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on Transition Economics |
| By: | Lazar, Corina Georgiana |
| Abstract: | The evolution and development of institutions mean several changes with different intensities; either they adapt to the changes in the environment, either they exploit certain opportunities. In order to survive to the accelerated pace of change specific for the modern society, the public institutions should find new forms of organization, more flexible, aiming to respond to the new priorities or to improve their activity. Romania is facing a process of change, where all the economic, social, political, civic elements have recorded a new dynamics, attempting to adapt to the current conditions. The process of change in public administration gained new dimensions in the last years. Romania and Bulgaria joined the EU on January 1, 2007. During the accession process and also after integration, public institutions in Romanian and Bulgaria suffered a series of changes. The paper aims to analyze, the efficiency and effectiveness of organizational change of public institutions in the context of public administration reform, in general, and in particular the changes determined by Romania and Bulgaria integration in the European Union. Analyze of efficiency of this change is important because the measures taken by public institutions in Romania and Bulgaria are similar to those taken in the process of Europeanization of ministries across the EU. |
| Keywords: | public institution; organizational change; reform; efficiency |
| Date: | 2011–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:nsu:apasro:413&r=tra |
| By: | Andrei Vernikov |
| Abstract: | State-controlled banks are currently at the core of financial intermediation in Russia. This paper aims to assess the magnitude of government banking, and to reveal some of its special features and arrangements. We distinguish between directly and indirectly state-controlled banks and construct a set of bank-level statistical data covering the period between 2000 and 2011. By January 2011 the market share of state-controlled banks reached almost 54 percent of all bank assets, putting Russia in the same league with China and India and widening the gap from typical European emerging markets. We show that direct state ownership is gradually substituted by indirect ownership and control. It tends to be organized in corporate pyramids that dilute public property, take control away from government bodies, and underpin managerial opportunism. Statecontrolled banks blur the borderline between commercial banking and development banking. Dominance of public banks has a bearing on empirical studies whose results might suggest state-owned banks’ greater (or lesser) efficiency or competitiveness compared to other forms of ownership. We tend to interpret such results as influenced by the choice of indicator, period of observations, sample selection, etc., in the absence of an equal playing field for all groups of players. We suggest that the government’s planned retreat from the banking sector will involve non-core assets mainly, whereas control over core institutions will just become more subtle. |
| Keywords: | Russia, banks, government, state-owned banks, public sector |
| JEL: | G21 G28 P31 P52 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:13-11&r=tra |
| By: | Zhang, Zhichao (BOFIT); Shi, Nan (BOFIT); Zhang, Xiaoli (BOFIT) |
| Abstract: | We build an optimising framework to analyse a class of economies that adopt an ECU-type basket currency while in transition to increased flexibility of the exchange rate regime. Instead of conventional basket pegging, such an economy uses an ECU-type currency index as a benchmark for monitoring and assessing exchange rate movements. This provides an anchoring device for the nations exchange rate regime and allows the home currencys exchange rate to fluctuate. Under the assumption that the central bank is chiefly interested in maintaining stability, the optimal structure of the basket currency is based on its contribution to minimizing the volatility of the countrys external account. A currency invariance index is applied to capture the effect of the countrys exit from exclusive linkage with the US dollar. The approach is illustrated by Chinese exchange rate policy. We find it advisable and viable for China to form a basket currency with a diversified portfolio of currencies. While the portfolios weighting scheme could favour the dollar, euro and Japanese yen, we show that the composition of the basket is open to a wide range of possibilities. Moreover, contrary to general fears, there is considerable potential for China to engage in currency diversification, which will not necessarily affect the dollars position. |
| Keywords: | basket currency; currency diversification; China |
| JEL: | E58 F31 P45 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_019&r=tra |
| By: | Mau, Vladimir (BOFIT) |
| Abstract: | This paper examines the role of institutions in economic growth and the role of the institutions created by the Russian state in particular. The author stresses the finding that growth-supporting institutions vary according to the level of economic development in a country. In a post-industrial society, that Russia aspires to be, further economic development requires promotion of institutions securing e.g. property rights and economic freedom. Finally, based on these observations, the three development scenarios frequently discussed in the current Russian economic policy debates are analysed. |
| Keywords: | modernisation; role of institutions; economic development; Russia |
| JEL: | O10 O20 O30 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_023&r=tra |
| By: | He, Dong (BOFIT); Wang, Honglin (BOFIT) |
| Abstract: | China has a dual-track interest-rate system: bank deposit and lending rates are regulated while money and bond rates are market-determined. The central bank also imposes an indicative target, which may not be binding at all times, for total credit in the banking system. We develop and calibrate a theoretical model to illustrate the conduct of monetary policy within the framework of dual-track interest rates and a juxtaposition of price- and quantity-based policy instruments. We model the transmission of monetary policy instruments to market interest rates, which, together with the quantitative credit target in the banking system, ultimately are the means by which monetary policy affects the real economy. The model shows that market interest rates are most sensitive to changes in the benchmark deposit interest rates, significantly responsive to changes in the reserve requirements, but not particularly reactive to open market operations. These theoretical results are verified and supported by both linear and GARCH models using daily money and bond market data. Overall, the findings of this study help us to understand why the central bank conducts monetary policy in China the way it does, using a combination of price and quantitative instruments with differing degrees of potency in terms of their influence on the cost of credit. |
| Keywords: | monetary policy; People’s Bank of China; dual-track interest rates; interest rate liberalization |
| JEL: | C25 C32 E52 E58 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_021&r=tra |
| By: | Beck, T.H.L.; Brown, M. (Tilburg University, Center for Economic Research) |
| Abstract: | This paper uses survey data for 60,000 households from 29 transition economies in 2006 and 2010 to explore how the use of banking services is related to household characteristics, as well as to bank ownership, deposit insurance and creditor protection. At the household level we find that the holding of a bank account, a bank card, or a mortgage increases with income and education in most countries and find evidence for an urban-rural gap. The use of banking services is also related to the religion and social integration of a household as well as the gender of the household head. Using the within-country variation between 2006 and 2010, we find that the privatization of state-owned banks and an increase in market share of foreign banks are associated with a stronger use of banking services. Foreign bank ownership is also associated with a higher use of bank services among highincome households and households with formal employment. State ownership, by contrast is hardly associated with more outreach to poorer households. More generous deposit insurance and stronger creditor rights also foster the use of banking services among the urban, rich, better educated and formally employed. |
| Keywords: | Access to finance;Household finance;Bank-ownership;Deposit insurance;Creditor protection. |
| JEL: | G2 G18 O16 P34 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011089&r=tra |
| By: | Frait, Jan; Gersl, Adam; Seidler, Jakub |
| Abstract: | The Czech Republic had experienced a credit boom similar to those in other converging economies in the pre-crisis years. Nevertheless, the consequences of this credit boom were limited as was the impact of the global crisis on domestic financial institutions. This paper describes the developments in the Czech banking sector and explains how the tough macroeconomic environment in the Czech Republic acted as a strong tool of macroprudential policy. It concludes that although it is difficult to tame credit booms in small converging economies, a concerted set of microprudential and macroprudential measures, including monetary and fiscal ones, may ensure some success. |
| Keywords: | Banks&Banking Reform,Debt Markets,Currencies and Exchange Rates,Access to Finance,Emerging Markets |
| Date: | 2011–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5771&r=tra |
| By: | Chow, Gregory C (BOFIT); Liu, Changjiang (BOFIT); Niu, Linlin (BOFIT) |
| Abstract: | We estimate a time-varying regression model to study the relationship between returns in the Shanghai and New York stock markets, with possible inclusion of lagged returns. The parameters of the regressions reveal that the effect of the current stock return for New York on that for Shanghai steadily increases after the 1997 Asian financial crisis and turns significantly and persistently positive after 2002, when China entered WTO. The effect of the current return for Shanghai on New York also becomes significantly positive and increasing after 2002. The upward trend has been interrupted during the recent global financial crisis, but reaches the level of about 0.4 to 0.5 in 2010 for both markets. Our results show that China’s stock market has become more and more integrated into the world market in the past twenty years, with interruptions occurring during the recent global economic downturn. |
| Keywords: | China; globalization; rate of return; stock markets; time-varying parameter regression |
| JEL: | C29 C50 G14 P43 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_016&r=tra |
| By: | Robert Price; Andreas Wörgötter |
| Abstract: | Estonia has already experienced many benefits of increasing international integration, most obviously in significant convergence. From the Russian crisis in 1998 to the great recession in 2009 Estonia gained an impressive 20% in GDP per capita relative to the EU27 average in PPPs. Like the other Baltic economies, however, a considerable part of earlier convergence gains was lost in the crisis, the impact of which was aggravated by the collapse of world trade. While this was also true for Ireland, central European countries in the process of catching up, like Czech Republic, Poland and Slovakia, have been less affected by the crisis and have been able to maintain most of their convergence gains. Moreover, prior to the recession Estonia’s gap in income and productivity levels compared with the EU average was still around 30% and as the country emerges from recession it faces major policy challenges to regain its pre-crisis rate of growth potential. A greater focus on closing the productivity gap in the manufacturing-for-export sector compared with other transition countries would serve as a useful and challenging benchmark in order to get more out of globalisation.<P>Estonie : Tirer le meilleur parti de la mondialisation<BR>L'Estonie a déjà tiré grand profit du renforcement de son intégration internationale, et notamment des résultats probants obtenus en matière de convergence. Entre la crise russe de 1998 et la profonde récession de 2009, le pays a amélioré de quelque 20% - chiffre impressionnant - sa position relative, en PPA, par rapport au PIB moyen par habitant de l'UE27. Mais comme dans les autres pays baltes, une grande part des gains antérieurs liés à la convergence a fondu avec la crise, elle-même aggravée par l'effondrement du commerce mondial. Si l'Irlande a connu le même sort, des pays d'Europe centrale en plein rattrapage tels que la Pologne, la République tchèque et la République slovaque ont été moins touchés par la crise et ont pu préserver la majeure partie de leurs gains de convergence. Toutefois, l'écart entre les niveaux moyens de revenu et de productivité communautaires et estoniens avoisinait encore 30 % avant la récession ; au moment où l'Estonie sort de la crise, les pouvoirs publics se heurtent donc à des défis de taille pour maintenir le taux de croissance potentielle enregistré avant la récession. Dans la perspective de mieux exploiter la mondialisation, l'accent mis par d'autres pays en transition sur la résorption du déficit de productivité dans le secteur manufacturier exportateur pourra servir de point de repère intéressant. |
| Keywords: | globalisation, productivity, competition, education, innovation, convergence, FDI, Estonia, export performance, enterprise, periphery, productivité, entreprise, innovation, éducation, convergence, concurrence, mondialisation, Estonie, performance à l'exportation, périphérie, IDE |
| JEL: | F14 F23 |
| Date: | 2011–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:876-en&r=tra |
| By: | Zhang, Yanbing (BOFIT); Hua, Xiuping (BOFIT); Zhao, Liang (BOFIT) |
| Abstract: | How do monetary policy variables affect housing prices? In this paper we apply a non-linear modelling approach, the Nonlinear Auto Regressive Moving Average with eXogenous inputs (NAR-MAX), to investigate determinants of housing prices in China over the period 1999:01 to 2010:06. The NARMAX approach has an advantage over prevailing methods in that it automatically selects linear and non-linear forms of variables and the numbers of corresponding lags according to statistical properties. Both linear and non-linear estimation results identify a number of key monetary and price variables, including most notably mortgage rate, producer price, broad money supply and real effective exchange rate. Meanwhile, some key real economic variables such as income are not independently significant. Our findings should be helpful in understanding the formation of housing prices in China and will provide some valuable insights on how to use monetary policies to manage asset prices. |
| Keywords: | housing prices; monetary policy; NARMAX; China |
| JEL: | C32 C67 E47 E52 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_017&r=tra |
| By: | Wang, Hua; Shi, Yuyan; Kim, Yoonhee; Kamata, Takuya |
| Abstract: | While polluted surface water is encountered across most of China, few economic valuation studies have been conducted on water quality changes. Limited information about the economic values associated with those potential water quality improvements or deteriorations is a disadvantage for making proper choices in water pollution control and clean-up activities. This paper reports an economic valuation study conducted in Yunnan, China, which aims to estimate the total value of a real investment project to improve the water quality of Lake Puzhehei by one grade level. Located in Qiubei County, which is far from large cities, the lake has been experiencing fast water quality deterioration in the past years. A conservative estimation strategy shows that on average a household located in Qiubei County is willing to pay about 30 yuan per month continuously for 5 years for water quality improvement, equivalent roughly to 3 percent of household income. The elasticity of willingness-to-pay with respect to income is estimated to be 0.21. The economic rate of return of the proposed project is estimated to be 18 percent, indicating a strong demand and high efficiency of investment in water quality improvement in China. This study also demonstrates that previous knowledge about water quality changes and the project may have a significant positive impact on people's valuation, and that the interviewer effect on valuation can be negative. |
| Keywords: | Water and Industry,Environmental Economics&Policies,Water Supply and Sanitation Governance and Institutions,Town Water Supply and Sanitation,Water Supply and Systems |
| Date: | 2011–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5766&r=tra |
| By: | Carausan, Mihaela |
| Abstract: | The European treaties allowed the European Union to be seen more as a political and economic area and less as a space with a common culture and values. However, in order to become a member state of this community, every country should respect such values as democracy, the rule of law, individual freedom and the market economy principles. Now, according to article 2 of the Treaty of European Union, the EU values are established and they are granted the binding force of the law. Therefore, ‘the Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States ...'. That is why values are at the heart of the European project. Croatia and the fYRoM have a special status - candidate countries of the EU, but in order to become member states they have to reach the same values as the EU27. In our study we will find out which the European values are and we will try to determine how the people from the Balkan countries - Croatia and fYRoM - are aware them. We will continue to see, based on the Eurobarometers results, what the EU represents for them, in terms of values. For this reason, we will put together the items obtained in the last years and we will see in the end if the Western Balkan citizens are ready to become EU citizens. |
| Keywords: | the future of Western Balkans; development standards; citizen's perspe ctive |
| Date: | 2011–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:nsu:apasro:412&r=tra |
| By: | Deryugina, Elena B. (BOFIT); Ponomarenko, Alexey A. (BOFIT) |
| Abstract: | We examine the drivers behind loan supply fluctuations in Russia using Bayesian vector autoregressive model with sign restrictions on impulse response functions. We identify two types of structural innovations: loan supply shock and monetary stance shock. We find that contractionary shocks of both types contributed significantly and in the roughly equal measure to the decrease of bank lending after the Lehman Brothers collapse. |
| Keywords: | loan supply; Bayesian VAR; sign restrictions; financial crisis; Russia |
| JEL: | C11 C32 E51 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_020&r=tra |
| By: | Anja Vatterrott (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | In the twenty years since the reunification of Germany, we have seen a convergence of total fertility rates in the eastern and western parts of the country, but differences remain in the timing, number and spacing of births. Our aim in this paper is to better understand the persistence of these differences by studying the fertility behaviour of migrants from the East to the West. Millions of people have followed this migration path in recent decades, mainly in response to the unfavourable economic conditions in the East. We use data from the German Socio-Economic Panel of the years 1990 to 2009. Using event history modelling, we analyse whether the first and second birth behaviours of female East-West German migrants resemble the patterns of one of the non-mobile populations in the eastern or western parts of the country. We find that migrants’ first and second birth risks lie in between those of non-mobile eastern and western Germans. Socio-economic characteristics, value orientations and partners’ characteristics are employed as explanatory variables, but do not fully account for the differences between the three groups. We investigate whether the special behavioural patterns of migrants can be explained by the fact that they are a selected group, but do not find support for this hypothesis. |
| Keywords: | Germany, fertility, internal migration |
| JEL: | J1 Z0 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2011-013&r=tra |
| By: | Wang , Hua; He, Jie; Kim, Yoonhee; Kamata, Takuya |
| Abstract: | Municipal solid waste management continues to be a major challenge for local governments in both urban and rural areas across the world, and one of the key issues is their financial constraints. Recently an economic analysis was conducted in Eryuan, a poor county located in Yunnan Province of China, where willingness to pay for an improved solid waste collection and treatment service was estimated and compared with the project cost. This study finds that the mean willingness to pay is about 1 percent of household income and the total willingness to pay can basically cover the total cost of the project. The analysis also shows that the poorest households in Eryuan are not only willing to pay more than the rich households in terms of income percentage in general, but also are willing to pay no less than the rich in absolute terms where no solid waste services are available; the poorest households have stronger demand for public solid waste management services while the rich have the capability to take private measures when public services are not available. |
| Keywords: | Urban Solid Waste Management,Environmental Economics&Policies,Waste Disposal&Utilization,Energy and Environment,Environment and Energy Efficiency |
| Date: | 2011–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5767&r=tra |
| By: | Mikolaj Szoltysek (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | The view of Eastern Europe as a locus of complex family organisation and familistic societal values has reached the status of general dogma in Western social sciences and demography. By offering an overview of almost entirely unknown scholarly achievements of Eastern Europeanists, this essay represents an attempt to persuade scholars to accept less stereotypical images of families from outside ‘Western Europe’. Well into the late 1990s, Eastern European literature on family forms remained screened off from the main current of European thought. Thus, not surprisingly, tracing the lineage of work from east of the ostensible Hajnal Line reveals the sharp differences between the findings of Eastern European researchers and the dominant assumptions of Western science. These marginalised discourses need to be integrated into mainstream research and discussion, so that scholars can better understand marriage, family, household and community patterns in Europe and elsewhere. The diversity of family forms and the rhythms of their development in historical Eastern Europe revealed in this literature also provide us with an excellent opportunity to free ourselves from a simplistic view of the continent’s familial history, and particularly from the one implied by the notion of a ‘dividing line’. |
| Keywords: | family forms, historical demography, household composition, marriage |
| JEL: | J1 Z0 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2011-014&r=tra |
| By: | Margit Molnár; Dániel Holló |
| Abstract: | Apparent characteristics of the Hungarian banking market such as large profits and high margins suggest weak competitive pressures. Weak competition in turn, may reduce efficiency in a lack of pressures to converge to marginal cost and to stimulate managerial efforts to reduce X-inefficiency. Such conditions call for a gauging of efficiency of banks to better assess what is needed for a competitive and well-functioning banking system. Although the level of efficiency is only an indirect measure of competitive pressures, it may be superior to other ones available for international comparison. Concentration ratios are only a very imperfect measure, moreover, the Hungarian banking market structure with one larger and several somewhat smaller banks of similar sizes would suggest an even playing field. In fact, different market segments show very different degrees of concentration and several conditions for a competitive market are missing. Moreover, interest margins, particularly on mortgage loans are high in international comparison and the downward stickiness and lagged reaction of retail lending rates to money market rates also suggests weak competitive pressures. In a lack of readily available data to obtain mark-ups, which would be a better measure of competition than concentration measures or interest margins, this paper estimates cost efficiency scores that allow for grasping the size of competitive pressures indirectly. Cost efficiency is estimated in the EU 25 context given that cross-border competition can be important in some market segments and that cross-border lending is significant in Hungary. The paper uses the stochastic frontier analysis with a Fourier-flexible specification of the cost function and a time-varying decay model. A specific feature of the methodology is that bank lending is corrected for non-performing loans. This way, the categorising of banks that boost their loan portfolio by excessive risk-taking - i.e. produce large amounts of bad loans - as efficient can be partly avoided. The results show that in Hungary, bank efficiency is not particularly high in either European or regional comparison. Competition could be the major push for efficiency gains and the paper lists a series of measures that could be adopted to boost competitive pressures.<p> This paper relates to the 2010 Economic Survey of Hungary.<P>Les banques hongroises sont-elles efficientes ?<BR>Les caractéristiques apparentes du marché bancaire hongrois, comme l'importance des bénéfices et des marges financières, évoquent un manque de pressions concurrentielles. Cette faiblesse de la concurrence peut elle-même réduire l'efficience de ce marché, faute de pressions incitant à converger vers le coût marginal et à stimuler les efforts des dirigeants pour réduire l?inefficience-X. Cette situation invite à une évaluation de l'efficience des banques afin de mieux mesurer les conditions nécessaires à l?existence d'un système bancaire concurrentiel et fonctionnant bien. Bien que le niveau de l'efficience ne soit qu'un indicateur indirect des pressions concurrentielles, il présente peut-être plus d?intérêt que d'autres mesures disponibles pour effectuer des comparaisons internationales. Les ratios de concentration ne sont en effet qu'un instrument très imparfait ; de plus la structure du marché bancaire hongrois, marquée par la présence d'une plus grande banque et de plusieurs autres établissements plus petits de tailles similaires, semble témoigner de l'existence de conditions de concurrence équitables. En fait, les différents segments du marché présentent des concentrations très variées et il manque plusieurs conditions pour pouvoir parler d'un marché concurrentiel. De plus, les marges financières, notamment sur les prêts hypothécaires, sont élevées par rapport aux autres pays et la viscosité à la baisse et les réactions tardives des taux débiteurs des banques de réseau à l'évolution des taux du marché monétaire indiquent également un manque de pressions concurrentielles. En l'absence de données immédiatement disponibles permettant de calculer les marges bénéficiaires, qui constituerait un meilleur indicateur de la concurrence que les mesures de concentration ou les marges financières, cet article procède à une estimation des scores d'efficience coût qui permet de mieux saisir de façon indirecte l'importance des pressions concurrentielles. L'efficience coût est estimée dans le contexte de l'UE-25 car la concurrence transnationale peut être importante dans certains segments du marché et les opérations transnationales de crédit sont considérables en Hongrie. Cet article fait appel à l?analyse de frontière stochastique avec une forme flexible de Fourier de la fonction de coût et un modèle d?obsolescence variable en fonction du temps. Les caractéristiques spécifiques de la méthodologie utilisée tiennent au fait que le crédit bancaire est corrigé des prêts non productifs. De cette façon, on évitera en partie de considérer comme des établissements efficients les banques qui gonflent leur portefeuille de prêts en prenant des risques excessifs – et génèrent donc des volumes considérables de créances irrécouvrables. Les résultats montrent qu'en Hongrie, l'efficience des banques n'est pas particulièrement élevée au regard de la situation européenne ou régionale. La concurrence pourrait être un facteur majeur d'efficience et cet article énumère une série de mesures de nature à stimuler les pressions concurrentielles.<p> Ce document se rapporte à l?Étude économique de l’OCDE de la Hongrie. |
| Keywords: | Hungary, stochastic frontier analysis, banking efficiency, banking competition, Fourier-flexible form, Hongrie, analyse de frontière stochastique, efficience des banques, concurrence des banques, forme flexible de Fourier |
| JEL: | G21 |
| Date: | 2011–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:848-en&r=tra |
| By: | ´He, Xinhua (BOFIT); Qin, Duo (BOFIT); Liu, Yimeng (BOFIT) |
| Abstract: | The familiar claim of Chinese currency manipulation is generally asserted without reference to empirical evidence. To investigate the legitimacy of the claim, we ask if the undervalued misalignment found in the real effective exchange rate (REER) of the Chinese renminbi (RMB) over the past decade has any recent historical precedents. Four cases are examined: the Japanese yen, the Deutsche mark, the Singapore dollar and the Taiwan dollar. Panel-based misalignment estimates of the REER of the four currencies are obtained using quarterly data from the late 1970s to the early 2000s. Our estimates suggest that there are precedents to the recent misalignment of the RMB in terms of magnitude, duration or breadth of currency coverage, and that a net build-up in foreign asset does not necessarily result in currency misalignment. In addition to finding little empirical justification for the claim of Chinese currency manipulation, we note that REER misalignment runs a risk of propagating inflation in the home economy. |
| Keywords: | REER misalignment; RMB; yen; D-mark; Singapore dollar; Taiwan dollar |
| JEL: | C23 F31 F41 O57 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2011_022&r=tra |
| By: | Jimborean, R. |
| Abstract: | This paper aims to complete our understanding of the relationship between changes in nominal effective exchange rates and prices in the new EU member states. We investigate the exchange rate pass-through to import, producer and consumer prices for ten Central and Eastern European countries with quarterly data from January 1996 to June 2010. In a first step, the pass-through estimates are derived from a dynamic panel data model, through the generalized method of moments. A statistically significant exchange rate pass-through to import prices is found, while no statistically significant exchange rate pass-through is estimated to consumer and producer prices. We further investigate whether exchange-rate pass-through estimates have declined in response to a change in inflation environment and find evidence of such decline only for import prices, both in the short run and the long run. In a second step, we proceed to an individual analysis, country by country, and find support for an increased heterogeneity in the exchange rate pass-through estimates. We equally test for the stability of the estimated. |
| Keywords: | inflation and prices, exchange rate pass-through, GMM, international topics. |
| JEL: | C33 E31 E42 E52 F31 O52 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:341&r=tra |
| By: | Zaman, Gheorghe; Georgescu, George |
| Abstract: | Despite the governments took rescue and/or stimulus packages, signs of recovery occurring in 2009 and 2010, the global growth sustainability seems uncertain. Romania was hit hard by the crisis, suffering a severe contraction of the economy, estimated at 7.1 percent in 2009. The worsening of the external and internal financial framework of Romania and the danger of a currency market crisis urged the need for a financing agreement with IMF. The study shows that an excessive burden of external debt compared with financing resources needed to comply with the external payments obligations would maintain Romania on the brink of default risk. Collateral risks associated with unfavorable developments of Eurozone and also with pressures coming from a non-restructured public debt could make the default situation even unavoidable. |
| Keywords: | financial crisis; global recession; anti-crisis measures; public debt; debt sustainability; sovereign risk |
| JEL: | C10 G15 E44 H68 H63 E47 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32924&r=tra |
| By: | Andrzej Torój (Ministry of Finance, Poland); Joanna Osińska (Ministry of Finance in Poland) |
| Abstract: | We investigate the determinants of support for the euro adoption in Poland in 2009 and 2010. Using two unique survey datasets, collected in December 2009 and June 2010, we estimate ordered and unordered logit models explaining the respondents' attitude to the introduction of the common currency. Whereas the public support has generally declined over this period, probably against the background of sovereign debt crises in the euro area, this decline was concentrated along some dimensions. We find that the declared level of information about the euro is a key driver of this support, both in 2009 and -- even more so -- in 2010, as well-informed respondents tend to be significantly more supportive of the common currency than badly-informed ones. We also find some evidence that political views influence the attitude towards the euro, but they are by no means its main determinant. During the crisis, the conviction of euro being a “strong, stable currency” has faded; instead, a negative attitude started to result from low income, high age and low economic knowledge. Surprisingly, in 2010 a more negative attitude was represented by students, white-collar workers and big city residents. All in all, the public perception of the euro does not seem to be fixed, but evolves with economic and political developments, so that new concerns appear. |
| Keywords: | EMU, attitudes towards the euro, public opinion, ordered logit, unordered logit |
| JEL: | C25 F33 |
| Date: | 2011–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:fpo:wpaper:9&r=tra |
| By: | Kraft, Evan; Galac, Tomislav |
| Abstract: | Croatia employed macroprudential measures to manage credit growth and capital inflows during the boom years of the 2000s, including reserve requirements on loan growth, a marginal reserve requirement on increases in foreign liabilities, foreign exchange liquidity minima, and elevated capital adequacy ratios. Although quantitative analysis is complicated by substantial overlaps among measures, the econometric results in this paper suggest that the measures were most effective in requiring banks to hold high liquidity and capital buffers, and less effective in slowing credit growth and capital inflows. Larger buffers seem to have helped Croatian banks weather the financial crisis, making the adjustments to capital and liquidity during the crisis smaller. |
| Keywords: | Banks&Banking Reform,Debt Markets,Access to Finance,Emerging Markets,Bankruptcy and Resolution of Financial Distress |
| Date: | 2011–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5772&r=tra |