nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒01‒09
24 papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Russia's war on Ukraine and the rise of the Middle corridor as a third vector of Eurasian connectivity: Connecting Europe and Asia via Central Asia, the Caucasus, and Turkey By Eldem, Tuba
  2. Can Russia reorient its trade and financial flows? By Simola, Heli
  3. Bargaining for working conditions and social rights of migrant workers in Central and Eastern European countries (BARMIG), Comparative report By Agnieszka Kolasa-Nowak; Tibor T Meszmann; Karolina Podgórska
  4. International spillovers of social challenges as a result of sanctions against Russia: An evaluation of the Azerbaijani case By Niftiyev, Ibrahim
  5. Peace talks between Russia and Ukraine: Mission impossible By Fischer, Sabine
  6. The politics of bank failures in Russia By Fungáčová, Zuzana; Karas, Alexei; Solanko, Laura; Weill, Laurent
  7. Quantity restrictions and price discounts on Russian oil By Henrik Wachtmeister; Johan Gars; Daniel Spiro
  8. Different Choices, Divergent Paths: Poland and Ukraine By Thorvaldur Gylfason; Eduard Hochreiter; Tadeusz Kowalski
  9. From Central Counter to Local Living: Pass-Through of Monetary Policy to Mortgage Lending Rates in Districts By Jiri Gregor; Jan Janku; Martin Melecky
  10. Who cares about sanctions? Observations from annual reports of European firms By Davydov, Denis; Sihvonen, Jukka; Solanko, Laura
  11. Politically motivated intergovernmental transfers in Russia: The case of the 2018 FIFA World Cup By Paustyan, Ekaterina
  12. A cost-of-living squeeze? Distributional implications of rising inflation By Orsetta Causa; Emilia Soldani; Nhung Luu; Chiara Soriolo
  13. Ethnic and regional inequalities in the Russian military fatalities in the 2022 war in Ukraine By Bessudnov, Alexey
  14. Elite murder and popular resistance: Evidence from post-World War II Poland By Krzysztof Krakowski; Max Schaub
  15. State-business relations and access to external financing By Tkachenko, Andrey
  16. The impact of the Ukraine crisis on international trade By Zsolt Darvas; Catarina Martins
  17. The role of nuclear weapons in Russia's strategic deterrence: Implications for European security and nuclear arms control By Wachs, Lydia
  18. European Economic Impacts of Cutting Energy imports from Russia : a Computable General Equilibrium Analysis By Sirgit Perdana; Marc Vielle; Maxime Schenkery
  19. The Labor Market in Ukraine: Rebuild Better By Anastasia, Giacomo; Boeri, Tito; Kudlyak, Marianna; Zholud, Oleksandr
  20. Do China and Russia Undermine US Sanctions? Evidence from DiD and Event Study Estimation By Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
  21. Historical roots, cultural selection and the "New World Order" By Miller, Marcus
  22. Capturing the Educational and Economic Impacts of School Closures in Poland By Gajderowicz, Tomasz; Jakubowski, Maciej; Patrinos, Harry A.; Wrona, Sylwia
  23. Collective emotions and macro-level shocks: COVID-19 vs the Ukrainian war By Rossouw, Stephanié; Greyling, Talita
  24. COVID-19 Pandemic and the Health and Well-being of Vulnerable People in Vietnam By Hai-Anh Dang; Minh Do

  1. By: Eldem, Tuba
    Abstract: Among the many significant geopolitical consequences of Russia's war against Ukraine has been the reinvigoration of the Middle Corridor, both as a regional economic zone comprising Central Asia, the Caucasus, and Turkey but also as an increasingly attractive alternative route between Europe and China. Russia's war has disrupted overland connectivity via the New Eurasian Land Bridge, also known as Northern Corridor, which passes through - now heavily sanctioned - Russian and Belarusian territory. While the Middle Corridor will not be able to fully replace the Northern Corridor, regional integration along the Trans-Caspian International Transport Route is likely to increase its potential at the expense of Russia in the long-term. Ankara's close cultural ties with the Central Asian republics combined with the latter's willingness to diversify their foreign relations away from Moscow and Beijing provide Turkey with greater leverage in the region. The EU and Turkey share a common interest in enhancing Eurasian connectivity for several reasons: to promote peace and prosperity in the South Caucasus and Central Asia, to enhance commercial access to Central Asia, to increase the resilience of European supply chains, and to diversify European energy supplies. Strengthening Eurasian connectivity would also work to balance Russian, Chinese, and Iranian influence in Central Asia.
    Keywords: Russia's war on Ukraine,Middle Corridor,Central Asia,Caucasus,Turkey,Northern Corridor,China,Belarussia,Azerbaijan,Kazakhstan,Uzbekistan
    Date: 2022
  2. By: Simola, Heli
    Abstract: Russia's invasion of Ukraine and resulting sanctions have substantially hurt Russia's economic relations with developed economies. Countries imposing sanctions on Russia accounted for half of Russia's foreign trade and over half of foreign financial flows before the war. We analyse the development of Russia's trade and financial relations in recent months and find that Russia's success in reorienting its trade and investment flows has been mixed.
    Keywords: Russia,Ukraine,sanctions,trade,FDI
    Date: 2022
  3. By: Agnieszka Kolasa-Nowak; Tibor T Meszmann; Karolina Podgórska
    Abstract: Since 2016 the former socialist EU Member States have experienced acute labour shortag- es, especially due to the outmigration of workers to labour markets in western EU states, but also due to demographic factors. The resulting labour shortage has increasingly been compensated for by employing migrant workers from neighbouring non-EU countries, espe- cially from Serbia and Ukraine. The BARMIG project’s original logframe was defined in 2019 to analyse developments in industrial relations in the six Central and Eastern European (CEE) states in order to address challenges and opportunities for trade unions and employer organisations stemming from the above-mentioned labour market developments. Due to the Covid-19 pandemic and the subsequent crisis, the plan of the project was modified also in order to incorporate the impact of Covid-19 on the labour markets in general, and more particularly its effect on the employment of migrant workers, along with reactions from social partners. The research analysed developments in the period between January 2016 and December 2021. The BARMIG project thus could not deal with the entirely new situation stemming from the Russian aggression on Ukraine and the war which also affects produc- tion, labour markets and employment of migrant workers in Central and Eastern Europe. Nevertheless, the final output of the project, the conference in April 2022, with the partici- pation of social partner organisations and renowned experts, also shed light on problems of migrant workers from Ukraine and Russia after February 2022. The basis of the comparative report are six national reports, covering developments in Croatia (Butković, Samardžija, and Rukavina 2022), Czechia (Martiškova and Šumichrast 2022), Estonia (Masso, Roosaar, and Karma 2021), Hungary (Meszmann 2022), Poland (Pol- kowska et al 2022) and Slovakia (ZEPSR 2022). These reports assessed constraints, opportu- nities and challenges for industrial-relations actors, which stem from the increased pres- ence of migrant workers in four traditional sectors – health care, construction, hospitality and retail services, and metal manufacturing, as well as services provided as part of the digitised economy (i.e. platform work). The national reports also analysed how, and with what capacities, trade unions and employer organisations in the six countries responded to these changes and challenges in general, and more particularly how collective bargaining and social dialogue tackled the issue of migrant workers. The labour-market integration of migrant workers from the countries neighbouring the EU – especially Ukraine and Serbia – was of particular concern to the research. The national reports mapped opportunities for trade unions and employer organisations to influence policy in the areas of migration, pro- tection and representation of migrant workers’ interests, fair employment, equal rights and integration of migrant workers, also through collective bargaining.
    Date: 2022–08–06
  4. By: Niftiyev, Ibrahim
    Abstract: Since February 2022, a new phase of the war between Russia and Ukraine has begun. Apart from the direct consequences for Russia and Ukraine, all post-Soviet countries are affected, as Western sanctions against Russia significantly limit the economic development and cooperation prospects of the post-Soviet region. Azerbaijan is one of Russia's most important trading partners and a neighboring country, and there are serious concerns that these sanctions could have a negative impact on Azerbaijan's socioeconomic life. This is mainly because domestic production in Russia has declined, agricultural exports have been curtailed, and trade and transportation routes have been disrupted. Against the background of all these factors, the social impact of this situation seems to be dramatic. Therefore, this article analyzes qualitative data from social media and websites dealing with Azerbaijan's social challenges. To this end, expert opinions were analyzed using the thematic analysis method to examine the social impact of sanctions at three levels: people living abroad (migrants or expats), remittances, and the purchasing power of locals. The results show that there is a high expectation among experts that sanctions could have a negative impact on remittance flows from Russia to Azerbaijan due to the devalued Russian ruble. There is also a possibility that migrants working and living in Russia will return to Azerbaijan in greater numbers. Finally, experts agreed that the purchasing power of locals in Azerbaijan has declined due to sharp price increases that followed the production slump and export restrictions in Russia. These findings could support ongoing preparations for new socioeconomic realities in Azerbaijan as a result of Western sanctions against Russia. Now policymakers must develop a plan to quickly address Azerbaijan's social problems, even if it is not an emergency.
    Keywords: Azerbaijani economy,expert opinion,Russia,sanctions,social impacts,thematic analysis
    Date: 2022
  5. By: Fischer, Sabine
    Abstract: President Vladimir Putin escalated Russia's war on Ukraine in September 2022, announcing a partial mobilisation and repeating his threat to use nuclear weapons. But what really ended efforts to bring about peace - which had continued since the 24 February invasion - was the proclaimed annexation of the Ukrainian oblasts of Luhansk, Donetsk, Zaporizhzhia and Cherson. Since his election in 2019, Ukrainian President Volodymyr Zelenskyy has repeatedly called on Putin to agree to a personal meeting, even in the first weeks of this year's Russian invasion. But on 4 October 2022, in response to the actions of the Russian side, he signed a decree rejecting direct talks. Ever since the beginning of the Russian aggression in 2014, and all the more so since 24 February 2022, the course of Ukrainian-Russian negotiations has been highly dependent on the situation in the battlefield and the broader political context.
    Keywords: Russia,war in Ukraine,invasion,Istanbul Communiqué,Vladimir Putin,Volodymyr Zelenskyy,Petro Poroshenko,NATO,security guarantees,mobilisation,nuclear weapons,peace talks,Luhansk,Donbas,Crimea
    Date: 2022
  6. By: Fungáčová, Zuzana; Karas, Alexei; Solanko, Laura; Weill, Laurent
    Abstract: Russia has witnessed a high number of bank failures over the last two decades. Using monthly data for 2002-2020, spanning four election cycles, we test the hypothesis that bank failures are less likely before presidential elections. We find that bank failures are less likely to occur in the twelve months leading up to an election. However, we do not observe election cycles in bank failures are more pronounced for banks associated with greater political costs. Overall, our results provide mixed evidence that political cycles matter for the occurrence of bank failures in Russia.
    Keywords: bank failure,election,Russia
    JEL: G21 D72 P34
    Date: 2022
  7. By: Henrik Wachtmeister; Johan Gars; Daniel Spiro
    Abstract: Following Russia's invasion of Ukraine, Western countries have looked for ways to limit Russia's oil income. This paper considers, theoretically and quantitatively, two such options: 1) an export-quantity restriction and 2) a forced discount on Russian oil. We build a quantifiable model of the global oil market and analyze how each of these policies affect: which Russian oil fields fall out of production; the global oil supply; and the global oil price. By these statics we derive the effects of the policies on Russian oil profits and oil-importers' economic surplus. The effects on Russian oil profits are substantial. In the short run (within the first year), a quantity restriction of 20% yields Russian losses of 62 million USD per day, equivalent to 1.2% of GDP and 32% of military spending. In the long run (beyond a year) new investments become unprofitable. Losses rise to 100 million USD per day, 2% of GDP and 56% of military spending. A price discount of 20% is even more harmful to Russia, yielding losses of 152 million USD per day, equivalent to 3.1% of GDP and 85% of military spending in the short run and long run. A price discount puts generally more burden on Russia and less on importers compared to a quantity restriction. In fact, a price discount implies net gains for oil importers as it essentially redistributes oil rents from Russia to importers. If the restrictions are expected to last for long, the burden on oil importers decreases. Overall, both policies at all levels imply larger relative losses for Russia than for oil importers (in shares of their GDP). The case for a price discount on Russian oil is thus strong. However, Russia may choose not to export at the discounted price, in which case the price-discount sanction becomes a de facto supply restriction.
    Date: 2022–12
  8. By: Thorvaldur Gylfason; Eduard Hochreiter (The Vienna Institute for International Economic Studies, wiiw); Tadeusz Kowalski
    Abstract: We compare the economic growth trajectories of Poland and Ukraine since 1990 to try to understand the extent to which the observed growth differentials can be traced to increased efficiency in the use of capital and other factors (intensive growth), rather than to simple accumulation of capital (extensive growth). We stress the role of qualitative factors such as education, governance and institutions. We ask whether the EU perspective and NATO membership played a role. We discuss the closely related histories of the two countries and note the stark differences between them, including their different approaches to the EU vs Russia, full vs incomplete transition to a market economy, and democracy vs anocracy, as well as different initial conditions. We compare key determinants of growth and growth trajectories, using economic as well as social indicators, and trying to disentangle efficiency and accumulation and combine path dependence and the role and scope of creative destruction. While Poland had the shortest and mildest transformation recession among CEE countries, Ukraine has been stagnant, or in decline, since 1990. The statistics we report and the stories we tell suggest that both countries have a complex relationship with democracy and that the nearly threefold difference in per capita GDP at PPP in 2021 in Poland’s favour, with the ratio of investment to GDP similar in both countries, can most plausibly be traced to (a) Poland’s more extensive and diversified exports, and fewer restrictions on trade, in addition to more comprehensive and quicker restructuring of the national economy inspired by the EU perspective; (b) Poland’s more extensive and better-quality education; (c) Poland’s greater democracy and longer experience of democracy, lower levels of corruption, better governance, and freer press; (d) Poland’s smaller agricultural sector and greater emphasis on manufacturing; and (e) Poland’s lower inflation and higher level of financial development. Furthermore, Poland built market-friendly institutions to EU specifications and joined NATO. Against all this, Ukraine had more economic equality and lower unemployment as well as, from the early 1990s, a lower initial level of income per person, but was hampered by political divisions, path-dependent corruption and poor governance. During the global Covid-19 pandemic, Ukraine apparently suffered fewer deaths than Poland, despite fewer vaccinations.
    Keywords: Economic growth, Poland, Ukraine, Governance, Transition, Education, Economic reforms, Exports, European Union, Inflation, Labour markets
    JEL: O11 O16 O19
    Date: 2022–12
  9. By: Jiri Gregor; Jan Janku; Martin Melecky
    Abstract: This paper studies the pass-through from the market benchmark rate (proxied by the 5-year swap rate) to interest rates on all newly issued residential mortgage loans in the Czech Republic-an EU country. It tests for and explains the potential spatial heterogeneity in the pass-through to local mortgage rates highlighted by the literature for the US (Scharfstein & Sunderam, 2016). This spatial pass-through has not been studied in the context of the EU with its specific mortgage loan market structure. Using unique data on residential mortgages in the Czech Republic over 2016-2021, we show that the pass-through varies notably across districts and is significantly driven by local mortgage market concentration (bank market power) and the unemployment rate. We find a lower aggregate pass-through than previous studies (about 0.5). The most important pricing factors for residential mortgage loans appear to be the loan-to-value ratio, the net income of the borrower, the loan maturity, and the length of the fixed-rate period.
    Keywords: Banking market concentration, districts and regions, heterogeneity, interest rate pass-through, mortgage lending rates
    JEL: E43 G21 G51 R32
    Date: 2022–11
  10. By: Davydov, Denis; Sihvonen, Jukka; Solanko, Laura
    Abstract: This paper uses textual analysis to examine how European corporations assess sanctions in their annual reports. Using observations from a panel of almost 11,500 corporate annual reports from 2014-2017, we document significant cross-country variation in how firms perceive Russia-related sanctions. Even after controlling for firm-level characteristics, cross-country differences remain for sentiments about sanctions and contexts in which sanctions are mentioned. We also examine the role of macroeconomic linkages in explaining these differences. We show that the Russia's inward and outward FDI stocks and high levels of imports and exports with Russia only partially explain the cross-country variation, leaving a nontrivial share of variation unexplained.
    Keywords: sanctions,textual analysis,European firms,annual reports
    JEL: D22 F51
    Date: 2021
  11. By: Paustyan, Ekaterina
    Abstract: This paper studies the distribution of politically motivated intergovernmental transfers in Russia focusing on the case of the 2018 FIFA World Cup. It investigates what factors have accounted for the selection of the 2018 FIFA World Cup venues. Qualitative Comparative Analysis of 14 cases reveals that well-connected political elites were able to secure the right for their regions to host the championship and, as a result, to extract additional funds from the center. These findings are in line with the argument that the regional governments in Russia play an important role in the distribution of politically sensitive transfers. Taking into account that these transfers have been increasing over the past years, there is no surprise that the regional elites have developed various lobbying strategies and mechanisms for attracting them.
    Keywords: Russia,politically sensitive transfers,Qualitative Comparative Analysis
    JEL: E62 L83 O23 P26 R11
    Date: 2021
  12. By: Orsetta Causa; Emilia Soldani; Nhung Luu; Chiara Soriolo
    Abstract: Inflation has quickly and significantly increased in most OECD countries since the end of 2021 and further accelerated after Russia’s war of aggression against Ukraine, mostly driven by surging energy and food prices. Certain categories of households are particularly vulnerable, as large parts of their consumption expenditures are devoted to energy and food. Drawing on national micro-based household budget surveys and on CPI data, this paper provides a quantification of the impact of rising prices on households’ welfare. Declines in household purchasing power between August 2021 and August 2022 are estimated to range from 3% in Japan to 18% in the Czech Republic. This decline is driven by energy prices in most countries, especially Denmark, Italy, and the United Kingdom, while energy prices play a lesser role in countries where inflation is more broad-based like the Czech Republic and the United States. In all considered countries, inflation weighs relatively more on low than high-income households. Rural households are hit particularly hard, most often more than low-incomes ones, and this is driven by energy price inflation. To cushion vulnerable households from rising inflation, especially from energy prices, these findings call for a careful targeting of income and price support measures, notwithstanding their administrative and logistical complexity, taking into account their effects on economic activity, inflation, and, last but not least, environmental goals.
    Keywords: distribution, energy, inequality, inflation, policy analysis, purchasing power
    JEL: H12 H23 I3 Q41 Q48
    Date: 2022–12–22
  13. By: Bessudnov, Alexey
    Abstract: This paper explores ethnic and regional inequalities in mortality in the Russian army during the 2022 war in Ukraine. The analysis is based on a newly available data set containing the names of about 9,500 Russian servicemen killed in Ukraine from February to November 2022. The data set was collected by a team of volunteers from the social media and other available sources. There are large inequalities in the army mortality rates across Russian regions, with the highest mortality of soldiers originating from poor regions in Siberia and the Russian Far East and the lowest from Moscow and St.Petersburg. Some ethnic minority groups, in particular Buryats and Tuvans, are overrepresented among the fatalities, compared to their population share. Once regional inequalities are taken into account, ethnic gaps in mortality are reduced substantially. It is likely that ethnic fatality gaps are largely driven by socio-economic inequalities: young men in poorer regions see the career in the military as more attractive. The paper places these findings in the context of the previous research on inequalities in US military casualties.
    Date: 2022–12–10
  14. By: Krzysztof Krakowski; Max Schaub
    Abstract: Does repression of opposition elites prevent resistance against foreign-imposed regimes? On the one hand, elimination of elites can undermine the opposition's capacity for anti-regime resistance. Yet killing opposition elites deprives the new regime of useful human capital. Co-optation of elites becomes a tempting alternative. We examine this trade-off by studying the effects of elimination vis-à-vis survival of Polish elites during World War II. Our focus is on the Polish nobility, intellectuals, and (reserve) army officers.
    Keywords: Elites, War, Poland
    Date: 2022
  15. By: Tkachenko, Andrey
    Abstract: Firms' contractual relations with a state may give lenders a positive signal and facilitate access to debt. This paper studies the impact of public procurement contracts on ftrms' access to debt using an extensive survey of Russian manufacturing ftrms combined with accounting and procurement data. It shows that earnings from state-to-business contracts increase the short-term debt twice as much as revenue from private contracts. Long-term debt is not affected by public contracts differently compared to private contracts. The debt sensitivity to public contracts is four times larger for politically connected ftrms, although it is still positive and signiftcant for non-connected and small ftrms. The paper concludes that political connection does not entirely suppress the beneftcial access to debt that public contracts create.
    Keywords: public procurement,political connection,leverage,short-term debt,long-term debt,capital structure,Russia
    JEL: G18 G32 H57
    Date: 2022
  16. By: Zsolt Darvas; Catarina Martins
    Abstract: The direct aim of trade sanctions seems to have been achieved, while Russia’s capacity to finance the war from fossil fuel revenues is bound to shrink
    Date: 2022–12
  17. By: Wachs, Lydia
    Abstract: In the West, Russia's nuclear deterrence strategy is often described as one of 'escalate to deescalate'. The thinking goes that Moscow is prepared to use nuclear weapons at an early stage in a conflict in order to 'deescalate' and terminate the confrontation quickly in its favour. However, Russia's official military doctrine, nuclear exercises of the Russian military, and debates among political and military elites have so far pointed in a different direction. With the concept of 'strategic deterrence', Russia has developed a holistic deterrence strategy in which nuclear weapons remain an important element. Yet, to gain more flexibility below the nuclear threshold in order to manage escalation, the strategy also conceptualises a broad range of non-military and conventional means. Given Russia's dwindling arsenal of conventional precision weapons due to its war against Ukraine as well as the strategic adaptation of the North Atlantic Treaty Organization (NATO), Russia's strategy is likely to change: In the coming years, Russia's reliance on its non-strategic nuclear weapons will probably increase. These developments could both undermine crisis stability in Europe and further impede the prospects for nuclear arms control in the future.
    Keywords: nuclear weapons,strategic deterrence,Russia,strategic deterrence,military doctrine,North Atlantic Treaty Organization (NATO),war against Ukraine
    Date: 2022
  18. By: Sirgit Perdana (CMCS-EPFL - CMCS-EPFL - EPFL - Ecole Polytechnique Fédérale de Lausanne); Marc Vielle (CMCS-EPFL - CMCS-EPFL - EPFL - Ecole Polytechnique Fédérale de Lausanne); Maxime Schenkery (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School)
    Abstract: The recent economic sanctions against Russia can jeopardize the sustainability of the European Union's (EU) energy supply. Despite the EU's strong commitment to stringent abatement targets, fossil fuels still play a significant role in the EU energy policy. Furthermore, high dependency on Russian energy supplies underlines the vulnerability of the EU energy security. Using a global computable general equilibrium model, we prove that the current EU embargo on coal and oil imported from Russia will have adverse supply effects, substantially increasing energy prices and welfare costs for the EU resident. Although it reduces emissions, extending the embargo to include natural gas doubles this welfare cost. The use of coal is likely to increase, especially with respect to EU electricity generation, given the current constraints of additional import capacities from nonRussian producers. The impact on Russia once the EU extends the sanctions to natural gas is less substantial than on the EU. Russian welfare cost will increase less than 50%, indicating that extending the current restriction to boycott Russian gas is a costly policy option.
    Keywords: European Union, Russia, Computable General Equilibrium Model, Fit for 55 Package, Imports Ban
    Date: 2022–11–01
  19. By: Anastasia, Giacomo (Fondazione Rodolfo DeBenedetti); Boeri, Tito (Bocconi University); Kudlyak, Marianna (Federal Reserve Bank of San Francisco); Zholud, Oleksandr (National Bank of Ukraine)
    Abstract: The full-scale invasion of Ukraine and the ongoing war have caused and continue causing damages of devastating proportions. We analyse the impact on the Ukrainian labor market and propose a framework for its rebuilding. The Ukrainian labour market needs not only to be rebuilt – it needs to be rebuilt better. The unprecedented challenges imposed by the reconstruction can be met by a labour market promoting labor market participation and easing the reallocation of workers across jobs. Reconstruction will require a mix of emergency measures dealing with the legacies of the war and structural reforms addressing pre-existing inefficiencies of the Ukrainian labour market. We illustrate the challenges in light of the experience of other European countries having gone through military conflicts in a recent past and propose strategies for action. The detailed proposals are consistent with a four-pronged strategy for reconstruction aimed at: investing in human capital for the future by offering remedial education to the pupils having lost years of education, and offering retraining to job losers still far from retirement; making a better use of existing human capital, increasing labour force participation of women and tackling youth unemployment among internally displaced workers; protecting the most vulnerable groups (job losers, veterans, fragile and older workers) in a sustainable fashion; promoting a return of ideas if not of people, involving in the reconstruction the human capital migrated abroad that will not return back home. These policies should be linked to the EU accession process: they will require technical assistance from European countries having longstanding experience with labour market policies at times of reallocation, and part of them could possibly be financed by instruments connected with EU accession.
    Keywords: Ukraine, labour markets, reconstruction, armed conflict, war
    JEL: E2 J24 N4 H5 L5
    Date: 2022–12
  20. By: Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
    Abstract: A frequently employed argument against imposing international sanctions is that rival superpowers are likely to bust sanctions to simultaneously shield the target, harm the sender, and make a profit. We evaluate the legitimacy of this concern by studying the effect of US sanctions on trade flows between sanctioned and third countries during the period 1995–2019 using panel difference-in-differences estimations and an event study design. Motivated by the claim that China and Russia purposefully undermine US sanction efforts, we test whether target countries’ trade with China and Russia increases under US trade sanctions. We find no evidence for systematic sanction busting. Russia does not change its trade patterns with sanctioned countries. Trade of targets of US sanctions with China declines even more than trade with the US. These general patterns are reconfirmed for trade in different groups of commodities. In addition, we find some evidence that a reduction in industrial value added and a devaluation of the domestic currency of the target country are transmission channels through which US sanctions hamper trade with third countries.
    Keywords: geopolitics, international political economy, international sanctions, trade substitution
    JEL: F13 F14 F50 F51 F52 F53 K33
    Date: 2022
  21. By: Miller, Marcus (University of Warwick, CAGE and CEPR)
    Abstract: Francis Fukuyama’s bold prediction that Western liberal democracy is ‘the final form of human government’ was promptly challenged by Samuel Huntington, who foresaw the future as a continuing clash of civilisations. This latter view has found support in the recent Beijing declaration by China and Russia of a ‘New World Order’ with distinct spheres of influence for different cultures. After discussing the contrast between such historical perspectives (of ‘immaculate convergence’ versus cultural diversity), we outline two accounts of how forms of governance emerge from competitive struggle ( either domestically or between nation states). However, to set the scene for applying these perspectives to current events, the paper begins with a summary of three eras of political economy post World War II - including the current ‘age of the strongman’, to use the terminology of Gideon Rachman. Subsequently, these various perspectives are employed to see what light they may throw on the disastrous turn of events following the Beijing declaration, with a focus on Russia, where the history of a powerful central state has played a crucial role. How enduring the Russian example may prove in the Darwinian struggle of cultural competition is, of course, a key issue for our time.
    Date: 2022
  22. By: Gajderowicz, Tomasz (University of Warsaw); Jakubowski, Maciej (University of Warsaw); Patrinos, Harry A. (World Bank); Wrona, Sylwia (University of Warsaw)
    Abstract: The effect of school closures in the spring of 2020 on the math, science, and reading skills of secondary school students in Poland is estimated. The COVID-19-induced school closures lasted 26 weeks in Poland, one of Europe's longest periods of shutdown. Comparison of the learning outcomes with pre- and post-COVID-19 samples shows that the learning loss was equal to more than one year of study. Assuming a 45-year working life of the total affected population, the economic loss in future student earnings may amount to 7.2 percent of Poland's gross domestic product.
    Keywords: COVID-19, school closure, learning loss, Poland
    JEL: I21 I24
    Date: 2022–12
  23. By: Rossouw, Stephanié; Greyling, Talita
    Abstract: We know that when collective emotions are prolonged, it leads not only to action (which could be negative) but also to the formation of identity, culture, or an emotional climate. Therefore, policymakers must understand how collective emotions react to macro-level shocks to mitigate potentially violent and destructive outcomes. Given the above, our paper's main aim is to determine the effect of macro-level shocks on collective emotions and the various stages they follow. To this end, we analyse the temporal evolution of different emotions from pre to post two different types of macro-level shocks; lockdown, a government-implemented regulation brought on by COVID-19 and the invasion of Ukraine. A secondary aim is to use narrative analysis to understand the public perceptions and concerns that lead to the observed emotional changes. To achieve these aims, we use a unique time series dataset derived from extracting tweets in real-time, filtering on specific keywords related to lockdowns (COVID-19) and the Ukrainian war for ten countries. Applying Natural Language Processing, we obtain these tweets underlying emotion scores and derive daily time series data per emotion. We compare the different emotional time series data to a counterfactual to derive changes from the norm. Additionally, we use topic modelling to explain the emotional changes. We find that the same collective emotions are evoked following similar patterns over time regardless of whether it is a health or a war shock. Specifically, we find fear is the predominant emotion before the shocks, and anger leads the emotions after the shocks, followed by sadness and fear.
    Keywords: COVID-19, Big Data, Twitter, collective emotions, Ukraine, macro-level shock
    JEL: C55 I10 I31 H12 N40
    Date: 2022
  24. By: Hai-Anh Dang (World Bank); Minh Do (Vietnam National University, Hanoi)
    Abstract: Despite a sizable population and modest status as a low-middle-income country, Vietnam has recorded a low COVID-19 fatality rate that rivals those of richer countries with far larger spending on health. This paper offers an early review of the emerging literature in public health and economics on the pandemic effects in Vietnam, with a specific focus on vulnerable population groups. The review suggests that vulnerable workers were at more health risk than the general population. The pandemic reduced household income, increased the poverty rate, and worsened wage equality. It increased the proportion of below-minimum-wage workers by 2.5 percentage points (i.e., a 32-percent increase). While government policy responses were generally regarded as effective, public support for these responses was essential for this success, particularly where there was stronger public participation in the political process. The review also indicates the need for a social protection database to identify the poor and informal workers to further enhance targeting efforts. Finally, it suggests future directions for research in the Vietnamese context.
    Keywords: COVID-19, health, vulnerable households, poverty, inequality, Vietnam
    JEL: D00 H00 I1 I3 O1
    Date: 2022–11

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