An application of Ramsey model in transition economy: a Russian case study

This case study uses the Ramsey model to analyze whether the current electricity prices charged by the natural monopoly Novosibirskenergo in a major industrial region of the Russian Federation are socially optimal. Our estimates of demand elasticities for two major groups of consumers, namely households and industrial users, show that prices are not socially optimal. A decrease in price for industrial users and an increase in price for households would bring the prices closer to socially optimal.Natural monopolies; Transition economy; Ramsey model.

Human Costs of Post-communist Transition: Public Policies and Private Response

The transition to capitalism in former communist countries of Eastern Europe and the USSR was achieved at a very high human cost, leading to unprecedented increases in poverty, inequality, and other forms of deprivation. This paper surveys the literature and data on human costs of post-communist transition and discusses differences in responses to poverty among countries of the region. It argues that human costs of transition to the market were strongly influenced by policy choices made by the governments and were least severe in countries of central eastern Europe, where public response dominated the anti-poverty efforts. In most of the countries of the former USSR and south-eastern Europe, state-run poverty abatement programs were largely inadequate, putting the brunt of the struggle with poverty onto the shoulders of families and individuals.poverty, social deprivation, government policies, welfare,

Models of Capitalism and Income Distribution in Transition Economies: A Comparative Perspective

During the 1990s, all of the European transition economies (TE) experienced a major recession and suffered from the explosion of income inequality. However, distribution of income between labor and capital differed greatly from one group of post-communist countries to another. The paper discusses and analyzes linkages between models of capitalism that emerged in former communist countries in the 1990s and the outcome of capitalist transition for labor in terms of income distribution and inequality. It is based on the estimates of the Marxian rate of exploitation and other indicators of labor income performance during the reform period.income distribution, inequality, rate of exploitation, real wages, government policies,

Defence Industry Transformation in Russia: Evidence from a Longitudinal Survey

The article is devoted to the new phenomena in the market transformation of the Russian defence-industrial complex. Based on the data generated by the repeated survey of the CEOs (general directors) of defence enterprises in 1995‐99, it examines economic performance of enterprises, their conflicts with the government and efforts at internal restructuring brought about by reductions of Russia's defence spending, mass privatisation and opening up of the domestic market. We found that despite the dramatic reduction in defence orders, inconsistent government policies and extremely unfavourable macroeconomic environment, the Russian defence industry has made significant progress in its adjustment to the market. Even before the devaluation of the ruble in the autumn of 1998 economic performance of defence enterprises had been gradually improving; it entered a virtual boom since then. Contrary to widely held views, the painful experience of the 1990s has not made the top managers of the defence industry more hostile to reforms: at the end of the decade they were generally more supportive of the market than in 1995.

The investment/labor ratio in the Russian armed forces: Lessons from the us?

The main goal of this paper is to evaluate recent trends in Russian military reorganization. In this effort, we enlist the experience of the US military's transition from conscription to an all-volunteer force (AVF). We show how the US 1970s transition to market-based acquisition of labor contributed to a rising military investment-to-labor (?K/L) ratio. In Russia since the start of market reforms, this ratio has been falling. We explain this divergence by noting the increase in the relative price of Russian military capital resulting from the switch to “quasi-market” acquisition of capital while a draft remains in use for obtaining labor. Russia's transition to an AVF and the latest efforts to “recapitalize” its military are analyzed and evaluated.Military manpower, Military investment, Military capital, Conscription, Volunteer force,