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on Transition Economics |
| By: | Ibadoghlu, Gubad |
| Abstract: | This article examines Azerbaijan’s post-oil economic trajectory and assesses the country’s growing exposure to the middle-income trap. Drawing on retrospective macroeconomic data, medium- and long-term forecasts, and comparative evidence from Armenia, Georgia, and Kazakhstan, the study argues that Azerbaijan’s hydrocarbon-dependent growth model has become increasingly unsustainable. While oil and gas revenues supported rapid growth during the boom years, declining oil production, weak diversification, low productivity growth, and reduced foreign investment have contributed to a sharp slowdown since 2016. The analysis shows that Azerbaijan is projected to underperform its regional peers in GDP growth, GDP per capita, innovation capacity, governance quality, economic freedom, and human development. Institutional constraints, monopolization, systemic corruption, and limited political and civil liberties further weaken the country’s capacity for structural transformation. The article concludes that, absent comprehensive market-oriented reforms, stronger institutions, anti-corruption measures, and productivity-enhancing diversification, Azerbaijan is likely to remain trapped in the upper-middle-income category for an extended period, while Armenia, Georgia, and Kazakhstan are better positioned to converge toward high-income status. |
| Keywords: | Azerbaijan, Kazakhstan, Armenia, Georgia, post-oil economy, middle-income trap, economic diversification, hydrocarbon dependence, institutional quality, governance, corruption, economic growth, freedoms |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esrepo:340201 |
| By: | Filip Blaha; Jan Botka; Josef Sveda; Ales Michl |
| Abstract: | We construct a quantile regression forest for inflation forecasting in the Czech Republic, inspired by growing literature on the use of Machine Learning in macroeconomics and finance. We contribute to the literature by implementing an optimisation scheme with time-varying weights that incorporates information from the entire distribution to form the point forecast. By dynamically reflecting the distribution of future inflation paths, our framework outperforms both standard mean and median point forecasts and delivers gains relative to conventional linear benchmark models. We also forecast individual inflation subcomponents that enable us to disentangle the drivers of future inflation and its risks. Furthermore, we integrate the Shapley-value decomposition to enhance the interpretability of our results and adjust the model's predictors for a small open economy. |
| Keywords: | Czech Republic, forecasting, inflation, machine learning, quantile regression forest, small open economy, time varying weights |
| JEL: | C53 C55 E31 E37 E52 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/09 |
| By: | Alessandra Michelangeli; Umut Türk |
| Abstract: | The Russian invasion of Ukraine in 2022 caused an unprecedented economic shock, yet reliable measures of economic activity during wartime are scarce, particularly at the subnational level. Official GDP statistics are available only at the national level and with substantial delays, while no systematic estimates exist on how the war affected economic activity across regions. This paper provides the first subnational assessment of the economic impact of the war in Ukraine by exploiting satellite-based nighttime light data as a proxy for local economic activity. Using annual VIIRS Day/Night Band data for the period 2014–2024, we analyze changes in nighttime light intensity across Ukrainian urban areas and relate them to geographic exposure to armed conflict events recorded by ACLED. We estimate two-way fixed effects models that exploit within-urban area variation over time and spatial variation in distance to conflict locations following the escalation of the war in 2022. At the national level, we document a strong correlation between official GDP and nighttime lights, supporting the validity of the proxy in the Ukrainian context. Our results reveal a pronounced spatial gradient in wartime economic disruption. Urban areas located closer to conflict events experienced significantly larger declines in nighttime light intensity after 2022, while economic losses attenuate sharply with distance and largely dissipate beyond approximately 50 kilometers. These findings highlight the highly localized nature of wartime economic damage and underscore the value of satellite data for measuring economic activity in settings characterized by data gaps, conflict, and institutional disruption. |
| Keywords: | Nighttime lights; Armed conflict; Economic activity; Ukraine; War |
| JEL: | O47 R11 F51 C23 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:572 |
| By: | Tomas Sestorad; Jan Vlcek; Karel Musil |
| Abstract: | This paper examines how alternative definitions of the output gap influence the dynamics and monetary policy prescriptions of New Keynesian DSGE models used in inflation-targeting regimes. Using the Czech economy as an example of a small open economy, we compare one exogenous and seven endogenous output-gap measures, including flexible equilibrium concepts, statistical filters, and structural approaches. The results show that endogenous identification is essential for ensuring internal consistency among business cycle fluctuations and other macroeconomic variables, while only structurally identified gaps fully exploit the advantages of the DSGE framework. Technology-augmented output emerges as the most operationally robust and conceptually coherent measure for real-side policy analysis. The findings further highlight that the policy implications of output-gap stabilization are determined by the chosen measure, which should align with the policymaker's preferences. Because these mechanisms are structural rather than country-specific, the conclusions extend to other small open economies with similar characteristics. |
| Keywords: | Business cycle, DSGE model, flexible equilibrium, HP filter, monetary policy, output gap, real marginal costs, technological growth |
| JEL: | D58 E32 F41 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/03 |
| By: | Adrian Domitrz (Narodowy Bank Polski); Olga Zajkowska (Institute of Economics, Polish Academy of Sciences; Narodowy Bank Polski) |
| Abstract: | The Labour Force Survey (LFS) (pol. Badanie Aktywności Ekonomicznej Ludności – BAEL) is a key labour market study used both for estimating the most important labour market indicators and for conducting in-depth analyses. The survey results provide unique, highly detailed information on, among other things, economic activity, employment, economic inactivity, and unemployment. The population to which the BAEL results are generalized is adjusted every 10 years based on census results. After each census, the Statistics Poland (GUS) revises historical data based on the new population structure, but only going back a few years, which causes problems with the comparability of results over time. At the same time, these data are characterized by numerous periods of disrupted comparability caused by changes in the survey methodology over the years. In particular, the new classification of the respondents’ status on the labour market introduced in 2021 and the modified definition of the reference population have led to a break in the continuity of time series. The aim of this paper is to present a proposed correction to historical LFS data that will enable the construction of comparable and methodologically consistent data covering a long time period since 1995. This procedure consists of two stages: (1) adjusting the weights used to generalize the study results, and (2) adjusting the labour market status classification, thus unifying it across the entire analyzed time period. This procedure, to the best of the authors' knowledge, allows for the most accurate reconciliation of population series and labour market status since 1995. This allows for the implementation of analyses and in-depth forecasts on the longest possible time series. The following sections of this work outline the subsequent stages of deriving the final form of the proposed Polish LFS (BAEL) time series. The underlying assumptions and statistical methods used to obtain the presented results are described in detail. The final section contains conclusions and implications for the analysis of developments in the Polish labour market. The procedure presented here can also be used in the context of other representative surveys, such as the national Household Budget Survey (BBGD) conducted by the Statistics Poland (GUS), as well as international surveys such as the Labour Force Survey (LFS). The adjusted Polish LFS (BAEL) time series are available in a separate Excel file, which allows other researchers to use the adjusted data in their analyses of the Polish labour market. |
| Keywords: | LFS, Polish LFS, BAEL, population, weights, imputation, data revision |
| JEL: | C18 C81 C83 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:nbp:nbpmis:386 |
| By: | Nikolova, Elena; Plopeanu, Aurelian |
| Abstract: | This paper investigates how the historical institutional legacies of the Habsburg and Ottoman empires affect present-day attitudes toward women and minorities in Romania. We conduct a thorough historical analysis which shows that the institutional setup in the Ottoman part of Romania was more favorable toward women and minorities compared to that in the Habsburg part. Using the 2016 round of the EBRD-World Bank Life in Transition Survey, we find that these differences in historical institutions have long-run impacts on attitudes today. While we find mixed support for our hypotheses when it comes to gender attitudes, consistent with our expectations, men and women in ex-Habsburg locations report that women have less decision-making power in the household, and are less tolerant towards people of different races, gay people, and Jews. The paper has important implications for advancing the debate on long-run imperial legacies by highlighting their persistent impact on women and minorities. |
| Keywords: | gender, diversity, Romania, persistence, empires |
| JEL: | N00 J16 P20 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1747 |
| By: | Zuzana Gric; Jan Janku; Simona Malovana |
| Abstract: | We show that divergences between Czech and euro-area policy rates reshape the currency composition of corporate lending. Using loan-level data from AnaCredit for 2019–2024, we document that a widening PRIBOR–EURIBOR spread triggers a sharp reallocation toward euro-denominated credit, concentrated in new loans. The effect is asymmetric: strong when the differential widens, but only partially reversible when it narrows. It is driven mainly by large, less-capitalised banks and by larger, lower-leverage firms, while exchange-rate movements play virtually no role. These findings imply that persistent positive differentials weaken domestic monetary transmission and increase foreign-currency exposures, underscoring the need for macroprudential attention in small open economies with rising euroisation. |
| Keywords: | AnaCredit, bank lending, corporate credit, credit channel, euroization, monetary policy |
| JEL: | E51 E52 E58 G21 G28 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/07 |
| By: | Volha Audzei; Michal Franta |
| Abstract: | The paper examines international spillovers of euro area (EA) monetary policy to the real economy of an advanced small open economy with a high degree of credit euroization and close trade links with the EA. We focus on Czechia, as it has a similar degree of trade and financial integration with the EA as the rest of the non-EA countries in the region. Based on firm-level data and high-frequency identified monetary policy shocks, we assess the channels of EA monetary policy spillovers. More precisely, we estimate the responses of investment by Czech firms to EA monetary policy shocks using panel local projections and compare the responses for various groups of firms. The results suggest the presence of the trade channel of spillover transmission. Some evidence is found for the balance sheet channel. The foreign currency borrowing cost channel is detected after 2014, suggesting that the high degree of credit euroization in Czechia has altered the transmission of spillovers of EA monetary policy. Importantly, the overall spillovers from the EA have weakened significantly since 2014. |
| Keywords: | Credit euroization, Investment of firms, Small open economy, Transmission channels |
| JEL: | C23 D22 E52 F41 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/05 |
| By: | Dang, Hai-Anh (World Bank); Do, Minh (University of Economics and Business, Vietnam National University, Hanoi) |
| Abstract: | While Vietnam has been remarkably successful in poverty reduction, the country is faced with various challenges ranging from uneven pockets of poverty, regional inequality, low labour productivity, and high informality rates, to a fast-ageing society. We offer an updated overview of the social protection system in Vietnam, including its design and function, scale and reach, and the impacts of some key programmes. Our results, based on recent literature review and new analysis using data from various international and national sources, could offer relevant inputs for policies to help address current challenges. |
| Keywords: | social protection, social insurance, social assistance, health, poverty, inequality, vulnerability, Vietnam |
| JEL: | H55 I30 J20 O10 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18588 |
| By: | Josef Simpartl |
| Abstract: | This article examines forms of direct monetary policy communication and their impact on inflation expectations and the public's perception of the central bank. To this end, an experiment was conducted in August 2024 with three groups of respondents representative of the Czech population, the first of which was exposed to a monetary policy statement, the second to a related Facebook post, and the third to no information. Respondents who were exposed to the above-mentioned texts significantly reduced their inflation expectations and the link between those inflation expectations and perceived current inflation. At the same time, their knowledge of the monetary policy of the Czech National Bank (CNB) improved somewhat. However, none of the groups of respondents changed their opinion on the CNB, with the exception of a slight improvement in the assessment of its communication in the case of the group exposed to the Facebook post. |
| Keywords: | Inflation expectations, central bank, communication, social media, survey |
| JEL: | C83 D84 E31 E58 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/04 |
| By: | Pignatti, Clemente, |
| Abstract: | Drawing on data from the Georgian Labour Force Survey (2021–2022), this paper provides a detailed statistical profile of informal employment in Georgia and discusses its key drivers. |
| Keywords: | informal employment, informal workers, income, working conditions |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ilo:ilowps:995691372702676 |
| By: | Aldashev, Alisher (Kazakh British Technical University); Danzer, Alexander (Catholic University of Eichstätt-Ingolstadt) |
| Abstract: | Ceremonies are central to social life, yet the pressure to conform to community spending norms traps households in a collectively suboptimal equilibrium, imposing severe financial burdens. Using nationally and regionally representative longitudinal data from Tajikistan and Kyrgyzstan, we document that ceremonial expenditures are sizeable, display striking income inelasticities, and are strongly shaped by local spending norms, making celebrations disproportionately burdensome for poorer households. We evaluate two distinct regulatory approaches through separate natural experiments: a top-down legal ban on lavish wedding celebrations in Tajikistan and a bottom-up, community-driven norm agreement in Kyrgyzstan- interventions with close analogues in Afghanistan, China, India, and Pakistan. Both yield reductions in ceremonial spending, with household savings larger under the bottom-up approach, but they operate through fundamentally different compliance mechanisms. The top-down reform hinges on external monitoring and credible sanctions, while the bottom-up intervention relies on social trust and norm internalization. These findings identify external enforcement and social trust as the key compliance mechanisms. |
| Keywords: | ceremonial spending, conspicuous consumption, compliance, monitoring, trust, anti-poverty policy |
| JEL: | D12 D04 H31 O17 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18585 |
| By: | De Gobbi, Maria Sabrina,; Kühn, Stefan,; Heins, Guido,; Malikova, Ziyodakhon, |
| Abstract: | This paper identifies existing labour market challenges associated with ageing in Europe and Central Asia. It presents a general overview and provides ideas to stimulate social dialogue. In 2024, there were 28 persons aged 65 years and above per 100 persons aged 15 to 64 years and this ratio is projected to rise to 43 by 2050. The proportion of older workers (55 years and above) will increase, while the prime-age workforce (25 to 54 years) will decline. This demographic transition is expected to result in a net loss of 10 million workers in the region by 2050. As pension systems increasingly have to rely on a diminishing pool of younger workers, sustaining current living standards will become more challenging. Productivity growth in Europe and Central Asia has been falling since 1991. New sources of productivity have to be unlocked if current standards of living are to be maintained. Increasing the labour force participation of inadequately represented groups, including women, persons with disabilities, the youth, migrants and refugees may only partially improve the situation. However, it would be a step forward in improving the outlook for the challenges that the region is experiencing. |
| Keywords: | labour force, ageing population, older workers, social dialogue |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ilo:ilowps:995649976202676 |
| By: | Mushtariy Boymatova (Central Bank of Uzbekistan) |
| Abstract: | This paper examines the interaction between nominal wage dynamics and consumer price inflation in Uzbekistan, with the aim of assessing the risk of wage-price spirals in an emerging market context. Using quarterly data covering the period from 2007 to 2025, the analysis investigates whether wage and price developments reflect self-reinforcing feedback mechanisms or primarily capture compensatory adjustments driven by external and institutional factors. The empirical framework combines cointegration analysis, conditional Granger causality tests, and a vector error correction model (VECM), complemented by impulse response functions to characterise the dynamic transmission of wage and price shocks. The results establish the presence of a stable long-run equilibrium between wages and prices, with adjustment operating exclusively through wages rather than prices. Granger causality tests reveal a clear unidirectional pattern: consumer prices drive nominal wages, while wages do not feed back into prices in either the short or long run. Impulse response analysis confirms that wage shocks generate only a moderate and gradual price response, whereas price shocks produce a persistent wage adjustment consistent with compensatory indexation. These findings do not support the existence of a self-sustaining wage-price spiral in Uzbekistan. Instead, wage dynamics appear to reflect institutionally driven responses to inflation, shaped by centralized public-sector wage setting, while exchange rate pass-through emerges as the dominant driver of price dynamics. |
| Keywords: | wage-price spirals; inflation; wages; Granger causality; pass-through; VECM |
| JEL: | E24 E31 E52 |
| Date: | 2026–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp13-2026 |