The Origins of Global Imbalances

In this paper we study the endogenous response of unequally developed regions to a drop in investment and trade costs in a general equilibrium model. The response is characterized by a rise in foreign direct investment in the underdeveloped region and increased consumption in the developed one, leading to trade imbalances between the regions. We hereby propose that declining investment and trade costs could have caused this century’s global imbalances.Economic development, foreign direct investment, global imbalances, multi-country general-equilibrium model.

Inquiries on dynamics of transition economy convergence in a two-country model

In this paper we propose an extension to New International Macroeconomic framework by introducing the vertical investment margin. The dynamic properties of the extended model are discussed in relation to relevant existing models with particular emphasis on the impact of productivity convergence and effects of timing of trade and financial liberalization on the convergence patterns. We compare the mechanisms behind the three investment margins (horizontal investment to new varieties, vertical investment to quality, and investment to export-eligibility) for the long-run equilibrium. Based on such comparison, the proposed extension proves crucial for consistent explanation of long-term trends in macroeconomic aggregates and the real exchange rate development observed in European transition countries. JEL Classification: F12, F36, F41convergence, New International Macroeconomics, Two-country modeling

Transition economy convergence in a two-country model: implications for monetary integration

In this paper we present a two-country dynamic general equilibrium model of ex ante unequally developed countries. The model explains a key feature recently observed in transition economies – the long-run trend real exchange rate appreciation – through investments into quality. Our exchange-rate projections bear important policy implications, which we illustrate on the collision between the price and nominal exchange rate criterion for the European Monetary Union in a set of selected transition economies in Central and Eastern Europe. JEL Classification: E58, F15, F43convergence, Currency area, monetary policy, Two-country modeling

Organized Labor and Restructuring: Coal Mines in the Czech Republic and Romania

We examine the role of organized labor in the restructuring experience of two coal mining regions in the 1990’s: Ostrava in the Czech Republic and the Jiu Valley region in Romania. Under similar external circumstances, the Ostrava region undertook gradual restructuring from early on whereas in Jiu Valley there was no restructuring until 1997, followed by massive layoffs over two years. We conduct a quantitative exercise that accounts for the mine productivity, the labor market conditions, and the constraints in compensating the laid-off miners. We show that the delay in restructuring in Jiu Valley was inefficient: gradual restructuring with compensation would have benefited both the miners and the government. The proximate reason for the delay was the Jiu Valley miners’ action against restructuring. We interpret their action in part as a behavioral pattern under a perceived threat to their livelihood. This accords with their history of militancy in contrast to Ostravian miners.http://deepblue.lib.umich.edu/bitstream/2027.42/40159/3/wp773.pd

Organized Labor and Restructuring: Coal Mines in the Czech Republic and Romania

We examine the role of organized labor in the restructuring experience of two coal mining regions in the 1990’s: Ostrava in the Czech Republic and the Jiu Valley region in Romania. Under similar external circumstances, the Ostrava region undertook gradual restructuring from early on whereas in Jiu Valley there was no restructuring until 1997, followed by massive layoffs over two years. We conduct a quantitative exercise that accounts for the mine productivity, the labor market conditions, and the constraints in compensating the laid-off miners. We show that the delay in restructuring in Jiu Valley was inefficient: gradual restructuring with compensation would have benefited both the miners and the government. The proximate reason for the delay was the Jiu Valley miners’ action against restructuring. We interpret their action in part as a behavioral pattern under a perceived threat to their livelihood. This accords with their history of militancy in contrast to Ostravian miners.organized labor; restructuring; coal; transition; welfare

Organized Labor and Restructuring: Coal Mining in the Czech Republic and Romania (in English)

The authors examine the role of organized labor in the restructuring experience of two coal-mining regions in the Czech Republic and Romania in the 1990s. Under similar external circumstances, the Ostrava region of the Czech Republic undertook early gradual restructuring, whereas the Jiu Valley region in Romania did not undertake restructuring until 1997, which was followed by massive layoffs in the sector. The authors conduct a quantitative exercise that accounts for mine productivity, labor-market conditions, and constraints in compensating laid-off miners. They show that the belated restructuring in the Jiu Valley was inefficient: gradual restructuring with reasoned compensation would have benefited both the miners and the state. An important factor in the delayed restructuring was the miners’ resistance to it. The authors discuss what motivated the miners’ opposition and the consequences.coal, organized labor, restructuring, transition, welfare

Counterfactual impact evaluation of human resources development

The methods of Counterfactual Impact Evaluation (CIE) have not been extensively applied in the case of the Structural Funds assistance in the EU. The main research question is whether the Counterfactual Impact Evaluation methods are applicable in the case of OP HRE (Operational program Human Resources and Employment), area of support 1.1 in the Czech Republic and what requirements have to be met. In case of this intervention, the “treatment” investigated by this paper is the enterprise support to training of employees.The crucial part of conducting Counterfactual Impact Evaluations is the quality of data set. The OP HRE was tested for the compliance with the data requirements (sample size, randomization for approval of the assistance, homogeneity of the assistance). The area of support 1.1 in the OP HRE met the basic requirement for the Counterfactual Impact Evaluation. There is enough assisted firms and the assistance is homogenous (i.e. there are trainings in just a few type of educational themes). The OP HRE support 1.1 offers possibility for the Counterfactual Impact Evaluation

The Convergence of a Transition Economy: The Case of the Czech Republic

In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. The model’s novel feature is the inclusion of quality investment to the standard framework of applied general equilibrium two-country models. This extension proves crucial ingredient for explanation of the trend in real exchange rate. Using a case study calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently explain dynamics in key macroeconomic variables that are essential inputs for commonly used ‘gap models’ in monetary policy practice.Convergence, monetary policy, two-country modeling.

The Impacts of Subsidies on Czech Firms

In the Czech Republic there has been invested a lot of money to the human capital through the European Social Fund. The Human Resources and Employment Operational Programme plays an important role by providing subsidies for the training of employees and an introduction of modern forms of management and human resource development. This paper summarizes the application of the regression discontinuity method to test whether there is an impact of EU assistance on employment in supported firms in 2009. The estimations were conducted with a sample with 1 176 supported and 87 rejected applicants. The estimation results suggest that the impacts of the intervention on employment is positive and statistically significant. The employment change in supported firms was on average about 10–15 p.p. higher than in unsupported firms

ORGANIZED LABOR AND RESTRUCTURING: COAL MINES IN THE CZECH REPUBLIC AND ROMANIA*

ABSTRACT We examine the role of organized labor in the restructuring experience of two coal mining regions in the 1990's. Under similar external circumstances, the Ostrava region in the Czech Republic undertook gradual restructuring from early on whereas the Jiu Valley region in Romania went through no restructuring until 1997, followed by massive layoffs over two years. We conduct a quantitative exercise that accounts for the mine productivity, the labor market conditions, and the constraints in compensating the laid-off miners. We show that the delay in restructuring in Jiu Valley was inefficient: gradual restructuring with compensation would have benefited both the miners and the government. The proximate reason for the delay was the Jiu Valley miners' action against restructuring. We discuss what motivated their action and why it was effective