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on Transition Economics |
| By: | Lasha Arevadze (Macroeconomic Research Division, National Bank of Georgia); Shalva Mkhatrishvili (Head of Macroeconomics and Statistics Department, National Bank of Georgia); Saba Metreveli (Macroeconomic Research Division, National Bank of Georgia); Giorgi Tsutskiridze (Macroeconomic Research Division, National Bank of Georgia); Tamar Mdivnishvili (Macroeconomic Research Division, National Bank of Georgia); Nika Khinashvili (PhD candidate, Geneva Graduate Institute.) |
| Abstract: | Last couple of decades of research has significantly advanced New Keynesian DSGE modeling. While each of such models faces its own important limitations, it can still contribute to robust policy analysis as long as we consolidate relevant macroeconomic features in it and remain conscious of the limitations. With this paper we are introducing a DSGE model for Georgia with features relevant for Emerging Market Economies (EMEs), characterized with large number of real and nominal imperfections. While some model features are already standard to existing DSGE frameworks, we also emphasize aspects particularly relevant to EMEs. These include dominant currency invoicing, forward premium puzzle, breakdown of Ricardian equivalence, impaired expenditure switching mechanism, decoupled domestic and imported price levels impacting real exchange rate trend, and other non-stationarities. Additionally, we distinguish between global financial centers and other trade partner economies. This LEGO model with these building blocks is planned to be expanded further with other properties in the future to make the model suitable for analyzing FX interventions and macroprudential policies, in addition to monetary and fiscal policies. The model is intended to become the workhorse model for macro-financial analysis in Georgia, representing a key addition to the NBG’s existing FPAS, though its adaptability can extend to other country contexts as well. |
| Keywords: | Non-tradable sticky prices; Monetary policy credibility; Core inflation |
| JEL: | E10 E31 E52 E58 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:aez:wpaper:2024-02&r= |
| By: | Kluge, Janis |
| Abstract: | Russia's full-scale invasion of Ukraine has fundamentally changed the terms of Russia-China economic relations. Economic cooperation with China has become vital for the Russian economy. Trade turnover between Russia and China has increased significantly since February 2022. However, Chinese companies remain hesitant about investing in Russia. Energy cooperation remains the backbone of Sino-Russian cooperation, but the expansion of Russian exports is hindered by infrastructure limitations. Russian arms exports have declined in recent years. Meanwhile, China exports large quantities of dual-use goods to Russia, which are urgently needed by the Russian military industry. Sino-Russian cooperation in the digital economy has been hit hard by Western sanctions. China's digital giants cancelled several projects in Russia due to fears of secondary U.S. sanctions. Russia's trade with China is mainly conducted in Chinese yuan. However, Russia continues to rely on the U.S. dollar for trade with the rest of the world. |
| Keywords: | Russia-China economic rlations, invasion of Ukraine, energy cooperation, arms exports, dual-use goods, Russian military industry, digital economy, yuan, U.S. dollar |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swprps:296472&r= |
| By: | Marcel Caesmann; Janis Goldzycher; Matteo Grigoletto; Lorenz Gschwent |
| Abstract: | The spread of propaganda, misinformation, and biased narratives from autocratic regimes, especially on social media, is a growing concern in many democracies. Can censorship be an effective tool to curb the spread of such slanted narratives? In this paper, we study the European Union’s ban on Russian state-led news outlets after the 2022 Russian invasion of Ukraine. We analyze 775, 616 tweets from 133, 276 users on Twitter/X, employing a difference-in-differences strategy. We show that the ban reduced pro-Russian slant among users who had previously directly interacted with banned outlets. The impact is most pronounced among users with the highest pre-ban slant levels. However, this effect was short-lived, with slant returning to its pre-ban levels within two weeks post-enforcement. Additionally, we find a detectable albeit less pronounced indirect effect on users who had not directly interacted with the outlets before the ban. We provide evidence that other suppliers of propaganda may have actively sought to mitigate the ban’s influence by intensifying their activity, effectively counteracting the persistence and reach of the ban. |
| Keywords: | Censorship, policy effectiveness, text-as-data, media slant |
| JEL: | D72 D78 L82 P16 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:zur:econwp:446&r= |
| By: | Haishi Li; Zhi Li; Ziho Park; Yulin Wang; Jing Wu |
| Abstract: | How do firms in neutral developing countries adjust their supply chains in response to geopolitical and economic fragmentation? Do they comply with or circumvent Western sanctions on Russia? Using comprehensive transaction-level bill of lading data from major developing countries, we study these questions in the context of the Russo-Ukrainian War. We find that firms in non-sanctioning countries significantly reduced exports of sanctioned products to Russia (and Belarus) if their headquarters are located in sanctioning countries (i.e., sanctioning MNEs), highlighting MNEs’ role in propagating sanctions globally. Domestic firms in developing countries observed a relative increase in such exports, weakening the effect of Western sanctions. Sanctioning MNEs expanded exports of sanctioned products to both sanctioning and Russia-friendly countries, indicating a blend of compliance and non-compliance. Sanctioning MNEs significantly reduced imports from Russia (and Belarus) in financially risky sectors, consistent with the effect of financial sanctions. To strengthen the effectiveness of sanctions, sanctioning countries should use their MNE networks, induce domestic firms in neutral countries to comply, and prevent sanction avoidance of MNEs through indirect exports. |
| Keywords: | global supply chains, geopolitical risk, international conflict |
| JEL: | F14 F63 O19 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11110&r= |
| By: | Postepska, Agnieszka (University of Groningen); Voloshyna, Anastasiia (University of Groningen) |
| Abstract: | Following the Russian Federation's invasion of Ukraine on 24th February 2022, over a quarter of the Ukrainian population became displaced, with many seeking refuge across Europe. Czechia emerged as a key destination, granting Temporary Protection to approximately 433 thousand Ukrainians by the end of 2022, thus sheltering the highest per capita number of Ukrainian refugees worldwide. The swift enactment of the Lex Ukraine Act granted the refugees benefits typically reserved for permanent residents, such as unrestricted access to the labour market. This led to a notable increase in the number of Ukrainians officially employed and expanding Czechia's workforce. Using individual micro-level data from sixteen waves of the Labour Force Sample Survey (LFSS), collected between the 1st quarter of 2019 and the 4th quarter of 2022, we examine the short-term impact of the influx of the Ukrainian refugees on the labour market outcomes of locals in Czechia. Using several empirical strategies, including a two-way fixed effects model (TWFE), extensions to the canonical difference in differences (DiD) estimator, and matching on selective characteristics of individuals/districts and pre-treatment trends, we find consistent evidence that the influx of refugees had no economically meaningful impact on employment, unemployment, or inactivity rates within the local population, regardless of gender, educational level, or industry, noting that we find small negative effects on employment and positive effects on unemployment in sectors that experienced the largest influx of workers. However, we treat these results with caution due to the small sample sizes. Most importantly, we find consistent evidence of an increase in weekly working hours among local females in treated districts. This increase is primarily driven by workers with secondary education employed in the most affected sectors. |
| Keywords: | Ukrainian refugees, immigrants, local labour market, labour supply |
| JEL: | F22 J15 J21 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16965&r= |
| By: | Jens-Christian Høj; Viktoriia Klimchuk |
| Abstract: | Before the war, the Ukrainian Pay-As-You-Go pension system required large government transfers. Since then, large scale emigration and an increasing number of people eligible for pensions have further increased the need for government transfers and exacerbated the challenges of population ageing. At the same time, the system provides relatively low pension benefits, despite fairly high contribution rates and short time in retirement. This reflects to a large degree a relatively narrow contribution base due to a large informal economy and underreporting of labour income. Reform of the system must encourage participation, secure liveable pensions, and safeguard the system’s fiscal sustainability. |
| Keywords: | informal labour markets, old-age poverty, pension systems, Public finances |
| JEL: | E6 H55 I32 J46 |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1805-en&r= |
| By: | Tamilina, Larysa; Hryniv, Dzvenyslava; Hulko, Pavlo |
| Abstract: | This research focuses on examining why young social media users might become trapped in a "social bubble" defined as seeking information that supports only one’s existing beliefs. We use a method called Qualitative Comparative Analysis to identify various combinations of factors that either contribute to or prevent the formation of these bubbles. Our findings reveal three combinations that tend to create social bubbles. All three involve young people's tendency to conform to dominant opinions and how often they expose themselves to diverse viewpoints. We have also identified one combination that leads to the opposite outcome, where young individuals reject the idea of being in a social bubble. Specifically, such persons are characterized by rarely conforming to dominant opinions, engaging in frequent debates, and regularly exposing themselves to diverse perspectives, even if they use only a few social media platforms. These results suggest that universities can play an important role in shaping social media behavior by teaching students to seek out diverse viewpoints and critically evaluate them to form their own independent opinions. |
| Keywords: | Social media, Social bubbles, QCQ, Young users, Ukraine |
| JEL: | C1 C5 C80 |
| Date: | 2024–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:121084&r= |
| By: | Daniela, Antonescu; Ioana Cristina, Florescu |
| Abstract: | In Romania, the issue of economic inequalities and regional convergence is one of the current important topics on which the attention of economic specialists and the decision-making factors is focused. In the current context, the regional policy in Romania is implemented at regional level, the regions being formed by counties that have voluntarily associated on the basis of a convention signed by the representatives of the county councils, respectively of the General Council of Bucharest. The paper is based on the analysis of the differences between the regions of Romania, in the period 2008-2022, during the COVID-19 pandemic, by highlighting the differences between the dynamics of certain indicators, of the analysis of the GINI index for measuring inequalities, trying to answer the question which of the two crises, financial or health, affected the level of territorial inequalities more and what was the evolution of the regions of Romania in these two sub-periods. |
| Keywords: | regional convergence, Gini Coefficient, NUTS 2 Regions, COVID-19 pandemic crisis, economic-financial crisis |
| JEL: | R0 R11 R15 R5 R58 |
| Date: | 2024–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120992&r= |
| By: | Bachev, Hrabrin; Ivanov, Bozhidar |
| Abstract: | This paper offers a holistic framework for an adequate understanding of the concept and components of agri-food governance and for assessing its quality. Agri-food governance is defined as a complex system with five components: (1) agri-food and related agents, (2) means (rules, forms, and mechanisms) that govern agents’ behavior, activities, and relationships, (3) processes and activities related to making diverse managerial decisions, (4) specific social order resulting from the governing process, and (5) outcomes of the functioning of the system in terms of the realization of sustainable development goals. For a holistic assessment of the quality of agri-food governance, a multidimensional hierarchical system with good governance 11 principles, 21 criteria, and 36 indicators and reference values is presented. The assessment of the farming component of agri-food governance system in Bulgaria, based on statistical and expert data, showed that its overall quality is at a moderate European Union level. In terms of sustainability, the quality of governance is at a good level, while for process, means, and order components, it is at a satisfactory level. The quality of agrarian governance is highest in terms of equity and solidarity and the good functioning public sector. The quality of agrarian governance is lowest in terms of stakeholder involvement and the Good Working Private Sector. In the future, in the latter two areas, combined actions of public, private, and collective agents are needed to improve the country’s agri-food governance. This study showed that particular attention is needed to improve currently inferior decision-making transparency, unacceptable lobbying, and high transaction costs for dealing with other agents, mitigate agricultural contribution to climate change, increase the significance of agriculture, match management decisions to public expectations, increase the competency and expertise of agrarian agents, and improve farm access to public support. The suggested framework for agri-food governance analysis and assessment is to be further adapted to the specificity of different agri-food systems and applied more broadly in diverse agri-food systems in a particular country and region, and international comparisons between (different EU) countries. The widespread application of the GAMPOS framework requires the systematic collection of new types of micro and macro data about the characteristics of governance agents, means, processes, order, and sustainability in different agri-food systems, including through official national, EU, and international statistical systems as well as the cooperation of all participating and interested parties in good governance. |
| Keywords: | governance; agri-food systems; quality; principles; criteria; indicators; assessment |
| JEL: | Q10 Q11 Q12 Q13 Q15 Q18 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120858&r= |
| By: | Bukvić, Rajko |
| Abstract: | On the basis of five balance variables in bank balances (total assets, deposits, capital, operating income, and loans), the Hirschman–Herfindahl indices for period 2016–2021 are calculated. The indices values are decomposed by the Bajo and Salas approach, based on the fact that the Hirschman-Herfindahl index is a special case of the Hanna-Kay index. So the impacts of number of banks and dispersion of its market shares are established. Then we classified the concentration changes, depending on relations between the rates of changes of two factors. They were unequal and vary during the years. Among the identified types of changes there was the most frequent decrease of HHI, caused by decrease of inequality of market shares and decrease of number of banks, where the first was greater. Finally, in 2021, the number of banks decreased with an increase in the dispersion of their shares in the three variables, which from a theoretical point of view is a clear condition for the growth of the concentration index. In the case of the remaining two variables, the dispersion of the share was reduced, so that the realized change in the Hirschman–Herfindahl index belonged to the second type. |
| Keywords: | market concentration, banking sector, decomposition of the index Hirschman–Herfindahl, number of banks, dispersion of market shares, types of the concentration degree changes |
| JEL: | C38 G21 L10 L19 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120970&r= |
| By: | Sandor Juhasz; Zoltan Elekes; Virag Ilyes; Frank Neffke |
| Abstract: | Strong local clusters help firms compete on global markets. One explanation for this is that firms benefit from locating close to their suppliers and customers. However, the emergence of global supply chains shows that physical proximity is not necessarily a prerequisite to successfully manage customer-supplier relations anymore. This raises the question when firms need to colocate in value chains and when they can coordinate over longer distances. We hypothesize that one important aspect is the extent to which supply chain partners exchange not just goods but also know-how. To test this, we build on an expanding literature that studies the drivers of industrial coagglomeration to analyze when supply chain connections lead firms to colocation. We exploit detailed micro-data for the Hungarian economy between 2015 and 2017, linking firm registries, employer-employee matched data and firm-to-firm transaction data from value-added tax records. This allows us to observe colocation, labor flows and value chain connec- tions at the level of firms, as well as construct aggregated coagglomeration patterns, skill relatedness and input-output connections between pairs of industries. We show that supply chains are more likely to support coagglomeration when the industries in- volved are also skill related. That is, input-output and labor market channels reinforce each other, but supplier connections only matter for colocation when industries have similar labor requirements, suggesting that they employ similar types of know-how. We corroborate this finding by analyzing the interactions between firms, showing that supplier relations are more geographically constrained between companies that operate in skill related industries. |
| Keywords: | coagglomeration, labor flow network, skill relatedness, supply chain |
| JEL: | R12 J24 O14 D57 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2416&r= |