nep-tra New Economics Papers
on Transition Economics
Issue of 2022‒05‒16
ten papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Performance of the Chinese energy market in times of Russian military interventions By Tapia, Pablo; Pastén, Boris; Sepulveda Velasquez, Jorge
  2. Comparative analysis of the views and attitudes of elementary and secondary school pupils from the Czech Republic and Slovak Republic on the division of the Czech and Slovak Federative Republic (ČSFR) By Marcel Lincényi; Matej Mindár
  3. Cutting Putin’s Energy Rent: 'Smart Sanctioning' Russian Oil and Gas By Ricardo Hausmann; Agata Łoskot-Strachota; Axel Ockenfels; Ulrich Schetter; Simone Tagliapietra; Guntram Wolff; Georg Zachmann
  4. Economic Transition and Wage Gap Between Communist Party Members and Nonmembers in China By MA Xinxin
  5. A Minimalist Model for the Ruble During the Russian Invasion of Ukraine By Guido Lorenzoni; Iván Werning
  6. Integration of Technological and Social Components in a Smart Urban Development Model: A Case Study of China By Heshmati, Almas; Koohborfardhaghighi, Somayeh; Summers, Christopher R.
  7. How Distortive Are Turnover Taxes? Evidence from Replacing Turnover Tax with VAT By Jing Xing; Katarzyna Anna Bilicka; Xipei Hou
  8. Nowcasting Bosnia and Herzegovina GDP in Real Time By Antonio Musa
  9. Russia's oil & gas sector in global energy transition By Simola, Heli; Solanko, Laura
  10. An Optimizing IS-LM Model Specification with Inflation Targeting. Microeconomic Evidence for Price Adjustment By Vîntu, Denis

  1. By: Tapia, Pablo; Pastén, Boris; Sepulveda Velasquez, Jorge
    Abstract: China is the world’s largest importer and Russia one of its main exporters, particularly of energy. Consequently, foreign military activities by Russia could influence the performance of China’s energy market. The research objective is to present evidence on the effects of the 2002-2022 Russian military interventions on the returns of the Chinese energy market. Using event study methodology, we found evidence that Russian military intervention announcements had positive and negative effects on these returns. These findings suggest that the effect of these interventions could be related to the level of acceptance of each intervention and relationship between China and Russia.
    Keywords: China; energy markets; war; market efficiency; event study
    JEL: G11 G14 G15
    Date: 2022–04–10
  2. By: Marcel Lincényi (Alexander Dubček University of Trenčín); Matej Mindár (Alexander Dubček University of Trenčín)
    Abstract: This paper addresses current views and attitudes of pupils on the division of the Czech and Slovak Federative Republic (CSFR). The current young generation has not experienced the division of the former common state of Czechs and Slovaks. They thus gain their opinions and knowledge on this issue not only from the school environment, but also from their parents or grandparents. The main research objective was a comparative analysis of the current views and knowledge of selected elementary and secondary school pupils in the Czech Republic and the Slovak Republic on the division of ČSFR into two separate States. Through their research method, the authors identified how selected respondents perceived post-November political processes leading to the constitutional and peaceful division of the Czech and Slovak Federative Republic. One of the positive benefits of their study was the fact that most Slovak and Czech respondents perceived positively the emergence of the independant Slovak and Czech Republics as of 1 January 1993.
    Keywords: Czech and Slovak Federative Republic,Slovak Republic,Czech Republic,research,elementary schools,secondary schools,citizenship,education
    Date: 2021–03–30
  3. By: Ricardo Hausmann (Center for International Development at Harvard University); Agata Łoskot-Strachota; Axel Ockenfels; Ulrich Schetter (Center for International Development at Harvard University); Simone Tagliapietra; Guntram Wolff; Georg Zachmann
    Abstract: Following the Russian aggression against Ukraine, major sanctions have been imposed by Western countries, most notably with the aim of limiting Russia’s access to hard international currency. However, Russia remains the world’s first exporter of oil and gas, and at current energy prices this provides large hard currency revenues. As the war continues, European governments are under increased pressure to scale-up their energy sanctions, following measures taken by the United States, the United Kingdom, Canada and Australia. This piece argues that given the inelasticity of Russia’s oil and gas supply, for Europe the most efficient way to sanction Russian energy would not be an embargo, but the introduction of an import tariff that can be used flexibly to control the degree of economic pressure on Russia.
    Keywords: Ukraine War, Russia
    Date: 2022–04
  4. By: MA Xinxin
    Abstract: Using the data from the Chinese Household Income Project Survey, this study investigates the influence of membership in the Communist Party of China (CPC) on wage levels during the 2000s, and the determinants of wage gaps between CPC members and nonmembers. We apply the wage function estimations considering the sample selection bias and use three decomposition methods. Three new findings emerge. First, the probability of joining a CPC organization is higher for a male worker, a well-educated worker, and a worker with parents who are CPC members: there is an inheritance of CPC membership in China. Second, the wage premium of CPC membership differs by models, which indicates that the selection bias may affect the wage premium greatly. Third, the contribution rate of the explained component including human capital on wage gap is larger than that of the unexplained component, and it became larger from 2002 to 2013. When the sample selection bias is addressed, the main factor is the explained part in 2002, while it is the unexplained part in 2013. It is indicated that as the economic transition advanced, discrimination against CPC nonmembers and factors that determine the probability of gaining CPC membership such as the inheritance of CPC membership grew in influence and contributed even further to the expansion of the wage gap.
    Date: 2022–04
  5. By: Guido Lorenzoni; Iván Werning
    Abstract: This note isolates an overlooked economic force for the Ruble to appreciate in response to international sanctions limiting exports to Russia. The economic intuition is that when Russians are unable to buy the mix of foreign goods they wish, then foreign goods becomes less attractive, increasing the demand for domestic goods; to reestablish an equilibrium a real appreciation is needed to raise the relative price of domestic goods and incentivizing the accumulation of foreign assets and the import from non-sanctioning countries. We also review well-known forces for a depreciation (e.g. Russian export reduction). Our analysis emphasizes that the exchange rate is an inadequate signal of welfare impacts and the effectiveness of sanctions.
    JEL: E0 F3 F31 F4 F51
    Date: 2022–04
  6. By: Heshmati, Almas (Jönköping University, Sogang University); Koohborfardhaghighi, Somayeh (University of Amsterdam); Summers, Christopher R. (University of Missouri-St. Louis)
    Abstract: The path of urbanization around the world and in particular in China has been rapid. This study addresses measurement of a composite index of networking among key components of societal infrastructure and how it affects the process of urbanization. This study has a number of objectives. First we identify key determinants of public infrastructure components in China at the province level. Second a multidimensional index of the networking among the components is computed. The index belongs to parametric family of composite indices. It is composed of a number of components: Economic, Hospitality, Public Facilities, Human Development, and Communication Facility. Each component of the index is composed of a number of indicators. The index is used to rank provinces in China by development of level of the networking among public infrastructure components. In another step we estimate the effects of the composite index and its underlying components on urbanization. Finally, the findings is used to achieve smooth urbanization strategy for Chinese provinces. The empirical results are based on China's province level data covering the period 2005-2014. Our investigations provide evidence that integration of technological and social components are necessary to promote the development of an optimal and a smart urban development model. The necessity of an optimal and targeted urban infrastructure investment strategy emerges from our analysis. We briefly discuss the possible lessons learned from some of the successful provincial urbanization strategies.
    Keywords: multidimensional index, composite index, principal component, urban infrastructure, China’s provinces
    JEL: D31 I10 I20 I30 J13
    Date: 2022–04
  7. By: Jing Xing; Katarzyna Anna Bilicka; Xipei Hou
    Abstract: In this paper, we investigate distortions created by turnover taxes. As a natural experiment, we explore a reform that replaced turnover taxes with value-added taxes for some service industries in China, while the taxation of manufacturing industries remained unchanged. The reform increased sales, R&D investment, and employment for affected service firms, which is primarily driven by outsourcing from downstream manufacturing _rms. We document that smaller and less innovative manufacturing firms outsource more, and reallocation increases the quality of innovation for affected service firms. Our study provides new evidence on the negative impact of turnover taxes imposed on business inputs.
    Keywords: turnover tax, value-added tax, outsourcing, R&D investment
    JEL: H25 H26 O32 D25
    Date: 2022
  8. By: Antonio Musa (Central Bank of Bosnia and Herzegovina)
    Abstract: The aim of this paper is to evaluate current quarterly nowcasts of the gross domestic product in Bosnia and Herzegovina based on the flow of available monthly economic indicators that are available during the same quarter. The nowcasting performance indicates that it is worthwhile to include a broad group of forecasting models based on the different methodologies. In addition to the models, the choice of the variables and measurement of the loss function in evaluating nowcasting performance are the core of nowcasting. In a time marked by pandemic of corona virus and war in Ukraine, nowcasting models have more profound role than more structural models. The high variance of the specific nowcasting model influences the use of the results of combinations of many models. Using a comprehensive method for preselection of variables and by using the other combination methods, the forecasting errors are lower, even in times of high uncertainty.
    Keywords: Nowcasting; short-term forecasting; uncertainty; pandemic
    JEL: E17 E66 C52 C55 O11
    Date: 2022–04–26
  9. By: Simola, Heli; Solanko, Laura
    Abstract: The past two decades have witnessed a major transformation of global energy markets. While growth in energy demand now comes from emerging economies, and technologies critical to oil and natural gas production have seen dramatic advances, the biggest changes in global energy markets lie ahead. For countries to meet their ambitious climate goals, demand for conventional energy sources must fall significantly and be accompanied by a massive shift in investment to renewable energy sources. Such changes can have major implications for the Russian economy, which depends heavily on oil and gas. This brief provides an overview of the latest trends in Russia's oil & gas sector in the context of evolving global energy markets.
    Keywords: Russia,oil,natural gas,energy transition
    Date: 2021
  10. By: Vîntu, Denis
    Abstract: The article describes a specific canonical form of IS-LM model under Inflation Targeting. Throughout last two decades, economy of Republic of Moldova have gone through recurrent periods of boom and bust. This is the fascinating phenomenon of business cycles and economic fluctuations. Although long periods of high economic growth have sometimes led people to believe that the business cycle was dead, statistical data show that it is still alive and well: economic activity continues to fluctuate in an irregular cyclical manner around its long-run growth trend. and at the start of the present decade the growth rate of real GDP per capita turned negative in all of the three largest OECD economies. A fundamental challenge for macroeconomic theory is to explain why the economy goes through these cyclical movements rather than evolving smoothly over time. The two previous years of COVID-19 implications derived the capitalist market economies of the world through recurrent periods of dynamic trends. At the start of the present decade the growth rate of real GDP per capita turned negative in all of the three largest Eastern European Economies: Russia, Ukraine and Romania. We concludes that that numerous disarrays identifying with the arrangement of strategies utilized by Monetary Policy in a specific space of study financial variables and parameters can reconsider anticipated time-arrangement and/or uncertainty in terms of model errors.
    Keywords: IS-LM model; Joint Analysis of Fiscal and Monetary Policy; Stabilization; discrete regression; stochastic dynamic general equilibrium (SDGE); prices; business fluctuations and cycles; econometric methods.
    JEL: C13 E21 E30 E41 E44
    Date: 2022–03

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