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on Transition Economics |
| By: | Pham, Thai Minh; Tran, Tuyen Quang |
| Abstract: | Drawing on the Young Lives data obtained from three cycles of surveys from 2006 to 2016, our study examines factors affecting children’s cognitive ability in Vietnam. Controlling for the conditional wealth, which is the residual of the regression equation of the household wealth index in 2006 and 2013, our study provides evidence that conditional wealth has an effect of increasing the cognitive capacity of 15-year-old children, manifested in all three methods of measurement: by vocabulary points, math scores and reading comprehension scores in Vietnamese. This finding once again confirms that late intervention after the first 1,000 days has a positive impact on children's cognitive ability. Notably, our finding suggests that using the conditional wealth enables to capture the impact of economic shocks, which in turn have a significant effect on the cognitive ability of children in Vietnam. |
| Keywords: | household wealth; conditional wealth; cognitive skills; the gender gap |
| JEL: | D1 D10 D13 D6 D62 D63 |
| Date: | 2021–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107168&r=all |
| By: | David Szakonyi (George Washington University) |
| Abstract: | Cracking down on corruption has become a key tool for politicians to build popular support. But little is known about whether anti-corruption measures actually change political behavior. This paper evaluates the effects of a common reform -- financial disclosures -- using data on 25,724 elections in Putin-era Russia. I argue that financial disclosures function like a personal audit, generating information for journalists and prosecutors to investigate illicit gains earned inside and outside of government. Exploiting staggered elections, I find that the passage of a disclosures requirement led to roughly 25% fewer incumbents seeking re-election and 10% fewer candidates with suspicious financial histories. Greater media freedom and law enforcement capacity further increase the risk of corruption and tax evasion being exposed, resulting in even fewer candidacies from those criminally exposed. Increasing transparency changes the incentives for serving in elected office, even in settings where other political motives may be at play. |
| Keywords: | corruption; anti-corruption; Russia; reforms; elections |
| JEL: | D7 H40 D73 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2020-21&r=all |
| By: | Matthias Diermeier; Hannah Frohwein; Aljoscha Nau |
| Abstract: | The radical right in Europe seemed to be on an unprecedented rise. In the run-up to the European Parliament elections in 2019, a newly founded ‘super-faction’ profoundly scared established politicians. In contrast to the widespread fear of a consolidated right-wing, this contribution carves out that the radical right’ policy congruence in the European Parliament is limited due to internal division primarily caused by the parties’ nativist core ideology. Splitting the radical right into its Eastern and Western European offshoots, reveals a significant economic nativism that systemically prevents comprehensive interregional cooperation. What is more, despite common authoritarian grounds with foreign powers such as the Peoples Republic of China and Russia and their significant advance on influencing the European radical right, nativism divides the radical right also in their stance on foreign autocracies. Whereas economic nativism triggers an opposition against China within the Western European radical right, political nativism in the East obviates cooperation between European rightwingers regarding Russia. |
| Keywords: | radical right, authoritarianism, nativism, economic policy, European Parliament |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:167&r=all |
| By: | Mitchell Orenstein; Bojan Bugaric |
| Abstract: | Since 2008, Hungary and Poland have developed a distinctive populist economic program, which has begun to spread to other Central and East European Countries (CEECs). This article develops a theory of the political economy of populism in CEECs, arguing that these countries’ dependence on foreign capital constrained them to follow (neo)liberal economic policies. After the global financial crisis, populist parties began to break from the (neo)liberal consensus, “thickening” their populist agenda to include an economic program based on a conservative developmental statism. Case studies of Hungary, Poland, and Serbia describe these policies and show that they exhibit a particular form of economic nationalism that emphasizes workforce activation, natalism, and sovereignty. This shift has gone hand-in-hand with attempts to attract investments from Eastern authoritarian states, illustrating the connection between CEEC development strategies and sources of foreign capital. |
| Keywords: | Political economy, populism, Central and Eastern Europe, development statism |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:163&r=all |
| By: | Richard Juřík (Ministry of the Environment of the Czech Republic); Nils Axel Braathen (OECD) |
| Abstract: | This paper assesses the design of the air pollution tax in conjunction with a stringency analysis of the emission concentration limits in the Czech Republic. The analysis draws upon a detailed database containing environmental reporting by industrial stationary sources. The assessment of the emission concentration limits focuses on analysing the shift of the statutory limits between 2013 and 2017 and the corresponding real-life measured concentration on individual source basis. It provides an assessment of stringency of the air protection instrument and also of the vintage differentiation applied in the form of transitional schemes. The stringency analysis of the emission concentration limits stringency is related to the air pollution tax relief provision. |
| Keywords: | air pollution, air pollution tax, air protection, emission concentration limits, environmental policy, policy design |
| JEL: | H21 H23 K32 P48 Q50 |
| Date: | 2021–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:174-en&r=all |
| By: | Merike Kukk; Natalia Levenko |
| Abstract: | The paper investigates how much alternative options for corporate financing have affected the quality of domestic corporate bank loans in Estonia. We use quarterly data from 2004Q1–2019Q3 and three different methods to detect the relationship between the non-performing corporate loans of domestic banks and alternative sources of financing for firms. We find that a rise in intra-group borrowing from parent companies is associated with an increase in overdue corporate loans. There is also some evidence that foreign bank loans and trade credit might be positively related to non-performing corporate loans. The results suggest that a broader set of sources of corporate financing beyond domestic bank loans should be considered when assessing the dynamics of the overdue corporate loans of the domestic banking sector. |
| Keywords: | corporate debt, non-performing loans, alternative financing, Bayesian model averaging, local projection method |
| JEL: | G32 G34 C11 C14 |
| Date: | 2021–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2020-6&r=all |
| By: | Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Kiril Tochkov (Texas Christian University, Fort Worth, TX, US) |
| Abstract: | The lack of developed financial markets and well-functioning transmission channels assigns monetary aggregates in emerging economies the potential role of nominal anchor, intermediate target, or informational variable for monetary policy. The effectiveness of this approach relies crucially on the correct measurement of money, which is not fulfilled by the conventional index based on the simple sum of financial assets. This paper calculates alternative Divisia monetary aggregates for Russia over the period 1998-2019, which account for the level of liquidity of a given monetary asset by assigning weights according to the usefulness of that asset for transaction services. Divisia is found to follow a growth pattern markedly different from the simple sum, whereby deviations between the two series are even more pronounced when foreign-currency accounts are included. We conduct three empirical exercises to demonstrate the advantages of Divisia over the simple sum. Divisia confirms the stability of the money demand function and reflects portfolio shifts in response to changes in the opportunity cost of simple sum. Lastly, Divisia mitigates the price puzzle phenomenon relative to the conventional measure. We conclude that Divisia monetary aggregates would improve the effectiveness of monetary policy in Russia. |
| Keywords: | Monetary policy, monetary aggregates, Divisia, nowcasting, Russia |
| JEL: | C43 E41 E52 O52 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:fds:dpaper:202101&r=all |
| By: | Marta Gancarczyk; Marta Najda-Janoszka; Jacek Gancarczyk; Robert Hassink |
| Abstract: | The Małopolska region in southern Poland has a long tradition of mature and heavy industries, but more recently also new, unrelated industries have been emerging in this region, such as knowledge intensive business services. At the same time, innovation policies have been decentralizing over the last 20 years in Poland and in the Małopolska region, therefore, the effects of regional innovation policies on regional industrial transformation (RIT) have grown. Against this background, the paper aims to explain the role of regional innovation policies in regional industrial transformation from a co-evolutionary perspective. For this purpose, it extends the common co-evolutionary theoretical framework with interaction mechanisms, i.e. the processes underlying policy-industry mutual influences, and thus explaining their co-evolution. Interaction mechanisms allow us to better understand the major directions in industrial development and in policy approach, namely, the exploitation of extant capabilities and the exploration of new economic areas. The role of innovation policy in the Małopolska RIT can be described as predominantly assisting and adjusting to industrial change with some level of proactive promotion of new industrial opportunities. Overall, we observe reciprocal relationships with regional industry rather than unidirectional influence of this policy. We find this dynamic interaction a positive phenomenon that enabled the evolution of policy to balance the exploitative and explorative approaches to industrial development. |
| Keywords: | regional innovation policies, regional industrial transformation, co-evolution, Małopolska, Poland |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwpeg:geo-disc-2021_03&r=all |
| By: | Radostin Neykov; Caroline Robert |
| Abstract: | This paper explores the role of the euro in a number of Eastern neighbours to the EU that are part of the Eastern Partnership (EaP) initiative: Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine. Based on a survey conducted by the European Commission at the end of 2019 on the use of the euro and other currencies in these countries, as well as desk research, it looks into four dimensions: crossborder trade transactions, foreign exchange reserves, external public debt and the commercial bank sector. It finds that most of the EaP countries are skewed towards using the US dollar. This reflects both historical developments and the efficiency of the US dollar financial market. However, the growing political ties and economic exchanges between these countries and the EU provide a rational basis for a greater role of the euro. Since 2014, the euro is steadily increasing its share in trade invoicing and debt stock in a number of countries. Overall, Moldova stands out by a large margin as it uses the euro in more than half of its total international transactions. At the other end of the spectrum are Georgia and Armenia, where the euro plays a more moderate role in most areas. Based on these findings, the paper highlights some areas where the EU could encourage the use of the euro in the region through enhanced economic diplomacy and policy initiatives that would increase its attractiveness such as development of instruments that create sufficient supply of safe euro assets or target niche segments where the EU could play a leading role (for example social bonds, green bonds). |
| JEL: | E41 E42 E52 E58 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:138&r=all |
| By: | Biljana Jovanovic (National Bank of the Republic of North Macedonia); Marko Josimovski (National Bank of the Republic of North Macedonia) |
| Abstract: | In this paper, we investigate the effects of monetary policy concerning the inflation rates specific for each income group of households. We find that the prices specific for high-income households are generally more rigid and less volatile compared to the prices specific for middle and lower-income households. This means that monetary policy can differently affect the different inflation rates specific for each of the income groups. By using a Factor-Augmented VAR (FAVAR) model, we show that a monetary policy shock affects high-income households less compared to middle and lower-income households, although the differences between the separate income groups are generally small. Then, by using a small scale gap model, we find that the prices of low-income households are the most sensitive to a monetary policy shock, while the prices of the top-income households are the least sensitive to the shock, which is in line with our empirical findings. |
| Keywords: | Inflation, monetary policy, distributional effects |
| JEL: | E31 E52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:mae:wpaper:2021-01&r=all |
| By: | Haykaz Igityan (Monetary Policy Department, Central Bank of Armenia); Hovhannes Manukyan (Monetary Policy Department, Central Bank of Armenia) |
| Abstract: | This paper discusses the evaluation of structural parameters and estimated potential economic growth of Armenia using different specifications of DSGE models. We extend the simple models so that they are consistent with a balanced steady state growth path driven by deterministic labor-augmenting technological progress. Using a Bayesian likelihood approach, paper estimates DSGE models for the Armenian economy using three macro-economic time series. As a result, the dynamics of estimated potential economic growth of the model with demand and mark-up shocks is consistent with economic stylized facts contrary to other models that have no demand and markup shocks or only have one of these shocks. Additionally, estimated potential economic growth of the model with demand and markup shocks shows high correlation with other estimates of Central Bank of Armenia. Paper then structures and estimates two specifications of simple RBC model and the estimated potential economic growth of the model with persistent permanent productivity is identical with DSGE’s one. We show that our models are able to beat Vector Autoregression (VAR) models in out-of-sample forecasting of economic growth. |
| Keywords: | Bayesian Estimation, VAR, Real Business Cycles, DSGE |
| JEL: | C11 C32 E12 E32 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:ara:wpaper:014&r=all |
| By: | Merike Kukk; Jaanika Merikyll; Tairi Room |
| Abstract: | There is abundant evidence on the gender wage gaps across countries, but much less is known about the gender differences in personal wealth. This paper provides comparative estimates of the gender wealth gaps for 21 European countries, employing data from the Household Finance and Consumption Survey. A common problem for studies focusing on this topic is that the data on wealth are usually provided at the household level and not at the individual level. This means it is only possible to estimate gender wealth gaps for single-person households. To overcome this constraint, we propose a novel approach using a model averaging methodology to predict individualised wealth data for multi-person households. We find that the gender wealth gaps tend to be in favour of men in the whole population, especially when estimated at the top of the wealth distribution. In contrast, the estimated gaps in the subset of single-person households tend to be statistically insignificant. The country-level gender wealth gaps are correlated with overall wealth inequality but not with gender gaps in pay and employment. |
| Keywords: | gender gap, imputation, model averaging, wealth distribution, inequality, intra-household allocation of wealth, household finance, Europe |
| JEL: | D31 G51 J16 J71 |
| Date: | 2021–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2020-7&r=all |
| By: | Stella Mnoyan (Monetary Policy Department, Central Bank of Armenia) |
| Abstract: | In this paper, we develop a semi-structural macroeconomic model to estimate the Exchange Rate Pass-through in Armenia using Bayesian estimation. The pass-through both to import prices and core inflation is somewhat lower than the average results for comparable emerging economies reported in the literature. As we calculate time-varying pass-through rates we also explore critical factors causing shifts over time. The macroeconomic view of exchange rate pass-through incompleteness, especially the monetary policy credibility factor, plays a significant role. |
| Keywords: | Purchasing Power, Taylor Rule, Risk Premia, Exchange Rates, Exchange Rate Pass-through, Output Inflation, Bayesian Analysis, Econometric Modeling, Simulation |
| JEL: | F31 E31 E37 C11 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:ara:wpaper:013&r=all |
| By: | Erik Vardanyan (Economic Research Department, Central Bank of Armenia) |
| Abstract: | The paper explores the impact of workers’ remittances on the level of export diversification. The hypothesis is that significant inflow of remittances causes overvaluation of real exchange rate, which in turn deteriorates diversity of export. The theoretical base is in line with the Dutch disease phenomenon. The paper uses annual cross-national panel data over 2000-2016 period and System GMM methodology. The evidence suggests that indeed large inflow of remittances is associated with less diversified export. The economic intuition behind is that remittance-caused real exchange rate appreciation unevenly suppresses export of goods: some goods "suffer" more than others do. In terms of the number of product-names, a percentage point increase in remittances to GDP sent home "reduces" variety of export by approximately five active lines. There are other interesting findings as well. An improvement of government effectiveness facilitates overall export diversification; terms of trade improvement and rise of real exchange rate volatility mostly increase export concentration rather than alter number of exported product-names. |
| Keywords: | remittances, export diversification, export concentration, export variety, real exchange rate, System GMM |
| JEL: | F14 F24 F31 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ara:wpaper:010&r=all |