nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒08‒16
eleven papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. The Political-Economic Causes of the Soviet Great Famine, 1932–33 By Andrei Markevich; Natalya Naumenko; Nancy Qian
  2. Separating the political from the economic: the Russia–traffic in transit panel report By Crivelli, Pramila; Pinchis-paulsen, Mona
  3. Measuring heterogeneity in banks’ interest rate setting in Russia By Anna Burova; Alexey Ponomarenko; Svetlana Popova; Andrey Sinyakov; Yulia Ushakova
  4. Monetary autonomy of CESEE countries and nominal convergence in EMU: a cointegration analysis with structural breaks By Léonore Raguideau-Hannotin
  5. Applying Evolutionary Economic Geography beyond case studies in the Global North: Regional diversification in Vietnam By Moritz Breul; Fabio Pruß;
  6. Urban Poverty in Vietnam: Recent Evidences from Household Surveys By Nguyen, Cuong
  7. COVID-19 and the gig economy in Poland By Maciej Ber\k{e}sewicz; Dagmara Nikulin
  8. Paternal Circular Migration and Development of Socio-Emotional Skills of Children Left Behind By Davit Adunts
  9. Subjective Well-being, Income, and Ethnicity in Slovakia By Želinský, Tomáš
  10. Choose the school, choose the performance. New evidence on the determinants of student performance in eight European countries By Bonacini, Luca; Brunetti, Irene; Gallo, Giovanni
  11. Financial Dollarization in Emerging Markets: Efficient Risk Sharing or Prescription for Disaster? By Lawrence Christiano; Hüsnü Dalgic; Armen Nurbekyan

  1. By: Andrei Markevich; Natalya Naumenko; Nancy Qian
    Abstract: This study constructs a large new dataset to investigate whether state policy led to ethnic Ukrainians experiencing higher mortality during the 1932–33 Soviet Great Famine. All else equal, famine (excess) mortality rates were positively associated with ethnic Ukrainian population share across provinces, as well as across districts within provinces. Ukrainian ethnicity, rather than the administrative boundaries of the Ukrainian republic, mattered for famine mortality. These and many additional results provide strong evidence that higher Ukrainian famine mortality was an outcome of policy, and suggestive evidence on the political-economic drivers of repression. A back-of-the-envelope calculation suggests that bias against Ukrainians explains up to 77% of famine deaths in the three republics of Russia, Ukraine and Belarus and up to 92% in Ukraine.
    JEL: N14 O1 O13 P16
    Date: 2021–07
  2. By: Crivelli, Pramila; Pinchis-paulsen, Mona
    Abstract: This paper reviews the World Trade Organization (WTO) Panel Report Russia – Measures Concerning Traffic in Transit of April 2019. It constitutes the first attempt to disentangle the legal and political aspects related to the invoked essential security interests from the economic considerations underlying the measures imposed on the transit through Russia of goods exported from Ukraine to the Republic of Kazakhstan and Kyrgyzstan. One the one hand, the panel’s interpretation of Article XXI of the GATT denies Members unilateral determination over security exceptions. It further enables a pathway for future WTO panels to review possible abuses of security exceptions – a growing concern due to the rising complexity of transnational economic relations. On the other hand, our economic analysis suggests a stricter assessment of Russia’s transit restrictions was necessary. In particular, it argues that the panel adopted a circular assessment when considering the plausibility of whether Russia implemented its measures for the protection of its essential security interests at a time of emergency in international relations. Ultimately, although the panel’s focus on finding a diplomatic and legal path forward failed economic scrutiny a legal assessment argues that the panel’s findings fit the legal design of Article XXI:b of the GATT.
    Keywords: WTO; dispute settlement; national security; transit; trade barriers; Russia; CUP deal
    JEL: L81
    Date: 2021–07–14
  3. By: Anna Burova (Bank of Russia, Russian Federation); Alexey Ponomarenko (Bank of Russia, Russian Federation); Svetlana Popova (Bank of Russia, Russian Federation); Andrey Sinyakov (Bank of Russia, Russian Federation); Yulia Ushakova (Bank of Russia, Russian Federation)
    Abstract: We use credit registry data on all corporate loans issued by all Russian banks since 2017 to decompose the bank interest spreads into a common factor, as well as borrower and lender-related components while controlling for loan characteristics. We find that variation in loan rates associated with lender-specific factors (heterogeneity of banks) and borrower-specific factors (heterogeneity of borrowers) is substantial. We use the identified bank-specific components to measure fragmentation of the corporate credit market in Russia. We illustrate the developments in the Russian credit market during the pandemic using the obtained estimates. The results indicate that heterogeneity in banks’ interest rate setting is high and increased in the early stage of the pandemic. The range of borrower-related premiums charged by banks also widened (mostly due to increase in rates of loans to companies in sectors presumably affected by the pandemic). Finally, our results suggest that banks tightened non-interest loan conditions during the pandemic.
    Keywords: bank interest margin, bank interest spread, corporate credit, credit registry, financial stability, credit market fragmentation, Russian banking sector in the pandemic.
    JEL: E44 E51 E52 E58 G21 G28
    Date: 2021–07
  4. By: Léonore Raguideau-Hannotin (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre)
    Abstract: This paper investigates the monetary autonomy of Central Eastern and South Eastern European countries with the Euro area. These countries are European Union Member States that have not adopted yet the Euro single currency. Despite high degree of convergence as measured by Maastricht criteria, four of them do no plan to enter the Euro area soon. We therefore assess monetary autonomy of these countries over the long run through the use of a multivariate cointegration methodology with structural breaks (Johansen et al., 2000). This methodology allows us to capture the multidimensional aspects of monetary autonomy in the context of nominal convergence in the Economic and Monetary Union, by including both domestic and Euro area variables into the system (policy rates, inflation rates, exchange rate). It also enables us to exploit all information contained in the macroeconomic series of these countries, for which broken economic history translates into non-stationary time series with breaks. Our empirical results suggest that modelling structural breaks changes the number and/or nature of cointegrating relations between our variables compared to the standard error correction model without breaks. With this modelling, we fi nd monetary policy spillover from the Euro area to Bulgaria, the Czech Republic, Hungary and Romania. The inclusion of Euro area inflation to our baseline model enriches the cointegrating relations for the Czech Republic and Bulgaria. Poland is found to be the most monetary-independent country of our study across the various models estimated. On the other hand, Romania's monetary interdependence with Euro area is better modelled without taking into account any structural break.
    Abstract: La motivation de ce papier est de comprendre les interdépendances existant entre les politiques monétaires conventionnelles menées par les pays CESEE membres de l'Union Européenne et par la zone Euro. Elles sont théoriquement renforcées par la convergence nominale à l'œuvre dans ces pays (et telle que mesurée par certains critères de Maastricht) et les trilemme et dilemme de politique monétaire. Pour autant, les pays CESEE en régime de change flottant ne sont pas candidats à l'adhésion au Mécanisme de Change Européen II, dernier stade du processus d'adhésion à l'Euro. La question de recherche posée se rapporte ainsi au degré d'autonomie des politiques monétaires domestiques par rapport à la zone Euro. La principale contribution de ce papier est de proposer une analyse de cointégration multivariée par pays des variables de politique monétaire domestique (augmentées des variables monétaires de la zone Euro et du taux de change), robuste aux ruptures structurelles caractéristiques des séries macroéconomiques de ces économie en transition. Nos résultats confirment la pertinence de cette modélisation à ruptures pour la Bulgarie, la Hongrie et la République Tchèque. Le degré de dépendance monétaire est lié aux régimes de change, sans que cela soit vérifié pour la Croatie. La Pologne est le pays le plus autonome monétairement sur longue période et l'interdépendance entre la Roumanie et la zone Euro est mieux modélisée sans prendre en compte de rupture structurelle.
    Keywords: CESEE countries,Economic and Monetary Union,European Union,Nominal convergence,Monetary autonomy,Structural breaks,Cointegration,EMU,EU
    Date: 2021–02–21
  5. By: Moritz Breul; Fabio Pruß;
    Abstract: Hitherto, the path-dependent understanding of regional diversification in Evolutionary Economic Geography (EEG) has drawn largely on insights into industrialized countries. However, in the past few decades several regions in the Global South have undergone rapid structural transformations despite starting out with unfavourable regional asset bases. This raises the question as to whether the strong emphasis on endogenous capabilities in EEG also provides a sound theoretical framework for explaining these tremendous diversification dynamics. This paper therefore aims to re-evaluate the wider validity of the path-dependent conceptualization of regional diversification in the context of a lower-middle income economy. To this end, we analyse the diversification of Vietnamese regions between 2006 and 2015. In order to take into account context-specific conditions that characterize Vietnam’s economy, we add the role of foreign-owned firms and state-owned enterprises to the conceptualization of regional diversification processes. While the role of relatedness holds true for Vietnam, the presence of foreign- owned firms allowed Vietnamese regions to break away from path dependency and diversify to unrelated industries. The findings highlight that only by adapting the analysis to context-specific conditions are we able to understand how regional diversification takes place across different settings.
    Keywords: Regional diversification, relatedness, Evolutionary Economic Geography, path creation, Vietnam
    Date: 2021–07
  6. By: Nguyen, Cuong
    Abstract: This study examines the poverty trend and profiles of urban population in Vietnam using recent household surveys. While the poverty rate in the urban areas is very small, at 1.1% in 2018, the vulnerability rate remains rather high, at 8.3%. We find different poverty rates across population sub-groups. Even living in the same urban areas, ethnic minorities have much higher poverty and vulnerability rates than Kinh/Hoa. The poverty rate of Kinh/Hoa was only 0.6% in 2018, while this rate of ethnic minorities was 14.6%. Similarly, there are large differences in the poverty and vulnerability rates between households with different education levels and occupations.
    Keywords: Urbanization; Urban poverty; Inequality, Household Survey; Vietnam.
    JEL: O2
    Date: 2020–07–15
  7. By: Maciej Ber\k{e}sewicz; Dagmara Nikulin
    Abstract: We use a dataset covering nearly the entire target population based on passively collected data from smartphones to measure the impact of the first COVID-19 wave on the gig economy in Poland. In particular, we focus on transportation (Uber, Bolt) and delivery (Wolt, Takeaway, Glover, DeliGoo) apps, which make it possible to distinguish between the demand and supply part of this market. Based on Bayesian structural time-series models, we estimate the causal impact of the first COVID-19 wave on the number of active drivers and couriers. We show a significant relative increase for Wolt and Glover (15% and 24%) and a slight relative decrease for Uber and Bolt (-3% and -7%) in comparison to a counterfactual control. The change for Uber and Bolt can be partially explained by the prospect of a new law (the so-called Uber Lex), which was already announced in 2019 and is intended to regulate the work of platform drivers.
    Date: 2021–07
  8. By: Davit Adunts
    Abstract: This study investigates the short-run effect of paternal absence due to circular migration on the socio-emotional skills of their children left behind. To address the endogeneity of the migration decision, and building on previous studies, this study focuses on children whose fathers have all engaged in circular migration. Furthermore, using quasi-exogenous variation in the timing of return migration induced by bilateral migration laws between Ukraine and Poland, I circumvent the bias related to the return migration decision. The findings of this study suggest that current paternal absence due to circular migration negatively affects the socioemotional skills of children left behind. Overall, this result suggests that circular migration is not necessarily a "triple-win" solution that benefits all involved parties.
    Keywords: circular migration; children left behind; perseverance skills; formation of socioemotional skills;
    JEL: F22 O15 J24
    Date: 2021–07
  9. By: Želinský, Tomáš
    Abstract: This paper utilizes two measures of subjective well-being to test a hypothesis that a marginal increase in subjective well-being associated with a marginal increase in income is larger for poorer than for richer populations. This hypothesis is examined in the setting of Slovak Roma, who are poor in comparison to the non-Roma population. The results suggest that the correlation between income and satisfaction is greater for the lower-income group (the Roma) than for the higher-income group (majority population). Further, the correlation between income and emotional well-being does not differ between the two groups.
    Keywords: Satisfaction,Emotional well-being,Roma,Income,Poverty
    JEL: I31 J15
    Date: 2021
  10. By: Bonacini, Luca; Brunetti, Irene; Gallo, Giovanni
    Abstract: This study aims to identify the main determinants of student performance in reading and maths across eight European Union countries (Austria, Croatia, Germany, Hungary, Italy, Portugal, Slovakia, and Slovenia). Based on student-level data from the OECD’s PISA 2018 survey and by means of the application of efficient algorithms, we highlight that the number of books at home and a variable combining the type and location of their school represent the most important predictors of student performance in all of the analysed countries, while other school characteristics are rarely relevant. Econometric results show that students attending vocational schools perform significantly worse than those in general schools, except in Portugal. Considering only general school students, the differences between big and small cities are not statistically significant, while among students in vocational schools, those in a small city tend to perform better than those in a big city. Through the Gelbach decomposition method, which allows measuring the relative importance of observable characteristics in explaining a gap, we show that the differences in test scores between big and small cities depend on school characteristics, while the differences between general and vocational schools are mainly explained by family social status.
    Keywords: Gelbach decomposition,Education inequalities,Machine learning,PISA,Schooling tracking,Student performance
    JEL: I21 I24 J24
    Date: 2021
  11. By: Lawrence Christiano; Hüsnü Dalgic; Armen Nurbekyan
    Abstract: This paper pushes back against two views about the effects of dollarization. First, there is a view that the dollar is a device by which rich countries provide business cycle insurance to emerging market (EME) countries. We find that the dollar is important for risk sharing, but the evidence suggests that it is primarily a device to shift business cycle risk across different people within individual EMEs and within rich countries rather than across countries. Second, there is a widespread view that dollarization raises the risk of systemic banking and other crises. Although we identify sources of fragility in some aspects of dollarization, the common view that financial dollarization is a source of fragility is over-stated. Our insurance view about financial dollarization and the lack of risks to financial stability emerges from a study of a large cross-country dataset, as well as case studies for Peru and Armenia. We develop a simple model which formalizes the insurance view, which is consistent with the key cross-country facts on interest rate differentials, deposit dollarization and exchange rate depreciations in recessions.
    JEL: F3 F4 G15
    Date: 2021–07

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