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on Transition Economics |
| By: | Christopher J. Neely |
| Abstract: | This article analyzes financial market reactions to the Russia-Ukraine war with a focus on the opening weeks. Markets did not completely anticipate the war and asset price reactions strengthened from the first week—when there were hopes for a quick resolution—to the second week, when prices generally peaked and began to partially revert to pre-war values. Exposure to commodity trade and trade with Russia-Ukraine determined market perceptions of the riskiness of equity and foreign exchange assets. Credit default swap prices on sovereign debt and breakeven inflation rates indicate that markets saw the war as a measurable fiscal risk even for non-belligerents. |
| Keywords: | Russia; Ukraine; commodity price; War; oil; capital controls; exchange controls; sanctions; Exchange rate; equity |
| JEL: | Q02 F51 G15 G32 H56 |
| Date: | 2022–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:94820&r= |
| By: | Alona Shmygel (National Bank of Ukraine) |
| Abstract: | In this article, we developed a reliable method to detect house price bubbles using data for the largest Ukrainian cities. Further, we identified the thresholds, the breach of which is signaling that house price growth may be problematic as a bubble may be forming. In this paper, house price bubbles are detected with the help of two general approaches: ratio calculation and regression analysis. These general approaches are subdivided into two each. We calculated the Price-to-Rent and Price-to-Income ratios that can identify a possible over- or undervaluation of house prices for Ukrainian cities under the scope of this investigation. Then, we performed the regression analysis by building individual multifactor models for different cities and by running a pooled OLS regression for the panel data. According to the results, the only pronounced and prolonged period of house price bubbles is the one that coincides in time with the Global Financial Crisis – from late 2005 to early 2009. The bubble signals, produced by these methods are, on average, simultaneous and are in accordance with economic sense. A tool for measuring fundamental house prices and an indicator of bubble on housing markets will be used to monitor the systemic risks stemming from the real estate market. Thus, it will help the National Bank of Ukraine maintain financial stability. |
| Keywords: | House price bubbles, Fundamental house prices, Mortgage lending, Systemic risk, Regression analysis |
| JEL: | C31 C33 E30 G21 |
| Date: | 2022–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp22-2022&r= |
| By: | Miklós Szanyi (Institute of World Economics, Centre for Economic and Regional Studies, ELRN) |
| Abstract: | The rents play immanent role in the economy. Many types of rents thwart economic development, few of them deliver incentives. In case of emerging market economies, the most usual forms of rents are scarcity rents (mainly natural resources and arable land), regulatory rents and geopolitical rents. The existence of these rents and the creation of rent sources may impose serious moral hazards. In case rentiers collude with politicians (who are responsible for the control of the negative effects of rents) the hazards increase. This danger is smaller if the society is more open. The negative effects can lead to growth collapses if the society and the political arena is more closed. The paper compares two very different countries from the viewpoint of the negative economic effects of rents: Iran and Hungary. Iran is treated as a classic example of rentier state with closed social and political relationships. Hungary is placed historically at the crossroads of the Western competition state model (open society) and the traditional Byzantine rentier state (closed social relationships). The paper discusses the Iranian and Hungarian efforts of the introduction of competition state model elements from the angle of rent creation and rent control. The comparison showed that in Iran the strong legacy of closed society and the large-scale rent stream allowed little political space for the competition state institutions. The country suffered repeated growth collapses. In Hungary the transition process created many control institutions over rent seeking especially during the 1990s. However, the establishment of rentier state especially after 2010 could be implemented. Political, social and economic controls over rent seeking were not powerful enough to block the process. Yet, the rent streams are much more limited, and the control devices could not be eliminated entirely. Thus, rent seeking is not so much pervasive than in Iran. Nevertheless, its negative consequences are strong enough to block sustainable development, and direct Hungary towards the middle-income trap. |
| Keywords: | rent, corruption, open society, competition state, rentier state, Iran, Hungary |
| JEL: | H82 L32 L78 P27 P51 Q32 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:iwe:workpr:267&r= |
| By: | Deininger,Klaus W.; Ali,Daniel Ayalew; Kussul,Nataliia; Shelestov,Andrii Yu; Lemoine,Guido; Yailimova,Hanna |
| Abstract: | This paper uses a 4-year panel (2019–2022) of 10,125 village councils in Ukraine toestimate direct and indirect effects of the war started by Russia on area and expected yield of winter crops. Satelliteimagery is used to provide information on direct damage to agricultural fields; classify crop cover using machinelearning; and compute the Normalized Difference Vegetation Index (NDVI) for winter cereal fields as a proxy for yield.Without conflict, winter crop area would have been 9.14 rather than 8.38 mn. ha, a 0.75 mn. ha reduction, 86% ofwhich is due to economy-wide effects. The estimated conflict-induced drop in NDVI for winter cereal, which isparticularly pronounced for small farms, translates into a 15% yield reduction or an output loss of 4.2 million tons.Taking area and yield reduction together suggests a war-induced loss of winter crop output of 20% if the currentwinter crop can be harvested fully. |
| Date: | 2022–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:10123&r= |
| By: | Arndt, Channing; Diao, Xinshen; Dorosh, Paul A.; Pauw, Karl; Thurlow, James |
| Abstract: | Global food, fuel, and fertilizer prices have risen rapidly in recent months, driven in large part by the fallout from the ongoing war in Ukraine and the sanctions imposed on Russia. Other factors, such as export bans, have also contributed to rising prices. Palm oil and wheat prices increased by 56 and 100 percent in real terms, respectively, between June 2021 and April 2022, with most of the increase occurring since February (Figure 1). Wide variation exists across products, with real maize prices increasing by only 11 percent and rice prices declining by 13 percent. The price of crude oil and natural gas has also risen substantially, while the weighted average price of fertilizer has doubled. With these changes in global prices, many developing countries and their development partners are concerned about the implications for economic stability, food security, and poverty. |
| Keywords: | PHILIPPINES, SOUTH EAST ASIA, ASIA, Ukraine, poverty, food security, armed conflicts, crises, prices, shock, agrifood systems, equality, diet, commodities, fertilizers |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:gccbrf:20&r= |
| By: | Cuong Viet Nguyen |
| Abstract: | In view of the detrimental effect of COVID-19 lockdowns on household welfare, most countries implemented economic stimulus aid packages to support households. The extent to which these packages mitigated the pandemic's adverse effects on households is not just an intriguing question for researchers but is also important for policy makers. Using individual fixed-effect regressions, I find that an additional month of lockdown reduced per capita income by 8.3 per cent in Viet Nam. |
| Keywords: | COVID-19, Social assistance, Lockdown, Household welfare, Viet Nam |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2022-111&r= |
| By: | Iimi,Atsushi |
| Abstract: | Large-scale transport infrastructure investment can facilitate structural transformation bychanging firm behavior. Although its impact is evident over the long term, an important empirical challenge is potentialendogeneity of infrastructure placement. By using the dynamic panel data regression, the paper examines theimpacts of massive road corridor investment under the Nurly Zhol program in Kazakhstan. The paper takes advantage ofdetailed micro shipping data to capture historical changes in transport connectivity over the past 10 years. While theaverage travel speed has slightly increased, transport costs have been nearly halved. The estimated translog costfunctions indicate that local market accessibility is the most important factor to boost firm productivity. Theelasticity was 0.24 in absolute terms. Inventory is found to be a major cost factor for firms. It is found that a10-percent improvement in accessibility to large cities, such as Astana and Almaty, could allow firms to reduce theirinventory by 8.7 percent. The market accessibility is found to foster firm agglomerations, but agglomeration economiesdo not seem to translate into higher firm productivity. This is possibly because the Kazakh economy still lacks effectiveforward or backward linkages across industries. |
| Date: | 2022–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:10196&r= |
| By: | Gourlay,Sydney; Maggio,Giuseppe; Safyan,Anahit; Zezza,Alberto |
| Abstract: | Evidence indicates that land rights are strongly associated with several indicators ofwell-being and development outcomes, including access to credit, resilience to shocks, productivity, and bargainingpower. Accurately capturing gender differences in land rights is thus critical for development policy, promptingthe need to shift from household-level land rights data collection to collecting more and better individual-leveldata on land rights. The importance of individual land rights has been recognized in the Sustainable DevelopmentGoals (SDG) agenda, with the inclusion of two key indicators on land rights—SDG indicators 1.4.2 and 5.a.1. Althoughclear guidance exists for computing and monitoring these, the choice of data collection methods may influence theresulting indicators and the understanding of the underlying land rights. Specifically, research has shown that the useof proxy respondents in the collection of data on assets, including land, results in a biased understanding of men’sand women’s holdings vis-à-vis self-reporting. This paper uses data from a methodological experiment in Armenia toassess the implications of survey design—namely, respondent strategy and the level of disaggregation of land data—on themeasurement of individual land rights and SDG indicator monitoring. The findings suggest that in the context ofArmenia, the measurement of SDG 5.a.1 and 1.4.2 (a) is robust to respondent approach and data disaggregation level,driven largely by the high rates of documentation. Meanwhile, land rights that are less objective, such as theright to bequeath and perception of tenure security, are sensitive to these survey design choices. |
| Date: | 2022–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:10140&r= |
| By: | Jakub Cerveny (Ministry of Health of the Slovak Republic); Jan C. van Ours (Erasmus University Rotterdam) |
| Abstract: | This paper investigates the effects of health-care spending on mortality rates of heart attack patients. We relate in-hospital deaths to in-hospital end-of-life spending and post-discharge deaths to post-discharge health-care spending. In our analysis, we use detailed administrative data on individual personal characteristics and information about health-care expenses at the regional level. To account for potential selectivity in the region of health-care treatment we compare local patients with visitors and stayers with recent movers from a different region. In regions with higher health-care spending mortality after heart attacks is substantially lower. Apparently, there are long-term returns to local health-care spending. |
| Keywords: | Health-care spending, heart attack, mortality, duration models |
| JEL: | C41 H75 I11 I18 |
| Date: | 2022–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20220072&r= |
| By: | Mariusz Kapuściński (Narodowy Bank Polski) |
| Abstract: | In this study I analyse the effects of the transition to higher actual regulatory capital ratios due to the tightening of capital regulations in Poland. In contrast to earlier studies for this economy, as a measure of capital regulations I directly use minimum regulatory capital ratios. I focus on the impact on bank lending and GDP. I apply Bayesian panel vector autoregressive models to bank-level data. I find that the tightening of capital regulations lowers bank lending and GDP for at least one out of two analysed minimum regulatory capital ratios. This implies that capital regulations are an effective prudential policy tool in Poland. I also illustrate, as the starting point for the choice of a research design, the threats of not distinguishing capital regulation shocks from capital shocks. Finally, I attempt to identify non-linearities in the effects of changes in capital regulations. |
| Keywords: | capital regulations, bank lending, Bayesian panel vector autoregressive models, panel data, macroprudential policy |
| JEL: | E69 E51 G21 C33 C11 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:350&r= |
| By: | Ilkin Huseynov (Central Bank of the Republic of Azerbaijan); Nazrin Ramazanova (Central Bank of the Republic of Azerbaijan); Hikmat Valirzayev (Central Bank of the Republic of Azerbaijan) |
| Abstract: | This study examines whether payment system data can be useful for tracking economic activity in Azerbaijan. We utilise the transactional payment system data at the sectoral level and employ a Dynamic Factor Model (DFM) and Machine Learning (ML) techniques to nowcast quarterover- quarter and year-over-year nominal gross domestic product. We compared the nowcasting performance of these models against the benchmark model in terms of the out-of-sample root mean square error at three different horizons during the quarter. The results suggest that ML and DFM models have higher predictability than the benchmark model and can significantly lower nowcast errors. Although our payment time series is still too short to obtain statistically robust results, the findings indicate that variables at a higher frequency in such data can be helpful in assessing the current state of the economy and have the potential to provide a faster estimate of the economic activity. |
| Keywords: | Payment data, Nowcasting, ML, DFM |
| JEL: | C32 C38 C52 C53 E42 |
| Date: | 2022–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp23-2022&r= |
| By: | French, E.; Lindner, A.; O'Dea, C.; Zawisza T. |
| Abstract: | We estimate the impact of public pension systems on labor supply far from the normal retirement age by exploiting Poland's switch from a Defined Benefit to a Notional Defined Contribution scheme for men born after 1948. Using the universe of taxpayers and this sharp cohort-based discontinuity in the link between current contributions and future benefits, we estimate an employment elasticity with respect to the return to work of 0.44 for ages 51-54. We estimate a lifecycle model that matches these results. The model implies that the change in the contribution-benefit link from the reform increases employment among those in their 30s but decreases it at older ages, reducing overall labor supply across the lifecycle by 2 months. |
| Keywords: | Labor supply, pensions, contribution-benefit link, defined benefit, defined contribution |
| JEL: | D15 H55 J22 J26 |
| Date: | 2022–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2248&r= |