nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒11‒13
ten papers chosen by
Maksym Obrizan, Kyiv School of Economics

  1. Trends and Inequality in Lifetime Earnings in France By Berthou Antoine
  2. Empirical Determinants of Innovation in European Countries: Testing the Porter's Hypothesis By Makrevska Disoska, Elena; Tonovska, Jasna; Toshevska-Trpcevska, Katerina; Tevdovski, Dragan; Stojkoski, Viktor
  3. Is the Price Cap for Gas Useful? Evidence from European Countries By Ravazzolo, Francesco; Rossini, Luca
  4. Reconstructing and reforming Ukraine By Berglöf, Erik; Rashkovan, Vladyslav
  5. MIDAS regression: a new horse in the race of filtering macroeconomic time series By Michal BenÄ ík
  6. The impact of the pandemic of Covid-19 on child poverty in North Macedonia: Simulation-based estimates By Marjan Petreski
  7. Weather Shocks and Bride Kidnapping in Kyrgyzstan By Aizhamal Rakhmetova; Ivan Trestcov
  8. Bespoke scapegoats: Scientific advisory bodies and blame avoidance in the Covid-19 pandemic and beyond By Roger Koppl; Kira Pronin; Nick Cowen; Marta Podemska-Mikluch; Pablo Paniagua Prieto
  9. Power outages and firm performance: a hydro-IV approach for a single electricity grid By Elliott, Robert J.R.; Nguyen-Tien, Viet; Strobl, Eric A.
  10. OTT opportunities for public broadcasters: A review and cross-country analysis in European countries By Papathanasopoulos, Athanasios; Varoutas, Dimitris

  1. By: Berthou Antoine
    Abstract: This paper shows that international sanctions can undermine the role of the US dollar in trade invoicing. The analysis is based on the episode of international sanctions targeting Russia after the invasion of regions of Ukraine in 2014. While European sanctions increased trade costs for firms located in the EU and conducting transactions with Russia, sanctions imposed by the United States affected firms located in third countries due to the extra-territoriality of the US law. This created an incentive to diversify away from the US dollar to avoid these sanctions when exporting to target countries such as Russia. The empirical exercise relies on detailed customs data for France with information on the currency of invoicing by transaction. Following the start of the Western sanctions on Russia in 2014, the propensity of French exporters to invoice their contracts in US dollars decreased. Estimation results highlight the role played by (i) strategic complementarities between firms, (ii) the diversification of Russian foreign reserves, (iii) US secondary sanctions targeting exports of dual-use goods, and (iv) threats of US secondary sanctions faced by exporters’ banks.
    Keywords: Dollar dominance, Currency Invoicing, International Sanctions
    JEL: F10 F14 F44
    Date: 2023
  2. By: Makrevska Disoska, Elena; Tonovska, Jasna; Toshevska-Trpcevska, Katerina; Tevdovski, Dragan; Stojkoski, Viktor
    Abstract: We investigate the interplay between innovation and productivity, emphasizing the role of environmental regulations on the innovation behaviours of European firms. Anchored in the Porter hypothesis, which proposes that environmental regulations can drive technological innovation and bolster commercial competitiveness, we utilize the CDM model (Crépon, Duguet, and Mairesse, 1998) for in-depth analysis. Our approach begins by pinpointing the factors that shape firms' decisions to innovate and the associated investments, employing the Heckman correction model. Subsequently, we adopt the three-stage least squares (3SLS) methodology to analyse both innovation outputs and firm productivity in tandem. Drawing data from the Community Innovation Survey (CIS) 2018, our structured examination unveils how diverse innovation drivers can elevate labor productivity in varied institutional landscapes. By contrasting the performance of South Europe (comprising Greece, Spain, Portugal) and Central Eastern Europe (countries like Bulgaria, Estonia, Hungary) against a German benchmark, our research offers a nuanced understanding of environmental regulations' influence on innovation and productivity across European contexts.
    Keywords: innovation, productivity, CDM model, CIS, Porter`s hypothesis
    JEL: C33 C36 O31 O33
    Date: 2023–09–29
  3. By: Ravazzolo, Francesco; Rossini, Luca
    Abstract: Since Russia’s invasion of Ukraine, many countries have pledged to end or restrict their oil and gas imports to curtail Moscow’s revenues and hinder its war effort. Thus, the European ministers agreed to trigger a cap on the gas price. To detect the importance of the price cap for gas, we provide a mixture representation for the gas price to detect the presence of outliers made by a truncated normal distribution and a uniform one. We focus our analysis on Germany and Italy, which are major Russian gas importers by exploiting the response of the different commodities to a gas shock through a Bayesian vector autoregressive (VAR) model. As a result, including a lower gas price cap smooths the impact of a gas shock on electricity prices, while not considering a price cap will increase exponentially this impact.
    Keywords: Public Economics, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy
    Date: 2023–10–30
  4. By: Berglöf, Erik; Rashkovan, Vladyslav
    Abstract: Helping Ukraine to reconstruct and reform its economy is arguably the most important project for Europe this century. It will require extraordinary collaboration from within and outside of the country. We establish a set of principles that should guide these efforts, based on international and Ukraine’s own experience. This experience also suggests key building blocks of a reform and reconstruction architecture that can help ensure that these principles are successfully applied. We assess the current institutional arrangements in this light and suggest adjustments that will increase the likelihood of success. The core of the argument is that the unfathomable choices involved in reconstruction and reform, including the use of donor resources, must be made by the Ukrainian people and its elected representatives, and the outcome must be owned by them.
    Keywords: Ukraine; post-conflict reconstruction; reform architecture; aid effectiveness
    JEL: N0
    Date: 2023–09–08
  5. By: Michal BenÄ ík (National Bank of Slovakia)
    Abstract: We propose a new method of dealing with the end point problem when filtering economic time series. The main idea is to replace filtered quarterly observations at the end of the sample with static forecasts from a MIDAS regression using higher frequency time series. This method is capable to improve stability of output gap estimates or other cyclical series, as we confirm by empirical analysis on selected CEE countries and the United States. We find that stability may still be violated due to structural breaks in business cycles, or by an excessive amount of short-term noise. While MIDAS regressions have the potential to improve output gap estimates compared to the HP filter approach, the country-specific circumstances play a considerable role and need to be considered.
    JEL: C22 E32
    Date: 2023–10
  6. By: Marjan Petreski
    Abstract: The objective of this paper is to estimate the expected effects of the pandemic of Covid-19 for child poverty in North Macedonia. We rely on MK-MOD Tax & Benefit Microsimulation Model for North Macedonia based on the Survey on Income and Living Conditions 2019. The simulation takes into account the development of income, as per the observed developments in the first three quarters of 2020, derived from the Labor Force Survey, which incorporates the raw effect of the pandemic and the government response. In North Macedonia, almost no government measure directly aimed the income of children, however, three key and largest measures addressed household income: the wage subsidy of 14.500 MKD per worker in the hardest hit companies, relaxation of the criteria for obtaining the guaranteed minimum income, and one-off support to vulnerable groups of the population in two occasions. Results suggest that the relative child poverty rate is estimated to increase from 27.8 percent before the pandemic to 32.4 percent during the pandemic. This increase puts additional 19, 000 children below the relative poverty threshold. Results further suggest that absolute poverty is likely to reduce primarily because of the automatic stabilizers in the case of social assistance and because of the one-time cash assistance.
    Date: 2023–10
  7. By: Aizhamal Rakhmetova; Ivan Trestcov
    Abstract: This study investigates the understudied relationship between climate shocks and gender discrimination. Utilizing data from the Life in Kyrgyzstan Survey, we empirically demonstrate that insufficient winter precipitation significantly raises the likelihood of bride kidnapping and influences societal attitudes towards this practice in Kyrgyzstan. Our analysis reveals heterogeneity in the effects, with individuals from lower-income households being more susceptible to positive attitude shifts. Additionally, the presence of daughters in households correlates with negative attitudes toward bride capture. We do not find heterogeneous responses to the shocks based on gender and education levels.These findings shed light on the gendered consequences of climate change in developing countries and emphasize the necessity of implementing gender-sensitive adaptation strategies.
    Keywords: climate shocks, marriage market, bride kidnapping
    Date: 2023–09
  8. By: Roger Koppl; Kira Pronin; Nick Cowen; Marta Podemska-Mikluch; Pablo Paniagua Prieto
    Abstract: Scholars have not asked why so many governments created ad hoc scientific advisory bodies (ahSABs) to address the Covid-19 pandemic instead of relying on existing public health infrastructure. We address this neglected question with an exploratory study of the US, UK, Sweden, Italy, Poland, and Uganda. Drawing on our case studies and the blame-avoidance literature, we find that ahSABs are created to excuse unpopular policies and take the blame should things go wrong. Thus, membership typically represents a narrow range of perspectives. An ahSAB is a good scapegoat because it does little to reduce government discretion and has limited ability to deflect blame back to government. Our explanation of our deviant case of Sweden, that did not create and ahSAB, reinforces our general principles. We draw the policy inference that ahSAB membership should be vetted by the legislature to ensure broad membership.
    Date: 2023–10
  9. By: Elliott, Robert J.R.; Nguyen-Tien, Viet; Strobl, Eric A.
    Abstract: We estimate the impact of power outages on firm performance using a hydro-instrumental variable strategy which integrates a river flow with a hydropower generation model and an electricity-grid-based distance interpolation technique. Comparing World Bank Enterprise Surveys in 2005 and 2015 for Vietnam, we find that despite considerable economic progress, firms have become more susceptible to power outages. Our estimates suggest that reducing the length of power cuts by 1% would have increased revenues by 4.66 billion USD. Other results show that firms with less reliable electricity have lower productivity and use less flexible inputs, which is not mitigated by backup generators.
    Keywords: firm performance; growth; instrumental variables; power outages; Vietnam
    JEL: O13 Q54 R11 N55
    Date: 2021–11–01
  10. By: Papathanasopoulos, Athanasios; Varoutas, Dimitris
    Abstract: This analysis examines the opportunities and challenges presented by Over-The-Top (OTT) platforms for public service broadcasters in different European countries. Through a cross-country analysis of several EU countries, namely: France, Germany, Greece, Italy, the Netherlands, Romania, and Sweden, this paper provides a comprehensive perspective on the topic. The analysis includes revenue trends, subscriber numbers, and other indicators to evaluate the performance of public broadcaster-owned OTT platforms. The findings suggest that while OTT platforms present challenges for public broadcasters, they also offer opportunities for these broadcasters to compete and attract viewers in a rapidly changing media landscape.
    Keywords: OTT platforms, Public Service Broadcasting, media competition
    Date: 2023

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