nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒11‒20
eight 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 Do, Hung Xuan; Nepal, Rabindra; Pham, Son Duy; Jamasb, Tooraj
  2. The Effects of Rising Prices on Maize Production in Western African Countries By Marco Rogna
  3. Is the Price Cap for Gas Useful? Evidence from European Countries By Francesco Ravazzolo; Luca Rossini
  4. Geoeconomic Fragmentation and Commodity Markets By Mr. Jorge A Alvarez; Mehdi Benatiya Andaloussi; Chiara Maggi; Alexandre Sollaci; Martin Stuermer; Petia Topalova
  5. The impact of justice attitudes on air quality valuation: a study combining factorial survey and choice experiment data. By Anna Bartczak; Wiktor Budziński; Ulf Liebe; Jurgen Meyerhoff
  6. Inflation Dynamics in Bulgaria: The Role of Policies By Anh D. M. Nguyen; Hajime Takizawa; Iglika Vassileva
  7. International Mobility of Inventors and Innovation: Empirical Evidence from the Collapse of the Soviet Union By Gaetan de Rassenfosse; Gabriele Pellegrino
  8. Biodiversity-related Financial Risks - why it matters and how can we measure them? By Elene Nikuradze; Salome Tvalodze

  1. By: Do, Hung Xuan (School of Economics and Finance, Massey University); Nepal, Rabindra (Faculty of Business and Law, University of Wollongong); Pham, Son Duy (Finance, University of Aberdeen Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School)
    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: D04 L94 Q43
    Date: 2023–06–02
  2. By: Marco Rogna (European Commission - JRC)
    Abstract: The intensification of the Russo-Ukrainian war started in February 2022 with the Russian invasion of Ukraine has generated a dramatic increase in the price of several goods. In particular, energy, gas and oil have been the most interested by this spike in prices, followed by several agricultural commodities. Fertilizers, whose production is energy intensive and/or directly dependent from oil derivatives, have also experienced a sharp increase in prices. This has risen concerns for food insecure countries, particularly in Africa, since, besides a lower possibility to purchase food commodities on the international market, they will likely decrease their own production due to a lower utilization of fertilizers. Quantifying this potential decrease in agricultural production is important in order to fully assess their vulnerability in terms of food security. The present paper tries to accomplish this task by forecasting the change in maize production in 2022 and 2023 compared to 2021 in seven Western African countries. We find an overall decline in maize production of 10% circa in both years with a strong heterogeneity among countries. Trivial users of fertilizers, such as Niger, experience a very modest decline in production (less than 2%) whereas others, such as Benin and Togo, have a double digit decline: approximately 13% the former and 32% the latter.
    Keywords: Crop models; Food security; Maize yields; Western Africa; Yields forecast.
    JEL: Q12 Q17 Q18
    Date: 2023–09
  3. By: Francesco Ravazzolo (Norwegian Business School and Free-University of Bozen-Bolzano); Luca Rossini (University of Milan and Fondazione Eni Enrico Mattei)
    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: Bayesian time series, Forecasted error variance decomposition, Gas price cap, Impulse response function, Mixture representation
    JEL: C11 C32 Q41 Q43
    Date: 2023–10
  4. By: Mr. Jorge A Alvarez; Mehdi Benatiya Andaloussi; Chiara Maggi; Alexandre Sollaci; Martin Stuermer; Petia Topalova
    Abstract: This paper studies the economic impact of fragmentation of commodity trade. We assemble a novel dataset of production and bilateral trade flows of the 48 most important energy, mineral and agricultural commodities. We develop a partial equilibrium framework to assess which commodity markets are most vulnerable in the event of trade disruptions and the economic risks that they pose. We find that commodity trade fragmentation – which has accelerated since Russia’s invasion of Ukraine – could cause large price changes and price volatility for many commodities. Mineral markets critical for the clean energy transition and selected agricultural commodity markets appear among the most vulnerable in the hypothetical segmentation of the world into two geopolitical blocs examined in the paper. Trade disruptions result in heterogeneous impacts on economic surplus across countries. However, due to offsetting effects across commodity producing and consuming countries, surplus losses appear modest at the global level.
    Keywords: Commodities; international trade; sanctions; spillovers; prices; geoeconomic fragmentation; trade disruption; price change; commodity producer; net-commodity-importing country; trade fragmentation; Commodity markets; Commodity price fluctuations; Agricultural commodities; Inflation; Global
    Date: 2023–10–03
  5. By: Anna Bartczak (University of Warsaw, Faculty of Economic Sciences); Wiktor Budziński (University of Warsaw, Faculty of Economic Sciences); Ulf Liebe (University of Warwick, Departement of Sociology); Jurgen Meyerhoff (Berlin School of Economics and Law)
    Abstract: In this paper, we investigate the effect of respondents’ attitudes concerning distributive justice in payments on their stated preferences for programmes reducing ambient air pollution in four cities in Poland. By combining two multi-factorial survey experiments, we propose a novel approach of incorporating justice attitudes into non-market valuation. In the first experiment – a factorial survey experiment (FSE) – we record justice attitudes towards payments. In the second experiment – a choice experiment (CE) – we elicit stated preferences for air pollution reduction programmes. As a modelling framework, we employ a hybrid choice model. The same respondents undertook both experiments in separate surveys one to two weeks apart, minimising the likelihood of biased estimates of the effect of justice attitudes on stated preferences. The results indicate a substantial effect of the justice attitude on the stated willingness to pay. The proposed approach could be used for joint modelling of justice attitudes and preferences in a wide range of fields, contributing further insights into their interactions.
    Keywords: air pollution, choice experiment, distributive justice attitude, factorial survey experiment, hybrid choice model, willingness to pay
    JEL: D63 I18 Q51 Q53
    Date: 2023
  6. By: Anh D. M. Nguyen; Hajime Takizawa; Iglika Vassileva
    Abstract: This paper analyses inflation dynamics in Bulgaria using different complementary econometrics technics. We find that common factors play a large role in the EU’s inflation variation but impact individual countries differently due to country-specific factors. Greater weight of energy and food in Bulgaria’s CPI basket amplifies the impact of shocks on headline inflation. Furthermore, second-round effects in Bulgaria are likely pronounced, associated with a higher inflation persistence compared to the EU countries. Recent ECB monetary tightening has been insufficient for Bulgaria and its transmission is weak. Fiscal policy supported the recovery from the COVID crisis but added to inflation.
    Keywords: Inflation; Monetary policy; Fiscal policy; ECB interest rates; Phillips curve; Principal Component Analysis; VARl Sign restrictions.; inflation dynamics; HICP inflation; ECB Policy rate; inflation variation; inflation development; inflation in EU country; Energy prices; Inflation persistence; Food prices; Global
    Date: 2023–09–29
  7. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Gabriele Pellegrino (Catholic University of Milan)
    Abstract: This paper assesses the extent to which the international migration of inventors affects innovation in the receiving country. Drawing on a novel database that maps the migratory patterns of inventors, we exploit the end of the Soviet Union and the consequent post-1992 influx of ex-Soviet inventors to the United States. Econometric analysis on a panel of U.S. cities and technological fields shows that the patenting activity of U.S. inventors increased significantly after the arrival of ex-Soviet Union inventors.
    Keywords: geographic mobility; innovation; inventors; patents
    JEL: O31 O34 O51 J61
    Date: 2023–10
  8. By: Elene Nikuradze (Sustainable Finance Division, National Bank of Georgia); Salome Tvalodze (Head of Sustainable Finance Division, National Bank of Georgia)
    Abstract: The potential consequences of biodiversity and ecosystem services loss can have a significant impact on the stability of economies and financial systems. The following research paper contributes to a growing body of literature that seeks to analyze the connections between biodiversity loss and financial stability. The study focuses on the assessment of biodiversity-related financial risks (BRFR) in Georgia and provides quantitative estimates of the dependencies and impacts of the financial system on biodiversity and ecosystem services. The findings reveal that around 46 percent of Georgian commercial banks' lending portfolio to legal entities could be exposed to biodiversity-related physical risk, being moderately or highly/very highly dependent on one or more ecosystem services. Additionally, around 54 percent of Georgian banks’ business lending portfolio could be exposed to sectors that strongly impact ecosystem services and, thus, may face a high transition risk.
    Keywords: Biodiversity; Biodiversity-related Financial Risks; Ecosystem Services, ENCORE
    JEL: E58 G21 Q01 Q57
    Date: 2023–07

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