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2016, Issue 3 (31). Abstracts
On Intergenerational Distribution of the Burden of Greenhouse Gas Emissions In this paper we propose an extension to the Dynamic Integrated model of Climate and Economy (DICE) by William Nordhaus, where we introduce overlapping generations (OLG) in the original model, and consider competitive equilibrium with the government, which follows Ramsey optimal policy on greenhouse gases (GHG) emissions reduction. In this framework it is possible to distinguish between subjective discount rate of individuals and social discount rate of the government. Thus the model provides two discount rates in the OLG model: the social discount rate under which cost-benefits analysis of climate projects are evaluated and the market discount rate for investments in physical capital. Using numerical simulations methods we show that the introduction of overlapping generations in the model could streamline more and early GHG emissions reduction, without causing a significant impact on the return on capital market. Long term gain from this policy is approximately 1 °C. Key words: intergenerational discounting, greenhouse gases emissions, global warming, overlapping generations, integrated assessment models
Investment Effects of Preferential Trade Agreements: Quality Matters We develop a theoretical model of international capital movement in form of FDI. Our theoretical model describes non-linear impact of heterogeneous preferential trade agreements (PTAs) on FDI. In order to quantify PTAs heterogeneity we develop a methodology of PTAs classification. Using the methodology, we quantified a quality of more than 200 PTAs (out of 380 existing globally). Our model predicts that impact of PTA on FDI will depend on observed quality of PTA while marginal investment effect of PTAs will decrease with PTAs’ quality improvement. Empirically, we show that use of simple dummy for PTAs without taking into account PTAs heterogeneity and the non-linear effects of PTA on FDI overestimate the investment effects of PTAs up to 100%. Bilateral PTAs within CIS insignificantly affects FDI between countries – maximum investment effects of such agreements are estimated at 19%. Multilateral PTAs have a significant investment effects: FDI between signatories of multilateral PTAs rose up to 71%. Key words: foreign direct investment, preferential trade agreements, estimation of investment effects of integration, mathematical modelling
Real Wage Flexibility in Russia: Comparative Analysis Elasticity of real wages with respect to unemployment is measured for Russia. The estimates are compared to those obtained for a sample of advanced and transition countries by other authors. In order to make our conclusions more robust 3 different specifications are used to construct "wage Phillips curve". One model draws on data by region, two others draw on country-wide series. We find that regardless of the econometric specification real wage elasticity in Russia exceeds by far elasticity in all (or almost all) other countries for which comparable estimates are available. This evidences that high wage flexibility is an important salient feature of the Russian labor market. We obtain thus an explanation to the sustained low unemployment in the recent years despite marked output decline. Key words: Phillips curve, wage flexibility, Russia, unemployment rate, comparative analysis
Stock Markets under the Changing Terms of Trade Stock indices are among the indicators of the state of the economy, that among the first to respond to both the positive and the negative economic phenomena. It makes the understanding of mechanisms influencing them very important. Structural Vector Autoregression model (SVAR) approach is widely used for this purpose. These models allow us to estimate impulse responses of indices to the impact of different economic variables. A slightly different Smooth Transition Autoregression model (STAR) approach that allows identifying differences in responses due to economic conditions is used in this paper for the estimating of responses of stock indices. More specifically we apply Smooth Transition Vector Error Correction model (STVECM) approach. We use oil prices as the characteristic of the Russian economy defining changes in economic conditions and as a proxy defining changes in terms of trade, since oil is one of the major export goods for Russia. Other macroeconomic factors used in the paper are state budget expenses, consumer price index (CPI), the exchange rate of the dollar against the ruble, ratio of the exchange rates of dollar and euro against the ruble, LIBOR interest rate, and the S&P500 index. Obtained results show that the responses differ significantly depending on the level of oil prices. These results are also useful for the design of mechanisms affecting stock market. Key words: stock market, stock indices, macroeconomics, switching state models
State Policy of Higher Education Sector Financing under the Budgetary Constraints The article describes the changing portrait of Russian higher education institutions compared to other countries. It is shown that the proportion of the funds allocated for the levels of higher education is similar to the structure of expenditure in other countries, however, its absolute values are three times behind the level of the OECD countries. Summarizing the international practice of higher education funding reforms, the authors analyze two aspects of the Russian higher education institutions’ reaction to the budgetary constraints: diversification of income sources and changes in the cost structure. The paper reveals major trends in the financing of the Russian higher education: concentration on leading universities support, reliance on public funding as the main source of higher education funding, low use of public-private partnership mechanisms and income from endowment funds. The paper gives the assessment of these trends impact on the universities’ economic position. Key words: higher education financing, universities’ fiscal policy, expenses on education, subsidy for state task, financial restrictions, income diversification
Long-Term Trends in Income Distribution Income and wealth inequalities in most countries – in the West, the former communist economies and in many developing states – have been growing in the last three decades. Inequalities in the late XIX century were much higher than before the rise of workers’ movements in the West and the 1917 Bolshevik Revolution, the strong inequalities of the previous century declined for over half a century until the 1980s as the threat of communism spreading inspired welfare redistributive reforms, giving capitalism "a more human face". But these checks and balances have greatly weakened in recent decades, especially after the fall of the Berlin Wall, and the growth of inequalities resumed in most developed and many developing countries with some notable exceptions (Latin America). This article discusses long term past and possible future trends in inequality. High inequalities are associated with an array of negative consequences, which lower the competitiveness of societies and countries, especially at higher stages of development. Inequalities cannot grow endlessly, there is probably a critical level of inequality, and if it is exceeded, national states descend into turmoil of social conflicts and fall apart. If the growth of income inequalities continues, then countries can get into the bad stable equilibrium trap that reproduces itself: poor quality of state institutions, low growth, low social mobility, high social tensions. Gradual reforms could help overcoming the trap, but if they are delayed, the further growth of inequalities could lead to social revolution. Key words: income and wealth inequalities, communism, capitalism, welfare state, share of labour and capital in national income
Social Inequality in the World – the Interpretation of Not-Evident Tendencies The inequality in the economy was different in different periods of economic development, within different political regimes, and depends on differences in the structure of society. The term is nowadays widely used – especially in political rhetoric – and almost always implies inequality of income distribution. Excessive income inequality distribution limits opportunities for economic growth of the country, for example, due to the increase in social inequality. Fluctuations in income from profits, shares, rents during crisis may temporarily reduce inequality, but the periods of prosperity naturally increase income inequality. Social inequality has a serious impact on economic growth and social stability in the country, but with a significant increase in income and consumption levels of the poor population in the XX–XXI centuries inequality in itself might not cause social unrest. Russia in the period of transformation has moved from a quasi-egalitarian society (in accordance with the parameters of inequality) to society, similar to the Latin American countries. Key words: wealth inequality, income inequality
Decomposition of Income Inequality in Contemporary Russia Over the last 25 years, Russia has passed from the group of countries distinguished by low levels of income inequality to the group distinguished by high ones. The macroeconomic analysis shows that this process is due to the differences in salaries, the weak equalizing effect of social transfers and new sources of income such as the income from property and of business activity. We have a poor understanding of the factors determining this inequality at the household level so far. Decomposition of equivalised household expenditure inequality into inter- and intra-groups using cross-sectional data (RLMS–HSE, 1994–2014) shows that during the whole research period one of the most significant factors of intergroup inequality is region of residence. During periods of high economic growth the significance of education and intensity of employment increased in intergroup inequality; however, during the period of economic stagnation the intergroup differentiation of educational potential began to decrease. Despite the important population policy aimed to increase the birth rate, children in families have become the most significant factor of intergroup inequality for the last years. A regression analysis of the determinants of inequality, which allows us to estimate the contribution of each factor to the model dispersion of per capita expenditure allows us to draw the conclusion that meritocratic factors explain a majority of observed inequality. The contribution of the child-burden factor to total inequality did not change during the past ten years, and at the same time, the inequality-decreasing effect of the presence of pensioners in households has continuously increased. Key words: income and wages inequality, wealth and poverty, human capital
Structural Change and Inter-Industry Wage Differentiation The paper discusses how industrial division of the Russian economy affected wage inequality in the beginning of XXI century. This impact depended on the industrial composition of employment, industrial wage premiums, and intra-industry wage differentiation. Calculations based on various Rosstat data sources suggest that all three factors contributed to the narrowing of wage inequality. Proportion of employment in the highest and lowest paying industries tended to shrink, compressing the wage distribution from the both tales. Wages in these industries approached the averages for the whole economy. At the same time, the intra-industry wage differentiation measured by Gini coefficients contracted as well. Observed dynamics in cross-industrial inequality can survive in medium term perspective. Lower hydrocarbon prices are likely to affect negatively the wage paying capacity of firms in this sector, thus compressing relative wages. The same can happen in the crisisridden financial sector. If upward pressures on wages in the budgetary sector do not disappear, relative wages here will grow bringing an equalizing effect on the total wage distribution Key words: wages, inequality, cross-industry differentiation Back | ||
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