Inequality, Fiscal Capacity and the Political Regime: Lessons from the Post-Communist Transition

Using panel data for twenty-seven post-communist economies between 1987-2003, we examine the nexus of relationships between inequality, fiscal capacity (defined as the ability to raise taxes efficiently) and the political regime. Investigating the impact of political reform we find that full political freedom is associated with lower levels of income inequality. Under more oligarchic (authoritarian) regimes, the level of inequality is conditioned by the state’s fiscal capacity. Specifically, oligarchic regimes with more developed fiscal systems are able to defend the prevailing vested interests at a lower cost in terms of social injustice. This empirical finding is consistent with the model developed by Acemoglu (2006). We also find that transition countries undertaking early macroeconomic stabilisation now enjoy lower levels of inequality; we confirm that education fosters equality and the suggestion of Commander et al (1999) that larger countries are prone to higher levels of inequality.http://deepblue.lib.umich.edu/bitstream/2027.42/57211/1/wp831 .pd

Do real interest rates converge across Latin american countries?

In this study, we apply the Sequential Panel Selection Method (SPSM), pro- posed by Chortareas and Kapetanios (Journal of Banking and Finance 33:390–404, 2009), to investigate and assess the non-stationary properties of the real interest rate parity (RIRP) for fourteen Latin American countries. Utilizing the SPSM, we can classify the entire panel into a group of stationary series and a group of non-stationary series. We clearly identify how many and which series in the panel are stationary processes and provide robust evidence that clearly indicate RIRP holds true for ten countries. Our findings note that these countries’ real interest rate convergence is a mean reversion toward RIRP equilib- rium values in a non-linear way. Our results have important policy implications for these Latin American countries under study.info:eu-repo/semantics/publishedVersio

The histone demethylase Jumonji domain-containing protein 3 (JMJD3) regulates fibroblast activation in systemic sclerosis.

OBJECTIVES: Systemic sclerosis (SSc) fibroblasts remain activated even in the absence of exogenous stimuli. Epigenetic alterations are thought to play a role for this endogenous activation. Trimethylation of histone H3 on lysine 27 (H3K27me3) is regulated by Jumonji domain-containing protein 3 (JMJD3) and ubiquitously transcribed tetratricopeptide repeat on chromosome X (UTX) in a therapeutically targetable manner. The aim of this study was to explore H3K27me3 demethylases as potential targets for the treatment of fibrosis. METHODS: JMJD3 was inactivated by small interfering RNA-mediated knockdown and by pharmacological inhibition with GSKJ4. The effects of targeted inactivation of JMJD3 were analysed in cultured fibroblasts and in the murine models of bleomycin-induced and topoisomerase-I (topoI)-induced fibrosis. H3K27me3 at the FRA2 promoter was analysed by ChIP. RESULTS: The expression of JMJD3, but not of UTX, was increased in fibroblasts in SSc skin and in experimental fibrosis in a transforming growth factor beta (TGFβ)-dependent manner. Inactivation of JMJD3 reversed the activated fibroblast phenotype in SSc fibroblasts and prevented the activation of healthy dermal fibroblasts by TGFβ. Pharmacological inhibition of JMJD3 ameliorated bleomycin-induced and topoI-induced fibrosis in well-tolerated doses. JMJD3 regulated fibroblast activation in a FRA2-dependent manner: Inactivation of JMJD3 reduced the expression of FRA2 by inducing accumulation of H3K27me3 at the FRA2 promoter. Moreover, the antifibrotic effects of JMJD3 inhibition were reduced on knockdown of FRA2. CONCLUSION: We present first evidence for a deregulation of JMJD3 in SSc. JMJD3 modulates fibroblast activation by regulating the levels of H3K27me3 at the promoter of FRA2. Targeted inhibition of JMJD3 limits the aberrant activation of SSc fibroblasts and exerts antifibrotic effects in two murine models

European Competitiveness: A Semi-Parametric Stochastic Metafrontier Analysis at the Firm Level

In this paper a semiparametric stochastic metafrontier approach is used to obtain insight into firm-level competitiveness in Europe. We divert from standard TFP studies at the firm level as we simultaneously allow for inefficiency, noise and do not impose a functional form on the input-output relation. Using AMADEUS firm-level data covering 10 manufacturing sectors from seven EU15 countries, (i) we document substantial, persistent divergences in competitiveness (with Belgium and Germany as benchmark countries and Spain lagging behind) and a wide technology gap, (ii) we confirm the absence of convergence in TFP between the seven selected countries, (iii) we confirm that the technology gap is more pronounced for smaller firms, (iv) we highlight the role of post-entry growth for competitiveness

Russia from Bust to Boom: Oil, Politics or the Ruble?

Contains fulltext : 67126.pdf (publisher's version ) (Open Access)This paper develops and estimates a small macroeconomic model of the Russian economy. The model is tailored to analyze the impact of the oil price, the exchange rate, and political stability on economic performance. The model does very well in explaining Russia’s economic history in the period 1995-2002. We then use the model to simulate two sets of scenarios, one with various oil price scenarios and one with various adverse shocks. The simulations suggest that the Russian economy is still very vulnerable to oil price swings, and that these swings have asymmetric effects. Indeed the cost of a downward swing of oil prices seems to be larger than the benefit of an upward swing. We also find that the aggregate effects of an oil price collapse are comparable to these of renewed political instability. Although their propagation mechanism is quite different, both adverse shocks do have a similar effect on real GDP. A real exchange rate appreciation on the other hand has relatively mild effects on real GDP. All in all, it is suggested that Russia should reduce its vulnerability to adverse oil price shocks and maintain political stability27 p

Reform Reversals and Output Growth in Transition Economies

This paper tests whether there is a macroeconomic cost of a reform reversal during transition. A reform reversal is defined as a downgrading in the level of an average reform indicator. In the standard empirical framework the current level of reform affects growth negatively, while the lagged level affects growth positively. This non-linear effect is shown to imply a counterintuitive, short-lived positive effect of a reversal. From a theoretical point of view however, most models assume a reversal to be costly. The existence of reversal costs is even crucial for gradualist strategies to dominate big bang strategies in the presence of aggregate uncertainty. In a simultaneous equation system with growth and the level of reform as dependent variables we explicitly introduce a reversal parameter. Empirical results suggest that a reversal generates an immediate negative contribution to real output growth. Taking into account the level of reform a country achieved, a reversal is found to be more costly at higher levels of the reform indicator.transition; structural reform; reversal; stabilization; initial conditions

Gradualism versus Big Bang: Evidence from Transition Countries

This paper uses previous empirical work to simulate the impact on real economic growth of the big bang and gradualist approaches to reform. Uncertainty concerning the appropriate reform steps introduces the possibility of reform reversals. We find that higher expected probabilities of reversal make policymakers more likely to opt for gradualism. Even relatively small probabilities are su.cient to tilt the balance in favour of gradualism. This is reinforced by shortsightedness of policymakers that follows from standard political cycles, but may be moderated by voter myopia.policy reform, gradualism, big bang