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on Transition Economics |
| By: | Lehmann, Hartmut (University of Bologna) |
| Abstract: | Since the beginning of transition in 1990 from a centrally planned to a market oriented economy, the performance of Poland’s economy has been outstanding if we take GDP growth as our measure. It is not specific reforms that can explain this performance but the radical (“big bang”) reforms at the beginning of transition in conjunction with persistent efforts during the two decades by all governments to keep on a reform path, no matter what their political orientation. Reforming a centrally planned economy that has very serious macroeconomic disequilibria requires reforms that can be done immediately but also structural or systemic reforms that require years to implement. Both types of reforms will be discussed. In a democratic context reforms can only be undertaken in a sustained way if a majority of voters favours such reform efforts. Even when reform-friendly governments were voted out of office, the new governments in Poland never reversed reforms undertaken by the previous government. This continuous reform stance over two decades is the main cause of the Polish growth miracle. The reasons for the ability of Polish policy makers to pursue economic and administrative reforms in spite of short-run costs to large sections of society will be discussed extensively. |
| Keywords: | policy making, transition economies, political economy of reform, Poland |
| JEL: | D78 J40 P20 P26 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp40&r=tra |
| By: | Kahanec, Martin (Central European University and IZA) |
| Abstract: | The 2004 and 2007 enlargements of the EU extended the freedom of movement to workers from the twelve new member states mainly from Central Eastern Europe. This study summarizes and comparatively evaluates what we know about mobility in an enlarged Europe to date. The pre-enlargement fears of free labor mobility proved to be unjustified. No significant detrimental effects on the receiving countries’ labor markets have been documented, nor has there been any discernible welfare shopping. Rather, there appear to have been positive effects on EU’s productivity. The sending countries face some risks of losing their young and skilled labor force, but free labor mobility has relieved them of some redundant labor and the associated fiscal burden. They have also profited from remittances. Of key importance for the sending countries is to reap the benefits from brain gain and brain circulation in an enlarged EU. For the migrants the benefits in terms of better career prospects have with little doubt exceeded any pecuniary and non-pecuniary costs of migration. In conclusion, the freedom of movement in the EU provides for a triple-win situation for the receiving and sending countries as well as for migrants themselves, provided the risks are contained and efficient brain circulation is achieved. |
| Keywords: | EU labor markets, migration, EU enlargement, labor mobility, free movement of workers, transitional arrangements, new member states, European Union |
| JEL: | F22 J61 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6485&r=tra |
| By: | Clarke, George R.G.; Cull, Robert; Kisunko, Gregory |
| Abstract: | Two data sets are used to study how country and firm characteristics affected firms'financial constraints and their likelihood of survival during the early phase of the recent global financial crisis in Eastern Europe and Central Asia, a region that was especially hard hit. The first data source provides information on the reported severity of financial constraints for 360 firms from 23 countries in 2002, 2005, and 2008. By following the same firms over time, the study summarizes both the gradual easing of financial constraints from 2002 to 2005 and their tightening during the crisis. Key findings are that financial constraints during the crisis were less severe in countries with well-established foreign banks (entered prior to year 2000), and that changes in the severity of financial constraints were more pronounced for large firms than others during the crisis (although large firms continued to have less severe constraints on average). The second data source provides information on whether firms remained in operation in 2009 in six countries in Eastern Europe and Central Asia. Controlling for other relevant characteristics, firms were more likely to survive the crisis if they had access to external credit. |
| Keywords: | Banks&Banking Reform,Access to Finance,Debt Markets,Microfinance,Bankruptcy and Resolution of Financial Distress |
| Date: | 2012–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6050&r=tra |
| By: | Li, Yuheng (China Economic Research Center) |
| Abstract: | This paper investigates the spatial-temporal disparity evident in rural household incomes at the provincial level in China in the period 1978-2007. The research is introduced through a framework comprising the transitional processes of decentralization, marketization, urbanization, and globalization. The research uses Moran’s I index and the spatial regression model. Research results show a clear spatial-temporal disparity in rural household incomes in China in the post-reform era, whereby the eastern provinces possess higher rural household incomes in comparison to the lower rural household incomes of the inland provinces. This disparity is attributed to the joint influence of processes of marketization, urbanization, and globalization upon household incomes derived from the non-agricultural industries. Decentralization proves to be non-significant in explaining the disparity in rural household incomes across China, as a result of the agricultural income generated from the limited household land allocated to each rural household. |
| Keywords: | Rural household income; spatial-temporal; Moran’s; transitional process; China |
| JEL: | N95 O11 R11 R58 |
| Date: | 2012–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hacerc:2012-021&r=tra |
| By: | Juan Carlos Cuestas (Department of Economics, The University of Sheffield) |
| Abstract: | This paper analyses the sustainability of the current accounts of a group of Central and Eastern European countries. Given the link between national savings (public and private) and investment, current account may yield stabilities in the former fundamental macroeconomic variables. Hence, this analysis is of paramount importance given the 2008-2011 debt crises faced by many European economies, and the addition of new EU countries to the EMU. By means of unit root tests and fractional integration it shows that, in general, the ratio of current account to gross domestic product is a stationary and mean reverting process, although in some cases shocks tend to have long lasting effects, implying that there is no evidence of a potential debt default in this group of countries. |
| Keywords: | unit roots; fractional integration; current account; EU |
| JEL: | C32 E24 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2012011&r=tra |
| By: | Alexander Jung (European Central Bank); Gergely Kiss (Fitch Ratings) |
| Abstract: | The aim of this paper is to study preference heterogeneity in monetary policy committees of inflation-targeting (IT) countries in Central and Eastern Europe (CEE) during the period 2005–2010. It employs (individual) voting records of the Monetary Council of the Magyar Nemzeti Bank (the central bank of Hungary) and of the Monetary Policy Council of the National Bank of Poland. Preference heterogeneity in committees is not directly observable. Therefore, we pursue an indirect measurement and conduct an econometric analysis based on (pooled) Taylor-type reaction functions estimated using real-time information on economic and financial indicators and voting records. Recent evidence for the monetary policy committees (MPCs) of advanced economies (see Besley et al., 2008; Jung, 2011) suggests that preference heterogeneity among its members is systematic. Unlike for monetary policy committees of advanced countries, the present paper finds preference heterogeneity to be random for both the members of the Monetary Policy Council of the National Bank of Poland (NBP), and the members of the Monetary Council of the Magyar Nemzeti Bank (MNB). But, similar to the committees of advanced economies, the diversity of views on the inflation forecast is measurable in both committees. A separate cluster analysis shows that different preferences of MPC members may be attributable to their status (chairman, internal member, external member) and that members may also differ in their desired response to changes in the economic outlook. |
| Keywords: | central banking, monetary policy committee, inflation targeting, collective decision-making, voting, preferences, pooled regressions |
| JEL: | C23 D72 D83 E58 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mnb:wpaper:2012/2&r=tra |
| By: | Dong He (Hong Kong Monetary Authority and Hong Kong Institute for Monetary Research); Lillian Cheung (Hong Kong Monetary Authority); Wenlang Zhang (Hong Kong Monetary Authority); Tommy Wu (Hong Kong Monetary Authority) |
| Abstract: | In this paper we study the determinants of gross capital flows, project the size of China's international investment positions in 2020 and analyse the implications for the renminbi real exchange rates. We assume in this exercise that the renminbi will have largely achieved capital account convertibility by the end of this decade, a timetable consistent with recent proposals by the People's Bank of China. Our analysis shows that China's gross international investment positions would grow significantly, and inflows and outflows would become much more balanced. The private sector would turn its net liability position into a balanced position, and the official sector would reduce its net asset position significantly, relative to the country¡¦s GDP. Because of the increasing importance of private sector foreign claims and the decreasing importance of official foreign reserves, China would be able to earn higher net investment incomes from abroad. Overall, China would continue to be a net creditor, with the net foreign asset position as a share of GDP remaining largely stable through this decade. These findings suggest that the renminbi real exchange rate would not be particularly sensitive to capital account liberalisation as capital flows are expected to be two-sided. The renminbi real exchange rate would likely be on a path of moderate appreciation as China is expected to maintain a sizeable growth differential with its trading partners. |
| Keywords: | Capital Account Liberalisation, Net Foreign Asset Position, Exchange Rates |
| JEL: | F21 F31 F37 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:092012&r=tra |
| By: | Bacchetta, Philippe (University of Lausanne, CEPR); Benhima, Kenza (University of Lausanne); Kalantzis, Yannick (Banque de France) |
| Abstract: | Motivated by the Chinese experience, we analyze a semi-open economy where the central bank has access to international capital markets, but the private sector has not. This enables the central bank to choose an interest rate different from the international rate. We examine the optimal policy of the central bank by modelling it as a Ramsey planner who can choose the level of domestic public debt and of international reserves. The central bank can improve savings opportunities of credit-constrained consumers modelled as in Woodford (1990). We find that in a steady state it is optimal for the central bank to replicate the open economy, i.e., to issue debt financed by the accumulation of reserves so that the domestic interest rate equals the foreign rate. When the economy is in transition, however, a rapidly growing economy has a higher welfare without capital mobility and the optimal interest rate differs from the international rate. We argue that the domestic interest rate should be temporarily above the international rate. We also find that capital controls can still help reach the first best when the planner has more fiscal instruments. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:rbp:wpaper:2012-009&r=tra |
| By: | Vuong Quoc, Duy |
| Abstract: | This paper investigates the factors affecting the access of rural individual and group-based households to formal credit in the Mekong Delta (MD), Vietnam. Poverty levels in the Mekong Delta have declined significantly over the last decades, but in the rural areas they remain significant. If it is assumed that access to credit is a suitable vehicle for poverty alleviation, it is necessary to assess the way households decide on borrowing. This paper identifies the determinants of the decision to borrow and of the amount that is borrowed by using the double hurdle model and the Heckman selection model. Data used in this paper were obtained from a survey of 325 rural households, conducted between May and October 2009. The results indicate that household capital endowments, marital status, family size, distance to the market centre, and location affect both the probability and the amount of asking for credit. |
| Keywords: | Formal credit; Double hurdle model; individual and group-based lending; rural households |
| JEL: | G2 O2 E5 |
| Date: | 2012–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38202&r=tra |
| By: | Katarzyna Budnik (National Bank of Poland) |
| Abstract: | The measured TFP growth in Poland slowed from around 4% in the second half of the 90s to 2% a decade later. This reduction in the growth rate of the Solow residual is argued to reflect the evolution of worker effort and, indirectly, of the labour market within the period. The unobserved worker effort is identified within a structural efficiency wage model with shirking. The model estimates suggest that a reduction in the generosity of the unemployment benefit system and the stabilization of the job destruction rate before 2000 reinforced worker motivation. In turn, the economic revival and the intensification of emigration around the date of the Polish accession to the European Union undermined it. Consequently, a steep increase in worker effort before 2000 temporarily boosted the measured TFP growth. A levelling off and the eventual correction of effort after 2000 depressed the observed TFP growth rates. Around 15% of the estimated decline in GDP tied to an increase in emigration after 2004 can be attributed to negative changes in worker discipline. |
| Keywords: | emigration, TFP, labour productivity, efficiency wages, shirking, potential product, gross worker flows, EU enlargement |
| JEL: | C11 J30 J61 J64 F22 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:113&r=tra |
| By: | Shang-Jin Wei; Xiaobo Zhang; Yin Liu |
| Abstract: | While in standard housing economics housing is regarded as an asset and a consumption good, we study in this paper the consequences for housing prices if housing is also a status good. More concretely, if a family’s housing wealth relative to others is an important marker for relative status in the marriage market, then competition for marriage partners might motivate people to pursue a bigger and more expensive house/apartment beyond its direct consumption (and financial investment) value. To test the empirical validity of the hypothesis, we have to overcome the usual difficulty of not being able to observe the intensity of status competition. Our innovation is to explore regional variations in the sex ratio for the pre-marital age cohort across China, which likely has triggered variations in the intensity of competition in the marriage market. The empirical evidence appears to support this hypothesis. We estimate that due to the status good feature of housing, a rise in the sex ratio accounts for 30-48% of the rise in real urban housing prices in China during 2003-2009. |
| JEL: | G12 R2 R3 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18000&r=tra |
| By: | Anna Sznajderska (National Bank of Poland) |
| Abstract: | This paper empirically examines the potential asymmetries in the interest rate pass-through in Poland. We investigate the chosen retail interest rates in commercial banks on deposits and loans denominated in the Polish currency. It is considered whether their adjustment to changes in interbank rates is asymmetric in the long term as well as in the short term. We test for asymmetric cointegration using threshold autoregressive models and momentum-threshold autoregressive models. Next, if it is possible applying the threshold error correction models, we search for asymmetries associated with the direction of change in the money market rate, the level of the economic activity, the level of liquidity in the banking sector, the central bank’s credibility and the economic agents’ expectations. Finally, we test whether using the asymmetric models improves the quality of forecasts of retail bank interest rates. |
| Keywords: | interest rate pass-through, asymmetries, threshold models, forecasting |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:114&r=tra |
| By: | William R. Cline (Peterson Institute for International Economics) |
| Abstract: | For several years China has run current account surpluses that have been widely seen as the most serious source of global imbalances on the surplus side. Its exchange rate intervention limited appreciation of the currency and led to a buildup of external reserves to more than $3 trillion. Nonetheless, the surplus has fallen from 10 percent of GDP in 2007 to 2.8 percent in 2011, even though in September the International Monetary Fund projected the 2011 surplus at 5.2 percent of GDP and forecast a rebound to 7.2 percent of GDP by 2016. This policy brief examines whether the moderate 2011 surplus was a transitory aberration or a sign of a new trend. A statistical model explains the bulk of the reduction in the surplus as the consequence of the real exchange rate appreciation of about 20 percent that occurred from 2005–06 to 2009–10. Slow global growth, a rising oil deficit, and erosion in the capital income balance were additional causes. Projections based on this model and another used by the author indicate that if the exchange rate remains unchanged, the surplus is likely to be in a range of 2–4 percent of GDP in 2012–14 but rebound to 4 to 5 percent of GDP by 2017. If instead the government continues real appreciation at the 3 percent annual rate pursued since June 2010, by 2017 the current account would be approximately in balance. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb12-7&r=tra |
| By: | Pastore, Francesco (University of Naples II) |
| Abstract: | This paper aims to study the mechanisms of the intergenerational transfer of poverty: it considers household poverty as a risk factor for youth poverty. The study is based on a unique, nationally representative School-to-Work Transition survey carried out in 2006 in Mongolia, one of the 50 poorest countries of the world. A young person born in a household living out of $1 a day has a ceteris paribus probability about 4 times greater of dropping out of school, 2.5 times greater of being educationally marginalized and 20 times greater of being a working poor than a contemporary born in a family living out of more than $3 a day. |
| Keywords: | transition from plan to market, poverty and inequality, intergenerational transfer of poverty, Mongolia |
| JEL: | D63 H24 J62 I32 P36 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6487&r=tra |