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Home > Publications Publications23.01.2012Privatization in Belarus – Obstacles and Perspectives Maria Akulava For a long time Belarus considered privatization as a minor factor in influencing the economy’s development, competitiveness and effectiveness. The former economic model relied on concessional loans and donations from Russia and various international organizations. The 2011 financial crisis led to the breakdown of this model and forced the authorities to reconsider privatization. A draft of a new law on investment has been prepared, which is aimed at increasing foreign capital inflow to the country. However, it does not contain sufficient measures to significantly raise the investment attractiveness. In turn the lack of such attractiveness can have a very negative effect on the economy in the near future. 11.11.2011 Structural Breaks and Dynamic Characteristics of Inflation and Growth Rates of Monetary Aggregates  (233Kb)
Igor Pelipas The paper addresses the problem of determining the order of integration of inflation and growth rates of monetary aggregates under the multiple structural breaks in dynamics of these variables. Discussing the existent approaches for unit root and structural breaks testing, we propose the modified one where on the first stage the structural break points are determined endogenously by impulse indicator saturation technique and then the matching break points are utilized exogenously in the appropriate Dickey-Fuller unit root test. This approach allows unit root testing for any number of structural breaks. An application of the proposed approach to Belarusian data for 1995-2009 led us to conclusion that the rates of inflation both on the basis of GDP deflator and consumer price index, as well as the growth rates of monetary aggregates M0, M1, M, and M3 are the stationary variables with a changing mean. Consequently, these variables have the order of integration I(0). The determined dates of structural breaks correspond to regime changes in the dynamics of the examined variables and have a clear economic interpretation. The results presented in the paper are useful for econometric modeling of inflation and monetary policy. 31.08.2011 The Impact of Directed Lending on Long-Run Growth in Belarus (563Kb)
Dmitry Kruk The study deals with a specific form of financial repression peculiar to Belarus – a mechanism of directed loans. Under selective or directed credit programs, banks are required to allocate certain percentages of their asset portfolios for loans to priority sectors at subsidized loan rates of interest. In order to hedge against possible risks associated with directed loans, banks can offer higher interest rates or ration credit to non-favored borrowers. As a result, the flexibility of the financial system is decreased, while its fragility is increased. Under directed loans the economy may benefit from more rapid capital accumulation, but faces losses in efficiency. Directed lending may be justified until additional gains in capital accumulation compensate losses in. efficiency. This may be true in case of definitely high elasticity of output on capital, which might happen within a transitory period. Nevertheless, the practice of directed lending may not be recognized as effective tool for a longer time period. First, gains in capital gradually decline and losses in efficiency might exceed them. Moreover, when the economy reaches its balanced growth pass, only losses will be associated with the mechanism of directed lending. Second, the mechanism of directed lending may be a source of shocks and high-magnitude fluctuations in the economy. Finally, we show that in Belarus the mechanism of directed lending may result in the decline of growth rates of the economy in the long run. 31.08.2011 The Mechanism of Adjustment to Changes in Exchange Rate in Belarus and its Implications for Monetary Policy (263Kb)
Dmitry Kruk Knowing fair value of the Belarusian ruble is one of the most vital issues for economic agents in 2011. In the second half of 2010 aggressive expansionary policy led to significant macroeconomic fluctuations. Since then, the pressure at the currency market has been progressing. In March 2011, de-facto multiplicity of exchange rates was settled. Gradually the gap between official rate and the market ones was progressing, which pushed National bank to devalue the official rate by 56% in May. Nevertheless, the uncertainty was not eliminated from the market and the growth of the gap between market rate and a new official one continued. As a rule, assessments of the equilibrium exchange rate are used to answer such a question. Such an approach of “equilibrium exchange rate” is mostly applicable to the economies that exploit fixed exchange rate regime (with this or that extent of fixity). Besides providing a quantitative benchmark, the methodology of equilibrium exchange rate estimation provides a background for understanding the adjustment processes to a new exchange rate in the economy. The latter seems much more important from a view of economic policy and understanding the patterns of the economy in the situation of a currency crises. This paper aims at visualizing adjustment mechanisms of the Belarusian economy to changes in exchange rate level and providing correspondent policy recommendations. The paper is organized as follows. Section 2 deals with methodological issues of equilibrium exchange rate estimation and its specifics for Belarus. Section 3 is devoted to analysis of the pass-through effect from nominal exchange rate to prices and its impact on the short-term equilibrium exchange rate. In fourth Section, main conclusions and policy recommendations are provided. 31.08.2011 Macroeconomic Trends in 2010: Growth at any Cost (336Kb)
Dmitry Kruk The year 2010 saw Belarus gradually being pulled out of cyclical recession owing to the revival of external markets and massive incentives provided by the economic authorities. However, the administration set itself a priority task of reaching ambitious GDP and income growth targets while largely ignoring economic requirements for sustainable and fast paced long-term economic development. Moreover, the investment expansion scenario formulated by the government, which envisaged measures to restrain the accumulation of structural disproportions, de facto was not implemented, as some of its prerequisites proved unfeasible. The outcome was twofold: on the one hand, the campaign to reach quantitative indicators resulted in quite impressive GDP and income growth figures; on the other hand, new disproportions in the economy were created, and those already in existence were enhanced. The problems of the foreign account deficit, external debt, money market imbalances, inflationary potential, fragile financial standing of domestic companies had therefore aggravated by early 2011. These problems put a question mark over both current macroeconomic stability and long-term sustainable growth. 19.07.2011 Foreign Investments: not Just Attraction, but Effectiveness (191Kb)
Maryia Akulava When it comes to Belarusian efforts to attract foreign investments, the year 2010 looked a lot like the previous year. Foreign capital inflow kept growing at a slow pace; there were no major privatization deals, as the state is still unwilling to put up for sale large property units and is reluctantly ready to cede control only in insignificant enterprises. Nevertheless, the year 2010 was marked by the country’s successful debut on European stock markets with issuing Eurobonds, listed at the Luxembourg Stock Exchange in summer. Furthermore, important steps were made to increase the investment appeal of the country: in 2010, the government abolished licensing of many business activities and lifted the ban on sale of Belarusian joint-stock companies’ shares, a move contributing to a recovery of the domestic stock market. 31.05.2011 Economic Determinants of Fertility in Belarus: A Micro-Data Analysis (384Kb)
Aliaksandr Amialchuk, Katerina Lisenkova, Mykhaylo Salnykov, Maksim Yemelyanau This paper examines the determinants of births in Belarus in 1996-2007 by using detailed micro data from the Belarusian Household Budget Surveys (BHBS). The literature offered several explanations of the recent trends in fertility in Belarus and in other former Soviet Union (FSU) countries. It was argued that the collapse of the Soviet Union and the concomitant economic instability reduced fertility in the 1990s, while the economic growth and stabilization were responsible for its recovery since 2005. We evaluate these hypotheses by looking at the determinants of the first, the second, and the third births, separately for women aged below 30 and above 30. We provide new evidence on the presence and the relative importance of the economic determinants, including income and wages, economic uncertainty, maternity and childcare benefits. Our findings can be incorporated in the future demographic policies in Belarus and other countries with similar experiences. 27.05.2011 The Role of The Guarantor as a Form of Credit Security for Housing Construction (282Kb)
Anastasiya Luzgina In some countries, including Belarus, the imperfect legislation in the field of maintenance of housing credits and insufficiently developed stock market complicate financing and slow down rates of housing building. Considering that building is one of stimulators of economic growth in the country, it is necessary to understand the basic problems in the field of attraction of investment means in the given sphere and to create necessary conditions for development the market of housing financing. The author examines the role of guarantor as one of the means of securing housing credits as well as the international practice of developing mortgage lending. 25.05.2011 KEI and BEROC experts about the crisis in Belarus Anastasia Luzgina and Kateryna Bornukova KEI and BEROC experts about the crisis in Belarus 24.05.2011 Real Business Cycles in The Model with Two-Person Household and Home (398Kb)
Kateryna Bornukova In the U.S. economy hours and productivity are negatively correlated, and volatility of hours is two times higher than volatility of productivity. In the standard one shock RBC model hours are positively correlated with productivity, and hours are two times less volatile than productivity. This paper is an attempt to replicate the co-movement of hours and productivity observed in the post-war U.S. data using one shock model. I explore the real business cycles in the model with two-person household and home production. The model economy has a representative household of two agents. Agents allocate their time among leisure, work on the market and home production. There is a xed cost of working on the market, and agents may choose not to work. The uctuations in the model are driven by aggregate technology shock. I calibrate the model to U.S. data, solve and simulate it. I nd that in the model hours are 2 times more volatile than productivity, and that hours and productivity are negatively correlated. The model replicates well the co-movement of hours and productivity observed in the U.S. data. | |||
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