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Home > Publications Publications13.11.2009Behemoths in Belarus belie stalling economy Pavel Daneyko “It’s hard to radically change direction without changing the leadership,” says Pavel Daneyko, an economist with the non-government Belarusian Research Centre. 26.10.2009 After Marxism's fall, curbs on news stay Lou Ureneck HOW DOES a nation move from a centrally planned and controlled economy to a free market, and what institutions does a free and civil society require? 30.09.2009 Second agriculture in Belarus and Ukraine: subsistence or leisure? 
Maksim Yemelyanau In many post-Soviet countries, more than half of all households use small land plots to produce significant agricultural output even though their members have paid jobs or collect state pensions. Existing studies suggest that in Russia such "second agriculture" helps smooth consumption. Using household survey data, I study the role of "second agriculture" in Belarus and Ukraine, two countries that differ significantly in the coverage of their social safety nets. I find that while in Belarus small land plots do help smooth consumption of the poorest households (during the 1998 crisis), Ukrainian poor appear to be unable to invest sufficiently in their small land plot production to produce similar benefits. Most urban households use their small land plots for leisure, and over years they tend to move away from this activity. 21.09.2009 Greed as a Source of Polarization
Igor Livshits and Mark Wright The past three decades has witnessed both a growing polarity of political views and a significant growth in campaign contributions. Abstracting from narrow interest groups, these campaign contributions tend to come from lobby groups with extreme positions and to be largest to politicians with extreme policy platforms. Is the rise in campaign contributions the cause of growing polarity of political views? In this paper, we show that if the polarity of campaign contributions is the result of a free-rider problem amongst potential contributors, then under standard assumptions the answer to this question is negative: candidates' policy agendas converge despite the polarity in the preferences of campaign contributors. However, we go on to show that a modest departure from standard assumptions |- allowing candidates to directly value campaign contributions (either because it allows them to use less of their own wealth to run the campaign, or because lax auditing allows them to misappropriate some of these funds) - delivers the ability of campaign contributions to cause policy divergence. 20.09.2009 Costly Contracts and Consumer Credit
Igor Livshits, James MacGee and Michele Tertilt This paper explores the implications of technological progress in consumer lending. The model features households whose endowment risk is private information, and intermediaries which observe a noisy signal of each borrower's default risks. To offer a lending contract, an intermediary incurs a fixed cost. Each lending contract is comprised of an interest rate, a borrowing limit and a set of eligible borrowers. Technological improvements which lead to more accurate signals of a borrowers type or lower the cost of offering a contract increase the number of contracts offered and lead to the extension of credit to riskier households. This results in higher aggregate levels of defaults and borrowing. To corroborate the predictions of the model, we examine data on credit card borrowing reported by households in the Survey of Consumer Finance. We find that the number of different credit card interest rates reported (one measure of the "number" of contracts) has increased, that the empirical density of credit card interest rates has become much more disperse and lower income households' share of outstanding credit card debt has increased since 1983. 19.09.2009 Sovereign Default and Banking
Igor Livshits and Koen Schoors Several recent defaults on government debt were accompanied by major banking crises in the defaulting countries. We argue that the banking crises, triggered by the defaults, may have been due to inadequate prudential regulations, which did not recognize the riskiness of the government debt. We use a simple model of prudential regulation to illustrate this point. We provide supporting evidence from the Russian 1998 crisis. We further show that the failure to adjust prudential regulation can be a conscious decision of the government, rather than an oversight. When risky government debt is considered safe by the regulation, domestic banks gamble by constructing portfolios correlated with government default. These banks bid up the price of the government bonds, which lowers government's cost of borrowing and may postpone (and give a chance to avoid) the default. 15.09.2009 Education and socioeconomic mobility in post-communist countries
Alina Verashchagina Patterns of intergenerational educational mobility are studied in thirteen post-communist countries of Cental Europe and the former Soviet Union. No clear trend in educational inheritance emerges over the recent 50 years, covering both the period of socialism and transition to a market economy. This is contrary to expectations formed by the existing literature that claims considerable weakening of the correlation between parental education and that of their children during the period of socialism. If any, we find the decrease in intergenerational persistance up until the generation of the 1950s. In subsequent years no further decline is observed. On the contrary in a number of states the correlation between parents' and children's schooling got stronger, further increasing over the period of transition. 28.07.2009 Quality of institutions and private investments in infrastructure
Yury Yatsynovich This article investigates the impact of institutional environment on the volumes of private investments in infrastructural sectors in low and middle income countries. Econometric models for limited dependent variables (Tobit, Heckit) and count variables (Poisson) are used for analysis. The obtained results support the theoretical predictions on positive impact of better institutions’ quality on probability of observing private infrastructural projects, total number of such projects and total volume of private infrastructural investments. The practical value of the work is in emphasizing of importance of proper institutional policy for attracting private investments in infrastructural sectors. 08.06.2009 Inequality in Belarus from 1995 to 2007
Maksim Yemelyanau Income and consumption inequality increased in all transition economies, albeit to very different levels. The existing literature suggests that countries that were slow to undertake pro-market reforms experienced the largest increases in inequality, with the notable exception of Belarus, one of the least reformed ex-Soviet republics, that nevertheless has inequality comparable to the most advanced and least unequal transition countries of Central Europe. This paper studies the evolution of inequality in Belarus in 1995-2007, decomposes inequality by sources of income, and provides a comparison of Belarus and Ukraine, which suggests that the large difference in inequality is due to different income policies of the two countries: Belarus not only avoided mass privatization, but also kept many of the old-style Soviet social security features. | |||
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