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on Transition Economics |
| By: | Patrick Higgins; Tao Zha; Karen Zhong |
| Abstract: | Although macroeconomic forecasting forms an integral part of the policymaking process, there has been a serious lack of rigorous and systematic research in the evaluation of out-of-sample model-based forecasts of China's real GDP growth and CPI inflation. This paper fills this research gap by providing a replicable forecasting model that beats a host of other competing models when measured by root mean square errors, especially over long-run forecast horizons. The model is shown to be capable of predicting turning points and to be usable for policy analysis under different scenarios. It predicts that China's future GDP growth will be of L-shape rather than U-shape. |
| JEL: | C53 E1 E17 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22402&r=tra |
| By: | Gang, Ira N. (Rutgers University); Gatskova, Kseniia (Institute for East and Southeast European Studies, Regensburg); Landon-Lane, John (Rutgers University); Yun, Myeong-Su (Inha University) |
| Abstract: | We examine vulnerability to poverty in Tajikistan during the global financial crisis, focusing on the roles played by international migration and remittances, using a formal, practical, and easily decomposable vulnerability measure. Our strategy is to estimate a Markov transition probability matrix with the aim of identifying the vulnerability of households to poverty. Importantly, by introducing the index of vulnerability as the weighted probability of a household falling into poverty over a given time horizon, we can use the estimated dynamics to assess the short, medium and long-run vulnerability. We find that during the "recession transition" almost all households were vulnerable to poverty while almost none were during the "recovery period". Overall, urban households, more educated households and households receiving remittances from international labor migrants were less vulnerable to poverty. While households with a current or very recent migrant did not have a significantly lower measured vulnerability to poverty, those households receiving remittances from migrants had a lower vulnerability to poverty. Our findings stress that the international labor migration from Tajikistan may not be considered as a reliable means of welfare security for the households because external economic shocks and internal political decisions may negatively affect Russian economy and lead to a reduction of remittances flow to Tajikistan. |
| Keywords: | mobility measurement, vulnerability, poverty, inequality, measurement, Tajikistan |
| JEL: | J60 D63 I32 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10049&r=tra |
| By: | Nie, Peng; Sousa-Poza, Alfonso; Xue, Jianhong |
| Abstract: | Using longitudinal and biomarker data from the China Family Panel Studies and the China Health and Nutrition Survey, this study examines the association between the type of domestic cooking fuel and the health of women aged Ï16 in rural China. Regarding three major domestic cooking fuels (wood/straw, coal and liquefied natural gas (LNG)), we find that, compared to women whose households cook with dirty fuels like wood/straw, women whose households cook with cleaner fuels like LNG have a significantly lower probability of chronic or acute diseases and are more likely to report better health. Even after controlling for unobserved individual heterogeneity, we find some evidence that women in households cooking with LNG are less likely to suffer from chronic/acute diseases. Cooking with domestic coal instead of wood or straw is also associated with elevated levels of having certain risks (such as systolic and diastolic blood pressure) related to cardiovascular diseases. |
| Keywords: | household cooking fuels,health,women,rural China |
| JEL: | I10 D10 J10 Q53 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:082016&r=tra |
| By: | Juan Carlos Cuestas (EestiPank); Luis A. Gil-Alana (University of Navarra) |
| Abstract: | The aim of this paper is to shine some light on the effect of oil price movements on unemployment in Central and Eastern Europe. In order to do so, we disentangle oil prices movements by their sign. From there we analyse the separate effect of positive and negative movements of oil prices on unemployment rates. We find that although oil prices and unemployment are not very much correlated in the short run, the effect of oil price shocks on the natural rate of unemployment goes in the same direction, i.e. increases or decreases in oil prices increase or decrease the natural rate of unemployment. |
| Keywords: | unemployment rates; oil prices shocks; Central and Eastern Europe |
| JEL: | C22 E39 Q43 |
| Date: | 2016–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:una:unccee:wp0216&r=tra |
| By: | Konstantins Benkovskis (Bank of Latvia); Eduards Goluzins; Olegs Tkacevs (Bank of Latvia) |
| Abstract: | This paper describes the first CGE model for Latvia that consists of 32 industries, 55 products and seven categories of final users. To construct the model we use Latvia's National Supply and Use tables for 2011 from the WIOD database. Special attention is devoted to the fiscal block: the model consists of five government expenditure types and five revenue sources, including such four major taxes as the personal income tax (PIT), state social insurance mandatory contributions (SSIMC), value added tax (VAT) and excise tax. We also introduce an endogenous shadow economy, the size of which depends on the level of tax rates and economic activity. These features of the model allow us to obtain rich and detailed conclusions about the effect of several fiscal measures on Latvia's economy, both in aggregate and by sector. |
| Keywords: | CGE model, Latvia, fiscal policy |
| JEL: | D58 C68 H2 H6 |
| Date: | 2016–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:201601&r=tra |
| By: | Iwasaki, Ichiro; Maurel, Mathilde; Meunier, Bogdan |
| Abstract: | In this paper, we aim to empirically analyze the determinants of firm entry and exit in Russia using a regional-level panel data for the years of 2008-2014, with special emphasis on institutional failures and the politico-economic impact of external crises. We found that these two elements exhibit statistically significant and economically meaningful effects both on the creation and destruction of Russian firms, controlling for potentially explanatory factors. Our empirical results also suggest that the process of firm entry and exit is manifold across Russian regions due to their heterogeneity. Nevertheless, a surprisingly robust estimate of the world oil price (irrespective of the difference in target regions) suggests a possible high exposure of each Russian region to a global crisis. This comes from the importance of oil trade with the world and, accordingly, the ongoing crisis may bring a harmful influence to regeneration of Russian businesses. |
| Keywords: | firm entry, firm exit, institutions, economic integration, crisis, Russia |
| JEL: | D22 F15 G01 P31 P33 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:hit:rrcwps:59&r=tra |
| By: | Tang, Can (Renmin University of China); Zhao, Liqiu (Renmin University of China); Zhao, Zhong (Renmin University of China) |
| Abstract: | We present the first systematic study on child labour in China. Child labour is not a negligible social phenomenon in China; about 7.74% of children aged from 10 to 15 were working in 2010, and they worked for 6.75 hours per day on average, and spent 6.42 hours less per day on study than other children. About 90% of child labourers were still in school and combined economic activity with schooling. Our results show that child labour participation is positively associated with school dropout rate. A child living in a rural area is more likely to work. Compared with place of residence, the gender of a child is less important. The educational level of the household head and its interaction with the gender of the household head seem to be unimportant. However, household assets per capita and household involvement in non-agricultural activities are negatively related to the incidence of child labour. A child from a household with more adults is less likely to work. The prevalence of child labour in China exhibits significant regional variations. The child labour incidence is correlated with the development level of each region: the Western region has the highest percentage of child labour, followed by the Eastern and Central region. |
| Keywords: | Child labour, Early leavers, School dropouts, Working hours, China |
| JEL: | J43 J81 O15 |
| Date: | 2016–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2016036&r=tra |
| By: | Xiaojie Liu; Jim Huangnan Shen; Kent Deng |
| Abstract: | Since Deng Xiaoping’s historic move towards a market economy in post-Mao China during the 1980s, by far, the most challenging task in China’s reforms has been that related to the moribund state-owned sector due to a range of ideological, political, as well as economic reasons. Such reforms have so far been slow and hesitant, moving forward and backward with mixed results. This paper tackles the pros and cons of such reforms and aims to square a rational strategy based on what has been done so far in the state sector. Unlike a narrow approach currently prevailing in the literature, this paper establishes a partial equilibrium model which incorporates the principal-agent problem into a mixed oligopoly model to explore an optimal strategy for state-owned enterprise reforms in China. We argue that ceteris paribus the current illnesses of low efficiency and rent-seeking commonly suffered by China’s state-owned sector can be cured by a two-pronged strategy in which the importance of property rights holds the key. We have identified two ‘Coase Property Right Points’ in the commonly known choices of institutional changes in a reforming Soviet economy to firstly, make it more efficient, and then Pareto optimal. One institutional change is a ‘joint-stock reform’; the other, a ‘full privatisation reform’. In particular, this study regards ‘social-extra policy burdens’ as the main obstacle to improve much needed efficiency in the state sector. Coase Property Right Points show the necessity for a reduction of the social-extra policy burdens vis-à-vis the state sector’s true comparative advantage |
| Keywords: | China; economic reforms; state-owned enterprises; efficiency; comparative advantage; Pareto optimum |
| JEL: | O53 N0 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:67019&r=tra |
| By: | Camba-Méndez, Gonzalo; Kostrzewa, Konrad; Marszal, Anna; Serwa, Dobromil |
| Abstract: | We analyze the market assessment of sovereign credit risk in an emerging market using a reduced-form model to price the credit default swap (CDS) spreads thus enabling us to derive values for the probability of default (PD) and loss given default (LGD) from the quotes of sovereign CDS contracts. We compare different specifications of the models allowing for both fixed and time varying LGD, and we use these values to analyze the sovereign credit risk of Polish debt throughout the recent global financial crisis. Our results suggest the presence of a low LGD and a relatively high PD for Poland during the crisis. The highest PD is in the months following the collapse of Lehman Brothers. The derived measures of sovereign risk are strongly linked with the level of public debt and with another measure of PD from a structural model. Correlations between our PD values and the CDS spreads heavily depend on the maturity of the sovereign CDS. JEL Classification: C11, C32, G01, G12, G15 |
| Keywords: | CDS spreads, loss given default, Poland, probability of default, sovereign credit risk |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20161924&r=tra |
| By: | Agbelie, Bismark R.D.K. (School of Civil Engineering, Purdue University); Chen, Yang (Division of Economics, Xi'an Jiaotong-Liverpool University); Salike, Nimesh (Division of Economics, Xi'an Jiaotong-Liverpool University) |
| Abstract: | The present paper examines the heterogeneous economic impacts of transportation characteristics, with a consideration of spatial heterogeneity, across Chinese prefecture-level cities. Using data from 237 Chines cities from 2000 to 2012, a random-parameters model was applied to account for the heterogeneity across these cities. The estimation results revealed significant variability across cities, with the computed impacts (elasticity values) of transportation-related features (highway and railway freight volumes, highway passenger volume, urbanization rate, public transit, paved roads, and highway congestion rate) varying significantly across cities. The impacts were mostly positive, except for highway congestion rate. A 1% increase in a city’s highway and railway freight volumes would increase the city’s gross product per capita from 0.0001% to 0.0972% and 0.0001% to 0.0254% across cities in China, respectively. While a 1% increase in highway congestion rate would decrease the city’s gross product per capita by an average of 0.031%. |
| Keywords: | Chinese cities, economic growth, heterogeneity, highway, railway, freight, random-parameters model |
| Date: | 2015–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:xjt:rieiwp:2015-02&r=tra |
| By: | Stoian, Andreea; Iorgulescu, Filip |
| Abstract: | The aim of this paper is to examine whether information on fiscal policy includes in the stock prices in a way which is consistent with the Efficiency Market Hypothesis. We conduct our investigation for the Bucharest Stock Exchange which is one emerging stock market from Central and Eastern Europe. For the purpose of our study, we employ the methodology suggested by Darrat (1988). We analyse the influence of past fiscal policy on current stock market return using two distinct datasets comprising of quarterly and monthly data. The results indicate that when we do not control for the anticipated and unanticipated effects of fiscal policy, past lags of changes in the overall budget balance and in public debt-to-GDP ratio have a significant impact on stock market return and, thus, we fail in accepting the semi-strong form of the efficiency market hypothesis. |
| Keywords: | fiscal policy, stock return, budget balance, public debt, Efficiency Market Hypothesis |
| JEL: | E44 E62 G14 H6 |
| Date: | 2016–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72458&r=tra |
| By: | Bartz, Wiebke (Centre for Development Finance, Frankfurt School of Finance and Management); Mohnen, Pierre (UNU‐MERIT, Maastricht University); Schweiger, Helena (European Bank for Reconstruction and Development) |
| Abstract: | In this paper, we compare the impacts of management practices and innovation on productivity, using data from a unique firm-level survey covering 30 mostly developing countries in Eastern Europe and Central Asia in the period 2011-2014. We adapt the well-established three-stage model by linking productivity to innovation activities and management practices. Results suggest that both returns to innovation and returns to management practices are important drivers of productivity in developing economies. However, productivity in lower-income economies is affected to a larger extent by management practices than by innovation while the opposite holds in higher-income economies. These results imply that firms operating in less favourable business environments can reap large productivity gains by improving the quality of management practices, before engaging in innovation through imitating and adapting foreign technologies. |
| Keywords: | innovation, management practices, productivity, developing countries |
| JEL: | M21 O12 O32 |
| Date: | 2016–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2016034&r=tra |
| By: | Yishen Liu; Yao Pan |
| Abstract: | This paper investigates the net impact of birth control policy in China on educational attainment of the partially excluded ethnic minorities. Exploring county-level variation in the value of fines levied for unsanctioned births, we show that more stringent enforcement of the birth control policy reduces educational attainment of urban ethnic minorities. Suggestive evidence shows this negative impact is likely to reflect the spillover effect from improved quality of ethnic majority children. For rural ethnic minorities, however, the level of enforcement of the birth control policy does not significantly affect education. The documented negative impact on education of urban ethnic minorities, combined with the improved quality found for both rural and urban ethnic majorities, implies that the birth control policy substantially contributes to the rising educational gap between ethnic minorities and majorities in China. |
| Keywords: | birth control, education, minority, quantity.quality tradeoff, China |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2016-077&r=tra |
| By: | Piotr Krajewski (Institute of Economics, Faculty of Economics and Sociology, University of Lodz, Poland) |
| Abstract: | We analyse the effects of fiscal policy in non-EMU Central and Eastern European counties. The analysis is based on new Keynesian model, which takes into account both optimizing Ricardian households and non-Ricardian households with liquidity constraints. Results of the study indicate that the share of non-Ricardians has significant impact on fiscal multipliers. The government spending multiplier reaches 3 in the country with highest share of non- Ricardian households, whereas in the country with lowest share of non-Ricardians is lower than one. Also effects of government spending shocks on consumption are very sensitive to the share of households with liquidity constraints. |
| Keywords: | fiscal policy, government spending, new Keynesian model, heterogeneity of households, non-Ricardian households. |
| JEL: | E32 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ann:wpaper:2/2016&r=tra |
| By: | Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Summary Research findings of the latest round of the wiiw-GDN project on development in the Balkans are surveyed. Historical and structural deficiencies of development in the Balkan countries are discussed in detail with emphasis of the role of investment, integration, and structural and policy deficiencies. These structural features have led to policy challenges in particular after the crisis of 2008-2009. Which are investment- and export-led growth, which implies slower growth of consumption than national savings; slow growth of wages and incomes over the period of structural adjustment and for reasons of prevention of real exchange rate appreciation; and free access to foreign markets due to slower recovery of domestic demand. With the policy framework biased towards rigidity, and having in mind the needed structural adjustment, development policies that are compatible with them are infrastructure, physical and institutional, investments supported by the EU and regionally; trade integration – regional, European, and within the World Trade Organisation; financial and entrepreneurial cooperation within the manufacturing networks in the EU primarily; sustainable macroeconomic policies especially when it comes to external balances. A list of studies and of the relevant literature is included. |
| Keywords: | development, Balkans, infrastructure, crisis, integration, state failure, investment, consumption |
| JEL: | N14 N74 O14 O18 O20 P27 R11 R41 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:wii:pnotes:pn:17&r=tra |
| By: | Prats Albentosa, María Asuncíon; Sandoval, Beatriz |
| Abstract: | A developed financial system is essential in a market economy. This paper studies the importance of the development of financial markets in general, and the stock market in particular, from the review of existing literature in the area of the relationship between financial development and economic growth, and especially, the link between the stock market and economic growth. Through an empirical analysis for six countries in Eastern Europe (Bulgaria, Slovakia, Hungary, Poland, Czech Republic and Romania) it is tried to show the link between the stock market development and economic growth in these countries from 1995 to 2012 in order to explain the transition processes, from communist to market economies, which began with the fall of the Berlin Wall in 1989. The results show evidence of Granger causality between economic growth variables and financial market variables. |
| Keywords: | economic growth,stock market,financial markets,financial development |
| JEL: | F43 O16 G2 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201635&r=tra |
| By: | Chen, Zhao (Fudan University, China); Fang, Tony (Memorial University of Newfoundland) |
| Abstract: | The rapid growth and high levels of internationalization by Chinese firms, raise a natural interest in the study of the factors which have led the notable international presence of Chinese firms. To contribute to this effort, we use data from the 2008-10 survey of China's High-tech firms, conducted by the Chinese Ministry of Science and Technology, to estimate the determinants of Chinese firm outward FDI (OFDI). In our analysis, the primary independent variables include high-tech intensity, human capital acquisition, and institutional factors. We have also controlled for various firm characteristics such as firm age, total value of fixed assets, and firm ownership. Estimation from our fixed-effects model uncovers a number interesting patterns in OFDI outcomes. Most notable, among the significant determinants of OFDI, the number of Chinese returnees employed by a firm seems to be more important than tax reduction policies. Further, the effects of the Chinese returnees have a stronger effect on non state-controlled firms than they do for state-controlled firms. This finding is intuitive, since the Chinese returnees who were trained in the West have an understanding of product markets, labour markets, financial markets, language and business culture, and trade laws in both China and the West. Their unique skill sets and knowledge appear to serve as an important catalysts in the growth of OFDI and internationalization by Chinese firms. |
| Keywords: | OFDI, Chinese firm internationalization, panel data |
| JEL: | F21 M16 F23 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10045&r=tra |
| By: | ZhongXiang Zhang |
| Abstract: | China has realised that for its own sake and from the international community's perspective, it cannot afford to continue on the conventional path of encouraging economic growth at the expense of the environment. Accordingly, the country has placed ecological goals at the same level of priority as policies on economic, political, cultural and social development. Specifically, meeting the grand goal involves not only capping China's nationwide coal consumption to let it peak before 2020 and carbon emissions peak around 2030, but also putting in place a variety of flagship programs and policies. This article argues that the 2030 carbon emissions peak goal is ambitious but achievable and concludes by arguing why there is reason to be optimistic about China's ‘green push’. |
| Keywords: | low-carbon economy, carbon emissions peaks, carbon pricing, energy prices, resource tax reform |
| Date: | 2016–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201617&r=tra |
| By: | Sara Hsu |
| Abstract: | China is in the process of undertaking financial reform in many directions—introducing small private banks in the banking sector, promoting bond and equity finance, increasing exchange rate and capital account liberalization, enhancing financial regulation, and promoting the efficiency and scope of finance. While some foreign analysts have focused on the importance of liberalizing the exchange rate and capital account, we believe these aspects of reform take second priority to traditional banking reform, even though the ongoing process in practice is to slowly implement reforms in all areas at once. |
| Keywords: | China, banking system, financial system, reform, liberalization |
| Date: | 2016–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201621&r=tra |
| By: | Quang-Hoi Vu; Thu Trang Vuong; Quan-Hoang Vuong |
| Abstract: | The notions of entrepreneurship and creativity in developed economies, despite having gained attention among researchers, remain embryonic in numerous emerging economies. Being focused on entrepreneurs in a typical transitional and emerging market economy, Vietnam, this paper aims to empirically explore the influence that past entrepreneurial efforts may exert on the perceptions of entrepreneurs about their own creativity performance. The study also seeks to understand how entrepreneurs social networks contribute to perceived creativity capacity by entrepreneurs who participate in those societies. The empirical research results suggest that entrepreneurs with business experience and active networking engagement are more likely to believe in their own creativity. This knowledge and insights in turn offer some implications for addressing the lack of radical creativity among Vietnamese entrepreneurs. |
| Keywords: | Creativity/innovation; entrepreneurship; emerging economy; Vietnam |
| JEL: | M13 O33 P21 P27 |
| Date: | 2016–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/233156&r=tra |