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on Transition Economics |
| By: | ITO Koji |
| Abstract: | Immediately after Russia launched its invasion of Ukraine on February 24, 2022, the G7, the EU, and others imposed economic sanctions, including trade measures, against Russia. The sanctions were expected to have a serious impact on the Russian economy. However Russia's real economic growth rate in 2022 was only down by 2.1%, leaving doubts about the effectiveness of the sanctions. Therefore, in this paper I conducted a simulation using the OECD "Inter Country Input-Output Table" (ICIO) to analyze the impact of the trade sanctions against Russia on the production activities of each country. If sanctions and countermeasures reduce trade between OECD member countries and Russia by 20%, Russian production will fall by 4.76%, mainly in the mining and petroleum and coal product manufacturing industries. This figure is close to the rate of decline in Russia's GDP during the chaotic period of the late 1990s, meaning that it will have a certain impact. However, based on the actual trade trends after the sanction, I analyzed the case where only OECD countries cut their exports to Russia and Russia does not restrict exports to sanctioned countries. In this case, even if exports decreased by 20%, Russia's production value would only decrease by 0.02%. This result can be attributed to Russia's trade structure, which mainly exports raw materials and imports final goods. Based on the analysis in this paper, the trade sanctions seem to be largely ineffective in the current situation where the number of countries implementing sanctions is small and Europe, Japan and other countries imposing sanctions are accepting imports from Russia. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:polidp:23004&r=tra |
| By: | Theresa Graefe |
| Abstract: | In 2013, TSOs from the Central European Region complained to the Agency for the Cooperation of Energy Regulators because of increasing unplanned flows that were presumed to be caused by a joint German-Austrian bidding zone in the European electricity market. This paper empirically analyses the effects of the split of this bidding zone in 2018 on planned and unplanned cross-border flows between Germany, Austria, Poland, the Czech Republic, Slovakia, and Hungary. For all bidding zones, apart from the German-Austrian one, planned flows increased. Further, I find that around the policy intervention between 2017 and 2019, unplanned flows between Germany and Austria as well as for the Czech Republic and Slovakia decreased. However, for Poland increasing unplanned flows are found. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.14182&r=tra |
| By: | Ewa A. Drzazga-Szcz\c{e}\'sniak; Piotr Szczepanik; Adam Z. Kaczmarek; Dominik Szcz\c{e}\'sniak |
| Abstract: | The concept of entropy is not uniquely relevant to the statistical mechanics but among others it can play pivotal role in the analysis of a time series, particularly the stock market data. In this area sudden events are especially interesting as they describe abrupt data changes which may have long-lasting effects. Here, we investigate the impact of such events on the entropy of financial time series. As a case study we assume data of polish stock market in the context of its main cumulative index. This index is discussed for the finite time periods before and after outbreak of the 2022 Russian invasion of Ukraine, acting as the sudden event. The analysis allows us to validate the entropy-based methodology in assessing market changes as driven by the extreme external factors. We show that qualitative features of market changes can be captured quantitatively in terms of the entropy. In addition to that, the magnitude of the impact is analysed over various time periods in terms of the introduced entropic index. To this end, the present work also attempts to answer whether or not the recent war can be considered as a reason or at least catalyst to the current economic crisis. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.16155&r=tra |
| By: | Cerami, Alfio |
| Abstract: | This article examines the relationship between presence of vertical and horizontal inequalities and the emergence of social, distributive and civil conflicts in Belarus, Latvia, Kazakhstan, Kyrgyzstan, Lithuania, Russian Federation, Tajikistan and Ukraine. Are ethnic, religious or linguistic conflict related reasons alone responsible for the emergence of social, distributive and civil conflicts? If not, what other factors play an equally determinant role (e.g. structure of the economy, regime type, welfare institutions, public policies) in structuring and determining in-groups and out-groups related tensions? These are the key quest this article addresses. In this article I show unstable trends in night lights development and associated electricity usage, which follow recent tensions in the oil and gas economic and political markets. The more oil and gas prices/supply become unstable, the more are the prospects for national and subnational social, distributive and civil conflicts. |
| Keywords: | Eastern Europe, in-groups and out-groups related tensions, social, distributive and civil conflicts, vertical and horizontal inequalities, shadow of war, Commonwealth of Independent States |
| JEL: | D1 D13 D6 D7 D70 D71 D72 D73 D74 D78 D79 D90 E3 I3 I30 I31 I32 I38 J7 J71 J78 L1 P1 P10 P16 P2 P3 P36 P5 P51 P52 R2 R20 R28 |
| Date: | 2023–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116870&r=tra |
| By: | Juraj Falath (National Bank of Slovakia); Alena Kissova (National Bank of Slovakia); Adriana Lojschova (National Bank of Slovakia) |
| Abstract: | We investigate the impact of the TLTRO III operations introduced by the European Central Bank in 2020 on the bank lending activity of Slovak banks, using unique bank-level data on the program. We deploy a difference-in-difference approach on monthly data covering the time period from January 2012 o December 2021with 34 banks included in the analysis. Our findings suggest that the credit easing measures had a positive effect on bank lending to non- inancial corporations and negative effect on lending rates, even when controlling for possible confounding factors. We also explore other possible uses of TLTRO III liquidity by banks besides increased lending. Although inconclusive, there is some evidence of banks improving their profitability via holding cheap liquidity in their deposit accounts and to a lesser extent via increasing their holdings of debt securities. |
| JEL: | E43 E44 E51 E52 E58 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:svk:wpaper:1093&r=tra |
| By: | Vassiliki Koutsogeorgopoulou |
| Abstract: | Lithuania is digitalising its economy with visible success, but much scope remains for the integration of advanced technologies. The COVID-19 crisis confirmed the importance of digitalisation to sustain activity. Increased private investment in innovation is essential to speed up digitalisation. The take-up of R&D tax incentives is low, however, despite relatively generous provisions, and many smaller firms have not been inclined to innovate. More effective public support for business R&D and stronger research-business collaboration on innovation are important. There is also a need to promote digital uptake, especially among smaller firms that lag behind. Improving access to equity finance for young innovative firms, reducing remaining gaps in digital infrastructure, along with better information on digital tools and how to use them, can help smaller firms digitalise. The public sector too has to become more digitalised. Addressing weaknesses in foundational skills through education reforms and responding more effectively to labour market needs for digital skills would enable a wider adoption of advanced technologies and higher productivity growth, while ensuring that the digitalisation dividends are distributed fairly. Increased participation in adult learning, especially among the less educated, is the way forward to adapt to increased job automation in the digital era. |
| Keywords: | Collaboration, connectivity, digital, innovation, productivity, R&D, skills, technologies |
| JEL: | J24 O3 O32 I23 |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1753-en&r=tra |
| By: | Fabio Ashtar Telarico |
| Abstract: | In the thirty years since the end of real socialism, Bulgaria's went from having a rather radically 'different' tax system to adopting flat-rate taxation with marginal tax rates that fell from figures as high as 40% to 10% for both the corporate-income tax and the personal-income tax. Crucially, the econometric forecasting models in use at the Bulgarian Ministry of Finance hinted at an increase in tax revenue compatible with the so-called 'Laffer curve'. Similarly, many economists held the view that revenues would have increased. However, reality fell short of those expectations based on forecasting models and rooted in mainstream economic theory. Thus, this paper asks whether there are betterperforming forecasting models for personal-and corporate-income tax-revenues in Bulgaria that are readily implementable and overperform the ones currently in use. After articulating a constructive critique of the current forecasting models, the paper offers readily implementable, transparent alternatives and proves their superiority. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.09405&r=tra |
| By: | François Geerolf (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po) |
| Abstract: | In a controversial policy paper, Bachmann et al. (2022) argued back in March 2022 that the economic effects for Germany of a complete immediate stop of energy imports from Russia would be small, between 0.5% and 3% of GDP loss. A few weeks later, Baqaee et al. (2022) even presented 0.3% GDP loss in the case of an embargo as the headline number, in a follow-up report for the French Council of Economic Analysis (CAE). This note argues that these estimates are both problematic from a scientific point of view, and also strongly biased towards finding small effects of a gas embargo: this is true of the (socalled) "Baqaee-Farhi approach" arriving at 0.2-0.3% of GDP, the "production function approach" arriving at 1.5% to 2.3% of GDP, as well as the "sufficient statistics approach" (also based on Baqaee-Farhi) arriving at 1% of GDP. This note argues that Olaf Scholz was correct in saying that the mathematical models which were used "don't really work" here, and tries to explain why. In any case, these models do not permit such categorical statements. |
| Keywords: | energy, sanctions, economic models |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04015954&r=tra |
| By: | Zegar, Józef Stanisław |
| Abstract: | The aim of the article is to determine the course of transformation of family farming in Poland in recent years in terms of the industrial model and challenges related to its sustainability. The results of the 2010 and 2020 agricultural censuses, other public statistics data, and the literature on the subject were used to achieve this goal. Apart from the general characteristics of the transformation, the focus was on changes in labor inputs, resource productivity, and household income of individual farm users. The analysis showed that the development of agriculture does not differ from the general model of industrial transformation, including the following processes: commercialization, intensification, concentration, and specialization. However, new challenges are emerging, especially the need for putting agriculture on a sustainable track and the demographic, environmental, and economic conditions that require significant adjustments in the transformation of agriculture. Significant intervention by political institutions is needed, especially in creating eco-innovations and conditions for the use of new income opportunities, which also requires intensifying the cooperation of farmers themselves. It is also advisable to extend the scope of agricultural advisory services, going beyond the sphere of using public funds and conventional economics of farms. |
| Keywords: | Agricultural and Food Policy, Farm Management |
| Date: | 2023–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iafepa:333728&r=tra |
| By: | Gan-Ochir Doojav (Bank of Mongolia); Munkhbayar Gantumur (Bank of Mongolia) |
| Abstract: | This study investigates the causal effects of the banking sector cleanup on lending conditions. To overcome the banking crisis consequences of 2014–2016, the National Bank of Ukraine changed its regulation approach to strict intolerance towards financially weak and opaque banks and launched the development of the macroprudential regulation concept. As a result, a significant number of banks, accounting for approximately one-third of pre-crisis banking assets, were declared insolvent or withdrawn from the market for other reasons. We analyze bank-firm-loan level data merged with information from borrowers' financial statements. Examining a significant set of loan, bank, and borrower characteristics, we cannot conclude that lending conditions have definitely tightened since the cleanup of the banking sector. On the one hand, banks reduce large exposures in response to stricter regulatory requirements, primarily for lending to related parties, thereby decreasing the loan amount on average. On the other hand, loan interest rates decline due to monetary policy easing. As the risks for banks gradually decreased over time, interest spreads also narrowed, which was reflected in lower loan prices. At the same time, banks deteriorate lending conditions for loss-making firms- loan size significantly decreases compared to the whole sample of firms, and interest rates rise. Furthermore, bank requirements for financial performance of corporates become more stringent and generally do not ease to pre-policy levels over time. Finally, the results suggest that the crucial factors for corporate borrowers to receive a loan from a new bank after their bank closure are firm profitability at the time of a new match and loans quality in closed banks. |
| Keywords: | Banking sector cleanup; Bank liquidations; lending conditions |
| JEL: | C21 C41 G21 G28 |
| Date: | 2023–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp06-2023&r=tra |
| By: | Konstantins Benkovskis (Latvijas Banka); Olegs Tkacevs (Latvijas Banka); Karlis Vilerts (Latvijas Banka) |
| Abstract: | This paper studies the employment effect of the job retention scheme implemented during the Covid-19 pandemic. Using firm-level data from Latvia, we investigate whether a change in the number of employees in firms that received support from the job retention programme has been different from that of similar firms which did not receive such support, and whether these differences have disappeared over time. We find strong evidence that job retention scheme participants in Latvia were less likely to cut employment and that this effect persisted for several months after receiving support. Participation in the job retention scheme affected both the likelihood of a firm’s survival and the rate at which employees were laid off. Our results also suggest that the participation effect was not uniform across firms, with the effect being less pronounced in service sectors with a higher level of contact intensity and more pronounced in sectors with a higher proportion of highly skilled employees. |
| Keywords: | Job retention schemes, idle-time allowance, Covid-19, employment |
| JEL: | E24 H12 J62 J68 |
| Date: | 2023–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202303&r=tra |
| By: | Gan-Ochir Doojav (Bank of Mongolia); Munkhbayar Gantumur (Bank of Mongolia) |
| Abstract: | This paper develops an estimated New Keynesian model of a commodity-exporting economy for an integrated policy framework, integrating the full range of policies used in practice and featuring a range of nominal and real rigidities, macro-financial linkages, and transmission channels of external shocks. We jointly examine the optimal conduct of conventional and unconventional monetary policies, macroprudential policy, foreign exchange intervention, capital flow management, and fiscal policy based on the model. The policy analysis framework is applied empirically to Mongolia, a small open, and developing economy highly dependent on imports and commodity exports. We find that an eclectic policy mix improves policy tradeoffs, and a lack of cooperation among policy authorities may result in conflicting policies, hence suboptimal results for overall economic stability. Our optimal policy analysis shows that policy mix adjustments should differ depending on the type of shocks and the policy objectives. The results suggest that the policy analysis framework can help policymakers choose their policy mix adjustments to deal with external shocks in an integrated and optimal way. |
| Keywords: | Monetary policy; Macroprudential policy; Foreign exchange intervention; Fiscal policy; Capital flow management; Optimal policy mix; Open economy macroeconomics; External shocks; Bayesian analysis |
| JEL: | C11 C32 E32 E43 E52 F41 |
| Date: | 2023–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp05-2023&r=tra |