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on Transition Economics |
| By: | Robert Gold; Julian Hinz; Michele Valsecchi |
| Abstract: | Do economic sanctions affect internal support of sanctioned countries’ governments? To answer this question, we focus on the sanctions imposed on Russia in 2014 and identify their effect on voting behavior in both presidential and parliamentary elections. On the economic side, the sanctions significantly hurt Russia’s foreign trade — with regional variance. We use trade losses caused by the sanctions as measure for regional sanctions exposure. For identification, we rely on a structural gravity model that allows us to compare observed trade flows to counterfactual flows in the absence of sanctions. Difference-in-differences estimations reveal that regime support significantly increases in response to the sanctions, at the expense of voting support of Communist parties. For the average Russian district, sanctions exposure increases the vote share gained by President Putin and his party by 13 percent. Event studies and placebo estimations confirm the validity of our results. |
| Keywords: | economic sanctions, voting behaviour, gravity estimation, rally-around-the-flag |
| JEL: | F12 F14 F15 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11033&r=tra |
| By: | Frantisek Brazdik; Tatiana Keseliova; Karel Musil; Radek Snobl; Jan Solc; Stanislav Tvrz; Jan Zacek |
| Abstract: | We investigate inflation expectations and their measures in the context of the 2022 inflation surge in the Czech Republic. Using data and econometric analyses, we explore how inflation expectations are formed and how they may affect inflation developments. To capture the overall trend of inflation expectations in the Czech economy, we develop a Common Inflation Expectations index. Additionally, we extend the CNB's g3+ core projection model by incorporating endogenous expectation premiums that reflect elevated inflation expectations. Utilizing the Common Inflation Expectations index and the modified model, we construct a simulation that provides policy-relevant outcomes when addressing high inflation. By presenting the simulation, we emphasize the importance and relevance of our research for practical policymaking. |
| Keywords: | Forecasting, inflation, inflation expectations, inflation expectations index, structural modelling |
| JEL: | C32 C50 E31 E37 E50 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2024/3&r=tra |
| By: | Morgane Salomé |
| Abstract: | A small Western Asian country, Georgia has an outward-looking economic model, mainly based on services such as trade and tourism. The Georgian economy is thus highly vulnerable to external shocks and was hard hit by the Covid-19 crisis, with a recession of 6.8% in 2020, the worst since 1994. In light of these characteristics and the country’s economic ties with Russia and Ukraine, most observers expected the Georgian economy to be adversely affected by the conflict between these two countries.However, these anticipated negative effects have not materialized and economic growth remained buoyant in 2022 (+10.1%, after the rebound of +10.5% in 2021). This was in particular due to a recovery in tourism and an explosion in migratory and financial flows from Russia. These factors have also contributed to a reduction in the fiscal and current account deficits (-2.6% of GDP and -4.0% of GDP, respectively) and an appreciation of the lari. In 2023, growth is expected to have remained above its potential (6.2% according to the International Monetary Fund – IMF) and the fiscal and current account deficits would appear to have been contained. |
| Keywords: | Géorgie |
| JEL: | E |
| Date: | 2024–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:avg:wpaper:en16665&r=tra |
| By: | Rodolfo G. Campos; Benedikt Heid; Jacopo Timini |
| Abstract: | The Cold War was the defining episode of geopolitical fragmentation in the twentieth century. Trade between East and West across the Iron Curtain (a symbolical and physical barrier dividing Europe into two distinct areas) was restricted, but the severity of these restrictions varied over time. We quantify the trade and welfare effects of the Iron Curtain and show how the difficulty of trading across the Iron Curtain fluctuated throughout the Cold War. Using a novel dataset on trade between the two economic blocs and a quantitative trade model, we find that while the Iron Curtain at its height represented a tariff equivalent of 48% in 1951, trade between East and West gradually became easier until the fall of the Berlin Wall in 1989. Despite the easing of trade restrictions, we estimate that the Iron Curtain roughly halved East-West trade flows and caused substantial welfare losses in the Eastern bloc countries that persisted until the end of the Cold War. Conversely, the Iron Curtain led to an increase in intra-bloc trade, especially in the Eastern bloc, which outpaced the integration of Western Europe in the run-up to the formation of the European Union. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.03508&r=tra |
| By: | Biswajit Banerjee (National Bank of Slovakia); Peter Toth (National Bank of Slovakia) |
| Abstract: | In recent years, a small number of studies have emphasized that subjective well-being of individuals depends not only on income but also consumption and wealth. However, only a few have examined the influence of all three variables simultaneously. Empirical studies have also analyzed the role of self-centered and community-centered inequalities but the inclusion of both measures in the same specification is scarce. In a departure from much of the existing literature, this paper analyzes concurrently the influence of all three economic well-being indicators and both types of inequalities on subjective well-being. We find that absolute levels of income, consumption and wealth all have a significant positive effect that remains robust even after the inclusion of self-centered and community-centered inequalities in the regression equations. The evidence indicates that both types of inequalities are important considerations for subjective well-being, but with different influences. Self-centered inequality measured using reference group average has a positive signalling effect, while inequality defined by the position of an individual within the distribution of the relevant economic well-being indicator has a negative comparison effect. Whereas community-centered inequality in income has a positive signalling effect, consumption and wealth inequalities have a negative comparison effect. |
| JEL: | I31 D12 D31 G51 |
| URL: | http://d.repec.org/n?u=RePEc:svk:wpaper:1104&r=tra |
| By: | Martin Cesnak (National Bank of Slovakia); Jan Klacso (National Bank of Slovakia); Patrik Kupkovic (National Bank of Slovakia); Andrej Moravcik (National Bank of Slovakia); Stefan Rychtarik (National Bank of Slovakia); Roman Vrbovsky (National Bank of Slovakia) |
| Abstract: | The residential real estate market in Slovakia is very important, both from the perspective of macroeconomy and financial stability. Home ownership is very high and housing loans form a large part of the banks’ assets. Therefore, the National Bank of Slovakia follows thoroughly the development on this market. Residential real estate data are quarterly published, and the development of real estate prices is assessed in regular publications, such as the Economic and Monetary Developments or the Financial Stability Report. For a better understanding of the development on this market, different indices have been developed. The list includes composite indices, housing affordability indices and macroeconomic models estimating fundamental prices or studying the impact of different shocks on real estate prices. This paper gives an overview of the recently used RRE-related indices and serves as a methodological note to the RRE dashboard that is available on the NBS website. |
| JEL: | G12 E37 R21 R31 |
| URL: | http://d.repec.org/n?u=RePEc:svk:wpaper:1103&r=tra |
| By: | Tersoo David Iorngurum (Charles University, Prague, Czech Republic) |
| Abstract: | The interest rate pass-through represents a vital transmission mechanism between the financial sector and the real economy. Nonetheless, the empirical literature offers no consensus regarding the direction and extent of asymmetry in this pass-through. In this paper, I systematically review the empirical literature using various contemporary meta-analytic techniques to test for publication bias and establish consensus for the conflicting study outcomes. I find evidence of publication bias. Beyond publication bias, the magnitude of the reported pass-through declines relative to the simple literature average, but substantial asymmetry remains. Precisely, bank lending rates appear to be a lot more responsive to increases than decreases in monetary policy interest rates. Furthermore, I identify the factors responsible for diverse study outcomes. These include study characteristics, asymmetry, and macrofinancial variables. Concerning study characteristics, results differ due to differences in data frequency, data source, the researched period, study quality, author affiliation, and estimation context. Concerning macrofinancial factors, results differ due to differences in openness to foreign direct investment inflows, openness to trade, the inflationary environment, and economic development status. The pass-through is particularly strong in countries more open to foreign direct investment inflows and developed economies but relatively weak for countries more open to import trade and countries with a high inflationary environment. Finally, I model the interest rate pass-through based on the best practices in the literature. On average, the short-run pass-through to bank lending rates is about 49.7% for a policy rate hike and about 29.7% for a policy rate cut. On the other hand, the long-run pass-throughs are about 69.6% and 46.6%, respectively. |
| Keywords: | Interest rate pass-through, asymmetry, meta-analysis |
| JEL: | E43 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_17&r=tra |
| By: | Konstantins Benkovskis (Latvijas Banka); Olegs Tkacevs (Latvijas Banka); Karlis Vilerts (Latvijas Banka) |
| Abstract: | This study draws on employer-employee data for Latvia to investigate how participating in a job retention scheme (JRS) impacts the within-occupation composition of skills in participating firms. The findings of this research reveal that involvement in JRS positively affects the likelihood of employees retaining their employment with the same firm after the end of the programme. This positive effect is independent of the employee's skill level. However, individuals that perform higher-skilled tasks in the same occupation are less likely to participate in the JRS because of legal restrictions on the maximum amount of the benefit and the income replacement rate. Taken together, these findings suggest that JRSs may have a detrimental impact on the within-occupation composition of the skills of the workforce at the firms that participate in such schemes. |
| Keywords: | job retention scheme, short-term work scheme, Covid-19, employment, skills |
| JEL: | E24 H12 J62 J68 |
| Date: | 2024–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:ltv:wpaper:202402&r=tra |
| By: | Bruno, Lars Christian (BI Norwegian Business School); Grytten, Ola Honningdal (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | This short paper uses recent estimates of GDP per capita for the Baltic countries for the 1919-2020(22) period to test for convergence between the Baltic and the Nordic economies. Drawing from the methodology used in Bernard and Durlauf (1996) and Greasley and Oxley (1997), we utilise a time-series approach to test for bivariate convergence between the various Baltic and Nordic economies. We find some evidence of conditional convergence and catching up for the interwar period, 1919-1939 and the post-Soviet era 1993-2022, when for the communist growth period until 1988 we find no trace of convergence, when thereafter during the last years of communism, the Baltic economies went into a severe and devastating recession. |
| Keywords: | Baltic; Scandinavia; economic growth; convergence; historical national accounts |
| JEL: | N14 N34 N94 O47 O52 |
| Date: | 2024–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2024_005&r=tra |
| By: | Créchet, Jonathan (University of Ottawa); Lalé, Etienne (York University, Canada); Tarasonis, Linas (Bank of Lithuania) |
| Abstract: | Cross-country employment differences are concentrated among women, the youth, and older individuals. In this paper, we document how worker flows between employment, unemployment, and out of the labor force vary by gender and age and contribute to aggregate employment differences across a large panel of European countries. We then build a life-cycle Diamond-Mortensen-Pissarides model capturing the salient features of our data. Key elements of the model are an extensive margin (i.e., labor force participation) and intensive margin (i.e., variable intensity) of search effort. The model attributes a major role to the production technology in driving differences in aggregate employment, while labor-market policies play a minor role. Search effort substantially amplifies the effects of technology across gender and age groups and is a prominent proximate cause of the cross-country variation in aggregate employment. |
| Keywords: | employment, unemployment, labor force participation, life cycle, worker flows, labor market institutions |
| JEL: | E02 E24 J21 J64 J82 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16878&r=tra |
| By: | Thang Nam Do (Crawford School of Public Policy, Australian National University); Paul J. Burke (Crawford School of Public Policy, Australian National University) |
| Abstract: | The phase-out of unabated coal power is crucial for meeting climate agreements in coal-dependent economies such as Indonesia and Vietnam. Despite both countries committing to the 2021 Global Coal to Clean Power Transition Statement, translating phase-out pledges into action poses considerable challenges. Drawing insights from interviews with government, civil society, and industry experts, this study identifies the key barriers hindering coal phase-out in each country. Concerns about potentially escalating electricity prices and power shortages loom large, with the former being more prominent in Indonesia and the latter more prominent in Vietnam. The obstacles appear particularly significant in Indonesia for reasons including its higher coal dependence. We conclude that prioritizing renewable energy growth, as well as halting the construction of new coal plants, would be the most practical and viable way forward for both countries rather than an oversized early focus on coal plant closures. The analysis is of high relevance to informing plans under the two countries’ Just Energy Transition Partnerships. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:2401&r=tra |
| By: | FANA Marta (European Commission - JRC); BÁRCIA DE MATTOS Fernanda; ESQUIVEL Valeria; ANZOLIN Guendalina; KUCERA David; TEJANI Sheeba |
| Abstract: | This report is the final output of a research project investigating the effects of automation on employment in the automotive, apparel and footwear industries in five countries, namely Germany, Indonesia, Mexico, Romania, and Spain. The main objective of this project has been to improve our understanding of how ongoing processes of technological upgrading, particularly automation, impact women’s and men’s employment and work in these industries. Our findings suggest that, in the short term, close to the introduction of new automation technology, the impact on employment takes the form of reassignment of workers directly involved in automated processes to other positions, tasks, and occupations. This study also explored the impact of automation in terms of work organisation and working conditions. Across the case studies, it emerged that the adoption of automation technologies has reduced heavy and repetitive tasks and improved health and safety for workers directly concerned by automation. Another interesting and related common finding is the reduction of workers’ autonomy who are now subject to more standardisation of tasks together with an ongoing process of deskilling of operators. Finally, in the apparel and footwear sector, we did not find evidence of defeminisation at the establishment level as well as the automotive factories remains highly male-dominated. Cultural norms and stereotypes which influence not only the jobs women and men apply to and get hired for, but also which training and education they engage in, contribute to this gender segregation in both sectors. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc136639&r=tra |