nep-tra New Economics Papers
on Transition Economics
Issue of 2022‒10‒17
nine papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Russian foreign trade after four months of war in Ukraine By Simola, Heli
  2. The influence of economic disparities of regions on political polarization in Czech Republic By Ondrej Rolnik
  3. Returns to Education in the Public and Private Sectors: Europe and Central Asia By Montenegro, Claudio; Patrinos, Harry A.
  4. A question of regulation or motivation? Environmental innovation activities in transition economies By Katharina Friz
  5. The impact of industrial pollution exposure on hospital admissions: Evidence from a cement plant in Russia By Mariia Murasheva; Maria A. Cunha-e-Sa
  6. The Start of Yugoslavia’s Disintegration: Where Borders Cut Commuting Spheres By Hoffstadt, Martin
  7. Using Macro-Financial Models to Simulate Macroeconomic Developments During the Covid-19 Pandemic: The Case of Albania By Lorena Skufi; Adam Gersl
  8. The Costs of Natural Gas Dependency: Price Shocks, Inequality, and Public Policy By Mats Kröger; Maximilian Longmuir; Karsten Neuhoff; Franziska Schütze
  9. North Korea as a Complex Humanitarian Emergency: Assessing Food Insecurity By Marcus Noland

  1. By: Simola, Heli
    Abstract: This brief examines the development of Russia's trade flows in the March-June period following Russia's invasion of Ukraine. Russia ceased publication of foreign trade statistics after the war broke out, so we utilize the trade statistics of Russia's major trading partners. We find that Russia's imports declined substantially in the period with the country struggling to find alternative import sources. On the other hand, Russian export revenues increased post-invasion due to high commodity prices, the lag in transition periods for EU import restrictions and higher export volumes going to other markets. Russian industrial output reflects a shift in foreign trade. High-tech industries reliant on imported inputs contracted, while output remained robust for some export-oriented industries. The first months of war show sanctions took an increasing toll on the Russian economy, seriously eroding the country's long-term growth potential.
    Keywords: Russia,trade,sanctions
    Date: 2022
  2. By: Ondrej Rolnik (Department of Economics, Faculty of Business and Economics, Mendel University in Brno, Zemedelska 1, 613 00 Brno, Czech Republic)
    Abstract: The aim of the paper is to prove a hypothesis concerning the causality of economic well-being and political polarization in the state. The causality is proven in all regions of the Czech Republic on the observed data set, from 1993 to the present. The evidence was provided by expressing the economic well-being by three indicators, i.e., gross domestic product per capita, unemployment and disposable income per capita in combination with the development of a created polarization index. This index depends on the left-right ideological party division combined with election results in the Chamber of Deputies of the Parliament of the Czech Republic for regional districts. Socio-demographic indicators of the development of individual regions were used as control variables. These include, the average state of the population, the share of university-educated people in the average state of the population, age indicators, the population density of a given region, or voter turnout in a given election year. The most important variable of the economic well-being influencing the development of polarization is the disposable income of households. The proof is accomplished by quantitative economic analysis using the Least Squares Method.
    Keywords: polarization, politics, economic well-being, Czech Republic, gross domestic product, disposable income, unemployment, political economics
    JEL: D72 E61 I31 P16
    Date: 2022–09
  3. By: Montenegro, Claudio (University of Chile); Patrinos, Harry A. (World Bank)
    Abstract: The returns to schooling are estimated for 28 European and Central Asian countries using the Mincerian function. Our results show that while the public sector pays on average more than the private sector, the effect of education on earnings is stronger in the private sector. However, the returns to tertiary education are higher in the private sector.
    Keywords: returns to education, wage differentials, public–private, Europe
    JEL: I21 J31
    Date: 2022–08
  4. By: Katharina Friz
    Abstract: Environmental innovation (EI) plays an important role in decoupling economic growth and environmental harm. This paper focuses on the environmental innovation behavior of companies in transition countries of Eastern Europe and Central Asia, which have been little studied so far. These countries share the Soviet legacy of environmental mismanagement, and have restructured their innovation systems relatively recently in the course of transition. The EBRD-EIB-WB Enterprise Survey (2018-2020) allows us to examine the determinants of environmental innovation in 29 transition countries. Although the theory places a greater emphasis on external sources of knowledge in EI, the results indicate that collaborative R&D is still quite weak in these countries. Moreover, environmental regulation increases the likelihood of adopting energy efficiency measures, while customers demanding environmental standards increase the likelihood across all innovation activities, indicating an increasing sustainability awareness among consumers.
    Keywords: Environmental innovation, transition economies, firm-level data, logit model
    JEL: O12 O31 O32 O5 Q55
    Date: 2021–09
  5. By: Mariia Murasheva; Maria A. Cunha-e-Sa
    Abstract: The effect of individual-level daily silicon dust exposure from cement production on the probability of hospital admissions for respiratory-related reasons is examined. The dataset was collected at the cement plant in Bryanskii region, Russia. We use an aerodynamic dispersion model to calculate pollutants’ exposure. We find significant impact of silicon dust on hospitalizations for children and elderly adults. We identify a non-linear response of the individual probability of hospital admissions to the average daily inhaled concentrations in the city area where exposure is higher. Our findings contribute to better inform policymakers aiming at reducing industrial air pollution exposure in Russia.
    Keywords: Ambient air pollution, Silicon dust exposure, High-frequency, Patient-level data, Dispersion model, Hospital admissions, Nonlinearity
    JEL: I10 Q51 Q53
    Date: 2022
  6. By: Hoffstadt, Martin
    Abstract: Borders are often associated with low economic activity. A popular explanation for this phenomenon argues that borders cut market access. But as a growing amount of literature demonstrates that border effects persist after the removal of formal barriers, the forces behind low economic activity near borders remain unclear. This paper develops a new methodology to measure the market access of 16,596 settlements in the Socialist Federal Republic of Yugoslavia in 1965, right before the hardening of Yugoslavia’s federal borders. Based on elevation, rivers, roads and the Dijkstra algorithm, this methodology identifies 4,682 settlements whose commuting spheres crossed Yugoslavia’s federal borders. Using panel data for the 1948-1991 period, a difference-in-differences estimation identifies that the settlements that lost access to their nearest town due to hardened federal borders experienced strong decline in population growth following the reforms. Robustness checks demonstrate that depopulation occurred when settlements lost access to towns of significant size. This effect appears regardless of ethnicity and history. Instead, depopulation occurred in the absence of a nearby alternative town in the same federal unit.
    Keywords: federal borders, market access, population growth, Yugoslavia
    JEL: H77 N44
    Date: 2022–09–16
  7. By: Lorena Skufi (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Adam Gersl (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The recent Covid-19 pandemic has increased the importance of properly forecasting macro-financial developments in turbulent times. Only a limited number of studies focus on how to employ macro-financial models to project key real and financial sector variables under large shocks and unusual assumptions. The aim of this paper is to examine whether a pre-constrained linear model can project the developments seen during the Covid-19 pandemic. We develop a macro-financial model for Albania and, using suitable assumptions, run two types of simulations and compare the results with the outturn. We also take into account the increased forecast risk by constructing uncertainty bands using a quantile regression approach. The results indicate that a linear model is flexible enough to analyse non-linear events and be used in abnormal times, but its precision is lower especially due to the government measures such as repayment moratoria that broke the link between the real and financial sector.
    Keywords: macro-financial model, scenario, quantile regression, uncertainty bands, pandemic
    JEL: E66 C53 C32
    Date: 2022–09
  8. By: Mats Kröger; Maximilian Longmuir; Karsten Neuhoff; Franziska Schütze
    Abstract: Natural gas prices in Germany saw a strong increase at the end of 2021, subsequently worsening with the start of the war in Ukraine in February 2022, raising concerns about the distributional consequences. Our study shows that low-income households are affected the most by the natural gas price increase. Low-income households pay at the median 11.70 percent of their equivalent income on gas bills, compared to 6.21 percent in 2020. Contrarily, high-income households pay at the median 2.41 percent, compared to 1.52 in 2020. Natural gas expenditures are higher for tenants in detached houses and in houses with no double glassing or thermal insulation. Our policy analysis builds on an exploration of new energy expenditure data in 2020 provided by the German Socio-Economic Panel, and shows that a well-targeted subsidy scheme can be more effective for reducing inequality and less costly than a subsidy for all households. Additionally, the introduction of a minimum energy-efficiency standard for buildings can help reduce inequality in the medium-term.
    Keywords: Natural gas prices, income distribution, energy efficiency, building retrofit
    JEL: D30 Q41 I38
    Date: 2022
  9. By: Marcus Noland (Peterson Institute for International Economics)
    Abstract: North Korea is a complex humanitarian emergency with food insecurity at its core. As of August 2022, both quantity and price data point to a deteriorating situation, made worse by the regime's self-isolating response to the COVID-19 pandemic and the war in Ukraine. Food availability has likely fallen below minimum human needs and on one metric is the worst since the 1990s famine. Food insecurity in North Korea is not only a humanitarian issue but also a strategic one. In this context, the diplomatic leverage conferred by aid is unclear, nor is North Korea's priority as a recipient, in light of competing needs elsewhere. Resolution of North Korea's chronic food insecurity would require changes in the regime's domestic and foreign policy commitments, but this seems unlikely due to enablement by China and Russia.
    Keywords: famine, food security, food prices, North Korea, complex humanitarian emergency
    JEL: Q1 O1 P2
    Date: 2022–09

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