nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒11‒06
nine papers chosen by
Maksym Obrizan, Kyiv School of Economics

  1. Can Central Banks Be Heard Over the Sound of Gunfire? By Ge Gao; Alex Nikolsko-Rzhevskyy; Oleksandr Talavera
  2. Exploring the Link Between Diet and Sustainability in Europe: A Focus on Meat and Fish Consumption By Diana Kmetkova; Milan Scasny; Iva Zverinova; Vojtech Maca
  3. Effectiveness of Car Scrappage Schemes: Comparative Analysis of European Countries By Miroslav Svoboda; Michael Fanta; Jan Mosovsky
  4. High-Frequency Groceries Prices: Evidence from Czechia By Anna Pavlovova
  5. Is There a Portfolio Rebalancing Channel of QE in Latvia? By Andrejs Zlobins
  6. Testing Identification Conditions of LATE in Fuzzy Regression Discontinuity Designs By Yu-Chin Hsu; Ji-Liang Shiu; Yuanyuan Wan
  7. Consumer trust in social network sites in Vietnam: PLS-SEM-ANN analysis By Phan, Tien-Thao Cong; Dang, Tri-Quan; Nguyen, Luan-Thanh
  8. Farmers' social media groups for better extension and advisory services By Djanibekov, Nodir; Kurbanov, Zafar; Tadjiev, Abdusame; Govind, Ajit; Akramkhanov, Akmal
  9. Negative Externalities of Financial Dollarization By Valida Pantsulaia; Ana Jangveladze; Shalva Mkhatrishvili

  1. By: Ge Gao (Beijing Sport University); Alex Nikolsko-Rzhevskyy (Lehigh University); Oleksandr Talavera (University of Birmingham)
    Abstract: In this study, we examined the effectiveness of central bank communications during times of significant adverse shocks. Specifically, we examined how the National Bank of Ukraine (NBU) regulated foreign exchange (FX) markets during the Russo-Ukrainian War in 2022. Data collected from both the black and authorized FX markets suggested that the content of the NBU’s announcements significantly impacted FX market agents. Announcements aimed at maintaining a fixed (floating) FX rate prompted an increase (decrease) in the black market premium in cash transactions. Moreover, the NBU's announcements influenced the sale side of foreign currency more than any other aspect, an area where the black market FX traders held near monopolistic power.
    Keywords: Russia-Ukraine war, central bank communications, black market premium, forex, ChatGPT
    JEL: D83 E44 E58 F31
    Date: 2023–10
  2. By: Diana Kmetkova (Charles University, Faculty of Social Sciences, Institute of Economic Studies, Prague, Czech Republic); Milan Scasny (Charles University, Faculty of Social Sciences, Institute of Economic Studies, Prague, Czech Republic); Iva Zverinova (Charles University, Faculty of Social Sciences, Institute of Economic Studies, Prague, Czech Republic); Vojtech Maca (Charles University, Faculty of Social Sciences, Institute of Economic Studies, Prague, Czech Republic)
    Abstract: Global food production practices and consumption patterns have changed notably in the last few decades. Current dietary patterns are characterized by increased consumption of refined sugars as well as higher intakes of heavily-processed and animal-source foods, which results in higher obesity rates and increased prevalence of diet-related non-communicable diseases. Moreover, diets high in animal products are associated with a larger environmental burden. The aim of this paper is to examine the association between the consumption of meat and fish and economic and socio-demographic factors, different consumption habits and behaviours of individuals in five European countries. Using household-level data, descriptive analysis is presented and regressions using Heckman’s standard sample selection model are conducted. The main reasons for not eating meat or fish are ethics, environment, taste and health. Our findings also suggest that though income results to be significant, its positive effect on meat and fish intake is rather small. Regarding fish, the price of groceries seems to have a significant negative impact while it does not affect the consumption of white meat. This indicates that if we want to lower the consumption of (especially red) meat, we should focus on other factors, such as gender, age, healthy habits and behavioural traits or values (especially factors that are part of the decisionmaking process during food purchases like price, taste, habit, family and appearance). Moreover, meat and fish intakes differ significantly among analysed countries, hence, the policy recommendations should be based on a local context.
    Keywords: income, meat and fish consumption, animal protein, healthy and sustainable diet, behavioural analysis
    JEL: C34 C38 I15 O12 O13 Q56
    Date: 2023–10
  3. By: Miroslav Svoboda (IREF Fellow and Anglo-American University, Prague, Czech Republic); Michael Fanta (Jan Evangelista PurkynÄ› University, Ústí nad Labem, Czech Republic); Jan Mosovsky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This study aims to investigate the effectiveness of car scrappage schemes implemented in the European Union (EU) during the economic crisis of 2009. The study uses a synthetic control variable and a difference-in-differences method to evaluate these policies. Using monthly data on new passenger car registrations in European countries, the study examines the impact of the schemes. The results show that the impact of scrappage schemes varies across countries, with statistically significant effects observed in Germany and Slovakia, followed by Greece and Italy, albeit limited in some aspects. The results of the study underline the need for careful policy design and show that the effectiveness of car scrappage schemes goes beyond the level of premiums or budget allocations. It is also influenced by other elements such as the duration of the scheme, the overarching policy environment and the novelty of the implementation strategies.
    Keywords: car scrappage schemes, synthetic control method, difference-in-differences
    JEL: H23 C21 R48
    Date: 2023–09
  4. By: Anna Pavlovova (Charles University, Institute of Economic Studies, Faculty of Social Sciences, Prague, Czech Republic)
    Abstract: How often do online retailers change prices? Are there any differences in their price rigity? I collected and analysed more than 4 million daily prices of online grocery retailers from Czechia during the unprecedented period between January 2020 and April 2021. There are substantial differences in pricing among the four retailers. The mean number of all price changes ranges among the retailers between 3.10 and almost 11 per year. Most of the price changes are temporary. Retailers change prices permanently on average between 0.68 to 4.04 times per year. The differences in pricing persist even after the disaggregation of the products into individual categories and even in the estimation of the within-between model of the probability of price change. An in-depth analysis of temporary price adjustments is crucial to robustly assess pricing and price rigidity. It is likely to explain part of the discrepancy in pricing found across the retailers.
    Keywords: price setting, price exibility, scraped prices, temporary price changes
    JEL: E30 D22 L11 L81 M21
    Date: 2023–10
  5. By: Andrejs Zlobins (Latvijas Banka)
    Abstract: Portfolio rebalancing is a key mechanism through which central bank asset purchases flatten the yield curve, thus providing additional monetary policy accommodation when conventional policy rate setting is constrained by the effective lower bound. Existing literature provides ample evidence that this channel has played a major role in compressing the long-term interest rates and provided a broad-based easing of financial conditions for firms and households in the euro area. However, this evidence originates from either aggregate euro area or its largest jurisdictions, leaving the effects of the Eurosystem's asset purchases on smaller member states, such as Latvia, unclear. Therefore, we employ a bilateral structural vector autoregression, featuring both aggregate euro area and Latvian blocks, as well as a panel structural vector autoregression with cross-sectional heterogeneity to obtain evidence from both macro-level and bank-level data in order to shed some light on the transmission of QE to the Latvian economy. Our findings suggest that QE led to a compression of sovereign borrowing costs in Latvia and boosted economic activity and prices. At the same time, we also document that the further pass-through to domestic financial conditions was weak owing to limited asset rebalancing by the domestic banking sector in response to the Eurosystem's QE. Instead, we show that Latvian yields were compressed due to direct intervention of the central bank in the bond markets and portfolio readjustment of foreign investors. Our study thus provides additional evidence that the transmission of common monetary policy to the Latvian economy is impaired via the domestic banking sector.
    Keywords: quantitative easing, portfolio rebalancing, monetary policy, euro area, Latvia
    JEL: C54 E50 E52 E58
    Date: 2023–10–23
  6. By: Yu-Chin Hsu; Ji-Liang Shiu; Yuanyuan Wan
    Abstract: This paper derives testable implications of the identifying conditions for the local average treatment effect (LATE) in fuzzy regression discontinuity (FRD) designs. Building upon the seminal work of Horowitz and Manski (1995), we show that the testable implications of these identifying conditions are a finite number of inequality restrictions on the observed data distribution. We then propose a specification test for the testable implications and show that the proposed test controls the size and is asymptotically consistent. We apply our test to the FRD designs used in Miller, Pinto, and Vera-Hernandez (2013) for Columbia’s insurance subsidy program, in Angrist and Lavy (1999) for Israel’s class size effect, in Pop-Eleches and Urquiola (2013) for Romanian school effect, and in Battistin, Brugiavini, Rettore, and Weber (2009) for the retirement effect on consumption.
    Keywords: Fuzzy regression discontinuity design; Moment inequalities; Local continuity in means; Weighted bootstrap
    JEL: C12 C14 C15
    Date: 2023–10–19
  7. By: Phan, Tien-Thao Cong; Dang, Tri-Quan; Nguyen, Luan-Thanh
    Abstract: While social network sites (SNSs) has emerged as one of the most promising futuristic trends in mobile commerce (m-commerce), how customers’ trust impact on customer attitude and willingness to buy through SNSs remains largely underexplored. This study develops a theoretical model to examine the impacts of characteristics of trustees on customer’s trust, customer attitude, and willingness to buy through theory of reasoned action (TRA). A survey was conducted and 200 valid questionnaires were collected from customers using Facebook, Twitter, and Tiktok platforms in Vietnam. Firstly, this study confirms that perceived reputation, multichannel integration, and system assurance exerted a positive influence on customer trust then customer trust has an influence on customer attitude and lead to willingness to buy. Secondly, the Neural Network Model was employed to rank relatively significant predictors obtained from structural equation modeling (SEM). This study contributes to the growing literature on the use of SNS apps in trying to elevate the m-commerce business. The new methodology and findings from this study will significantly contribute to the extant literature of m-commerce setting. Therefore, for practitioners concerned with fostering trust for their business when using SNS, the findings stress the importance of trust in m-commerce an integrated approach centered on key findings of this study.
    Keywords: m-commerce, Willingness to buy, TRA, Artificial neural network
    Date: 2023
  8. By: Djanibekov, Nodir; Kurbanov, Zafar; Tadjiev, Abdusame; Govind, Ajit; Akramkhanov, Akmal
    Abstract: The spread of information and communications technology (ICT) in Central Asia has reached a point where most farmers use smartphones with mobile internet access providing an opportunity for a low-cost and timely access to agricultural information and advisory services. When extension service is poor and does not cater to the farmers' needs, farmers seek other sources of information, such as exchanging knowledge with their peers and engaging in social media groups using instant messaging applications (apps) such as Telegram and WhatsApp. Analysis of a farm-level survey conducted in 2022 in Kazakhstan and Uzbekistan, suggests that farmers' participation in online groups for information exchange is influenced by the enabling environment rather than by the type of cultivated crops or farm size. The findings are relevant for developing private sector strategies and public policies to spread digital technologies among Central Asia's farmers with a holistic plan for a digital transformation. When introducing smartphone- or web-based digital technologies, policymakers are recommended to start scaling up with younger and more technologically-savvy farmers who on the one hand rely on their own knowledge but on the other hand are more open to embracing new ways of farming and interaction. Decision-making autonomy is an important factor to facilitate digital transformation in agriculture in the Central Asian context.
    Date: 2023
  9. By: Valida Pantsulaia (Financial Stability Analysis and Macro-financial Modeling Division, National Bank of Georgia); Ana Jangveladze (Financial Stability Analysis and Macro-financial Modeling Division, National Bank of Georgia); Shalva Mkhatrishvili (Head of Macroeconomics and Statistics Department, National Bank of Georgia)
    Abstract: Dollarization (usage of a foreign currency in place of a domestic one) is a widely observed phenomenon that historically emerged as a result of extended macro-financial instability and extreme price and nominal exchange rate fluctuations. Complete loss of public confidence in a local currency pushed lenders and borrowers to seek more stable foreign currencies like the US dollar and euro. What is more puzzling though is that in many countries dollarization remained at an elevated level even after taking care of its root cause (i.e. after achieving price stability). There have been several explanations of this phenomenon (the so-called dollarization hysteresis). In this short paper, we propose additional explanations in the form of several dollarization-induced negative externalities, including an amplification of credit procyclicality and exchange rate pass-through or a worsening of credit ratings of dollarized economies. We also offer some back-of-the-envelope calculations showing that these externalities could be economically significant (about 1 pp impact on real GDP growth per year) for a small and highly dollarized country like Georgia. This type of market failures underline the importance of prudential policies that internalize negative externalities and, hence, level the playing field for the local currency.
    Keywords: Financial dollarization; Negative externality
    JEL: E44 E58 F34
    Date: 2023–04

This nep-tra issue is ©2023 by Maksym Obrizan. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.