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on Transition Economics |
| By: | Łukasz Postek (Narodowy Bank Polski; University of Warsaw, Faculty of Economic Sciences); Małgorzata Walerych (Narodowy Bank Polski; Institute of Economics, Polish Academy of Sciences) |
| Abstract: | This paper investigates the role of demand shocks in driving labour market dynamics in Poland, an economy that transitioned from very high to low and stable unemployment despite repeated adverse shocks. Our contribution is threefold. First, we propose two complementary sign-restricted Bayesian VAR models that distinguish between labour-extensive and labour-intensive aggregate demand shocks, where the former operate primarily through changes in employment, while the latter mainly affect workers’ effort and hours per worker. Despite different specifications, both models yield highly consistent results. Second, we find that labour-extensive demand shocks are a key driver of unemployment, labour-intensive demand shocks primarily affect output, prices, and productivity, whereas both shocks are similarly important for hours per worker. Third, we document that the relative importance of these shocks changes over time, suggesting that the dominant margin of labour market adjustment may depend on economic conditions and the policy environment. |
| Keywords: | demand shocks, labour market, Bayesian VAR, sign restrictions, intensive margin, extensive margin |
| JEL: | C11 C32 E32 J23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:nbp:nbpmis:389 |
| By: | Wolff, Guntram B.; Binder, Johannes; Morgan, Thomas |
| Abstract: | * This report is built on an update of the Kiel Military Procurement Tracker, covering the UK, Poland and Germany up to January 2026. We show that orders have grown rapidly in frequency, size and number since the start of Russia's full-scale invasion of Ukraine. In 2025, German military procurement reached roughly €85 bn and dominates overall European military procurement, compared with about €25 bn in the UK and €21 bn in Poland. But is Germany also leading in innovation? * Defence strategies differ across the three countries. Germany's defence strategy is endorsed only by the defence minister and remains disappointing at both the strategic and the military-technological level. Reflections on Germany's contribution to European defence outside a US-led NATO are absent. While only partially public, reflection on lessons from changing warfare are limited and do not translate into a priority strategy. The UK's strategy review as well as Poland's defence strategy each carry the prime minister's backing and argue for lessons from Ukraine to be translated into an ambitious agenda. * We measure the shift toward the new warfare paradigm in our unique procurement dataset. Based on an LLM-assisted classification of all 736 procurement orders in the dataset, only about 12% of spending is dedicated to new-paradigm systems. In Germany, absolute spending on this category has stagnated over 2020 to 2026 while its share has fallen distinctively. The UK has raised absolute spending but seen its share stagnate; only Poland has increased both the absolute amount and the share of procurement devoted to new-paradigm equipment. * Germany, despite the highest spending levels in Europe, shows the slowest transformation of the three, possibly reflecting the absence of top-level political leadership. A re-orientation of Germany's procurement strategy is needed to prioritise early technological change. An update of military and training doctrines would be the necessary complement. Failing to learn the lessons may well mean that credible deterrence capabilities are not achieved or at excessively high costs. * We also show that across all three countries, the data confirm a strong home bias in procurement, with purchases from global suppliers falling sharply in 2025. Genuinely pan-European procurement remains extremely limited, pointing to fragmented industrial bases rather than a coordinated European rearmament effort. * Moreover, we show that expected delivery timelines at the time of ordering are long: Where final delivery dates are specified, they typically fluctuate between two and four years across all three countries. In Germany, however, a growing share of orders is placed without any reported specified delivery date, a trend not observed in the UK or Poland. |
| Keywords: | Defence, Armament, Weapon industry, Procurement, Germany, Europe, Russia |
| JEL: | H41 H56 H57 H60 L64 N44 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkrp:342469 |
| By: | Ibadoghlu, Gubad |
| Abstract: | This article examines the structural tension between Azerbaijan's international climate commitments and its expanding role as a major natural gas exporter to Europe. Since hosting COP29 in 2024, Azerbaijan has positioned itself as an active participant in global environmental governance while simultaneously accelerating hydrocarbon production, developing new gas fields (including Absheron Phase II, Babek, and non-associated gas at ACG), and deepening its strategic energy partnership with the EU through the Southern Gas Corridor (SGC) and Trans Adriatic Pipeline (TAP). Drawing on the concept of "exported emissions, " the article argues that while European states may reduce territorial emissions by substituting Azerbaijani gas for more carbon-intensive fuels, a substantial share of the associated methane emissions-generated during extraction, processing, compression, and transmission-remains externalized to Azerbaijan and other points along the supply chain. The analysis assesses whether existing environmental, health and safety, and human rights safeguards imposed by EU legislation, EBRD, EIB, IFC, OECD, and Equator Principles standards, as well as the new EU Methane Regulation (2024/1787), are adequate to address this challenge. It finds that although TAP operates under one of the most extensive formal governance frameworks applied to energy infrastructure, effective implementation depends heavily on independent monitoring, transparency, and civic space-all of which are significantly constrained in Azerbaijan and, to varying degrees, in Georgia and Türkiye. Restrictions on civil society, journalists, and human rights defenders limit the ability of independent actors to verify compliance, creating a gap between formal regulatory commitments and actual environmental and social outcomes. The article concludes that Azerbaijan's declining performance in the World Economic Forum's 2026 Energy Transition Index-driven by weaknesses in institutional and regulatory "Transition Readiness" rather than technical system performance-illustrates a broader dilemma facing hydrocarbon-exporting states: the credibility of climate commitments ultimately hinges not only on renewable energy targets, but on methane governance, transparency, and protection of the civic space needed to hold gas export infrastructure accountable throughout its operational lifecycle. |
| Keywords: | Azerbaijan, Southern Gas Corridor, Trans Adriatic Pipeline, European Energy Security, SOCAR, Exported/Embodied Emissions, Methane Emissions, Energy Transition, COP29, Civic Space, Resource Governance, Human Rights and Environmental Accountability |
| JEL: | K32 P18 Q42 Q43 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342434 |
| By: | Sinikka Parviainen; William Pyle |
| Abstract: | Measuring politically sensitive attitudes in authoritarian settings is difficult because expressions of political support may reflect repression and social pressure as much as genuine belief. We propose a complementary approach: using responses to questions that are not themselves politically sensitive to provide indirect evidence about politically sensitive attitudes. Using subjective well-being (SWB), we ask whether within-person changes in life satisfaction, after accounting for changes in material and personal circumstances, can provide evidence of incorporation into a wartime national project. Drawing on more than a decade of panel data from the Russian Longitudinal Monitoring Survey (2013--2024), we find that life satisfaction rises significantly following Russia's 2022 invasion of Ukraine. Gains are initially larger among ethnic Russians and smaller in Moscow and St. Petersburg, consistently larger in military-industrial regions, and sharply lower among those nearest the front. This theoretically patterned heterogeneity is difficult to reconcile with generalized social-desirability bias and is consistent with differentiated wartime incorporation. By 2024, rising non-response and attenuating subgroup differences suggest that the informational value of SWB may deteriorate over time. |
| Keywords: | subjective well-being, rally-round-the-flag, Russia-Ukraine war, preference falsification, authoritarian public opinion, social desirability bias |
| JEL: | C8 D7 F5 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12898 |
| By: | Ahmed, Shaker; Davydov, Denis; Solanko, Laura |
| Abstract: | Geopolitical conflicts force multinational enterprises to make difficult choices between protecting their operations in a host country and preserving their standing among stakeholders at home, even when formal sanctions do not require firms to exit. Whether to remain in a conflict-affected market is also often an ethical decision. Using panel data on more than 8, 000 listed European firms from 2010 to 2024, we compare corporate outcomes following Russia's 2014 annexation of Crimea and its 2022 full-scale invasion of Ukraine. We find that the 2014 shock produced little change in operating performance and modest deleveraging among firms with a Russian market presence, compared to those without. After 2022, firms that remained in Russia experienced stronger sales and employment growth than firms that completed their exit, without corresponding improvements in profitability or changes in leverage. Stayers experienced a larger post-2022 increase in media-based ethical scrutiny, whereas firms that completed their exit experienced a larger increase in idiosyncratic volatility. These findings suggest that corporate decisions to withdraw from an aggressor state are not necessarily associated with a consolidated profitability penalty, while decisions to stay may entail greater ethical scrutiny. |
| Keywords: | Business strategy, Self-sanctions, Reputational risk, European firms, Russia |
| JEL: | D22 F51 L2 M14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:343073 |
| By: | Becker, Torbjörn; Egorov, Konstantin; García-Herrero, Alicia; Klein, Matthew C.; Korhonen, Iikka; Ribakova, Elina; Risinger, Lucas; Schularick, Moritz |
| Abstract: | The contours of a genuine economic endgame are coming into view for Russia. The economy has not collapsed, but the structural foundations have eroded fast. Economic growth has come to a standstill and fiscal buffers are largely exhausted. Higher oil prices as a result of the war in the gulf will likely only bring temporary fiscal effects, as Ukrainian "drone sanctions" have been effective in reducing export volumes. • Russia's current macro stance is not sustainable. High interest rates are stifling the economy, while loose fiscal policy and quasi-fiscal operations are propping up the defense sector. The Q1 2026 budget deficit exceeded the full-year target in just three months. The choice now is between fiscal consolidation or monetary accommodation resulting in even higher inflation. Going forward, export revenues from the sale of raw materials remain the decisive variable for the economic outlook: With fiscal buffers spent, Russia's war capacity is more than ever directly coupled to hydrocarbon export income. • The war has made Moscow increasingly dependent on China. While both countries have derived tangible benefits from the partnership, it is not a coalition of equals, but an increasingly unbalanced arrangement in which China is accumulating structural advantages. Chinanowaccountsfor35 %ofRussia'stotaltradeand76%oftheincrease in its supply of banned critical military components. On its own exports of raw materials, Russia accepts deep discounts as a captive supplier with no alternative buyers. • China also plays the key role when it comes to supplying Russia with sanctioned products, especially the products most likely to contain so-called critical military components. China supplies more than 60% of all critical components while the remaining non-sanctioning countries within the top 10 together amount to only 15%. • Domestically, Russia's full-scale war against Ukraine has led to greater convergence of wages and incomes. Many poorer regions have benefited from a much higher budget for military procurement as well as higher salaries paid for those willing to sign up for the military. However, fiscal stress is mounting at the regional level too. More than two-thirds of Russia's 89 regions ran budget deficits by autumn 2025. • With Russia's economic weaknesses at a critical point, the window of opportunity for consequential Western action is open. Europe's task is to have the tools in place to convert economic pressure into a durable change in Russia's strategic calculus. The past months have shown that enforcement of the sanction regime makes a real difference and more must be done with respect to monitoring of the shadow fleet and the imposition of secondary sanctions. Export controls must be tightened with a particular focus on the role of Chinese firms, potentially linking access to the European market to compliance with export controls. Europe should also use its asymmetric negotiating position and impose a tariff on the remaining trade with Russia. The revenues from this Ukraine Support Tariff could be used to support Ukraine. |
| Abstract: | Vier Jahre nach Beginn der Vollinvasion der Ukraine zeichnet sich die Möglichkeit eines wirtschaftlichen Kollaps Russlands immer deutlicher ab. Bisher ist die russische Wirtschaft nicht zusammengebrochen, aber ihre Grundlagen erodieren schneller, als die offiziellen Statistiken erkennen lassen. Die Wirtschaft schrumpfte im ersten Quartal 2026 um 0, 3%, obwohl die Staatsausgaben im März 2026 im Jahresvergleich um 44% stiegen. Die Wachstumsprognose der Regierung für 2026 wurde auf 0, 4% zusammengestrichen, und selbst diese Zahl könnte sich angesichts vermehrter Anzeichen von Arbeitskräftemangel und Lieferengpässen als zu optimistisch erweisen. Es bestehen ernsthafte Zweifel an der Genauigkeit der offiziellen Wachstumszahlen. Sollte die Inflation, wie vielfach vermutet, zu niedrig ausgewiesen sein, wäre das reale Wirtschaftswachstum noch niedriger. Die zivilen und die militärischen Teile der russischen Wirtschaft sind zunehmend entkoppelt: Die Rüstungsindustrie wächst auf Kosten eines stagnierenden zivilen Sektors, bei nahezu zum Erliegen gekommenen Anlageinvestitionen außerhalb militärischer Prioritäten und einem Außenhandelsvolumen auf dem niedrigsten Stand seit fünfzehn Jahren. Auch dies führt dazu, dass die offiziellen Zahlen den Zustand der produktiven Wirtschaft erheblich überbewerten. Das Gesamtbild ist das einer Wirtschaft, die an die Grenzen ihrer Produktionskapazität stößt. Gleichzeitig wachsen die Risiken für die Stabilität des Finanzsystems: Die rasche Kreditexpansion in rüstungsrelevanten Sektoren, schwache Unternehmensbilanzen und der wachsende Druck auf das Bankenkapital führen zu einer Verschlechterung der Vermögensqualität im Finanzsystem. Die Beiträge in diesem Band, verfasst von führenden Ökonominnen und Ökonomen mit fundierter Kenntnis der russischen Wirtschaft, zeichnen ein klares Bild: Russlands fiskalische und finanzielle Reserven sind weitgehend aufgebraucht; die asymmetrische Abhängigkeit von China vertieft sich zu Bedingungen, die bereits heute erhebliche Kosten verursachen und künftig noch größere nach sich ziehen dürften; und die Exporteinnahmen bleiben die mit Abstand wichtigste Variable dafür, wie lange der Kreml seinen Angriffskrieg weiterführen kann. All diese Beobachtungen beschreiben die Wirtschaft Russlands im Endstadium- und damit eine günstige Gelegenheit für den Westen, wirkungsvolle Maßnahmen zu ergreifen. Europa muss die richtigen Instrumente einsetzen, um durch wirtschaftlichen Druck nachhaltig das strategische Kalkül Russlands zu beeinflussen. |
| Keywords: | Russland Wirtschaft, Russland Sanktionen, Kriegswirtschaft, Russland China Handel, Rohstoffabhängigkeit, Ukraine Krieg, Exportkontrollen, Staatsfinanzen Russland |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkrp:342497 |
| By: | Kamalbek Karymshakov (Kyrgyz-Turkish Manas University); Kijin Kim (Asian Development Bank); Dina Azhgaliyeva (Asian Development Bank); Dastan Aseinov (Kyrgyz-Turkish Manas University) |
| Abstract: | Household resilience to extreme weather events depends critically on financial access, yet the role of remittances in shaping expenditure responses to such events remains insufficiently understood. This study examines how remittances are associated with household expenditure patterns under precipitation extremes in the Kyrgyz Republic, using nationally representative panel household survey data (2019–2023). Exploiting exogenous variation in remittance flows generated by historical migration networks and exchange rate movements, the analysis identifies a context-dependent buffering role of remittances. Remittances may help sustain household expenditure during periods of extreme weather, with the strongest protective effects observed among rural and high-altitude communities. However, rural households receiving remittances during excess rainfall episodes appear to reduce their expenditure shares on education and health. The middle-income households exhibit the strongest remittance-climate buffering patterns, while the poorest households show limited ability to leverage remittances for meaningful expenditure reallocation—likely reflecting the insufficiency of remittances relative to the scale of climate-induced losses. |
| Keywords: | remittances;climate risks;Central Asia;Kyrgyz Republic;highland communities;precipitation;drought;weather extremes |
| JEL: | F24 Q54 D14 C23 |
| Date: | 2026–08–24 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:023539 |
| By: | Celian Colon; Stephane Hallegatte |
| Abstract: | Building resilience to natural hazards requires more than identifying critical assets. It requires understanding how supply chains respond to disruptions: where suppliers are located, what inventories firms hold, how diversified their sourcing is, and how products are transported. This paper summarizes key insights from DisruptSC, a spatial agent-based model that jointly represents the transport network and firm-level supply chains, applied to four countries or regions: Tanzania, Cambodia, Ecuador, and the Middle Corridor (Central Asia and South Caucasus). Five policy-relevant findings emerge. First, the duration of a disruption is a primary driver of total economic losses, making fast recovery a crucial lever for risk reduction. Second, the distribution of direct damages across firms and facilities matters as much as the total damages in determining total economic losses. Third, compounding events striking in close succession amplify losses in non-trivial ways, so that individual events cannot be assessed in isolation. Fourth, shorter supply chains do not always increase resilience: they buffer small, frequent disruptions but amplify large ones, reflecting a trade-off between efficiency and resilience that depends on the characteristics of the firm network and the nature of the risks. And fifth, resilience is a network externality—its benefits spill across firms and across borders — so markets under-provide it, and coordinated policy, within and between countries, has a role to play. The paper also illustrates how the model can be used for operational risk assessments or investment prioritization through transport investment stress testing, hotspot identification, and cost-benefit analyses that capture supply chain impacts. |
| Keywords: | supply chains, transport resilience, natural disaster, climate adaptation, criticality, agent-based modeling |
| JEL: | Q54 R42 D57 D85 C63 O18 H54 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12950 |
| By: | Brinkmann, Johannes (Department of Economics and CAGE, University of Warwick); Datta, Nikhil (Department of Economics and CAGE, University of Warwick and CEP, London School of Economics) |
| Abstract: | Large supply shocks often raise concerns that retailers exploit rising costs to increase markups. We study the oil-price shock following Russia's invasion of Ukraine using wholesale fuel prices, near-universe daily retail prices across Great Britain, and more than 200 million precisely geolocated searches from a major fuel-price comparison platform. Despite fuel prices rising by 37% over the preceding 21 months with essentially no change in search, the abrupt post invasion increase triggered a more than twentyfold surge in daily search while retail margins contracted sharply. An event-study design shows that this shock-induced search increase causally reduced retail prices and margins, with 95th- versus 5th-percentile exposure implying an 8% margin reduction at the peak. The implied loss to retailer margins peaked at £5.2 million per week, around £650 per station. We rationalise these findings with a model in which large, rapid price increases raise consumer attention and price sensitivity, intensifying competition and compressing margins. More broadly, supply shocks can therefore change not only firms' costs but also the demand conditions governing how those costs are passed through. Consistent with the model's additional predictions, pass-through is approximately complete and symmetric before the invasion, but lower and temporarily exhibits a pronounced rockets-and-feathers pattern afterwards |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:821 |
| By: | Arroyo-Machado, Wenceslao; Rafols, Ismael; Díaz-Faes, Adrian A. (CSIC) |
| Abstract: | Background: A central concern in global health priority-setting is whether the supply of scientific knowledge aligns with health needs and demands. This alignment is usually assessed by comparing research effort with disease burden, overlooking other type of “social demand” of disease, in particular whether diseases are socially visible and generate public attention. We develop an analytical framework that treats public attention and epidemiological burden as complementary dimensions of health demand and examines their alignment with knowledge supply. Methods: We combine data on publications indexed in OpenAlex, disability-adjusted life years from the Global Burden of Disease, and Wikipedia pageviews for 2016 to 2023, as indicators of research effort, disease burden, and public attention, respectively. We map 19 disease groups and 138 specific diseases across these three dimensions. Ternary plots are used to position diseases according to their relative balance across dimensions and to identify diseases that are over- or under-represented in research effort relative to epidemiological burden and public attention. We compare Global North-South patterns using German, Persian, Swahili, and Vietnamese language areas to assess how these relationships vary across territories. Results: The three dimensions show limited alignment. At the disease group level, cardiovascular diseases account for the largest share of disease burden, mental disorders attract the largest share of public attention, and neoplasms concentrate the largest share of research effort. Public attention and disease burden are weakly correlated at both group and specific disease levels, indicating that Wikipedia pageviews and DALYs capture distinct dimensions of health demand. Ternary plots reveal different forms of misalignment, with some diseases showing plots dominated by burden, others by research effort, and others by public attention. Territorial analyses add a further layer by showing that diseases follow disparate patterns of supply-demand (mis)alignment across different linguistic territories. Conclusions: Public attention provides a complementary dimension for mapping global health needs and demands. Our approach identifies where scientific knowledge supply fails to match epidemiological and/or public attention, supporting more nuanced global health analysis that may be useful for priority-setting. |
| Date: | 2026–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:jc49u_v1 |
| By: | Piotr Dybka; Stanisław Bartha; Maciej Łopusiński; Radoslaw Kotkowski |
| Keywords: | Mobile Payments; Synthetic Control Method; Financial Innovation; Technology Diffusion; Market Creation; Payment Sovereignty |
| JEL: | G21 O33 E42 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cxu:wpaper:62 |