nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒03‒27
eight papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. The attack on Ukraine and the militarisation of Russian Foreign and domestic policy: A stress test for military reform and regime legitimacy By Klein, Margarete; Schreiber, Nils Holger
  2. The Politics of Bank Failures in Russia By Zuzana FungáÄ ová; Alexei Karas; Laura Solanko; Laurent Weill
  3. Inflation Expectations in the Wake of the War in Ukraine By Geghetsik Afunts; Misina Cato; Tobias Schmidt
  4. Western Balkan foreign and security ties with external actors: An arena of geostrategic rivalry for the EU or a local power struggle? By Vulović, Marina
  5. Ukrainian asylum seekers in Latvia: the circumstances of destination choice By Zane Varpina; Kata Fredheim
  6. Cash Transfers and Labor Supply: New Evidence on Impacts and Mechanisms By Nguyen, Cuong Viet; Tarp, Finn
  7. The Micro and Macro Effects of Changes in the Potential Benefit Duration By Jessen, Jonas; Jessen, Robin; Galecka-Burdziak, Ewa; Góra, Marek; Kluve, Jochen
  8. Disabilities and Care Needs among Older People: Evidence from Vietnam By Nguyen, Cuong Viet; Nguyen, Quynh Ngoc

  1. By: Klein, Margarete; Schreiber, Nils Holger
    Abstract: Moscow's decision on 24 February 2022 to invade Ukraine constituted a culmination in the militarisation trajectory of Russian foreign policy since 2008. At the same time, the war has exposed the weaknesses of the military reform launched by Moscow in 2008. The high losses of the country's armed forces in Ukraine limit Russia's military power projection capabilities, for example in Syria and in other conflicts. Moreover, military setbacks and partial mobilisation have undermined an important pillar of the regime's legitimacy.
    Keywords: Ukraine, Russia, Vladimir Putin, military reform, invasion, war of aggression, militarisation of foreign policy, regime legitimacy, mobilisation
    Date: 2022
  2. By: Zuzana FungáÄ ová; Alexei Karas; Laura Solanko; Laurent Weill
    Abstract: We study whether bank failure probability systematically varies over the election cycle in Russia. Using monthly data for 2002-2020 and controlling for standard bank risk indicators we find that bank failure is less likely during periods preceding presidential elections. We explore whether this effect is more pronounced for banks whose failure is associated with greater political costs, such as important players in the household deposit market or important players in regional markets. We find no evidence for this latter effect. Overall, our results provide mixed evidence that political cycles matter for the occurrence of bank failures in Russia.
    Keywords: Bank Failure, Election, Russia
    Date: 2022
  3. By: Geghetsik Afunts; Misina Cato; Tobias Schmidt
    Abstract: Russia's invasion of Ukraine is posing a range of new challenges to the global economy, including affecting the inflation expectations of individuals. In this paper, we aim to quantify the effect of the invasion on short- and long-term inflation expectations of individuals in Germany. We use microdata from the Bundesbank Online Panel - Households (BOP-HH), for the period from February 15th to March 29th, 2022. Treating the unanticipated start of the war in Ukraine on the 24th of February 2022 as a natural experiment, we find that both short- and long-term inflation expectations increased as an immediate result of the invasion. Long-term inflation expectations increased by around 0.4 percentage points, while the impact on short-term inflation expectations was more than twice as large - around one percentage point. Looking into the possible mechanisms of this increase, we suggest that it can be partially attributed to individuals’ fears of soaring energy prices and increasing pessimism about economic trends in general. Our results indicate that large economic shocks can have a substantial impact on both short and long-term inflation expectations.
    Keywords: inflation expectations; Russian invasion of Ukraine; survey; natural experiment;
    JEL: D84 D12 E3
    Date: 2023–02
  4. By: Vulović, Marina
    Abstract: Even though the six Western Balkan countries (WB6) have close political ties with the EU, their alignment with the EU's Common Foreign and Security Policy (CFSP) has increasingly come into focus since the beginning of the Russian war of aggression in Ukraine. The EU should take a differentiated view of the WB6's political and security cooperation with external actors such as Russia, China and Turkey. Within the WB6, the two "outliers" of Serbia and Bosnia-Herzegovina's Republika Srpska use their foreign and security relations with Russia to achieve their own political goals. While Serbia seeks support for its Kosovo policy, Republika Srpska is trying to get backing for its separatist tendencies. The WB6 are not expected to end their cooperation with the aforementioned external actors in the near future. Nonetheless, in today's shifting geopolitical arena, the EU must set priorities that bind the WB6's outliers to the CFSP.
    Keywords: Western Balkan, EU, Common Foreign and Security Policy (CFSP), Russia, China, Turkey, Republika Srpska, NATO, Bosnia-Herzegovina, Serbia, Kosovo
    Date: 2023
  5. By: Zane Varpina (Stockholm School of Economics in Riga; Baltic International Centre for Economic Policy Studies); Kata Fredheim (Stockholm School of Economics in Riga; Baltic International Centre for Economic Policy Studies)
    Abstract: Russian invasion in Ukraine in 2022 has created the biggest refugee crisis in Europe since WWII. Close to 7 million people have left the country as of August 2022 and figures keep growing. Latvia has accommodated a mere 36 thousand of them, but it exemplifies other smaller countries in the refugee flows. Patterns and factors of asylee destination decisions for less popular destinations have not been explored making one wonder what makes refugees deviate from the mainstream migration flows. We explore why and how Ukrainian war-displaced people have chosen Latvia using the narratives of Ukrainian displaced people who arrived in Latvia in early stages of the conflict. Drawing on in-depth qualitative interviews with refugees in Latvia, we find that networks are the primary determinant of the choice to flee to Latvia. The closeness of kinship is not as important as the fact of having the contact as such, nor does it determine the level of support. Close or distant relatives and friends are the first instance to turn to for war-displaced civilians, while financial factors do not appear to be decisive. In the situation of acute displacement, the first asylee strategy is to seek support in kinship and other networks.
    Date: 2022–07
  6. By: Nguyen, Cuong Viet; Tarp, Finn
    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
  7. By: Jessen, Jonas (European University Viadrina, Frankfurt / Oder); Jessen, Robin (RWI); Galecka-Burdziak, Ewa (Warsaw School of Economics); Góra, Marek (Warsaw School of Economics); Kluve, Jochen (KfW Development Bank)
    Abstract: We quantify micro and macro effects of changes in the potential benefit duration (PBD) in unemployment insurance. In Poland, the PBD is 12 months for newly unemployed if the previous year's county unemployment rate is more than 150% of the national average, and 6 months otherwise. We exploit this discontinuity using RD estimates on registry data containing the universe of unemployed from 2004 to 2020. For workers whose PBD is directly affected by the policy rule (benefit recipients younger than 50), a PBD increase from 6 to 12 months leads to 13 percent higher unemployment. The aggregate effect on unemployment is entirely explained by this increase. Thus, the micro effect equals the macro effect. We find no evidence of spill-overs on two distinct groups of unemployed whose PBD is unchanged and no effect on measures of labour market tightness. A decomposition analysis reveals that 12 months after an increase in the PBD, changes in exits from and entries into unemployment each contribute to about one half of the overall increase in unemployment.
    Keywords: unemployment benefits, extended benefits, spell duration, separation rate, regression discontinuity
    JEL: H55 J20 J65
    Date: 2023–02
  8. By: Nguyen, Cuong Viet; Nguyen, Quynh Ngoc
    Abstract: In this study, we study disability among older people (aged 60 or older) using the 2016 Viet Nam National Disability Survey. We find that 31% and 12% of older people are living with low and high disabilities, respectively. These rates are remarkably higher than the disability rate identified by local authorities. Disability is found to be more prevalent in older people and women. There is a strong and negative association between education and disability, as well as between wealth and disability. Next, we analyze the need for care among older people with disabilities. We find that around 10% of older people need care, which is equivalent to around 1.2 million people. The proportion of people in need of care is 29% for older people with disabilities and 53.8% for older people with severe disabilities.
    Keywords: Disability, older people, care need, unmet care, Vietnam
    Date: 2023

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