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on Transition Economics |
| By: | Pierre Monnin (aCouncil on Economic Policies and Centre for Economic Transition Expertise (London School of Economic and Political Science)); Adam Banai (Magyar Nemzeti Bank); Kristina Bojare (Latvijas Banka); Jan Klacso (Narodna banka Slovenska); Reiner Martin (Narodna banka Slovenska); Janos Szakacs (Magyar Nemzeti Bank) |
| Abstract: | In this paper, we explore how borrower-based measures (BBMs) can be adjusted to provide additional funding for housing-related energy-efficiency investments without compromising financial stability objectives. We first show that lower energy costs and higher house price values resulting from renovation work allows an easing of borrowing limits while keeping loan risk metrics unchanged. We then focus on three recent easing measures implemented in Slovakia, Hungary, and Latvia and assess their effectiveness using a bank survey. We find that these policy changes did not significantly affect banks' credit portfolio risk profile and thus financial stability. At the same time, they did not generate a significant increase in loans for energy-efficient investments. We thus suggest combining BBM adjustments with other policy measures to improve energy-efficiency in real estate. |
| Keywords: | housing renovation, borrower-based measures, green loans |
| JEL: | C8 E44 E50 G21 |
| Date: | 2026–06–08 |
| URL: | https://d.repec.org/n?u=RePEc:ltv:wpaper:202603 |
| By: | Franziska Tinnefeld (Università Cattolica del Sacro Cuore and Fondazione Eni Enrico Mattei); Florian Wagener (Universiteit van Amsterdam) |
| Abstract: | We develop a multi-region, multi-sector Romer-type dynamic partial equilibrium model of endogenous growth. We calibrate on equally sized regions North, East, and South, based on data from Germany, Poland, and China. We compare the effect of trade block formation on innovation outcomes. Integration leads to aggregate increase in both product and process innovation, resulting in aggregate welfare gains. These are concentrated in North: the research sectors of East and South collapse. Our findings explain data from eastern European countries, as well as current R&D policies in China that are designed to avoid downstream lock-in. |
| Keywords: | product innovation, process innovation, integration |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2026.20 |
| By: | Etienne Farvaque (University of Lille, CNRS, IESEG School of Management, Lille; CIRANO, Montréal); Alexander Mihailov (Department of Economics, University of Reading); Piotr Stanek (Department of International Economics, Krakow University of Economics) |
| Abstract: | This paper examines how monetary policy rules operate under conditions of institutional reform, external constraints, and war in Ukraine as a case of prospective European monetary integration. Using monthly data from 2009 to 2026, we estimate Taylor-type reaction functions for the National Bank of Ukraine, allowing the setting of the policy rate to respond to inflation gaps, industrial-production activity gaps, exchange-rate pressure, interest-rate smoothing, and regime-specific wartime interactions. We then compute deviations between actual and model-implied policy rates and test whether these deviations are associated with institutional shifts, geopolitical shocks, conflict intensity, and social disruption. The results show that Ukrainian monetary policy remained partly rule-like even during periods of extreme stress. Interest-rate smoothing is strong, exchange-rate pressure enters the effective reaction function, and the largest deviations cluster around moments of nonlinear constraints: the 2015 currency crisis, the initial full-scale-invasion policy freeze, and the June 2022 credibility-restoring interest rate hike. These findings suggest that wartime central banking is not best understood as a suspension of rules. Rather, war generates constraint-contingent rule adaptation, in which credibility is preserved through temporary modifications of the instruments, coefficients, and state variables governing policy. The paper contributes to debates on rules versus discretion by showing how monetary-policy credibility can coexist with resilience-oriented adjustment in an emerging market economy exposed to geopolitical rupture. It also speaks to Ukraine’s European trajectory: eventual monetary integration will depend not only on nominal convergence, but on the demonstrated capacity to preserve rule-based credibility under extreme political and security shocks. |
| Keywords: | Taylor-type rules, Ukraine, exchange-rate stabilization, inflation targeting, geopolitical risk, wartime monetary policy, National Bank of Ukraine |
| JEL: | E52 E58 F31 F41 O52 P34 |
| Date: | 2026–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2026-08 |
| By: | Andriy Tsapin (National Bank of Ukraine; National University of Ostroh Academy) |
| Abstract: | This paper examines the role of corporate governance and prudential supervision in mitigating the detrimental effects of the initial russian military invasion on the financial health of Ukrainian banks. We find that shock exposure depends on the scale of banking activity and pre-war credit risk assessments in the affected regions. This research provides evidence that enhanced governance and prudential supervision contributed positively to restoring bank financial positions following the initial attacks. Our findings demonstrate that central bank supervision yields a health-restoring effect primarily for war-sensitive banks, provided that these banks comply with regulatory requirements. Conversely, independent supervisory boards contribute more significantly to the recovery of unaffected banks. These results are robust and offer practical policy implications for both bankers and regulators. |
| Keywords: | banks, war, financial health, supervisory board, prudential supervision |
| JEL: | G21 G28 G32 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ukb:wpaper:01/2026 |
| By: | Jackson, Karen; Luck, Phillip; Shepotylo, Oleksandr |
| Abstract: | Russia's full-scale invasion of Ukraine in February 2022 raised a critical question: do military alliances strengthen or fracture trade ties when war breaks out? This paper shows they strengthen them. Using monthly bilateral trade data through August 2025, we find that NATO members traded approximately 9-15% more with one another after the invasion relative to non-NATO pairs - a premium that persisted and grew through 2025. These effects are not limited to the war period: applying a disaggregated structural gravity framework over 1948-2022, we estimate that NATO accession generates 12-27% increases in bilateral exports, concentrated in dual-use, differentiated, and intermediate goods consistent with defence-industrial supply-chain. Moreover, there is synergy between security and economic cooperation as the effect of NATO is strenghened by the EU membership. |
| Keywords: | trade, geopolitics, NATO, security |
| JEL: | F14 F53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:342407 |
| By: | Almeida, Vanda (OECD); Brunelli, Filippo (European Commission - Joint Research Centre (JRC)); Caisl, Jakub (European Commission - DG EMPL); Giordano, Alessandro (European Commission - Joint Research Centre (JRC)); Hoffmann, Claire (OECD); Königs, Sebastian (OECD); Moreno-Monroy, Ana (OECD); Pacheco, Tainá (OECD); Salazar-Lozada, Mauricio (OECD) |
| Abstract: | Access to enabling services is an important determinant of labour market participation and social inclusion. This paper examines the role of capacity constraints and public transport access in shaping the accessibility of early childhood education and care (ECEC), primary schools and Public Employment Services (PES) at the municipal level and across degrees of urbanisation in Estonia and the Netherlands, drawing on data on service locations, capacity, enrolment and local transport infrastructure. The results confirm a clear urban-rural gradient in physical accessibility. However, proximity alone provides an incomplete picture: people in more densely populated areas benefit from shorter travel times, but high demand pressure and capacity constraints can result in lower competitive accessibility compared to less densely populated areas. In both countries, 13% to 14% of children in primary school face a double disadvantage of longer travel times and below-median competitive accessibility. For PES, geographic disparities in public transport provision can represent a source of vulnerability for people without access to a private motor vehicle. |
| Keywords: | access to essential services, accessibility, transport networks, public employment services, early childhood education and care (ECEC), primary education, service capacity, Estonia, Netherlands |
| JEL: | I24 J13 O18 R23 R53 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18811 |
| By: | Jahongir Begmatov (The Central Bank of the Republic of Uzbekistan, Uzbekistan); Guanie Lim (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: | This paper examines whether differences in reform sequencing during the early reform period are associated with differences in output stability and structural transformation. It compares three transition economies - China (1978-1988), Vietnam (1986-1996), and Uzbekistan (2017-2024) - using a structured comparative case study design. Drawing on the reform sequencing literature, the analysis is organized around the expectation that micro-first sequences, in which agricultural and enterprise reforms precede large-scale macroeconomic and external liberalization, are associated with more stable output and a more balanced pattern of structural change than macro-first sequences. Using data from the World Bank's World Development Indicators, the analysis proceeds through within-case studies and a structured cross-case comparison using descriptive statistics and aligned trend graphs. The patterns observed are broadly consistent with the expectation that sequencing matters. China and Vietnam, which followed micro-first reform sequences, achieved higher average growth rates underpinned by early agricultural productivity gains, avoided negative growth, and exhibited a relatively balanced reallocation of resources across sectors. Uzbekistan's macro-first sequence, which began with exchange rate unification and trade liberalization, also avoided recession, but growth was lower on average and appears to have depended more heavily on expansionary fiscal policy and state-led investment. Structural transformation in Uzbekistan was characterized by rapid industrial expansion without a preceding surge in agricultural productivity, while services expanded more gradually. Labour reallocation patterns and foreign direct investment trajectories reinforce these differences. The paper contributes to the reform sequencing literature by incorporating a contemporary transition into a common comparative framework and offers cautious policy insights for transition economies, particularly regarding the role of micro-level institutional reforms in supporting durable growth and structural transformation. |
| Keywords: | China, Vietnam, Uzbekistan, Reform, Growth, Structural Transformation |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ngi:dpaper:26-5 |
| By: | Kamala Babayeva Mustafayeva (Charles University, Prague, Czechia) |
| Abstract: | This paper examines the relationship between economic development and gender gaps in labor-force participation in Southeastern European countries. Using panel data for nine countries over the period 2000–2023, the study estimates fixed-effects models with Driscoll-Kraay standard errors to analyze how gross national income (GNI) per capita is associated with labor-market gender gaps while controlling for fertility, gender norms, and persistence in past gender gaps. The results indicate a positive and statistically significant relationship between economic development and the gender gap in labor-force participation. Overall, the findings suggest that economic development alone may not necessarily lead to narrower labor-market gender gaps, particularly in contexts characterized by persistent household specialization patterns and traditional gender roles. |
| Keywords: | economic development; gender gap; labor force participation; gender norms; Southeastern Europe |
| JEL: | J16 O15 J21 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_17 |
| By: | Daryn Zholdasbay |
| Abstract: | This thesis examines how social partners utilize modern algorithmic management systems as a new policy issue to increase their participation in policymaking within different industrial relations systems. The thesis focuses on Slovakia and Italy, two EU Member States subject to the same regulatory framework through the AI Act, but belonging to different industrial relations regimes. Building on Scharpf’s actor-centered institutionalism and the conceptualization of industrial relations systems, the thesis analyzes how institutional settings, actor strategies, actor constellations, modes of interaction, and participation channels shape social partner participation. The research is based on a comparative qualitative case study using semi-structured interviews with trade union and employer organization representatives at national and sectoral levels. The findings show that the AI Act created regulatory space for social partner participation, as it sets minimum standards that can be further developed by Member States and through collective agreements. However, this space was utilized differently in the two cases. In Italy, social partners used AI/AM systems more actively through participation channels, consultations, and collective bargaining. In Slovakia, participation remained more limited, mostly consultative, and often constrained by unilateral employer action, although a new participation channel was created. The thesis argues that new policy issues do not automatically increase participation in policymaking. They can create opportunities, but participation depends on the industrial relations system, the strength of social partners, the role of the state, and the salience of the issue for social partners and their members. The thesis contributes to debates on AI governance, industrial relations, and participatory policymaking by showing how AI/AM systems can become a resource for social partners to strengthen their role in policymaking. |
| Date: | 2026–07–20 |
| URL: | https://d.repec.org/n?u=RePEc:cel:report:72 |
| By: | Rashidghalam, Masoomeh; Heshmati-Kim, Jieun; Heshmati, Almas |
| Abstract: | AI is becoming a driving force in Vietnam's economic transformation. The country is moving beyond a growth model based on low-cost labour and export-led industries. Adoptions of the widespread generative AI and AI-powered assistants have accelerated the transformation. AI by reshaping the nature and future of work, it redefines the rules and productivity. This research overviews the recent research investigating how AI is transforming work, demand for digital skills, and productivity gains in AI-adopting Vietnamese industries. Optimal blend of AI and human collaboration influence positively its productivity impacts. Application of AI enable use of its potentials, but it has also significance challenges and risks of skill gaps, training costs, trust, job quality and distribution of its effects. Focus on adaptability, lifelong learning, and integration of AI ensures a positive future of work. This study identifies factors determining adoption of AI and heterogeneity in its productivity and future of work impacts. |
| Keywords: | AI application, Nature of work, Future of work, Economic transformation, Skill requirements, AI productivity impacts, Vietnam |
| JEL: | D24 E24 F63 J24 L52 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1796 |
| By: | Abdushukurova, Sevinch; Egamberdiev, Bekhzod; Djuraeva, Mukhayyo |
| Abstract: | Agriculture is central to the Kyrgyz economy, yet technology adoption lags, and existing models overlook trust and risk preferences, particularly their interaction. Moreover, no prior Kyrgyz study has addressed this gap. Hence, this research examines how risk attitudes and trust shape technology adoption among Kyrgyz farming households, using two waves (2016, 2019) of the Life in Kyrgyzstan panel survey restricted to farming households, yielding balanced panel data of 1, 305 households with 3, 298 observations. Using household fixed-effects regression, preliminary results show that risk preference alone is not a significant variable, while its interaction with trust reveals that risk-tolerant farmers adopt more when they have institutional trust or are cautious. It has also been observed that different types of trust have distinct direct effects on farmers' technology adoption. For instance, wariness predicts higher adoption, while institutional trust suggests lower adoption. These findings are crucial for Kyrgyzstan’s current push toward modern, particularly green and resource-efficient, approaches aimed at limiting environmental damage while improving resource management in farmers’ practices. Investments pay off only if farmers actually adopt technologies. Therefore, to maximize the returns from these investments, it is important to design trust- and risk-sensitive policy for Kyrgyzstan. |
| Keywords: | Agriculture, Risk preferences, Technology Adoption, Trust |
| JEL: | N50 O13 P32 Q1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342387 |
| By: | Jan Janku; Tomas Karhanek; Simona Malovana; Ivan Trubelik |
| Abstract: | This paper examines whether chronic physical climate risk affects corporate credit allocation. We focus on drought, one of the most salient climate-related risks for the Czech economy, and combine granular AnaCredit data with district-level measures of drought-related agricultural losses. Using almost 6 million bank-firm-month observations for nearly 140, 000 firms between 2019 and 2023, we show that long-term drought exposure is associated with a significant contraction in new corporate lending. The effect is concentrated at the origination margin: newly originated credit declines by about 12 percent in drought-affected regions, while outstanding credit volumes adjust more gradually. The impact varies across bank-firm relationships, credit-exposure characteristics, and sectors, consistent with banks incorporating chronic physical climate risk primarily into new lending decisions rather than immediately reducing existing exposures. |
| Keywords: | Bank lending, Climate risk, Corporate credit, Drought, Loan origination, AnaCredit |
| JEL: | E51 G21 G32 Q54 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/11 |
| By: | Parviainen, Sinikka |
| Abstract: | Russia's regions bear a rapidly growing share of the fiscal costs of war. Since showing surpluses as recently as 2021, the collective regional deficit quadrupled in a single year. Using five years of budget execution reports from the Russian Federal Treasury across all 85 Russian regions (federal subjects), we construct a war-cost composite measuring the fiscal opportunity cost of the war in each region and build a typology for classifying regions by their dominant fiscal relationship with the war. According to our conservative estimate, war-related regional spending reached nearly 1 trillion roubles in 2025, more than double from 2021. The adverse turn for healthcare is particularly notable. Regional healthcare lost 3.5 percentage points of budget spending share and an over 20 % real terms decline in spending, the largest real-term contraction in any major spending category. Moreover, the effects of wartime are not uniform across the regions. Direct war costs have fallen heaviest on frontline war-burdened regions, while military-industrial regions have captured a defence-wage windfall. Commodity exporters face a collapsing revenue base, while peripheral regions remain structurally transfer-dependent. A supplementary section documents Russia's attempts at fiscal absorption of the four illegally occupied Ukrainian territories. |
| Keywords: | Russia, economy, budget, war, regions |
| JEL: | H56 H72 H77 R11 P26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitb:342403 |
| By: | Mirkasimov, Bakhrom; Parpiev, Ziyodullo; Wolfson, Inna |
| Abstract: | Climate change is likely to reshape agriculture in an irrigated, water-scarce transition economy like Uzbekistan. We use IFPRI's International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) model and evaluate the direct effects of climate change on Uzbekistan’s agriculture through 2050. We assume changes in GDP, population, and technological progress to be exogenous. We find that climate change and the corresponding temperature increase will have significant adverse effects on the long-term yields of cotton and wheat through changes in water availability, precipitation patterns, crop yields, and the use of land, water, and other natural resources, but harvested area responses may differ. All climate change scenarios are similar in predicting an increase in harvested area for temperate fruits and vegetables, but their yield gains remain conditional on market prices, policy reform, water use and institutional constraints. For policymakers, this makes climate change adaptation actions an opportunity for incentives and structural reforms as well as for technology to adapt to changing environmental conditions and to ensure food security. |
| Keywords: | climate change; climate change adaptation; mathematical models; climate change impacts; modelling; Uzbekistan; Central Asia; Asia |
| Date: | 2026–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:cenawp:183323 |
| By: | Bolay, Matthieu; Knierzinger, Johannes; Pastré, Paule |
| Abstract: | Investor–state dispute settlement (ISDS) has become a key site where extractive capitalism collides with sovereignty claims by eroding democratic decision making, draining public budgets, and constraining climate policies. Yet, despite mounting calls for reform or abolition, withdrawals from the investment treaty regime remain rare. This article investigates the promises and processes of exit through three case studies where governments faced disputes with extractive investors over redistribution (Tanzania), anti-racism (South Africa) and climate policy (Slovenia), which catalyzed reappraisals of foreign investment protection. Drawing on interviews and fieldwork within the epistemic communities of investment arbitration (lawyers and arbitrators, government agents, activists) in the three countries, the article conceptualizes ISDS withdrawal as contentious politics that operates at the intersection of national projects, transnational legal orders, and the ambiguous mobilizations of civil society groups. “Civil society” preserved or even enforced the apolitical framing of ISDS while seeking to prevent exposure to it. Successful opt-out campaigns thus have to combine international solidarization and coordination with careful considerations concerning the generated level of contentiousness on the national scale. |
| Keywords: | arbitration;contentious Politics;investor-state dispute Settlement (ISDS);mining;Slovenia;South-Africa;Tanzania;treaty withdrawal |
| JEL: | J1 |
| Date: | 2026–06–27 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140158 |
| By: | Karsten Staehr (Tallinn University of Technology; Eesti Pank); Olegs Tkacevs (Latvijas Banka); Ann Merit Toiger (Tallinn University of Technology) |
| Abstract: | This paper studies the effects of fiscal shocks on the dynamics of public debt and other fiscal and macroeconomic variables. The data are annual and cover all the members of the European Union from 2001 to 2024. The fiscal shocks are identified using orthogonalised forecast errors computed from European Commission forecasts, and the impulse responses are generated using local projections. Primary balance shocks lower government debt measured in per cent of GDP, but the effect is gradual and is initially modest. There are large differences in how revenue and expenditure measures affect the stock of public debt. Revenue shocks have gradual and statistically insignificant effects, while primary expenditure shocks have fast, relatively large and statistically significant effects. The effects on the public debt stock differ because the resulting fiscal reactions are different for revenue or spending shocks. |
| Keywords: | government debt, debt dynamics, fiscal policy, austerity, euro area |
| JEL: | H63 H68 E62 |
| Date: | 2026–05–18 |
| URL: | https://d.repec.org/n?u=RePEc:ltv:wpaper:202602 |