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on Transition Economics |
| By: | Jens Klose (THM Business School Giessen) |
| Abstract: | What are the effects of sanctions and economic support on stock prices and exchange rates in the Russia-Ukraine war? We address this question using a panel-VAR model that incorporates data from 23 countries, besides Russia and Ukraine, spanning the period from 02/01/2022 to 02/24/2023. Our analysis relies on a detailed database to capture the nuances of sanctions and economic support. The results are presented from three distinct perspectives: firstly, in relation to the global economies; secondly, with regard to Russia; and thirdly, concerning Ukraine. The findings reveal that the overall impact of economic support provided to Ukraine is generally limited. In contrast, sanctions imposed by countries have minimal effects on the sanctioning country itself, but they can have significant consequences for the targeted nation. This is particularly evident when financial sanctions are implemented. However, it is important to note that such sanctions also exert effects on the opposing party in the war, Ukraine. Furthermore, if the sanctions originate from G7 or developed countries, the effects on Russia tend to be more pronounced. |
| Keywords: | Sanctions, Support Measures, Stock Prices, Exchange Rates, Panel-VAR |
| JEL: | F31 F51 G15 C33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202317&r=tra |
| By: | Mariusz Kapuściński (Narodowy Bank Polski) |
| Abstract: | In this research note I provide the first estimates of the transmission of monetary policy in Poland to risk-free rates, WIRON rates. I take into account the effects of changes in the policy rate, in the width of the standing facilities corridor and in the reserve position of the banking sector. I also make comparisons to the transmission to POLONIA and WIBOR rates. I find both the overnight and term WIRON rates to be affected by interest rate policy and other components of the operational framework of Narodowy Bank Polski. This makes the transmission similar as to the POLONIA rate, but to some extent different than to WIBOR rates. For the term rates, by construction, there are differences in transmission lags. This might have implications for the transmission mechanism of monetary policy in Poland in the future. The extent will depend on the character of changes in the policy rate (unexpected versus expected), and the term of the rate chosen for financial contracts and instruments. Given the limited number of observations, the conclusions should be treated with caution. |
| Keywords: | transmission mechanism of monetary policy, interest-rate pass through, risk-free rates, interest rate benchmark reform. |
| JEL: | E43 E52 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:358&r=tra |
| By: | World Bank; Coll-Black, Sarah; Von Lenthe, Cornelius Claus; Koettl-Brodmann, Stefanie |
| Abstract: | This paper explores the social protection response to the COVID-19 pandemic in Armenia, Azerbaijan, Georgia, Moldova and Ukraine to learn lessons on how to build the resilience of their social protectionsystem. These countries made substantial efforts to address the most serious consequences of the pandemic, pragmaticallyharnessing existing programs to reach vulnerable groups, while also introducing innovations to fill gaps in theexisting social protection system. Rigidities in administrative systems, complex eligibility criteria, aswell as weaknesses in information systems, limited governments’ ability to quickly identify and reach thosehouseholds that were most vulnerable to the impact of the pandemic with adequate support. These challenges strengthenthe case for investment in crisis preparedness – most immediately by improving the functioning of socialprotection systems and setting out the design features and delivery systems to support a response to future covariate shocks. |
| Date: | 2023–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:183521&r=tra |
| By: | Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Maciej J. Grodzicki; Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Niko Korpar (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Bernhard Moshammer (The Vienna Institute for International Economic Studies, wiiw); Ondřej Sankot; Bernd Christoph Ströhm (The Vienna Institute for International Economic Studies, wiiw); Maryna Tverdostup (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The EU member states of Central Eastern Europe (EU-CEE) have experienced rapid convergence in the decades following their EU accession, and have built up strong export-oriented manufacturing sectors boosted by foreign direct investment inflows. While this growth model has brought many positives, there are indications that it is hitting its limits. Endogenous limits to EU-CEE’s growth model are exacerbated by exogenous challenges of the ‘twin’ (green and digital) transitions, and the fallout of the pandemic and Russian invasion of Ukraine. This reinforces the imperative for EU-CEE to transition to a more innovation-driven, new growth model, enabled by a comprehensive industrial policy. However, the EU-CEE countries have not only lacked a stable and strategic approach to industrial policy in their development paths, but also find themselves in a unique position due to EU membership. As a result, innovation and industrial policies are underdeveloped in the region. Based on an in-depth analysis of the industrial landscape and the industrial policy environment of the region, we propose eight pillars for creating a EU-CEE version of the entrepreneurial state. |
| Keywords: | industrial policy, EU-CEE, convergence, transition, green, digital |
| JEL: | L52 O25 F63 L60 P27 O40 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:469&r=tra |
| By: | Natália Barbosa; Ana Paula Faria (Department of Economics and NIPE, University of Minho; Department of Economics and NIPE, University of Minho,) |
| Abstract: | Productivity disparities in the European regions tend to persist. In order to understand the underlying sources of this phenomenon we assess the importance of science and regional innovation modes on firms’ productivity growth on a sample of 150, 712 firms across 161 NUTSII European regions, over the period 2012-2017. We find that science is a major source of firms’ productivity growth, and it has been particularly important to firms located in Southern Europe and, to less extent, in Eastern EU regions, indicating that a science-push convergence process is at work in the EU peripheral regions. Our findings also show that the fast-growing productivity firms are those who benefit more from external knowledge and innovation. Growth by imitation seems to be a viable strategy restricted to the slow-growing productivity firms. These results help to conciliate contentious evidence regarding firms’ benefits from spillovers, namely from scientific knowledge. |
| Keywords: | Territorial innovation patterns, Firm productivity, Europe, Quantile regression |
| JEL: | O33 O38 L25 R11 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0175&r=tra |
| By: | Dmytro Boyarchuk; Marek Dabrowski |
| Abstract: | This paper analyses Ukraine’s war economy management and performance, according to information available in June 2023. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:node_9241&r=tra |
| By: | Martin Borowiecki; Federico Giovannelli; Jens Høj |
| Abstract: | This paper provides evidence on the impact of digitalisation on productivity in Slovenia during the COVID-19 crisis. The pandemic affected overall labour productivity negatively. Nonetheless, results show that firms that were more ICT-intensive before the pandemic experienced a smaller decline in their labour productivity growth compared to their less ICT-intensive peers in the same 2-digit level sector. This resilience effect was strongest for firms that are integrated in global value chains. A second finding is that COVID-19 resulted in productivity-enhancing reallocation of labour to ICT-intensive firms, reflecting that these firms registered higher employment growth relative to their less ICT-intensive peers during the pandemic. A third finding is that high levels of state ownership in a sector was associated with less productivity-enhancing reallocation. This suggests that state-owned enterprises retained workers that could be redirected to more productive firms. Together, these findings highlight the potential of digitalisation to support resilience and stronger productivity growth, although labour market rigidities and state ownership hamper the positive impact of digitalisation. |
| Keywords: | digitalisation, labour reallocation, productivity |
| JEL: | D24 E22 E24 O33 |
| Date: | 2023–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1766-en&r=tra |
| By: | Hubert Drazkowski (Group for Research in Applied Economics (GRAPE)); Sebastian Zalas (Group for Research in Applied Economics (GRAPE)) |
| Abstract: | We evaluate the usefulness of non-representative registry data such as Orbis in drawing inferences about economic phenomena in Poland. While firm-level studies of economic phenomena are of key policy relevance, census data and representative samples are scarcely available across countries. We obtain estimates of labor share for the period 1995-2019. For the overlapping period and samples, we compare our estimates to Growiec (2009), who drew on a census of Polish firms employing 50+ employees. We also refer to OECD STAN data. We demonstrate that time patterns are common across data sources. Additionally, we study the potential for various imputation methods to enrich inference. |
| Keywords: | labor share, firm-level data, missing data |
| JEL: | C81 E25 D33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:fme:wpaper:82&r=tra |
| By: | Antonela Miho; Martin Borowiecki; Jens Høj |
| Abstract: | This paper provides evidence on the effects of digitalisation on the labour market in Slovenia using a unique dataset of Slovenian workers and firms for the years 2016 to 2020. Results show that at the firm level, digitalisation – measured in terms of ICT investment, is associated with positive and statistically significant effects on employment. However, job growth is not evenly distributed: High-skilled workers and younger workers benefit the most from employment gains, whereas there is little to no employment increases for low- and medium-skilled workers and older workers aged 50 or more. Furthermore, employment effects from digitalisation are strongest for private manufacturing firms. In contrast, ICT investment by state-owned firms is not associated with employment gains. |
| Keywords: | employment, ICT investment, labour reallocation, wages |
| JEL: | E22 E24 J62 O33 |
| Date: | 2023–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1767-en&r=tra |
| By: | Brainerd, Elizabeth (Brandeis University); Malkova, Olga (University of Kentucky) |
| Abstract: | Can a policy intervention in the stressful first year after a birth affect marital stability? We examine this question using a large expansion in maternity benefits in 1982 in the Baltic countries of Estonia, Latvia and Lithuania. The program provided partially paid leave until the child's first birthday and included a small cash payment at birth. We use individual-level panel data and compare the Baltics with similar East European countries using a difference-indifferences framework. Maternity benefits decrease divorce within the first year after birth. This decrease persists for at least a decade, indicating that couples avoided divorce altogether rather than simply delaying it. While mothers extended their leave by several months, they returned to full-time work afterwards, consistent with egalitarian gender norms in the labor market. |
| Keywords: | marriage, divorce, marital stability, maternity benefits, Baltics, Eastern Europe |
| JEL: | J12 J16 J18 P2 P3 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16238&r=tra |
| By: | Karol Szafranek (Narodowy Bank Polski); Grzegorz Szafrański (Narodowy Bank Polski); Agnieszka Leszczyńska-Paczesna (Narodowy Bank Polski) |
| Abstract: | Following recent exceptional events in the world economy inflation increased remarkably across most countries, reinvigorating the prevalent discussion on the sources of consumer price dynamics. We analyse this issue for the small open economy of Poland by means of the Bayesian structural VAR. The model describes the evolution of eight key macroeconomic variables and is identified with a set of zero and sign restrictions. This framework, applicable also to other small open economies, provides sound economic interpretation of three domestic and five external shocks, of which two are country-specific and the remaining three are purely global. In a robust manner we show that country-specific energy price and global supply shocks mostly determine the recent inflation surge in Poland. We illustrate that inflation response to these two shocks has become markedly more persistent after the outbreak of the Covid-19 pandemic. We also demonstrate that the choice of an inadequate energy prices proxy may result in the understated importance of the energy price shock, whereas accounting for recent geopolitical threats and other exogenous events does not alter our baseline findings. For policy makers, we show that counterfactual inflation net of external shocks is far lower, but has recently increased as well. |
| Keywords: | Inflation decomposition, Bayesian SVAR model, energy prices, supply disruptions, domestic and external shocks. |
| JEL: | C11 C32 C51 E31 Q43 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:357&r=tra |
| By: | Mariusz Kapuściński (Narodowy Bank Polski) |
| Abstract: | In this research note I provide updated estimates of the role of the bank lending channel in monetary policy transmission in Poland. Previous estimates were described in Kapuściński (2017). The bank lending channel is defined following Disyatat (2011), as the amplification of the effect of monetary policy on bank lending, due to its impact on bank balance sheet strength. As before, the estimates are based on counterfactual impulse response functions from panel vector autoregressive models. Differences include not only the longer time series dimension of available data, but also enhancements in terms of the number of banks covered, data processing and coefficient uncertainty coverage. I find the bank lending channel to operate differently in cooperative and commercial banks. Nevertheless, estimates for the latter, significantly larger part of the banking sector are broadly in line with previous ones. 18 percent of a decline in bank lending after the tightening of monetary policy can be attributed to the bank lending channel. |
| Keywords: | transmission mechanism of monetary policy, bank lending channel. |
| JEL: | E52 G21 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:359&r=tra |
| By: | Salomao, Juliana; Varela, Liliana |
| Abstract: | This article develops a heterogeneous firm-dynamics model to jointly study firms’ currency debt composition and investment choices. In our model, foreign currency borrowing arises from a dynamic trade-off between exposure to currency risk and growth. The model endogenously generates selection of productive firms into foreign currency borrowing. Among them, firms with high marginal product of capital use foreign loans more intensively. We assess econometrically the model’s predicted pattern of foreign currency borrowing using firm-level census data from the deregulation of these loans in Hungary, calibrate the model, and quantify the aggregate impact of this financing. Our counterfactual exercises show that understanding the characteristics of firms borrowing in foreign currency is critical to assess the aggregate consequences of this financing. |
| Keywords: | firm dynamics; foreign currency debt; currency mismatch; uncovered interest rate parity |
| JEL: | F3 G3 |
| Date: | 2022–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:108168&r=tra |
| By: | Ozili, Peterson K |
| Abstract: | The study investigates the impact of monetary policy on the level of financial inclusion in the big-five emerging market countries from 2004 to 2020. Several indicators of financial inclusion and the central bank interest rate were used in the analysis. It was found that the monetary pol-icy rate has a mixed effect on financial inclusion, and the effect depends on the dimension of fi-nancial inclusion examined. Specifically, a high monetary policy rate has a significant negative impact on financial inclusion through a reduction in the number of depositors in commercial banks. A high monetary policy rate also has a significant positive impact on financial inclusion through greater bank branch expansion. The policy implication is that both contractionary and expansionary monetary policies lead to positive improvements in specific indicators of financial inclusion, because increase in interest rate leads to bank branch expansion which is beneficial for financial inclusion and decrease in interest rate leads to increase in the number of depositors in commercial banks which is also beneficial for financial inclusion. It was also found that the rising monetary policy rate has a negative effect on all indicators of financial inclusion in the post-financial crisis period. Overall, the effect of monetary policy on financial inclusion seem to depend on the monetary policy tool used by the monetary authority and the dimension of financial inclusion examined. The monetary authorities should pay attention to how their monetary policy choices might affect the level of financial inclusion and reduce the benefits that society gains from financial inclusion. |
| Keywords: | monetary policy, interest rate, financial inclusion, access to finance, emerging markets |
| JEL: | E51 E52 E58 G21 |
| Date: | 2023–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117804&r=tra |