nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒01‒23
eleven papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Children of Communism: The Former Party Membership and Demand for Redistribution By Libman, Alexander; Popova, Olga
  2. Attitudes towards migrants and preferences for asylum and refugee policies before and during Russian invasion of Ukraine: The case of Slovakia By Magdalena Adamus; Matúš Grežo
  3. Sanctions and the Exchange Rate By Oleg Itskhoki; Dmitry Mukhin
  4. Populists and Fiscal Policy: The Case of Poland By Maciej Wysocki; Cezary Wójcik; Andreas Freytag
  5. Challenges to international trade and the global economy: Recovery from COVID-19 and Russia’s war of aggression against Ukraine By Christine Arriola; Charles Cadestin; Przemyslaw Kowalski; Joaquim José Martins Guilhoto; Sébastien Miroudot; Frank van Tongeren
  6. Tendencies for Usage of Rapeseed Oil and Maize for Biocomponent Production in Poland Between 2015 and 2020 By Chmielewski, Łukasz
  7. Prospects for the Development of Polish Agri- -Food Exports to the Regional Comprehensive Economic Partnership Countries By Ambroziak, Łukasz; Szczepaniak, Iwona; Pawlak, Karolina
  8. Growth regimes of populist governments: A comparative study on Hungary and Poland By Kühnast, Julia
  9. Cash Transfers and Labor Supply: New Evidence on Impacts and Mechanisms By Cuong Viet Nguyen; Finn Tarp
  10. Retail Fund Flows and Performance: Insights from Supervisory Data By Martin Hodula; Milan Szabo; Josef Bajzik
  11. Fear, Trust and Demand for Regulation: Evidence from the Covid-19 Pandemic in Russia By Ekaterina Borisova; Timothy Frye; Koen Schoors; Vladimir Zabolotskiy

  1. By: Libman, Alexander (Freie Universität Berlin); Popova, Olga (Leibniz Institute for East and Southeast European Studies (IOS))
    Abstract: The paper looks at the persistence of egalitarian norms in post-Communist societies by focusing on the former members of the Communist parties in Central and Eastern Europe (CEE) and Russia and their children. Using the individual-level survey data, we show that there are striking differences between Russia and the CEE countries in this respect. While in the CEE both former members of the Communist parties and their children have stronger preferences for redistribution than the rest of the population, in Russia former CPSU members do not exhibit stronger preferences for redistribution – at the same time, their children support redistribution.
    Keywords: Communist Party, inequality, redistribution, Russia, Visegrad group
    JEL: D31 I30 N00 P36 P52
    Date: 2022–12
  2. By: Magdalena Adamus (Institute of Experimental Psychology of the Centre of Social and Psychological Sciences, Slovak Academy of Sciences, Slovakia, Faculty of Economics and Administration, Masaryk University, Czech Republic); Matúš Grežo (Institute of Experimental Psychology of the Centre of Social and Psychological Sciences, Slovak Academy of Sciences, Slovakia)
    Abstract: Extant literature shows that well-being is one of the key drivers of attitudes towards migrants as well as preferences for asylum and refugee policies. To investigate the underpinnings of these relationships, two studies on representative samples of 600 Slovaks each were conducted before the Russian invasion of Ukraine and during its initial phase. The results show that well- being had a stable positive relationship with attitudes towards migrants across the studies, albeit not with preferences for asylum and refugee policies. During the Russian invasion of Ukraine, the negative feelings elicited by the war predicted preferences for asylum and refugee policies beyond well-being. The divergence between the attitudes towards migrants and the preferences urges that there is a need to extend the traditional focus on general attitudes towards migrants. Finally, the results indicate that incorporating psychological factors, such as well-being and emotional responses to the looming threat of war, may considerably inform the debate surrounding the support for inclusive asylum and refugee policies.
    Keywords: well-being, attitudes towards migrants, asylum and refugee policies, migration crisis, common ingroup identity model
    JEL: D64 F22 I31 K37
    Date: 2023–01
  3. By: Oleg Itskhoki (University of California-Los Angeles (UCLA)); Dmitry Mukhin (London School of Economics (LSE); Centre for Macroeconomics (CFM))
    Abstract: We show that the exchange rate may appreciate or depreciate depending on the specific mix of sanctions imposed, even if the underlying equilibrium allocation is the same. Sanctions that limit a country’s imports tend to appreciate the country’s exchange rate, while sanctions that limit exports and/or freeze net foreign assets tend to depreciate it. Increased precautionary household demand for foreign currency is another force that depreciates the exchange rate, and it can be offset with domestic financial repression of foreign currency savings. The overall effect depends on the balance of currency demand and currency supply forces, where exports and official reserves contribute to currency supply and imports and foreign currency precautionary savings contribute to currency demand. Domestic economic downturn and government fiscal deficits are additional forces that affect the equilibrium exchange rate. The dynamic behavior of the ruble exchange rate following Russia’s military invasion of Ukraine in February 2022 and the resulting sanctions is entirely consistent with the combined effects of these mechanisms.
    Date: 2022–05
  4. By: Maciej Wysocki; Cezary Wójcik; Andreas Freytag
    Abstract: The past decade has witnessed an increase in populist movements across the world. Some of those movements have gained strong political support and formed populist governments promising new sets of economic and fiscal policies. This raises the pertinent policy question: how do such populist governments influence fiscal policy outcomes? We approach this question by looking at the case of Poland which according to several recent studies has experienced the highest level of populist rhetorics in recent years. Indeed, when the new populist government took power, between 2015-2019, Poland experienced a major social and fiscal policy shifts: the new government decreased the statutory retirement age despite sever aging problem and launched one of the biggest social programs in Europe which resulted in sharp increase in political support for the government. In the paper we provide some first evidence of the impact of such policies on fiscal outcomes. Our analysis reveals that fiscal sustainability parameters have significantly deteriorated sharply after 2015 when the new government undertook populist policies, despite the fact that current (observable) deficit and debt levels remained stable. Specifically, our estimates suggest that just after a year since the introduction of the new fiscal program, the strength of reaction of the primary balance to a change of the public debt decreased by nearly 50% in 2017 and the parameter turned negative and statistically insignificant thereafter which means that from 2018 fiscal policy lacked long term sustainability. Overall, our estimations show that in the period of 2016-2019 fiscal sustainability parameters were the lowest since Poland joined the EU in 2004. While our analysis has several limitations, the case of the populist government in Poland provides some early evidence that populists do have negative impact on long term fiscal sustainability.
    Keywords: fiscal sustainability, fiscal and social policy, populism
    JEL: C22 E60 H63
    Date: 2022
  5. By: Christine Arriola; Charles Cadestin; Przemyslaw Kowalski; Joaquim José Martins Guilhoto; Sébastien Miroudot; Frank van Tongeren
    Abstract: Amidst the recovery from the impact of the COVID-19 pandemic, Russia’s war of aggression against Ukraine has resulted in new challenges to the global economy and to international trade. This report relies on detailed trade data to assess the impact of these two overlapping shocks on international trade and supply chains. In February 2022, global trade was approaching pre-Covid levels in absolute terms, but with a different product and geographical composition resulting in a continued sense of tension in the trading system. Russia’s war of aggression against Ukraine has added a new dimension of challenges as it has led to deliberate radical interruptions of trade linkages between Russia, Ukraine and many industrialised economies, with significant repercussions on prices of key commodities in the energy and agricultural sectors.
    Keywords: AMNE, General Equilibrium Model, ICIO analysis, Oil
    JEL: C67 C68 F14 F17 F5 Q48
    Date: 2023–01–13
  6. By: Chmielewski, Łukasz
    Abstract: The aim of the article is to present the supply and demand situation on the market of rapeseed oil and maize used for fuel purposes in Poland, as well as analyze the relationship between their prices and production, as well as the consumption of gasoline and diesel fuel. The analysis covered the 2015–2020 period and was based on data from Statistics Poland, the National Support Center for Agriculture, and the Polish Oil Industry and Trade Organization. Statistical analysis showed that between 2015 and 2020 the dynamics of the usage of raw materials to produce biofuels exceeded the growth rate of their production and harvest. The assessment of the relationship between production and consumption of fuels in Poland showed that the demand from the fuel sector had a dominant influence on the prices of rapeseed oil and maize during the period under consideration, and fuel production had a less significant share in shaping wholesale prices of rapeseed oil and purchase prices of maize. Biofuels are an important and topical issue both in the context of the new energy policy of the European Union (EU) and Poland until 2040 and Russia’s invasion of Ukraine, with one of the consequences being the energy crisis and the announcement of the EU becoming independent from Russian energy. In such a situation, biofuels and raw materials for their production may turn out to be an important element of improving energy security.
    Keywords: Crop Production/Industries, Research Methods/ Statistical Methods
    Date: 2022–09–29
  7. By: Ambroziak, Łukasz; Szczepaniak, Iwona; Pawlak, Karolina
    Abstract: The aim of the article is to describe Polish agri-food exports to countries that are members of the Regional Comprehensive Economic Partnership (RCEP) and to assess the possibilities of developing exports of Polish food producers to the markets of these countries. The study was conducted, among others, with the use of a synthetic perspective index based on the data from Statistics Poland and the WITSComtrade database. The study shows that RCEP countries have a relatively low share in Polish agrifood exports (2.7% in 2021) and the trade is characterized by a permanently negative balance of food turnover. In the context of the growth prospects for Polish exports, it is difficult to speak of the same product groups in all markets. On the contrary, the choice of a given market determines which products can be regarded as prospective in Polish exports to this market. The products include not only processed, but also agricultural and low-processed ones. There is a risk that the agreement, which has been in force since the beginning of 2022, will cause the diversion effect, consisting in reducing the trade of RCEP countries with non-RCEP countries. This may make it necessary to adapt the trade strategy implemented on the Asian market by EU countries, including Poland, to the new conditions.
    Keywords: International Relations/Trade
    Date: 2022–12–22
  8. By: Kühnast, Julia
    Abstract: This paper aims to contribute to the debate of post-Keynesian growth models and Comparative Political Economy (CPE) by investigating the relationship between the changes in demand and growth regimes and the establishment of right-wing populist governments in Poland and Hungary after the Global Financial Crisis (GFC). In both countries, these parties established a system that lays a stronger focus on economic nationalism and the role of the state to reduce foreign influence. Both economies are currently in a transition phase in which their old, neoliberal regimes are slowly changing, but they have not yet completely abandoned neoliberalism. In both countries, post-GFC economic policies have led to changes in the growth regimes and increased the importance of the export sector. It was mainly the demands of domestic capitalists that constituted the social base for these changes.
    Keywords: Growth regimes, Populism, Comparative Political Economics
    JEL: E12 E65 F40 F43 G01 O57
    Date: 2022
  9. By: Cuong Viet Nguyen (International School, Vietnam National University, Hanoi, Viet Nam; and Mekong Development Research Institute, Hanoi, Viet Nam); Finn Tarp (University of Copenhagen, Denmark)
    Abstract: We study the impact of a national cash transfer program in Vietnam on labor supply using large household surveys and a regression-discontinuity design based on discontinuity in age eligibility. We do not find evidence of a disincentive effect of the cash transfer on labor supply for adults aged 15-64. More importantly, we find robust evidence that the transfer program causes the adults to move from self-employed non-farm work to wage-paying jobs. A likely mechanism is that the transfer program reduces the labor force participation of older people, and they help housework and childcare for younger adults to have wage-paying jobs.
    Keywords: Cash transfer, social security, employment, labor market participation, Vietnam
    JEL: J22 N35 H55
    Date: 2023–01–04
  10. By: Martin Hodula; Milan Szabo; Josef Bajzik
    Abstract: This paper explores flow patterns in retail equity mutual funds related to past and future performance. We employ supervisory data of monthly fund inflows and outflows in the Czech Republic and produce several key findings that shed light on the behavior of households as investors in an emerging market economy. First, we show that investor flows chase past performance and tend to underreact to poor performance - a typical finding in the literature. However, we find that retail investors are very sensitive to poor performance in times of aggregate illiquidity and when investing in funds that hold more illiquid assets. Second, we document that when facing illiquidity and a deteriorating performance, underperforming equity-investing funds experience lower investor purchases and a larger share of redemption requests. We observe similar investor behaviour in periods when retail investors face constraints on their disposable income. At such times, mutual fund inflows are found to decrease significantly and fund outflows to increase. Third, we document the presence of the smart money effect, while finding that it is caused by the buying (but not selling) decisions of retail investors.
    Keywords: Equity funds, liquidity, retail investors, smart money
    JEL: G11 G23
    Date: 2022–12
  11. By: Ekaterina Borisova; Timothy Frye; Koen Schoors; Vladimir Zabolotskiy
    Abstract: Understanding demand for state regulation is a foundational issue for social science. To account for this demand, existing theories rooted in market failure and government failure have focused on various forms of trust, but have paid little attention to fear. We test how fear and trust shape demand for government regulation by drawing on especially precise measures of Covid-related regulations gathered in a survey of more than 23, 000 respondents in 61 Russian regions. We show that fear of contracting the virus is directly related to greater demand for regulation. In addition, the impact of trust is conditional on the level of fear. Higher interpersonal trust is related to lower demand for Covid-19 regulation, while higher institutional trust is associated with greater demand, but, provided fear is sufficiently great, demand for regulation will be high regardless of levels of interpersonal and institutional trust. These results inform debates about theories of regulation, identify critical scope conditions for existing research on trust and demand for regulation, and open a fruitful line of research by examining how fear of social bads shapes support for state intervention.
    Keywords: fear, trust, demand for regulation, Covid-19, Russia
    JEL: D64 H11 I12 Z13
    Date: 2022

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