nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒10‒23
thirteen papers chosen by
Maksym Obrizan, Kyiv School of Economics

  1. Electricity Market Crisis in Europe and Cross Border Price Effects: A Quantile Return Connectedness Analysis By Hung Xuan Do; Rabindra Nepal; Son Duy Pham; Tooraj Jamasb
  2. Spillovers from Russia to Neighboring Countries: Transmission Channels and Policy Options By Shant Arzoumanian
  3. Energy Support for Firms in Europe: Best Practice Considerations and Recent Experience By Mr. Anil Ari; Philipp Engler; Gloria Li; Manasa Patnam; Ms. Laura Valderrama
  4. A Short History of the Great Depression in Bulgaria By Marinova, Tsvetelina; Nenovsky, Nikolay
  5. Effective sanctions against oligarchs and the role of a European Asset Registry By Theresa Neef; Thomas Piketty; Gabriel Zucman; Lucas Chancel; Panayioti Nicolaides
  6. A Comprehensive Regression Study on the Drivers of Labour Productivity By Shevelova, Anastasia; Machukha, Ielyzaveta; Motliuk, Mark; Kulinich, Volodymyr
  7. A Modern Excess Profit Tax By Manon François; Carlos Oliveira; Bluebery Planterose; Gabriel Zucman
  8. The Legal Design of Domestic MLA procedures in Southeast Europe: A Comparative Analysis of Serbia, North Macedonia and Bosnia and Herzegovina By Tomic, Slobodan; David-Barrett, Elizabeth
  9. Agriculture Economy and Rural Development - Trends and Challenges By Dragomir, Vili; Rodino, Steliana
  10. Not all oil types are alike By Jochen Güntner; Michael Irlacher; Peter Öhlinger
  11. Family Firms and Carbon Emissions By Marcin Borsuk; Nicolas Eugster; Paul-Olivier Klein; Oskar Kowalewski
  12. In search of accounting principles for the central bank By Krzysztof Kruszewski; Mikołaj Szadkowski
  13. Constructing a house price misalignment indicator: revisited and revamped By Damjanović, Milan; Lenarčič, Črt

  1. By: Hung Xuan Do; Rabindra Nepal; Son Duy Pham; Tooraj Jamasb
    Abstract: Despite the massive impacts of the COVID-19 pandemic and the Russia-Ukraine war on the European energy market, little is known about their effects on the transmission of risks between member states’ electricity markets and key electricity sources. In this paper, we first employ the quantile connectedness approach to quantify the return connectedness between eleven European electricity markets, natural gas, and carbon market, then examine the impacts of the two crises on the interconnectedness. We find a significant return interconnectedness of the system, mainly driven by the spillover effects among European electricity markets. An investigation of the connectedness across quantiles shows that the spillover effects are much stronger at the tails of conditional distribution and the natural gas and carbon markets are net recipients of return shocks across quantiles. More importantly, our results reveal opposite effects of the two crises on interconnectedness. While the COVID-19 pandemic reduces the interconnectedness, the Russia-Ukraine war intensifies the return shock transmission.
    Keywords: Natural gas, European Emission Allowance, Electricity markets, COVID-19, Russia-Ukraine war, Quantile connectedness
    JEL: D4 L94 Q43
    Date: 2023–09
  2. By: Shant Arzoumanian
    Abstract: This paper studies how output fluctuations in Russia are transmitted internationally. Using vector autoregression (VAR) and dynamic panel models, the paper finds that Russia’s output fluctuations are an important driver of output fluctuations of countries in the region, especially for oil importers, and are transmitted increasingly via trade and market confidence channels. The magnitude of cross-border spillovers is larger for countries with relatively high bilateral trade concentration, low export diversification, and weak external buffers. The paper also finds evidence that stronger public institutional quality- especially in the fiscal area- may help insulate countries from volatility in the Russian sovereign debt market.
    Keywords: Spillovers; international business cycles; trade; remittances; FDI; market confidence; emerging markets
    Date: 2023–09–08
  3. By: Mr. Anil Ari; Philipp Engler; Gloria Li; Manasa Patnam; Ms. Laura Valderrama
    Abstract: The surge in energy prices due to Russia’s February 2022 invasion of Ukraine significantly increased costs for European firms, prompting governments to introduce a range of support schemes. Although energy prices had eased by early 2023, uncertainty around prices remains unusually large. Against this backdrop, this paper examines the case for government intervention and identifies best practices with a view to improving the design of existing energy support schemes, facilitating exit from those schemes, and preparing policymakers for a downside scenario in which energy prices flare up again. The paper argues that support should be limited in size, strictly temporary in nature, narrowly targeted, and accompanied by strong safeguards and conditionality, while preserving price signals as much as possible to encourage energy conservation. Finally, the paper reviews recent support schemes introduced by European governments in light of the identified best practice considerations.
    Keywords: Energy prices; energy subsidies; financial support; price caps; energy crisis; Russia’s invasion of Ukraine
    Date: 2023–09–22
  4. By: Marinova, Tsvetelina; Nenovsky, Nikolay
    Abstract: The paper aims to synthesize the causes and factors that have given specific shape to the Great Depression in Bulgaria, its manifestation in the country (Part 1), its phases and forms (Part 2), as well as the subsequent structural change and trajectory of the Bulgarian economy and society (Part 3). We present the major economic ideas as well as the debates that accompanied them. We argue that the overall dynamic of the causes, phases, and consequences of the Great Depression has an internal logic and causal consistency.
    Keywords: agrarian crisis, financial crisis, Great Depression, Bulgaria, economic policy, economic thought
    JEL: B2 B25 E5 E52 N1 N2 N24 N54 Q1
    Date: 2023–09–01
  5. By: Theresa Neef (EU Tax - EU Tax Observatory); Thomas Piketty (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab); Gabriel Zucman (EU Tax - EU Tax Observatory, WIL - World Inequality Lab); Lucas Chancel (Sciences Po - Sciences Po, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab); Panayioti Nicolaides
    Abstract: This note provides data on wealth inequality in Russia and advocates for a European Asset Registry. Russia exhibits the highest wealth inequality in Europe. Further, Russia's wealthiest nationals conceal a large share of their wealth through tax havens. The current architecture of the global financial system impedes comprehensive knowledge on beneficial ownership across asset types and jurisdictions. Under the roof of a European Asset Registry, the already existing but currently dispersed information could be gathered. This would change the state of play, resulting in better-targeted sanctions and effective tools to curb money laundering, corruption and tax evasion. The European Union could have a pioneering role in taking the next step towards more financial transparency.
    Date: 2022–03–16
  6. By: Shevelova, Anastasia; Machukha, Ielyzaveta; Motliuk, Mark; Kulinich, Volodymyr
    Abstract: Labour productivity is an essential economic indicator, offering insights into a nation's hourly economic output. Understanding a country's performance is pivotal for assessing policy effectiveness and shaping new strategies. This study aims to identify the primary determinants of labour productivity and analyze their impact. Employing data from the World Bank and ILOSTAT, the linear regression method was used for analysis to uncover significant insights. The findings reveal a positive correlation between urbanization and labour productivity, while employment in agriculture, as expected, exerts a negative influence. Furthermore, a direct relationship was observed between a country's income level and labour productivity, with higher incomes associated with increased productivity. Notably, the unemployment rate exhibits a positive association with labour productivity, and this effect intensifies as income levels decrease.
    Keywords: Labour productivity, Country performance, Determinants of labour productivity, Linear regression analysis
    JEL: J0 J01 O4 O40
    Date: 2023–07–10
  7. By: Manon François (EU Tax - EU Tax Observatory); Carlos Oliveira; Bluebery Planterose (EU Tax - EU Tax Observatory); Gabriel Zucman (EU Tax - EU Tax Observatory, UC Berkeley - University of California [Berkeley] - UC - University of California)
    Abstract: This note presents a new way to tax excess profits. We propose to tax the rise in the stock market capitalization of companies that benefit from extraordinary circumstances, such as energy firms following the invasion of Ukraine in February 2022. Targeting the rise in stock market capitalization (which is easily observable) makes the tax much harder to avoid than standard excess profit taxes, and allows to capture rents irrespective of where multinational companies book their profits. We apply this proposal to energy companies that are headquartered or have sales in the European Union. We estimate that taxing the January 2022 to September 2022 valuation gains of energy firms at a rate of 33% would generate around €65 billion in revenue (0.3% of GDP) for the European Union. We discuss implementation practicalities and compare our proposals to other plans made to tax excess profits.
    Date: 2022–11
  8. By: Tomic, Slobodan; David-Barrett, Elizabeth
    Abstract: The chapter explores the domestic legal design of Mutual Legal Assistance (MLA) procedures, analysing individual forms of MLA such as extradition of suspects or convicts, takeover or surrender of prosecution, and execution of foreign judgments. The analysis compares legislation from three countries in Southeast Europe: Serbia, North Macedonia, and Bosnia and Herzegovina. It examines whether two key components of legal design, namely (i) the discretion granted to institutions within the criminal justice system and political establishment and (ii) the presence of checks and balances systems within MLA procedures, have a positive or negative impact on MLA policy in practice. The analysis reveals that, although the three countries share many similarities in their legal arrangements pertaining to MLA procedures, there are some variations in specific forms of MLA, in terms of the discretion granted to domestic actors and the presence of checks and balances within the procedure. The findings show that significant discretion given to specific actors within the MLA policy can pave the way for harmful practices such as arbitrariness, uneven application of the law, and potential political abuse. The study also highlights the value of incorporating built-in checks and balances within the MLA procedure to ensure accountability and mutual control mechanisms, confirming that, where such mechanisms are not present, appropriate accountability and control safeguards are missing, enabling potential abuse of power or neglect in handling the MLA procedure. At the same time, it emerges that these checks and balances, whether they include internal review mechanisms, joint decision-making models, and/or approval powers ('de facto vetoing'), should not be excessive or burdensome to avoid obstructing the MLA processes.
    Date: 2023–09–21
  9. By: Dragomir, Vili; Rodino, Steliana
    Abstract: The present volume is the collection of the conference papers presented on the 13th International Symposium Agricultural economy and rural development. Realities and perspectives for Romania, organized by The Research Institute for Agrarian Economy and Rural Development during 17 November 2022, in Bucharest, Romania. The main aim of this symposium was both to present the newest research results and findings in field of agricultural and rural development research and, also to encourage the direct implementation of these results in practice by creating a strong cooperation between academicians and researchers with the field experts and investors.
    Keywords: agrarian economy, rural development, agriculture, circular economy, bio economy
    JEL: Q0 Q01 Q13 Q16 Q18
    Date: 2022–11–17
  10. By: Jochen Güntner; Michael Irlacher; Peter Öhlinger
    Abstract: Motivated by the European Union's debate on sanctioning crude oil imports from Russia, we estimate the elasticity of substitution between different crude oil types. Using European data on country-level crude oil imports by field of origin, we argue that crude oil is not a homogenous good and that the relevant substitutability for analyzing the impact of trade sanctions must account for the quality of different oil types in terms of their API gravity and sulfur content. Our results suggest that, by neglecting these differences in quality, standard estimates significantly underestimate the production disruptions in crude oil refining resulting from sanctions.
    Keywords: Crude Oil Trade, Elasticity of Substitution, Refinery Economics, Sanctions
    JEL: F14 F51 L71 Q37 Q41
    Date: 2023–08
  11. By: Marcin Borsuk (Narodowy Bank Polski, Poland; Institute of Economics, Polish Academy of Sciences, Poland; University of Cape Town, South Africa.); Nicolas Eugster (University of Queensland, Australia.); Paul-Olivier Klein (University of Lyon.); Oskar Kowalewski (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 – LEM – Lille Économie, France.)
    Abstract: This study examines the relationship between family firms and carbon emissions using a large cross-country dataset comprising 6, 610 non-financial companies over the period 2010-2019. We document that family firms display lower carbon emissions, both direct and indirect, when compared to non-family firms, suggesting a higher commitment to environmental protection by family owners. We show that this differential effect started following the 2015 Paris Agreement. Differences in governance structure, familial values, and higher R&D expenditures partly explain our results. Paradoxically, we find that family-owned firms and family CEOs commit less publicly to a reduction in their carbon emissions and have lower ESG scores, although polluting less. This suggests a lower participation in the public display of such an outcome and a lower tendency to greenwashing.
    Keywords: carbon emission, ESG, governance, family firms, greenwashing, climate change.
    JEL: G3 G38 M14
    Date: 2023
  12. By: Krzysztof Kruszewski (Narodowy Bank Polski); Mikołaj Szadkowski (Narodowy Bank Polski)
    Abstract: The paper presents the selected accounting principles applied by central banks. It has been emphasised that since 2004 the NBP accounting principles are in line with the Eurosystem accounting principles. The paper shows that the possible change of these principles depends on the perspective of adopting the euro by Poland. If the adoption of the euro takes place in the near future, NBP will have to continue applying the current accounting rules. In this context the paper presents how the NBP balance sheet would change on the date of the hypothetical adoption of the euro by Poland. On the other hand, if the adoption of the single currency becomes a distant prospect, NBP could consider changing the applied accounting principles. Due to the growing risks faced by central banks in the first two decades of the 21st century, this choice should be correlated with the need to build a bank's strong equity position and to reduce the volatility of its financial result. Hence, the paper proposes directions for modification of the existing NBP accounting principles, which would ensure the implementation of the adopted assumptions. The authors indicate that in the case of NBP the application of IFRS would be unjustified.
    Keywords: central bank, central bank accounting, accounting principles of central banks.
    JEL: E58 G21
    Date: 2023
  13. By: Damjanović, Milan; Lenarčič, Črt
    Abstract: This paper replicates and augments a multiple indicator approach of Schneider (2013) and Lenarčič and Damjanović (2015) of the aggregate house price misalignment indicator with the intention of showing the under- and over-valuation in house prices in Slovenia with respect to economic fundamentals. The updated indicator incorporates a subset of underlying indices that better appropriate the post-Covid period. The main findings are that during the 2004-2008 economic boom period the aggregate misalignment indicator clearly indicates a significant over-valuation in house prices in Slovenia. Similarly, another boom(-ish) period is also observed from 2020 on until the present day, but not to the same extent as before. On the other hand, during the second phase of the global financial crisis there was an abrupt correction in house prices.
    Keywords: House prices, under-valuation, over-valuation, multiple indicator approach, PCA.
    JEL: C43 E31 G12 R31
    Date: 2023–09

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