Multisectoral econometric models of the centrally planned economies and the disequilibria

The paper provides a systematic analysis of the properties of large econometric macro models built for the Centrally Planned economies of the '70s and '80s. A specific typology of macro models is introduced, distinguishing between the demand and quasi-demand determined systems on the one hand and the supply and quasi-supply determined systems on the other, and also between complete and incomplete models specifying only one side of economic activities (i.e. generating either demand or supply). It is shown that, under the command type economy, the incomplete, fully supply determined systems prevailed, generating production and showing its allocation. The economic reforms of the '80s, which aimed at a slow transition towards market economies, brought about a tendency towards constructing complete quasi-supply determined systems (especially for Poland and the CSRS). Since, in principle, they were built for shortage economies, the model builders had to allow for unobservables (final and intermediate demand, capacity utilization) and, on the other hand, for an increasing role of the financial phenomena (including prices) and financial policy instruments. A summary of the applications of macro models in forecasting and policy simulations is provided and new tendencies associated with regaining economic equilibria and approaching the market mechanisms emerging in the period of transition are shown.     

The Dynamics of Capital Structure in Transition Economies

This paper uses a dynamic unrestricted capital structure model to examine the determinants of the private companies' target financial leverage and the speed of adjustment to it in two transition economies, the Czech Republic and Bulgaria. We explicitly model the adjustment of companies' leverage to a target leverage, and this target leverage is itself explained by a set of factors. The panel data methodology combines cross-section and time-series information. The results indicate that the Bulgarian corporate credit markets were less supply -constrained than those of the Czech Republic during the period under investigation. Bulgarian?companies adjusted much faster to the target leverage than Czech firms. The speed of?adjustment related positively to the distance between target and observed ratio for Bulgarian companies while the relationship was neutral for Czech companies. The conservative policies of Czech banks and the exposure control were likely responsible for the slower adjustment among the larger companies while the opposite were true for Bulgarian banks and companies.     

Wage determination in late socialism: The case of Poland

Does economic transition necessitate a profound change in the inter-industry wage structure? This paper argues that principles of wage determination in centrally planned economies were not basically different from those prevailing in market economies. Even if the center became involved in wage setting, reward for human capital and the compensating differential had to be taken into consideration. Moreover, market power led to rent-sharing via wage bargaining and efficiency wages. Hence, this paper claims that wages in socialist economies were determined by similar factors to those in market economies. This is supported by comparison of inter-industry wage structures between socialist and capitalist countries and by results of the estimation of the wage equation for Poland. There is a noticeable degree of similarity in wage structures generated by both systems.     

Purchasing Power Parity in Three Transition Economies

This paper uses cointegration analysis on monthly data over April 1994-December 2000 to test the relevance theory of Purchasing Power Parity (PPP) for two advanced transition economies (Poland and the Czech Republic) and one lagging transition economy (Romania). PPP is not rejected between the lagging reformer and developed market economies, but is rejected between the advanced reformers and the developed economies. However, PPP is not rejected between the two advanced transition economies, though it is rejected between the lagging and advanced transition economies. The evolution of the real exchange rates over 1994-2000 suggest that a significant explanation for these findings is the central role of the exchange rate in the disinflation strategies of Poland and the Czech Republic in the early part of this period, in contrast to the managed float followed by Romania throughout the period.     

Gender Pay Gap in Poland

In this paper we examine the gender pay gap in Poland over 1987–1996, i.e., shortly before and during the transition to market economy. The principle source of data used throughout the paper is the Household Budget Survey conducted by the Polish Central Statistical Office. The study documents three major results. First, the transition to market economy in Poland favored women substantially in terms of relative earnings differentials. The gender pay gap decreased by 10.2 log% points and the position of mean female in male wage distribution went up by 9.9 percentiles over 1987–1996. By 1995, the values of these measures reached the level observed in industrial economies such as the U.K., Austria, Italy or Australia. Second, rising relative skills of women and rising returns to skills explain about half of the fall in the gender pay gap over 1987–1996. Third, the pay gap did not follow a smooth adjustment process. 1989, the year of the first democratic parliamentary elections, which resulted in forming the first non-communist government, saw the most spectacular change, although actual market reforms began one year after. The changes in the early phase of the transition were mostly driven by sudden shifts in relative wages and employment across industries. Afterwards, the pay gap measures stabilized, partly because rising overall wage inequalities offset the advantages of females due to observed skills.     

美国金融监管的法律与政策困局之反思——兼及对我国金融监管之启示

对美国金融监管困局的反思表明,多年来"做大"金融市场份额即等同于提升市场竞争力的迷思,使美国陷入了监管失效的困境。同时,美国现行联邦和州多重监管的体制,导致监管成本高企、效率低下、监管重叠与监管真空并存、"监管竞次"和"监管套利"等重重积弊。此外,过于陈旧落后而不适应虚拟经济形态的的金融法规、以及金融监管部门屡被特殊利益集团俘获,更直接导致了监管灾难。鉴此,我国必须走出金融法"唯美(美国)主义"之陷阱,信守金融监管保护投资者之基础价值,彻底反思并重构不适应虚拟经济形态的金融法规,并运用"分期治理"之政治智慧推动金融监管框架之完善,将金融监管规则真正还原为市场和技术规则,而不是人际和政治之术。     

External shocks,economic reforms,and the foreign trade behavior of the Soviet Union,China, and Hungary, 1970–1987

This article examines the external shocks and subsequent adjustment processes in the Soviet Union, China, and Hungary during 1974–76, 1979–81, and 1984–87. It compares the experiences of the three socialist countries with regard to external shocks to those of inward-and outward-oriented groups of newly industrializing countries (NICs). In contrast to the NICs, terms of trade effects were of secondary magnitude to export demand effects of external shocks in the three socialist countries during the first two periods. The oil-exporting Soviet Union had beneficial terms of trade effects during the first two periods, with unfavorable effects coming only in the third period. The adjustment responses to the external shocks varied greatly in the Soviet Union from the other two reform-oriented socialist countries and from both groups of NICs. It is interesting to note that the types of responses in the Soviet Union were quite opposite to that one observes for market economies. However, reform-oriented China and Hungary seemed to have response patterns similar to those of market economies, though China's response was similar to the outward-oriented NICs, while Hungary's was similar to the inward-oriented NICs.     

The price-wage inflationary spiral in Poland

In this paper the problem of price-wage relationship modelling in the case of a mixed economy is addressed. The empirical investigation was based on Polish annual data for the period of a centrally planned system (1964–1989) and on quarterly data for the period of transition towards a market economy (1990.1–1990.3). The traditional approach proved to be inappropriate because of the variables' nonstationarity. Identification of long-run behaviour was attempted by applying the two-step Engle-Granger's, or alternatively, Johansen's maximum likelihood (ML) procedures. The ML estimator provided better estimates of cointegration vectors and, even more important, allowed as many as three to be found. The main conclusion which can be drawn from the empirical findings is that three variables: price index, average wages and labour productivity, form a multi-dimensional equilibrium space. This property of the described phenomena needs to be taken into serious account when building macroeconometric models explaining the behaviour of the Polish economy. The existence of these three cointegration vectors is troublesome because of unusual problems of interpretation. However, if it is not as a result of misspecification and/or small sample bias, it proves that much remains to be learned about the price-wage mechanisms functioning in economies having a mixed character.     

The role of interest rates during the transition to a market economy

We construct a simple two period model of an economy in transition from being centrally planned to being market oriented. Using this model, we draw certain positive conclusions about economic policies that reduce distortions during the transition period. In particular, we focus on the role of interest rates, a market parameter that has previously been almost entirely ignored in planned economies. Using stylized data derived from Czechoslovakia, we show that increase in nominal interest rates can actually be welfare-improving by partially compensating for the distortions induced by the transition process. The model is sufficiently general to be applied to a number of transition economies, and we use the cases of Czechoslovakia, the USSR, and China as examples of some of the phenomena that we are trying to explain. We show that the model generates a constrained, suboptimal equilibrium. In particular, we see that raising interest rates during the transition period reduces repressed savings, brought about by shortages in the controlled market. An improvement in consumer utility can therefore be brought about.     

The Private Interests of Public Officials: Financial Regulation in the US Congress

Legislators' private financial holdings affect policy decisions. Due to financial self‐interest, we theorize that legislators whose personal investment portfolios include equities from firms affected by proposed policies vote for legislation that benefits those firms. We also theorize that legislators with greater personal exposure to equity investments support policies that benefit equities markets generally. We create a novel data set of legislators' personal stock investments and examine major congressional actions since the 1990s on financial deregulation and market intervention. US House members who own stocks in firms who benefit from financial deregulation vote for deregulation. House members with greater exposure to financial and automotive stocks support the financial and auto bailouts, respectively. General exposure to equities markets is also associated with support for key legislation boosting markets. The normative implications are significant, as legislators' private interests influence decisions in the public sphere.     

在华外资金融机构的“政策破局”战略及其破解

中国加入WTO后,外资金融机构的市场准入将逐步放宽,中资金融机构面临的冲击和挑战将加大.在华外资金融机构主要凭借其在成熟市场经济体系下混业经营的体制优势和业务优势,利用中国对外资金融机构在业务审批和金融监管方面的缺漏,从政策上逐步突破业务经营制度上的限制,实现其破局为先、优势取胜的战略图谋.对此,中国金融监管当局应采取正视而不是回避,主动而不是被动的姿态,研究和制定中国金融业迎接外资金融机构挑战的长远期规划和策略,完善金融法规体系,积极鼓励中资金融机构业务创新和制度创新,提高金融监管效率和水平,创造内外资金融机构公平竞争的环境.     

Study on the financial supervision and anti-monopoly regulation of integration of industry and finance �� in view of confronting global financial crisis and mitigating domestic financial risks

With governmental loose control in the major global economies since 1980s, the integration of industry-finance capital generates group companies. The integration of industry and finance (hereinafter as the “IIF”) is on the way to gradually become the mainstream of the world. It is needed to reconsider the IIF in light of the current global financial crisis. The IIF expands economic scale and increases efficiency, bringing two challenges in practice: financial risk overlay and anti-competition of the market power. What is more, the formation and abuse of market power will amplify the effect of risk overlay. To mitigate financial risks and protect market competition and to improve the regulation of the IIF, it is needed to improve both financial supervision and anti-monopoly regulation, as both are crucial.     

Reforming a socialist developing country — The case of Vietnam

After over a decade of reform tinkering, Vietnam in early 1989 enacted a big bang that sought to combine stabilization with moving toward a market environment. In quick order, the pace of inflation was brought down to manageable levels. But the disarray resulting from stringent monetary policies not being supported by fiscal stances and control over foreign exchange led to considerable capacity underutilization and unemployment well beyond what would seem required to sustain the adjustment effort. The paper looks at the antecedents of the reform, its main components, the internal contradictions, and the dilemmas faced by the Government with a view to deriving lessons for other planned economies that may switch abruptly from a pervasive administrative planning environment to a model eventually to be anchored to market relations.     

The economic transformation of Eastern Europe: the case of Poland

This article identifies the main features of Poland's radical transition to capitalism-stabilization program, trade liberalization, and privatization reform. The ‘shock therapy’ adopted by Poland in 1991 is presented as the most effective approach, though not without political risk. In fact, the major threat to Poland's transition process is the emergence of well organized ‘interest groups’ putting increasing demand on the government to relax financial restrictions and re-open large-scale subsidization. These political pressures have already caused a slowdown in the privatization program, so that there is a possibility of the renewal of rapid inflation. Several methods for accelerated privatization, including the distribution of vouchers and setting up investment funds to manage portfolios of shares, are discussed in detail.     

后危机时代下国际金融监管法律规制比较研究——兼及对我国之启示

后危机时代下,世界主要经济体的主要任务开始由采取短期政策措施以遏制危机蔓延和深化转向金融监管立法制度改革,以此修复现行金融监管体系的根本性缺陷。美英及欧盟世界三大经济体先后颁布多项金融监管改革法案,折射出国际金融监管立法改革的新动向。其中加强系统性风险监管和加大金融消费者保护力度成为改革重点。为完善我国金融监管体制,突出解决系统性风险监管薄弱和金融消费者权益保护缺失提供了借鉴。     

Financial reforms and regional investment conflicts in China: A game-theoretic analysis

In the transition from a command to a market economy, macroeconomic stabilization poses a grave problem facing the reform governments. A distinct feature of China's economic fluctuations in the post-1979 period has been its “soft-constraint competition”. A two-region game theoretical model is developed in this paper. We find that monetary decentralization in the earlier stage of economic liberalization takes the inflation and fiscal deficits out of the control of the central monetary authorities. The prospective financial reforms will subject local governments' investment drives to the indirect regulations of monetary policy; but by strengthening monetary restraints, will result in massive borrowing from the domestic, or perhaps more likely, the international financial market to finance government deficits, and hence a large build-up in the stock of debts.     

INTERVENTION VS. CO-OPERATION: LEGITIMACY OF THE EBRD CONDITIONALITY

The EBRD is a “political bank.” “Multiparty democracy, pluralism and market economies” are the conditions (termed as “conditionality”) to get financial resources. The EBRD conditionality is coercive and intrusive. In sense of its nature, it is political rather than economic. Since it is purposed to foster the transition of open market, it is legitimate. In essence, it is believed to be a form of good international co-operation rather than that of willful or arbitrary intervention.     

The Chinese mafia: private protection in a socialist market economy

Gambetta's theoretical framework focuses on two important aspects directly relating to the birth and development of mafias, namely a demand for private protection and a supply of the same. In the Post-Mao era, China started its transition from a centrally controlled economy to a market-directed economy by adopting reform and opening-up policies. The widespread creation of property rights has exponentially enlarged the demand for protection. However, property rights are ambiguously defined in the Chinese legal system, and the state is unable and unwilling to provide efficient and sufficient law enforcement mechanisms for needy people because of the rampant corruption of government officials and the weak judicial system. In this case, the mafia that is interested in the private provision of protection developed into an alternative enforcement mechanism for ‘securing’ property rights in China's economic transition. The most important service offered by the mafia in China is not only to assist business enterprises in monopolising the market, but also to assist local government in China's economic reform.     

Eliminating Poverty? ‘Financial Inclusion’, Access to Land,and Gender Equality in International Development

The UK White Paper on International Development published in 2009 explicitly links access to financial services with poverty reduction. In doing so, it echoes the policies the World Bank set out in its 2008 Policy Research Report on Finance. This paper offers a detailed analysis of these development policies and connects the current plans for the expansion of financial sectors in the developing world with policies that promote the acquisition of formal land title. The paper argues that as asset‐backed lending expands, commercial banks will come to play an increasingly important role in third world economies. In light of this, it reviews important first‐hand accounts of the difficulties of drafting legislation to protect women's access to land in the face of opposition from commercial lenders, using Tanzania and Uganda as illustrative examples. The paper assesses the implications of expanding access to credit for gender equality and concludes that it is difficult to reconcile the promotion of financial inclusion with the aim of international development to end poverty.     

Econometric Analysis of Managers' Judgements on the Determinants of the Financial Situation in Russia

The paper presents an econometric analysis of the determinants of the financial situation in Russian manufacturing. Official statistics in Russia are not reliable. This is why the analysis is based on business opinion surveys carried out within `The Russian Economic Barometer' long-term research programme for monitoring and investigation of the transition to the market in Russia. The new adaptive approach elaborated by the author of the paper is used to form a correct set of explanatory variables in regression equations. This approach is based on the comparison of the forecast abilities of alternative models with different sets of explanatory variables. Two periods are considered and compared: January 1993 to January 1995 and February 1995 to January 1998. Two variables, the diffusion index of output and the average order-book level, provide the best explanation of the managers' judgement regarding the financial situation in Russia for the first period. It was found that for the second period, the influence of the `output index' diminished. The main factors with which managers related a `good' financial situation in their enterprises were the sample average of order-book level, the stocks of finished goods, the index of order-book level, the index of output prices ratio, and the indebtedness to banks. All relationships are presented in the context of linear probability and logit models.