nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒07‒10
ten papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Enhancing Public Support for International Sanctions By Kantorowicz, Jaroslaw; Kantorowicz-Reznichenko, Elena
  2. Who Is to Suffer? Quantifying the Impact of Sanctions on German Firms By Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
  3. Brief Considerations regarding the Main Union Legislative and Transposition Instruments, adopted with the View to Supporting Ukraine in the Context of the Russian Invasion By Elise-Nicoleta Valcu
  4. Bulgaria and Russia: A Diplomatic Deficit By Avgustina Asenova Peycheva
  5. Russia’s Relations with China Amidst US-China-Russia Strategic Competition By Park, Joungho; Kang, Boogyun; Hyun, Seungsoo; Jeh, Sunghoon
  6. Religion, Ideology and Fertility By Kumo, Kazuhiro; Perugini, Cristiano
  7. Firm Closures and Labor Market Policies in Europe: Evidence from Retrospective Longitudinal Data By Theodoropoulos, Nikolaos; Voucharas, Georgios
  8. Monetary policy transmission in Georgia: empirical evidence By Sergo Gadelia; Tamar Mdivnishvili; Shalva Mkhatrishvili
  9. The Legislative and Institutional Framework of National Minorities in Romania By Anca Jeanina Nita
  10. Firm Heterogeneity and the Impact of Payroll Taxes By Anikó Bíró; Réka Branyiczki; Attila Lindner; Lili Márk; Dániel Prinz

  1. By: Kantorowicz, Jaroslaw; Kantorowicz-Reznichenko, Elena (Erasmus University Rotterdam)
    Abstract: International sanctions are commonly used when military intervention is particularly undesirable. The recent Russian invasion of Ukraine increased the saliency of sanctions, as well as their high domestic costs for the sender states. Democratic states require public support to sustain long and costly sanctions. Yet empirical research on public perception and support for sanctions is scarce. We conduct two experimental studies on quota-representative samples in Poland and Germany using the context of the sanctions on Russia. The first study uses a novel conjoint experiment with the goal to examine how features of a sanctioning regime shape public support for sanctions. As expected, support increases with a decrease in domestic costs and increases in costs imposed on the target state. In addition, aid programs, which can mitigate domestic costs, and beneficial policy alternatives (e.g., developing sustainable energy to replace Russian oil) can enhance support. Furthermore, public support for sanctions requires larger sanctioning countries’ coalitions. In the second—information experiment—study, we find that people overestimate the sanctions’ costs for their country and that correcting this perception through the provision of estimated costs increases reported support. Yet, contrasting sanctions costs with other costs has no additional effect.
    Date: 2023–06–02
  2. By: Görg, Holger (Kiel Institute for the World Economy); Jacobs, Anna (University of Bielefeld); Meuchelböck, Saskia (Kiel Institute for the World Economy)
    Abstract: In this paper, we use a novel firm level dataset for Germany to investigate the effect of sanctions on export behaviour and performance of German firms. More specifically, we study the sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea and Russia's countermeasures. We find a substantial negative effect on both the extensive and intensive margin of German exports. While the negative effects are strongest for firms exporting products subject to trade restrictions, we provide further evidence on the indirect effects of sanctions. Analysing the impact on broader measures of firm performance, we document that the cost of sanctions is heterogeneous across firms but overall modest. Our results reveal that the negative impact of the shock was concentrated primarily among a small number of firms that were highly dependent on Russia as an export market and those directly affected by the sanctions.
    Keywords: sanctions, foreign policy, trade, firm behaviour, Germany
    JEL: F1 F14 F51 L25
    Date: 2023–05
  3. By: Elise-Nicoleta Valcu (University of Pitesti, Romania)
    Abstract: On February 24, 2022, the European Council condemned, in the strongest terms, Russia’s invasion of Ukraine, considering it “a serious violation of the territorial integrity, of the sovereignty†of an independent state, also representing a serious violation of international law and the principles of the United Nations Charter. In the same context, the European Council reaffirmed the need to adopt protective measures for refugees from Ukraine and to support the Ukrainian economy. Therefore, the member states of the European Union have determined that it is necessary for the Union legislator to adopt an appropriate regulatory framework, to which this material refers and which is to be presented, prioritizing two fundamental directions: (a) providing support both to Ukrainian citizens as well as to other refugees from Ukraine, located in the territory of any state of the European Union; (b) granting concessions to the Ukrainian authorities by adopting trade liberalization measures for all products, adopting policies on accelerating the elimination of customs duties for trade between the Union and Ukraine.
    Keywords: preferential treatment, trade liberalization, temporary protection, refugee, rights
    Date: 2022–10
  4. By: Avgustina Asenova Peycheva (Moscow State Institute for International Relations, Sofia, Bulgaria)
    Abstract: The article examines the contemporary Bulgarian - Russian relations and the definition of NATO information operations through a descriptive political analysis. The scientific relevance of the research topic is found in the insufficient study of it in political science due to its novelty. The purpose of this case study is to analyze the peculiarities of NATO information operations of Bulgarian - Russian relations and assess the possibility to re-apply them for the improvement of the current worldwide state of matters. The policy analysis makes use of the interdisciplinary approach to reassessing and redefining NATO information operations through historical, political, psychological analysis with the perspective of influencing the decision making of adversaries and potential adversaries in order to dissolve disagreements and adopt conflict resolution through communication and inclusivity. The authors H. D. Lasswell and B. McNair, who discuss tactics of manipulation and propaganda are used as a base to explain the theory of information operations. Complimentary authors, who explain for media communication’s influence are ones such as C.E. Merriam, T.V. Adorno, H. Marcuse. The duality of information operations is assessed too. The author concludes that the diplomatic deficit stems from a lack of understanding of information operations worldwide, the lack of clear laws approving, assessing, limiting and punishing for abuses of information operations. As a result, due to the need for peace, stability and development, conditions are created to enhance international efforts to take action against different types of contemporary terrorism and force diplomacy to prevail.
    Keywords: Bulgaria, Russia, information operations, diplomacy, NATO
    Date: 2022–10
  5. By: Park, Joungho (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kang, Boogyun (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Hyun, Seungsoo (Korea Institute for National Unification); Jeh, Sunghoon (Hankuk University of Foreign Studies)
    Abstract: This study comprehensively examines the development of Russia's strategic relationship with China amidst intensifying strategic competition among the United States, China, and Russia. Specifically, we analyze the fundamental meaning and direction of Russia's strategy toward China in the process of shaping a new global order, and the key features and characteristics of cooperation between the two countries in a wide range of fields spanning politics, diplomacy, security, military, economy, society, and culture. Accordingly, this research aims to draw valuable policy insights for Korea based on evaluation of the direction and level of Russia-China cooperation from the Russian perspective. In this respect, this study is composed of the following four parts. Part II examines Russia's perception of China and its policy direction, as well as evaluates the prospects of Russia-China relations. Part III conducts an in-depth analysis of the opportunities and constraints associated with Russia-China cooperation in the fields of advanced technology, energy, and finance, which are key strategic areas for strengthening Russia's economic security amidst intense Western sanctions against its economy. In Part IV, we explore the current status and characteristics of cooperation in the fields of education and research, culture and arts, mass media, tourism, etc. Part V presents policy implications for Korea, particularly suggesting promising directions and tasks for the Northern Policy given the major turning point in the changing external environment.
    Keywords: Russia-China Relations; US-China-Russia Strategic Competition
    Date: 2023–06–01
  6. By: Kumo, Kazuhiro (Hitotsubashi University); Perugini, Cristiano (University of Perugia)
    Abstract: In this paper, we investigate how attachment to religion is connected to conservative gender role beliefs and to what extent they, in turn, materialize into fertility decisions. We also test the hypothesis that exposure to gender-progressive political regimes and ideology can weaken this chain of effects, by eroding either the way religion shapes gender roles or the impact of gender beliefs on fertility. Our empirical analysis is based on World Value Survey (WVS) data for five Muslim ex-Soviet Republics vis-à-vis seven other Muslim countries in the neighbouring regions. Results highlight that higher attachment to religion is in both groups associated with more traditional gender roles; however, the link is significantly weaker for the individuals of former communist countries who spent their formative age under Soviet rule. More conservative gender beliefs, in turn, do not translate into higher fertility in Muslim ex-USSR Republics, while the opposite holds for other Muslim countries.
    Keywords: religion, gender norms, fertility, ex-Ussr
    JEL: J13 J16 Z12 P20
    Date: 2023–05
  7. By: Theodoropoulos, Nikolaos; Voucharas, Georgios
    Abstract: We examine the impact of active and passive labor market policies expenditures on the probability of re-employment, re-employment duration, unemployment duration, and re-employment wages in the case of job displacements due to firm closures. We use retrospective homogeneous longitudinal data from the Survey of Health, Ageing and Retirement in Europe and OECD data for 24 countries over the period 1985-2017 and we operate within alternative econometric frameworks. Our findings suggest that, in contrast to passive labor market policies, investing in active labor market policies increases the re-employment probability and the re-employment duration, reduces the risk of staying unemployed, and leads to higher wages at the lower end of the conditional wage distribution. Passive labor market policies estimates offset active labor market estimates and their interaction effect is always negative, but complementarities effects are found for Northern countries. By breaking down active and passive labor market policies into eight subcomponents, our results indicate that they have significant heterogeneous effects within and across labor market outcomes. Further, expenditures on labor market policies vary substantially across regions. For instance, active labor market policies have a stronger impact for Eastern countries, whereas passive labor market policies such as out-of-work income has a positive impact for Southern countries. Further, females are found to benefit more from active labor market policies in terms of re-employment probability, duration of re-employment, and risk of unemployment, but not in terms of wages, compared to males. Policymakers may consider the importance of implementing diverse reforms tailored to different countries and groups to enhance the effectiveness of labor market policies.
    Keywords: labor market policies, plant closures, job loss, re-employment probability, unemployment duration, re-employment wages
    JEL: C21 E24 J08 J65
    Date: 2023
  8. By: Sergo Gadelia (Junior Researcher, Private Sector Development Research Center (PCDRC), ISET Policy Institute (ISET PI)); Tamar Mdivnishvili (Macroeconomic Research Division, National Bank of Georgia); Shalva Mkhatrishvili (Head of Macroeconomics and Statistics Department, National Bank of Georgia)
    Abstract: The strength of monetary policy transmission mechanism is what defines central banks’ ability to influence a real economy and overall prices. This is what we analyse empirically within this paper. Namely, using structural vector autoregressions and based on data since 2009 when the NBG switched to an inflation targeting regime, we estimate the strength of interest rate and exchange rate channels in Georgia. The results suggest that both are relatively strong. Namely, an increase in interest rates seems to generate all three: smaller output gap, exchange rate appreciation and, consequently, lower inflation, underlining the improved transmission mechanism since the estimates from a decade ago. The reaction of inflation to an interest rate change peaks after 4 quarters, in line with other studies as well as the NBG’s communication. Moreover, a variance decomposition analysis shows that inflation is mostly driven by supply shocks with demand shocks having only a negligible effect. In principle, this may be in line with the presumption that it is the central bank’s systematic reaction function that neutralizes the effects of demand shocks on inflation, leaving the supply side as the major driver of inflation data.
    Keywords: Monetary policy; Transmission mechanism; Structural vector autoregressions; Inflation targeting.
    JEL: C13 E43 E52 F31
    Date: 2021–11
  9. By: Anca Jeanina Nita (Ovidius University of Constanta)
    Abstract: The present study aims to reignite the debate on the variables of the relationships between the majority and the national minorities, as well as stress the importance of the latter being involved, after 1989, in the making of the new democratic and constitutional framework. It briefly observes the internal and EU rules related to the legal protection of national minorities. It presents the current legal and institutional framework on national minorities in Romania, thus highlighting the fact that protecting national minorities has been one of the political requirements that Romania had to comply with as part of the EU accession process. The link between the right to identity – in its ethnic, cultural, linguistic, and religious components – and non-discrimination principle is analyzed from the perspective of both constitutional norms and that infraconstitutional legislation. The existence and implementation of a legal framework that is generally favorable to minority rights allow us to conclude that Romania is an inclusive society, where the principle of diversity is promoted and respected, this being a merit of both the majority and national minorities.
    Keywords: national minorities, right to identity, Constitution, National Council for Combating Discrimination, Council of Europe
    Date: 2022–06
  10. By: Anikó Bíró (Centre for Economic and Regional Studies); Réka Branyiczki (CEU, TÁRKI); Attila Lindner (UCL); Lili Márk (CEU); Dániel Prinz (World Bank)
    Abstract: We study the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, we examine the heterogeneous impact of the policy. Employment increases most at low-productivity firms offering low-wage jobs, which tend to hire from unemployment, while the effects are more muted for high-productivity firms offering high-wage jobs. At the same time, wages only increase at high-productivity firms. These results point to important heterogeneity in the incidence of payroll tax cuts across firms and highlight that payroll taxes have a significant impact on the composition of jobs in the labor market.
    Keywords: payroll tax, tax incidence, firm heterogeneity
    JEL: H24 H32 J23 J31
    Date: 2022–11

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