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on Transition Economics |
| By: | Jiri Gregor |
| Abstract: | This paper focuses on the calibration of borrower-based measures using a semi-structural modelling framework and defines two approaches to the setting of these measures. The first approach takes into account the magnitude of losses in the mortgage portfolio and the associated absorption potential of banks, while the second, preferred approach, considers both the benefits of regulation in terms of loss reduction and its costs manifested as foregone profits. This approach thus facilitates the optimization of the macroprudential strategy to minimize Type I error (no regulation) and Type II error (excessive regulation). The case of the Czech Republic serves as an illustrative example, demonstrating that borrower-based regulation appears unnecessary and costly during periods of low credit growth, specifically in the downward phase of the credit cycle. However, if any regulation is preferred with respect to other factors and circumstances that are not captured by the modelling framework, a purely loan-to-value regulation shows the best results in terms of cost-benefit analysis. |
| Keywords: | Borrower-based measures, macroprudential policy, mortgage lending, stress testing, systematic risk |
| JEL: | C63 E58 G21 G28 R31 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2024/2&r=tra |
| By: | Hugo Rojas-Romagosa |
| Abstract: | Russia’s war in Ukraine has disrupted the supply of natural gas for many European countries, triggering an energy crisis and affecting energy security. We simulate the medium-term effects of these trade disruptions and find that most European countries have limited GDP losses but those more dependent on Russian natural gas face moderate losses. European fossil fuel consumption and emissions are reduced and after accounting for the war impacts, achieving Europe’s emission targets becomes slightly less costly. In terms of energy security, the war eliminates European energy dependency from Russian imports, but most of the natural gas and oil imports will be substituted by other suppliers. We also find that constructing a new Russian pipeline to China does not provide significant macroeconomic benefits to either country. |
| Keywords: | Energy supply; energy security; trade disruptions; greenhouse gas emissions; computable general equilibrium |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/039&r=tra |
| By: | Bastian, Jens |
| Abstract: | Over the past decade, Turkey's defence industry has undergone rapid development and its products have repeatedly proved their military capability. The Bayraktar-TB2 drone - a product of the Turkish manufacturer Baykar - is exported to numerous countries. In Ukraine, it is being used extensively against the Russian army. In Nagorno-Karabakh, it turned out to be a game changer in favour of Azerbaijan in the conflict with Armenia. And it has left its mark on the battlefields of Syria as well as in northern Iraq and Libya. But the TB2 drone is only the most visible sign of what is a new era for Turkey's defence policy. The innovation ecosystem that has emerged in the Turkish military-industrial complex is intended to position the country as a 'teknonation'. For Turkey's NATO partners, this recalibration presents strategic challenges for further cooperation with Ankara. |
| Keywords: | Turkey's defence industry, Bayraktar-TB2 drone, NATO, Nagorno-Karabakh |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swpcom:284707&r=tra |
| By: | Deng, Kent; Du, Jane |
| Abstract: | It has been commonly believed that economic reforms in the post-Mao Era since 1980 have changed China from autarky to an export-oriented developmental path, accompanied by inward and cheap FDI with advanced foreign technology. This paper challenges this view with quantitative evidence and shows that China’s recent growth has depended heavily on a domestic source of capital coming from newly available household sayings, stemming from (1) state mandatory price control over food as a wage good on the one hand and (2) a fast-growing wage level due to arising labour productivity on the other. |
| Keywords: | developmental state; gradualism; saving-led growth; price overshoot; wage goods; economic transition |
| JEL: | O11 P21 P51 Q18 |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:122355&r=tra |
| By: | Zeynep Kantur (Baskent University) |
| Abstract: | A stranded asset refers to economic assets that lose their ability to contribute value within their own sector and in other sectors due to the decarbonization of production processes required to meet global climate targets. This process involves either idling or abandoning a portion of physical capital, which can harm the sector in which it is employed and propagate negative effects throughout the entire economy. This study examines the exposure of sectors in Latvia to the risk of physical capital stranding resulting from decarbonizing the economy. Using Input-Output Tables and capital stock data, we quantify the effects of stranded assets and find that the mining and quarrying sector has the highest external asset stranding multipliers. The sectors in Latvia most vulnerable to the impacts of global fossil stranding include land transportation and pipeline transport (H49), electricity, gas, steam, and air conditioning (D35), and agriculture (A01). |
| Keywords: | capital utilization, stranded assets, Input-Output Model, Ghosh multipliers |
| JEL: | C67 E22 L72 |
| Date: | 2024–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:dpaper:202401&r=tra |
| By: | Ludmila Fadejeva (Bank of Latvia); Janis Mauris (Bank of Latvia); Ieva Opmane (Bank of Latvia); Andris Fisenko (Bank of Latvia) |
| Abstract: | This paper presents results from the fourth wave of the Eurosystem Household Finance and Consumption Survey (HFCS) for Latvia conducted in 2020. The paper focuses on the net wealth components of the household balance sheet – real assets, financial assets and liabili- ties. The report includes three special boxes – on precautionary savings, on potential change in household balance sheet due to rising interest rates and expenditures, and on the effect of Covid-19 pandemic. A detailed description of the use of administrative data in the HFCS database construction is provided in the Appendix. |
| Keywords: | household finance and consumption survey, Latvia, assets, liabilities, net wealth, financial vulnerability, income, consumption |
| JEL: | D14 D31 E21 |
| Date: | 2023–07–27 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:dpaper:202301&r=tra |
| By: | Philipp Harms (Johannes Gutenberg University Mainz) |
| Abstract: | This is the manuscript of a keynote speech which I gave in October 2023 at a conference that celebrated 30 years of the Polish-German Academic Forum at the Warsaw School of Economics. The text reviews the evolution of globalization in the past decades, covering various dimensions of economic integration and devoting particular attention to the experiences of Poland and Germany. It then discusses the theoretical merits of free trade and international capital mobility, but also its distributional consequences, and eventually summarizes the empirical evidence on the effects of economic globalization. Finally, it sheds light on the recent anti-globalization backlash and analyzes the forces and motivations that determine individuals’ attitudes. The text concludes with the assessment that, if globalization is to persist, it has to be perceived as more than a purely economic project. |
| Date: | 2024–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:2406&r=tra |
| By: | Mr. Serhan Cevik; Alice Fan; Sadhna Naik |
| Abstract: | Using a large panel of firm-level data, this paper provides an analysis of how inflation shocks in the Baltics between 1997 and 2021 affected total factor productivity (TFP), gross profitability, and net fixed investment in nonfinancial sectors. First, we find that inflation and inflation volatility had mixed effects on TFP growth, profitability and net fixed investment in the first year as well as over the medium term, albeit at a dissipating rate. Second, focusing on subsamples, we find that inflation shocks had differential effects on large versus small firms. Third, we explore sectoral heterogeneity in how firms responded to inflation shocks and observe significant variation across tradable and non-tradable sectors. Finally, estimates from a state-dependent model suggest that firms’ response to inflation shocks varied with the state of the economy. The results suggest that nonfinancial firms in the Baltics have been agile in adjusting to inflation shocks, possibly by either transferring higher production costs to consumers or substituting inputs. Given the differences in the level and nature of the recent inflation shock and the sample period on which our analysis is based, empirical findings presented in this paper might not necessarily apply to the latest bout of inflation in the Baltics. |
| Keywords: | Inflation; firm performance; productivity; profitability; fixed investment; Baltics; Estonia; Latvia; Lithuania |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/043&r=tra |