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81. Financial Sector Structure and Financial Crisis Burden: A Model Based on the Russian Default of 1998

Author:
George Mavrotas and Dmitri Vinogradov
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We consider an overlapping generations model with two production factors and two types of agents in the presence of financial intermediation and its application to the Russian default of August 1998. The paper focuses on the analysis of the consequences of a sudden negative repayments shock on financial intermediation capacity and consequently on the economy as a whole. The model exhibits a 'chain reaction' property, when a single macroeconomic shock can lead to the exhaustion of credit resources and to the subsequent collapse of the whole banking system. To maintain the capability of the system to recover, regulatory intervention is needed even in the presence of the state guarantees on agents' deposits in the banks (workout incentives). We compare the results for an intermediated economy with those derived under the assumption of a market economy, and draw some broad conclusions on the consequences of the crises, which are contingent on the financial sector structure.
Topic:
Development, Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Russia

82. Economic Effects of Free Trade between the EU and Russia

Author:
Pekka Sulamaa and Mika Widgrén
Publication Date:
05-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This study simulates the economic effects of eastern enlargement of the EU and an EU-Russian free trade area. The main emphasis of the paper is on the effect this would have on the Russian economy. The simulations were carried out with a GTAP computable general equilibrium model, using the most recent GTAP database 6.0 beta, which takes the former Europe agreements between the EU-15 and the eight new Central and Eastern European member states into account. The results confirm the earlier findings that a free trade agreement with the EU is beneficial for Russia in terms of total output but not necessarily in terms of economic welfare when measured by equivalent variation. The main reason behind this is the deterioration that would occur in Russia's terms of trade. Improved productivity in Russia would, however, make the free trade agreement with the EU advantageous.
Topic:
Economics and International Trade and Finance
Political Geography:
Russia, Europe, and Asia

83. What Iraq and Argentina Might Learn from Each Other

Author:
Anna Gelpern
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Financial collapse usually triggers a flurry of market, academic, and policy innovation. The Latin American debt crisis of the 1980s produced the Brady Bonds and led to the rise of today's emerging markets. In the late 1990s, crises in Pakistan, Ecuador, and Ukraine helped teach the markets how to restructure international sovereign bonds. Crises in Mexico, Russia, Brazil, Turkey, and throughout East Asia raised doubts about the international system's ability to manage vast and rapid capital flows, and prompted a big-picture reassessment under the rubric “international financial architecture.” This included most famously the sovereign bankruptcy proposals discussed elsewhere in this volume.
Topic:
Development and Economics
Political Geography:
Pakistan, Russia, Turkey, Ukraine, Middle East, East Asia, Brazil, South America, Latin America, and Mexico

84. Western Capital vs. the Russian State: Towards an Explanation of Recent Trends in Russia's Corporate Governance

Author:
Stanislav Markus
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The literature on corporate governance in Russia stresses the abuse of shareholder rights in the face of various asset-diversion tactics by the management. Attributing this fiasco to a number of structural obstacles and the privatization legacy, the orthodox account fails to incorporate–let alone explain–the recent data demonstrating a qualitative improvement of corporate governance in crucial segments of the Russian economy. This paper disaggregates “corporate governance” into specific institutions and examines their quality at the firm level as well as by sector. The data supporting the analysis is drawn from recent studies by the OECD, UBS Warburg, CEFIR, and other organizations. The causal inference presented in this paper critically evaluates the impact of foreign capital on the improved corporate governance in Russia's blue-chip firms. The paper presents two alternative state-centered scenarios to explain the implementation of internationally accepted standards of corporate governance by Russia's big business.
Topic:
Economics, International Trade and Finance, and Politics
Political Geography:
Russia, Europe, and Asia

85. Well Being and Unemployment in Russian in the 1990's: Can Society's Suffering Be Individuals' Solace?

Author:
Andrew; Gaddy Eggers
Publication Date:
04-2004
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
This paper studies the effect of regional unemployment rates on subjective well-being in post-Soviet Russia. Research conducted in Europe and the United States has documented that higher unemployment rates lead to lower reported life-satisfaction. By contrast, our Russian study finds a small but significant effect in the other direction. We estimate that du ring the period of our study (1995-2001), each percentage point increase in the local unemployment rate was correlated with the average well-being of people in the region increasing by an amount equivalent to moving 2% of the population up one level in life satisfaction measured on a five-point scale. Our intuition is that the so-called comparison effect drives this result: when individuals observe their peers suffering in a troubled economy, they lower their standards of what is good enough. All else equal, they thus perceive themselves to be better off in worse times. In highlighting the dependence of subjective well-being scores on expectations and reference groups, we sound a note of caution against using happiness data from economies in crisis to draw macroeconomic policy conclusions.
Topic:
Economics and Human Welfare
Political Geography:
Russia, United States, Europe, Asia, and Soviet Union

86. Economic Prospects for Kaliningrad: Between EU Enlargement and Russia's Integration into the World Economy

Author:
Evgeny Vinokurov
Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The Kaliningrad oblast of Russia is currently an important focal point of discussions between the European Union and Russia. Although small in terms of geography and population, Kaliningrad has grown in importance due to the EU enlargement process. Since the break–up of the Soviet Union, the oblast has become an exclave of Russia, and it is now set to also become an enclave within the EU. This paper examines the state of Kaliningrad's economy and trade. The economic crisis that took place in Russia in the 1990s had severe consequences for Kaliningrad, as old patterns of production and trade were disrupted. Since 1999, however, the regional economy has grown with impressive speed. Kaliningrad's Special Economic Zone (SEZ) status has played a crucial role in determining its new patterns of production and trade specialisation. The paper argues that the SEZ regime has made the region's economic growth faster but also vulnerable.
Topic:
Economics and International Trade and Finance
Political Geography:
Russia, Europe, and Asia

87. The Language of Democracy: Vernacular Or Esperanto? A Comparison between the Multiculturalist and Cosmopolitan Perspectives

Author:
Daniele Archibugi
Publication Date:
12-2004
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Will Kymlicka has argued “democratic politics is politics in the vernacular.” Does it imply that democratic politics is impossible in a multilingual community, whether at the local, national, regional or global level? This paper discusses this assumption and maintains that democratic politics should imply the willingness of all players to make an effort to understand each other. Democratic politics imply the willingness to overcome the barriers to mutual understanding, including the linguistic ones. Any time that there is a community of fate, a democrat should search for methods that allow deliberation according to the two key conditions of political equality and participation. If linguistic diversity is an obstacle to equality and participation, some methods should be found to overcome it, as exemplified by the Esperanto metaphor. The paper illustrates the argument with four cases of multi-linguistic political communities: a) a school in California with English-speaking and Spanish-speaking students; b) the city of Byelostok in the second half of the nineteenth century, where four different linguistic communities (Polish, Russian, German and Yiddish) coexisted. This led Markus Zamenhof to invent Esperanto; c) the linguistic problems of the Indian state, and the role played by English – a language unspoken by the majority of the Indian population in 1947 – in developing Indian democracy; and d) the case of the European Parliament, with twenty languages and a wealth of interpreters and translators.
Topic:
Democratization, Economics, and Politics
Political Geography:
Russia, Europe, India, California, and Germany

88. CERI: Barter and Inter-business Transactions in Russia: Trade Normalization in View after the Ruble Crisis of 1998?

Author:
Caroline Dufy
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
Centre d'Etudes et de Recherches Internationales
Abstract:
Barter was a prominent issue in public debate during the 1990s in Russia: it prompted a more overall reflection on the nature of the Russian economy and the aim pursued by economic reforms. These major issues shaped a number of divisions: the government opposition portrayed barter as one of the pernicious effects of economic policies that gave priority to finance to the detriment of the national productive sphere. For others, it was to be interpreted as the legacy of the Soviet industrial sector and its lack of competitiveness.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Russia, Europe, and Asia

89. Chechen Militia Threaten Increased Terrorism

Author:
Tamara Makarenko
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
Centre for the Study of Terrorism and Political Violence, St. Andrews University, Scotland
Abstract:
Chechen resistance movements have reorganised to adjust to the post 11 September 2001 security environment, and appear to be adopting more lethal terrorist tactics. Tamara Makarenko reports.
Topic:
Security, Economics, and Terrorism
Political Geography:
Russia, Europe, Asia, and Moscow

90. The Federal Budget and the Regions

Author:
A.M. Lavrov
Publication Date:
01-2003
Content Type:
Working Paper
Institution:
EastWest Institute
Abstract:
Improvement of the financial relations between the Federation and the regions still remains quite an urgent problem. The Concept of Reforming Inter budgetary Relations in the Russian Federation in 1999 — 2000 is being implemented; Russia's Finance Ministry has developed the Concept of Reforming Budget Federalism in the Russian Federation to 2005, which will soon be approved by the Government; a special section on interbudgetary relations has been included in the Main Long- Term Trends of Socio-Economic Policy of the Russian Federation Government program, drafted by the Strategic Research Center.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Russia, Europe, and Bosnia