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on Transition Economics |
| By: | Irina Busygina (National Research University Higher School of Economics); Mikhail Filippov (National Research University Higher School of Economics) |
| Abstract: | The Eurasian Economic Union (EAEU) is the first and relatively successful attempt to establish strong multilateral institutions of post-Soviet regional integration. The EAEU has greater scope of supranationalism compared to all previous post-Soviet integration projects and the Union’s multilateral institutions are based on the formal recognition of equal status of all the members. However, such a union is unlikely to promote the Russian economic and political dominance in the region, at least compared to what would be attainable through bilateral deals. On contrary, the post-soviet countries got opportunities to act more independently from Russia. We argue that it was the Ukrainian crisis in spring 2014 and the need to promote the domestic image of Russia as “great power” that created incentives for Russian leadership to accept institutional compromises necessary to initiate the Eurasian Economic Union. |
| Keywords: | Domestic Legitimacy; Eurasian Economic Union; Incentives; Belarus; Kazakhstan; Russia; Bilateral Relations; Multi-lateral Relations; Sovereignty; Ukraine crisis. |
| JEL: | D74 F02 F15 P30 P48 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:31/ir/2018&r=tra |
| By: | Vértesy, László |
| Abstract: | In Hungary, more than 670,000 SMEs operate (99% coverage), which employ the 70% of all employees, more than 1.9 million people. The operating small and medium-sized enterprises are characterized by a strong territorial concentration: Central Hungary's weight is outstanding (40%). In the case of organizations, micro-enterprises dominate in all regions, at national level more than 94% of enterprises operate in this form. The main goal is to bring productivity and wage rise simultaneously, thus enabling Hungary to rise above the labor-cost – benefit competitiveness model and the medium-level trap. In terms of its labor productivity per employee, Hungary is somewhat below the average of the Visegrád countries (Czech Republic, Hungary, Poland and Slovakia). In the Visegrád region, the productivity of Hungarian manufacturing SMEs grew to a small extent (2.7%), while the growth rate of the service sector (3.5%) was the highest in the region. Six main themes can be identified, which clearly reduce the domestic and international competitiveness of small and medium-sized enterprises: weaknesses in the state and Union support system, low productivity and wage levels, moderate research and innovation performance, high public burdens and a lot of administrative burden. Therefore, the main objective is to strengthen the competitiveness. |
| Keywords: | Small and medium-sized enterprises, SME, economy, employment, competitiveness, R&D, taxation |
| JEL: | H0 H21 O4 O40 P42 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90066&r=tra |
| By: | Ksenia V. Rozhkova (National Research University Higher School of Economics); Sergey Yu. Roshchin (National Research University Higher School of Economics); Sergey A. Solntsev (National Research University Higher School of Economics) |
| Abstract: | Wage adjustments for employees are a reaction mechanism to changing market conditions and form a significant part of pay policy. Though various attempts to explore wage levels and wage differentials have been made, wage adjustment policies remain an understudied topic. This paper analyses the determinants of wage adjustments based on data from Russian enterprises 2015–17. The analysis is based on detailed data from an employer survey which covers more than 5,000 firms in both the public and private sector. The study adopts probit models to identify the reasons which determine wage revisions, depending on internal employer characteristics and external labour market conditions. The results are in line with previous research on the topic (Bayo-Moriones et al., 2016) and suggest that both internal and external factors influence wage adjustments. A wage adjustment is a reflection of the ability to pay meaning that revisions are often made by successful firms with high employee turnover. Institutional frameworks, especially trade union activity, affects the firm’s decision to adjust wages despite the general opinion on the insignificance of unions in Russia. This study contributes to the limited literature by analysing the determinants of wage policies depending on the firm’s characteristics. This is the first study of its kind based on extensive Russian data. |
| Keywords: | Russia, wage adjustment, pay policy, pay settlement, trade union |
| JEL: | D22 J01 J31 J33 J51 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:205/ec/2018&r=tra |
| By: | Xiaodong Gong; Jiti Gao; Xuan Liang; Xin Meng |
| Abstract: | In this paper, we study intra-city agglomeration externality and inter-city spillover effects on productivity of 185 Chinese cities at and above the prefectural level for the years between 1995 and 2009. In particular, we investigate how a shock may be amplified or weakened by these externality effects and how productivity in a city varies with and affects that of other cities in the economy. We estimate the impacts of population size on productivity in 185 Chinese cities using spatial fixed-effect panel data models. Both the endogenous and exogenous spatial dependence are allowed for. The direct and indirect effects of the factors are calculated and compared for various city groups. We find that a significant positive effect of urban population on the real wage levels, which confirms the existence of agglomeration economy within regions. We also find significant differences in both the direct and indirect effect of factors such as FDI between more and less population dense areas. This seems to suggest that agglomeration economy may also exist among regions. Disparity between regions in economic growth and productivity could be explained by the statistically significant regional variations in the direct and indirect effects. |
| JEL: | C23 R12 R23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:msh:ebswps:2018-20&r=tra |
| By: | Pollitt, M.; Dale, L. |
| Abstract: | In this paper, we begin by discussing the components of the price of industrial electricity in Great Britain, as an example of a fully reformed electricity market, where the market is roughly comparable in size to a reasonably large Chinese province. We go on to discuss the key actors in the liberalized electricity system in Great Britain, before unpacking each of the components of the price. We discuss the market determined elements first, then go on to introduce and discuss the regulated elements of the price before finishing with the central government determined price components. Our discussion covers the determination of the wholesale price, the retail margin, transmission charges, system balancing charges, distribution charges and environmental levies and taxes. In each of these cases we discuss the process by which they are determined (led by the market, the regulator, the central government or more than one) and the specific lessons for China. We conclude by emphasizing some of the high-level lessons on electricity price determination for China. |
| Keywords: | Chinese power market reform; industrial electricity price; electricity liberalization |
| JEL: | L94 |
| Date: | 2018–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1871&r=tra |
| By: | Dominika Kolcunova; Tomas Havranek |
| Abstract: | This paper focuses on the estimation of the effective lower bound on the Czech National Bank's policy rate. The effective lower bound is determined by the value below which holding and using cash would be preferable to holding deposits with negative yields. This bound is approximated on the basis of the storage, insurance and transport costs of cash and the loss of convenience associated with cashless payments. This estimate is complemented by a calculation based on interest charges reflecting the impact of negative rates on banks' profitability. Overall, we get a mean of slightly below -1%, approximately in the interval (-2.0%, -0.4%). In addition, by means of a vector autoregression we show that the potential of negative rates is not sufficient to deliver monetary policy easing similar in its effects to the impact of the Czech National Bank's exchange rate commitment during the years 2013-2017. |
| Keywords: | Costs of cash, effective lower bound, negative interest rates, transmission of monetary policy, zero lower bound |
| JEL: | E43 E44 E52 E58 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2018/9&r=tra |
| By: | Sergey Vlasov (Bank of Russia, Russian Federation) |
| Abstract: | The Note analyses fiscal multipliers in the Russian economy and estimates the im-pact of the fiscal manoeuvre, the start of which is planned for 2019, on GDP growth. Fiscal multipliers in the Russian economy proved to be rather low, in part due to “leakages” through imports and relatively low efficiency of budgetary funds. We estimate the multipli-er of total revenue of Russia’s budget at -0.75 and the multiplier of total spending at +0.28. Therefore, changes in the budget revenue produce a stronger effect on GDP growth com-pared with the effect from the comparable change in expenditures. However, compared to changes in expenditures, changes in revenue feed through to GDP growth more slowly. Our analysis of the components of total expenditure based on the Russian and inter-national experience suggests that in terms of the functional classification of expenditure, the biggest is the fiscal multiplier for economic spending, followed by military and social blocks. Spending on general state issues have a negative multiplier. The analysis of the economic classification of expenditure showed that the investment component has the highest multiplier. It exceeds more than twofold multipliers for other components. The estimation of the effects of the fiscal manoeuvre using fiscal multipliers gives grounds for expecting in the medium term additional 0.2-0.3 pp to GDP growth per year on average as a result of the manoeuvre. However, the actual effect may prove materially higher than the estimated one in case of efficient fund utilisation (e.g., a thorough selec-tion of investment projects) as well as rapid cost cutting coupled with labour productivity growth by VAT payers. This will raise the fiscal multiplier for spending and lower it for rev-enue. Additionally, fiscal multipliers demonstrate a short-term effect of the fiscal policy on GDP growth without assessing its impact on the potential growth, which should also be positive. The current situation in the economy bordering on the full utilisation of resources may serve as a constraining factor, thereby lowering the efficiency of their utilisation. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:bkr:wpaper:note17&r=tra |
| By: | Donaldson, John B.; Koulovatianos, Christos; Li, Jian; Mehra, Rajnish |
| Abstract: | Following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, FDI inflows relative to GDP for China versus India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the growth rate of the (urban) labor force due to the one-child policy permanently increases the capital per worker inherited from the previous generation. The resulting increase in China's (domestic K)/L thus "crowds out" the need for FDI in China relative to India. Our paper is a contribution to the nascent literature exploring demographic transitions and their effects on FDI flows. |
| Keywords: | Lucas paradox,capital-labor ratio,FDI-intensity,one-child policy |
| JEL: | F11 F21 J11 O11 E13 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:613&r=tra |
| By: | Anastasia B. Likhacheva (National Research University Higher School of Economics); Hryhorii M. Kalachyhin (National Research University Higher School of Economics) |
| Abstract: | An idea of lagging Pivot, so that Russian Policy of Pivot to the East Asia cannot last successfully on a long-term basis keeping an extensive lag between political and economic dimensions of the Pivot, becomes widely spread in Russia and abroad. And one of the most inevitable and necessary conditions of bridging this gap together can be found among instruments of trade liberalization with FTAs ahead. Here we should shift our focus from Russian interests to Eurasian economic Union (EAEU) that has a privileged mandate on trade negotiations with third countries and blocs like ASEAN: Russia cannot sign any FTA on its own since 2015. However, this puzzle was relatively poorly studied both in Russia and abroad and this paper attempts to fill this gap. We briefly analyze the scope of trade between Russia and key Asian markets (which still remain mostly limited to North-East Asia) to define the most sensitive export markets for Russia, then we systematize existing barriers that could be potentially eliminated by international trade negotiations and compare them with existing international activity of the Eurasian Economic Commission (EEC). Results of our study clearly demonstrate an objective demand for more intensive EAEU activity on trade liberalization in Asia with a particular focus on non-tariff barriers. |
| Keywords: | Pivot to Asia, political economy, geoeconomics, FTA, integration, non-tariff barriers, Russia, North-East Asia, EAEU |
| JEL: | Z |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:32/ir/2018&r=tra |
| By: | Huang, Bin; He, Xiaoyan; Xu, Lei; Zhu, Yu |
| Abstract: | We explore three recent comprehensive reforms which aim to equalize access to elite elementary schools in Beijing, to identify the causal effect of access to quality education on house prices. Using property transaction records from Beijing in 2013 and 2016, we construct a balanced panel of residential complexes, each of which linked to its designated primary school. Whereas the multi-school dicing reform involves randomly assigning previously ineligible pupils to key elementary schools through lotteries, the reform of school federation led by elite schools consolidates ordinary primary schools through alliance with elite schools. Moreover, an ordinary primary school can be promoted to key elementary school without involving neighbouring schools in surrounding residential complexes through a “pure” re-designation effect. We allow for systemic differences between the treated and non-treated residential complexes using the Matching Difference-in-Differences (MDID) approach. Our estimates indicate that the causal effect on house prices of being eligible to enrol in a municipal-level key primary school is about 5-7%, while the premium for being eligible for a less prestigious district-level key primary school is only about 1-3%. |
| Keywords: | quality school designation,house price premium,Matching DID,China |
| JEL: | R21 I28 H44 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:283&r=tra |
| By: | Du, Jun (Aston University); Zhang, Junfu (Clark University) |
| Abstract: | Throughout the imperial era, defensive walls surrounded Chinese cities. Although most city walls have vanished, the cities have survived. We analyze a sample of nearly 300 prefectural-level cities in China, among which about half historically had city walls. We document that cities that had walls in late imperial China have higher population and employment density today, despite the fact that their walls have long gone. Using data from various sources, we test several possible explanations of this fact, including (1) walled cities have a well-defined historical core that helps hold economic activity close to the city center today; (2) walled cities today tend to have different industry compositions that are less conducive to decentralization; (3) walled cities are situated in regions where the local geographies make it less desirable to build out; (4) walled cities have more compact shapes that facilitate high density development; and (5) walled cities are located in regions where rural land is more valuable today and discourages urban sprawl. We find that historically walled cities still have higher density after taking into account all of these factors, which we interpret as evidence of economic persistence. |
| Keywords: | urban density, city wall, persistence, China |
| JEL: | R11 R12 N95 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11951&r=tra |
| By: | Natan Colombo |
| Abstract: | The paper sheds light on and critically analyses the Belt and Road Initiative, the most ambitious financial and infrastructural plan China is promoting, inter alia, to reinforce its geopolitical role in the new global governance. After an introductive section on the evolution of the Chinese economy in the past decades, section 2 describes the background of the Initiative, with a focus on infrastructural connectivity, promotion of industrialisation in the involved areas, and collection of the capitals to be allocated for its projects. Section 3 deals with the main challenges and emerging problems, emphasising the geopolitical reactions of China's neighbouring countries to the Initiative, the delicate issues of its financial sustainability in the long term, the connected macroeconomic policies, and the evolution path of the Renminbi toward a wider internationalisation, in addition to comments on the infrastructural development. Several conclusive remarks end the work. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucec:2018-5&r=tra |
| By: | Michael McMahon; Alfred Schipke; Xiang Li |
| Abstract: | Financial markets are eager for any signal of monetary policy from the People’s Bank of China (PBC). The importance of effective monetary policy communication will only increase as China continues to liberalize its financial system and open its economy. This paper discusses the country’s unique institutional setup and empirically analyzes the impact on financial markets of the PBC’s main communication channels, including a novel communication channel. The results suggest that there has been significant progress but that PBC communication is still evolving toward the level of other major economies. The paper recommends medium-term policy reforms and reforms that can be adopted quickly. |
| Keywords: | Financial markets;Central banks and their policies;Asia and Pacific;Monetary policy;People’s Bank of China, Communication, Central Bank, Monetary Policy Transmission, People’s Bank of China, Monetary Policy (Targets, Instruments, and Effects), General |
| Date: | 2018–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/244&r=tra |
| By: | Levashenko, Antonina (Левашенко, Антонина) (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Ermokhin, Ivan (Ермохин, Иван) (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | The article presents an analysis of Russia's existing agreements on the protection of investments, as well as proposals for amending Russian Federation Government Decree No. 992 of 30 September 2016 "On the Conclusion of International Treaties of the Russian Federation on the Promotion and Protection of Investments". |
| Keywords: | OECD, investments, responsible business conduct, transparency, investment agreement, bilateral investment protection agreements |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:041828&r=tra |
| By: | Rui Mano; Jiayi Zhang |
| Abstract: | While China’s growth gathered momentum in 2017, rebalancing was uneven and decelerated along many dimensions reflecting the temporary factors behind the growth pickup. Going forward, rebalancing is expected to proceed as these temporary factors recede, but elevated income inequality and leverage will remain a challenge. The authorities are already pursuing several pro-rebalancing policies which could be expanded to support each dimension of rebalancing while reducing trade-offs between them. |
| Date: | 2018–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/243&r=tra |
| By: | Vértesy, László |
| Abstract: | As a result of the demographic processes, one of the major challenges facing aging societies is to ensure long-term and sustainable funding for old-age care. The Hungarian pension system is basically stagnating, and the political competition focuses only on welfare corrections, shattering the real and increasingly threatening threats. In recent years, however, several detailed studies and analyses have been published, which, according to internationally accepted norms of economics, anticipate the gradual lack of the Hungarian pension system. The analysis covers the following topics: legal and institutional background, retirement demographics, real value of pensions, reforms and problems affecting the pension system (private pension funds, reduced retirement opportunities, raising age pension fund ceiling, one-person personal income), pension funding and institutional system. |
| Keywords: | pension system, pensions, demography |
| JEL: | H55 H75 J11 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90399&r=tra |
| By: | Chen, Xi; Wang, Tianyu; Busch, Susan H. |
| Abstract: | We estimate the impact of pension enrollment on mental well-being using China’s New Rural Pension Scheme (NRPS), the largest existing pension program in the world. Since its launch in 2009, more than 400 million Chinese have enrolled in the NRPS. We first describe plausible pathways through which pension may affect mental health. We then use the national sample of China Family Panel Studies (CFPS) to examine the effect of pension enrollment on mental health, as measured by CES-D and self-reported depressive symptoms. To overcome the endogeneity of pension enrollment or of income change on mental health, we exploit geographic variation in pension program implementation. Results indicate modest to large reductions in depressive symptoms due to pension enrollment; this effect is more pronounced among individuals eligible to claim pension income, among populations with more financial constraints, and among those with worse baseline mental health. Our findings hold for a rich set of robustness checks and falsification tests. |
| Keywords: | pension enrollment,pension income,depression,mental health,older populations |
| JEL: | H55 I18 I38 J14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:285&r=tra |
| By: | Grogan, Louise (University of Guelph) |
| Abstract: | Impacts of child benefits and earned incomes on child wellbeing are identified for Russia. To predict earnings, a counter-factual commodity price model is constructed using information on local industrial composition and the evolution of world prices during 1994-2015 for six key commodity exports. Discontinuity in benefits eligibility at age 16 is exploited to predict the probability of receipt. Child benefits are found not to be spent differently from earned incomes or to influence child health differentially. Benefits do not observably crowd out private transfers to households containing children. Earned incomes and child health appear to be little related. |
| Keywords: | labour supply, Russia, child wellbeing, commodities prices, child benefits, program evaluation |
| JEL: | H3 I12 O12 O5 R11 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11962&r=tra |
| By: | Hanming Fang; Zhe Li; Nianhang Xu; Hongjun Yan |
| Abstract: | We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their “perk spending.” Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced. |
| JEL: | G30 G38 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25300&r=tra |
| By: | Iga Magda; Ewa Cukrowska-Torzewska |
| Abstract: | We analyse the link between the presence of female managers and the size of the firm-level gender pay gap. We look separately at the private and public sector, basing on a large linked employer-employee dataset for Poland. Using a non-parametric and parametric decompositions, we find that higher presence of female managers is associated with more pay advantage towards women in selected types of public sector units: the ones in which remunerations of women and men are already equal, and a large share of the workforce is tertiary-educated. The effects are, however, relatively small in size. In private establishments, lower gender wage inequality is associated with higher shares of female workers, but not female managers. |
| Keywords: | gender wage gap, wage inequalities, public sector, female managers, Nopo decomposition, Oaxaca- Blinder decomposition |
| JEL: | J16 J31 J45 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp082018&r=tra |
| By: | Karbowski, Adam; Kryśkiewicz, Łukasz; Prokop, Jacek |
| Abstract: | The present article shows and discusses the economic problems of market cartelization, and perceives cartels as objects of public policy and interest. In this paper, the term ‘cartel’ has been profoundly explained and elaborated, and the selected examples of industry cartelization, coming both from the Polish national economy and economy of the whole European Union, have been presented. Next, the discussion has been set in relevant economic theories that allow to interpret cartel behavior from the viewpoint of regulators (policy-makers) or in the light of collusion detection mechanisms. |
| Keywords: | Cartels; Public Policy |
| JEL: | K2 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90364&r=tra |
| By: | Jan Witajewski-Baltvilks; Marek Antosiewicz; Andrzej Ceglarz; Haris Doukas; Alexandros Nikas; Jakub Sawulski; Aleksander Szpor; Baiba Witajewska-Baltvilka |
| Abstract: | The Polish power sector currently stands at a crossroads, facing two alternative pathways. First, the decarbonisation pathway with radical CO2 emissions reduction, which involves a fast phase-down of coal. Second, the baseline pathway that abandons emission reduction targets, and involves a slow coal phase-down. Both pathways are associated with risks. The decarbonisation pathway requires large-scale investment in carbon-free technologies in the power sector that may crowd out investment in other sectors of the economy. Other risks associated with this pathway include the destabilisation of the power system, dependency on imported technologies and job losses in mining. The baseline pathway may involve the loss of international reputation, the waste of research and development (R&D) resources on coal technologies, and a growing dependency on imported coal. In this report we define the electricity mix associated with each pathway and compare their financial and macroeconomic costs using simulation models. We also perform a qualitative analysis of the risks that are not captured by the models. We argue that the decarbonisation pathway is unlikely to be significantly more costly than the alternative pathway of no reduction targets. Some socioeconomic risks of decarbonisation such as a potential fall in employment and increased dependency on imported technologies could be mitigated if the government communicates to firms and workers that the scale-down of coal sector is inexorable given the global commitment to combat climate change. However, it will be accompanied by a simultaneous scale-up of the sector related to carbon-free technologies. |
| Keywords: | low-carbon transition, DSGE and bottom-up modelling, stakeholder engagement |
| JEL: | Q43 Q52 Q58 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:report:rr052018&r=tra |