality in Tajikistan By Dalmacio F. Benicio; William Seitz; Jon Jellema; Maya Goldman
  9. Closed Product Life Cycle as a Basis of the Circular Economy By Maria Vetrova
  10. Risk and Cost Sharing in Firm-to-Firm Trade By Cristina Herghelegiu; Evgenii Monastyrenko
  11. Gender and ethnic wage differentials inhibit growth: A shred of evidence By Muhammad Asali
  12. The Impact of Mass Antigen Testing for COVID-19 on the Prevalence of the Disease By Kahanec, Martin; Lafférs, Lukáš; Schmidpeter, Bernhard
  13. The Non-Linear Impact of Digitization on Remittances Inflow: Evidence From the BRICS By Emara, Noha; Zhang, Yuanhao

  1. By: OLTEANU, DAN (National Institute of Economic Research - Romanian Academy)
    Abstract: This study aims to assess the extent to which the economic integration process of the EU and the Eurozone, expressed by the convergence of GDP per capita, is reflected in the convergence of economic well-being of households, revealed by income and consumption, during the last 20 years (2000-2019). We find that, first of all, the convergence process of GDP per capita is strongly correlated with that of household income and consumption, both for the EU and the Eurozone level. This proves that GDP remains a relevant determinant of economic well-being of population. Secondly, our analyzes show that the socio-economic convergence process has been mainly supported by the growth of emerging Eastern European economies. Together with the declining Southern countries, they are converging to a level below the current EU average. On the other side are the developed countries of Central and Northern Europe, which include a core with constant developments well above the EU average and a group of poor performing countries, which tend to approaches the EU average. For the group of initial euro area members, the alternation of convergence/divergence tendencies, together with the coefficient of variation in 2019 located very close to the 2000 one, indicate a lack of convergence during this period, both for GDP and household income
    Keywords: growth convergence, well-being convergence, household income and consumption, EU integration
    JEL: O47 I31 O52
    Date: 2020–12
  2. By: Gasanov, Oscar
    Abstract: The article provides a review of approaches to assessing and analyzing the effectiveness of the interest rate and exchange rate policy of the Bank of Russia in the period 2015-2019. Despite the decrease in the rate of price growth, inflationary expectations of economic agents remain at a high level. Monetary policy continues to be tight. The stability of the exchange rate to external shocks, expected from the introduction of inflation targeting and a free floating rate, did not happen. The complex of conditions that have developed due to geopolitical factors, low growth rates and the global economic crisis caused by the coronavirus pandemic require the search for new targets, such as economic growth and exchange rate stability. To maintain the stability of the ruble exchange rate, it is recommended to sell foreign exchange reserves accumulated according to the "Budget rule" in an equivalent amount; to support the liquidity of banks during periods of an attack on the ruble, it should through foreign exchange REPO, and develop a derivatives market.
    Keywords: inflation targeting, consumer price index, exchange rate, monetary policy, Russian ruble, Bank of Russia
    JEL: E52 E58
    Date: 2020–10–20
  3. By: Strango, Cristina
    Abstract: The aim of paper is to investigate the impact of digitalisation from public services on tax evasion. The analysis targets the European Union 27 (EU-27) member states over the period 2015-2019 by using panel estimators. The findings prove a nonlinear relationship between digitalisation from public services and tax evasion by U-shape. More precisely, the acceleration of digitalisation in public services reduces the level of tax evasion up to a certain point. Once the acceleration reaches that point, the level of tax invasion increases once again.
    Keywords: tax evasion, digitalisation, EU27, panel estimations
    JEL: C23 C89 H26
    Date: 2021–03–28
  4. By: Alina Malkova; Klara Sabirianova Peter; Jan Svejnar
    Abstract: The paper investigates the effects of the credit market development on the labor mobility between the informal and formal labor sectors. In the case of Russia, due to the absence of a credit score system, a formal lender may set a credit limit based on the verified amount of income. To get a loan, an informal worker must first formalize his or her income (switch to a formal job), and then apply for a loan. To show this mechanism, the RLMS data was utilized, and the empirical method is the dynamic multinomial logit model of employment. The empirical results show that a relaxation of credit constraints increases the probability of transition from an informal to a formal job, and improved CMA (by one standard deviation) increases the chances of informal sector workers to formalize by 5.4 ppt. These results are robust in different specifications of the model. Policy simulations show strong support for a reduction in informal employment in response to better CMA in credit-constrained communities.
    Date: 2021–02
  5. By: Artem Vdovychenko (National Bank of Ukraine); ;
    Abstract: In this study, we apply BEER and FEER approaches to estimate the REER trend on Ukrainian data. By applying BEER we were able to identify the long-run factors which explain the dynamics of the REER trend. FEER approach gives us information on the determinants and measurements of the current account norm for Ukraine. Although the two approaches are different in their nature, both of them identify the periods of REER undervaluation in the first half of the 2000s, after the crises of 2008-2009 and 2014-2015. Significant overvaluation was detected in the period 2011-2013. For more recent years estimates indicate moderate overvaluation of the REER which decreased in the second half of 2020.
    Keywords: BEER, FEER, REER trend, misalignment, current account norm, underlying current account
    JEL: F31 F32
    Date: 2021–03–29
  6. By: Satoshi Shimizutani; Eiji Yamada
    Abstract: Tajikistan’s economy hinges heavily on remittance inflows mainly from Russia that have exceeded a quarter of annual GDP in recent years. The COVID-19 pandemic is likely to have adverse effects on the economy through damage to migration and remittances. We use a unique monthly household panel dataset that covers the period both before and after the outbreak to examine the impacts of COVID-19 on a variety of household welfare outcomes. We provide several brand-new findings. First, the adverse effects of the pandemic were particularly pronounced in April and May in 2020 but gradually diminished afterward, with some indicators leveling out in autumn. Second, in contrast to expectation, the pandemic had a sharp but only transitory effect on the stock of migrants working abroad in the spring. Some expected migrants were forced to remain in their home country during the border closures, while some of the incumbent migrants expecting to return were not able to do so, and remained employed in their destination countries. Both departures and returns started to increase again from summer. Employment and remittances of the migrants quickly recovered to levels seen in previous years, after a sharp decline in April and May. Third, regression analyses reveal that both migration and remittances have helped to mitigate the negative economic outcomes at home during the “with-COVID-19” period, suggesting that they served as a form of insurance. Overall, the unfavorable effects of the COVID-19 pandemic were severe and temporary right after the outbreak, but households with migrants were more resilient against the pandemic.
    Keywords: COVID-19, remittance, migration, Tajikistan, household welfare
    Date: 2021–01–19
  7. By: Keim-Klärner, Sylvia; Bernard, Josef; Bischof, Susann; Dülmen, Christoph van; Klärner, Andreas; Steinführer, Annett
    Abstract: The aim of this Working Paper is to introduce a conceptual model and study design for researching social disadvantage in rural peripheries, focusing on the interplay of social disadvantage and spatial disadvantage. The paper presents the theoretical concepts,understandings, and definitions, as well as the research design we draw on in the international research project ‘Social disadvantage in rural peripheries in Czechia and eastern Germany: opportunity structures and individual agency in a comparative perspective.’ The project investigates the multifaceted relationships between social disadvantage, local and regional opportunity structures,and individual agency in rural peripheries in Czechia and eastern Germany from a comparative perspective. It focuses on two sets of research questions. The first set concerns the quantitative patterns of social disadvantage and spatial disadvantage in rural areas. The second set asks about the impact of opportunity structures as part of the residential context on particularly disadvantaged groups in four case study regions. The project applies theories of peripheralization and rural restructuring, and considers social networks and individual agency. Area-level secondary data and accessibility analyses and qualitative case studies,including ego-centered network analyses and GPS mapping of time-space activity patterns,are used.
    Keywords: Community/Rural/Urban Development
    Date: 2021–04–09
  8. By: Dalmacio F. Benicio; William Seitz; Jon Jellema (CEQ Institute); Maya Goldman
    Abstract: The design of fiscal policies can either improve or worsen poverty and inequality. To quantify the effects of government taxation and social spending on measures of poverty and inequality in Tajikistan, we use the Commitment to Equity (CEQ) Assessment method with data from a survey called Listening to Tajikistan (2015) and fiscal data from administrative sources over the same period. We find that fiscal policy in Tajikistan contributes to an increase in the poverty rate (at the $US PPP 3.20 per person per day poverty line) by 5.12 percentage points. The results also show that the fiscal system achieves some modest redistribution despite a relatively small social expenditure budget. Although some transfers are well-targeted in Tajikistan, direct and indirect taxes fall heavily on poorer households and offset the poverty-reducing effect of public expenditures. The size of the main targeted social assistance program is insufficient to either remarkably reduce poverty or compensate for tax contributions among the poorest households. The findings suggest that social expenditures intended for the poor do not in practice reach their targets, and expenditures on universal services such as education and health care are spread evenly across the population. The strongest options for greater redistribution to support poor and vulnerable households include i) improved targeting of public expenditures, ii) greater progressivity by redesigning tax policy to collect a larger share of revenue from higher income people, and iii) larger transfer budgets for the best targeted expenditures such as Targeted Social Assistance (TSA).
    Keywords: Fiscal Incidence, Fiscal Policy and Inequality, Income Inequality, Poverty, Social Spending, Social Assistance, Taxation, Tajikistan
    JEL: H22 I38 D31
    Date: 2021–02
  9. By: Maria Vetrova (Faculty of Economics, Saint Petersburg State University, Russia. Author-2-Name: Dinara Ivanova Author-2-Workplace-Name: Faculty of Economics, Saint Petersburg State University, Russia. Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The circular economy aims to preserve the value of products and materials within a closed supply chain. The existing models and decision-making methods for managing the end of the product life cycle are mostly focused on the economic aspects. While the circular economy is aimed at combining environmental, economic and social goals. This article aims to develop a model for enterprise decision-making on the disposal of used products, taking into account socio-environmental and economic factors. Methodology/Technique - The article analyzes the impact of digital technologies on the formation of closed supply chains and the development of a circular economy. At the same time, special attention is focused on the model of a closed product life cycle, as a fundamental element in the formation of a circular economy at the micro and nano levels, as well as the importance of using digital technologies at all stages of the product life cycle. Findings - The methods of product management at the end of the life cycle studied in the article have made it possible to form a simulation decision support model regarding the method of product disposal, taking into account environmental and economic feasibility. Novelty - This study identified the main trends in the development of closed supply chains under the influence of digital technologies in the context of a circular economy. Type of Paper - Review
    Keywords: Circular Economy; Digital Technology; Decision-making Model; Closed-loop Supply Chains
    JEL: F42 F43
    Date: 2021–03–31
  10. By: Cristina Herghelegiu (ECARES, Université Libre de Bruxelles, B); Evgenii Monastyrenko (Department of Economics and Management, Université du Luxembourg)
    Abstract: Firms are exposed to important risks and costs when trading across borders. Based on a set of standardized rules known as Incoterms, firms decide ex ante how to delimit their responsibilities throughout the shipping process to reduce the inherent contractual frictions. This paper investigates how sellers and buyers share risks and costs in international trade transactions depending on the characteristics of the exchanged product. We rely on a highly detailed dataset involving all Russian exporters and their foreign customers during 2012-2015. Our results suggest that buyers are more likely to bear responsibilities for goods that are (a) more distant from final use and (b) less tailored to their specific needs. These results are reinforced for products that constitute important inputs for buyers but reversed when there is a positive difference between the buyer and the seller size.
    Keywords: Risks, Costs, Incoterms, Firms Exports.
    JEL: F14 D22 D23 L11
    Date: 2020
  11. By: Muhammad Asali (International School of Economics at Tbilisi State University, Georgia; IZA, Bonn, Germany; SIPA, Columbia University, NY)
    Abstract: Racial, ethnic, and gender wage differentials, in particular those that are not explained by human capital differences between the respective groups, are fixtures of labor markets in almost all countries, developed and developing alike. Discriminatory wage differentials have detrimental social and economic effects. Gender differentials have larger distortional effects than other ethnic and racial differentials, and might call for different policies to address them. Measuring and documenting wage and employment differentials is an essential first step towards eliminating these differentials, which in turn is a very important economic as well as social policy goal akin to the Sustainable Development Goals set by the international community.
    Keywords: Gender wage gap, ethnic wage gap, discrimination in the labor market, economic growth, wage differentials, economics of transition, labor market tightness
    Date: 2021
  12. By: Kahanec, Martin (Central European University); Lafférs, Lukáš (Matej Bel University); Schmidpeter, Bernhard (University of Linz)
    Abstract: More than 100 million people have been infected and 2.5 million people have died of COVID-19 globally as of February 2021. Mass antigen testing could help to mitigate the pandemic and allow the economy to re-open. We investigate the effects of mass antigen testing on the pandemic, using data from a uniquely designed nation-wide testing implemented in Slovakia in Autumn 2020. After the first round, only districts above an ex-ante unknown prevalence threshold were re-tested. Comparing districts above and below the threshold using a quasi-experimental design, we find that repeated mass antigen testing reduced infections by about 25-30% and decreased R0 by 0.3 two weeks after the re-testing; the effects on incidence peaked around that time and all effects gradually dissipated afterward. These results suggest that mass testing could be an effective tool in curbing the spread of COVID-19, but for lasting effects regular retesting would be necessary.
    Keywords: COVID-19, COVID-19 policies, antigen testing, mass testing, non-pharmaceutical interventions
    JEL: D04 I18 J22
    Date: 2021–03
  13. By: Emara, Noha; Zhang, Yuanhao
    Abstract: Due to the impact of COVID-19, it is important now more than ever to analyze the relationship between the improvement in digitization and the flow of remittances in order to fill the void that has come as a result of stay at home and quarantine orders. Using a comprehensive measure of digitization that encompasses the commonly used proxies of financial technology (Fintech) and employing a System Generalized Method of Moments (GMM) panel estimation methodology on annual data over the period 2004-2018, this paper examines the impact of digitization, as a proxy of Fintech, on the inflow of remittances for a sample of 34 developed and developing countries. Our analysis provides a case study on Brazil, Russia, India, China and South Africa (BRICS), known as five emerging markets with a great number of workers out of abroad and below the average level of digital transfers. Using the Digital Ecosystem Development Index developed by Katz and Calorda (2018), the results of the paper uncover a statistically significant nonlinear relationship between the improvement in digitization measures and the inflow of remittances with an exact threshold level. More specifically, our results for the full sample indicate that improvement in digitization may initially increase the remittances inflow leading to an increase in the stock of remittances received. Nevertheless, once the digitization index reaches its threshold level further improvement in digitization tends decrease as penetration increases, giving rise to a decline in the rate of remittances inflow. This result implies that the marginal effect of the digital penetration is larger when at its lower level, before the threshold level. For countries such as the BRICS, with a level of digitization below the average of our sample, policy makers should apply more aggressive and comprehensive policies to recoup the maximum gains of a digital ecosystem. Hence, our policy implications are directed towards increasing the investments in developing human capacity including carrying different skill development training programs to prepare individuals for the information age, expanding the internet coverage and speed especially in educational establishments, encouraging the use and access of electronic banking by consumers, producers, and governments, and taking cyber security and fraud protection more seriously to encourage the flow of remittances, especially in light of its renewed utility due to the recent pandemic.
    Keywords: Remittances; Digitization; FinTech; Financial Inclusion; BRICS
    JEL: C23 G21 O47
    Date: 2020–10–21

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