Showing papers by "National Research University – Higher School of Economics published in 2002"

Utility Maximization, Choice and Preference

Abstract: The utility maximization paradigm forms the basis of many economic, psychological, cognitive and behavioral models Since it was first devised in the eighteenth century, numerous examples have revealed the deficiencies of the conceptThis book makes a contribution to overcome those deficiencies by taking into account insensitivity of measurement threshold and context of choice It covers classic theory as a special, context-free case and gives a systematic overview of new models of utility maximization within a context-dependent threshold as well as related preference and choice modelsThe second edition has been updated to include the most recent developments and a new chapter on classic and new results for infinite sets The presented models will be helpful to scientists in economics, decision making theory, social choice theory, behavioral and cognitive sciences, and related fields

Fiscal Games and Public Employment: A Theory with Evidence from Russia

Abstract: Why do some governments--both in different countries and in regions within those countries--employ more workers than others? Existing theories focus on the level of economic development, political redistribution, and social insurance. But they raise additional puzzles and do not account for all evidence or for a global trend toward decentralization of public employment. The authors propose a new theory, inspired by Russia's recent experience, that locates one motive for subnational public employment growth in a political and fiscal game between central and subnational governments. In countries with weak legal systems, local and regional officials may deliberately set their employment levels beyond their fiscal capacity, prompting bailouts from the central government, which fears the political cost to it if wage arrears accumulate and provoke strikes. The authors model the logic of such brinkmanship, derive several propositions, and show that they--and the model's assumptions--fit empirical evidence from Russia in the 1990s. Deficiencies of that country's overstaffed, underequipped, irregularly paid, ineffective, and strike-prone public sector appear to result in part from a system of dysfunctional incentives created by the interaction of electoral pressures with the system of fiscal federalism. The authors suggest parallels with Latin American countries such as Argentina and Brazil.

Why the Rich May Favor Poor Protection of Property Rights

Abstract: In unequal societies, the rich may benefit from shaping economic institutions in their favor. This paper analyzes the dynamics of institutional subversion by focusing on the public protection of property rights. If this institution functions imperfectly, agents have incentives to invest in private protection of property rights. The ability to maintain private protection systems makes the rich natural opponents of public property rights and precludes grass-roots demand to drive the development of the market-friendly institution. The economy becomes stuck in a bad equilibrium with low growth rates, high inequality of income, and wide-spread rent-seeking. The Russian oligarchs of 1990s, who controlled large stakes of newly privatized property, provide motivation for this paper.

Monetary policy and the financial accelerator in a monetary union

Abstract: In this paper, we consider the effect of a monetary union in a model with a significant role for financial market imperfections We do so by introducing a financial accelerator into a stochastic general equilibrium macro model of a two country economy We show that financial market imperfections introduce important cross-country transmission mechanisms to asymmetric shocks to supply and demand Within this framework, we study the likely costs and benefits of monetary union We also consider the effects of cross-country heterogeneity in financial markets Both the presence of financial frictions and the use of a single currency have significant impacts on the international propagation of exogenous shocks The introduction of asymmetries in the financial contract widens the differences in cyclical behavior of national economies in a monetary union, but financial integration compensates the loss of policy instruments

Islam & the West: Testing the Clash of Civilizations Thesis

Abstract: In seeking to understand the root causes of the events of 9/11 many accounts have turned to Samuel P. Huntington's provocative and controversial thesis of a "clash of civilizations", arousing strong debate. Evidence from the 1995-2001 waves of the World Values Study provide survey evidence allowing us, for the first time, to sift the truth in this debate by comparing attitudes and values in 75 societies around the globe, including many Islamic and Western states. The results confirm the first claim in Huntington's thesis: culture does matter, and indeed matters a lot, so that religious legacies leave their distinct imprint on contemporary values. But Huntington is essentially mistaken in assuming that the core clash between the West and Islamic worlds concerns democracy, as the evidence suggests striking similarities in the political values held in these societies. It remains true that Islamic nations differ from the West on issues of religious leadership, but this is not a simple dichotomous clash, as many countries around the globe display similar attitudes to Islam. Moreover the original thesis fails to identify the primary cultural fault line between the West and Islam, concerning the social issues of gender equality and sexual liberalization. The values separating Islam and the West revolve far more centrally around Eros than Demos.

Ownership and corporate governance in Russian industry: a survey

Abstract: The protection of property rights is more and more recognised as a core issue for improvement of the investment climate in Russia. In many post-privatisation Russian enterprises, shareholder rights have been severely disregarded by self-dealing transactions of the management, share dilution, exclusion of outside shareholders from the Board of Directors and even from shareholder meetings. A more recent development is the abuse of the bankruptcy procedure for the arbitrary redistribution of property. This article reviews the results of the privatisation process and concentrates then on the current structure of ownership and control in the Russian industry and on corporate governance mechanisms in the enterprises. It reviews the legal foundations of corporate governance and gives a detailed view of the state and the institutions of law enforcement. Special attention is paid to the connection between corporate governance and restructuring of enterprises and improved performance.

Mappings of generalized variation and composition operators

Abstract: In [18], Matkowski and Mís have shown that if the operator H acts from BV [a, b] onto itself and satisfies the Lipschitz condition, then we have the following for the function h that generates it: if h∗(t, x) = lim s→t−0 h(s, x) is the left regularization of h with respect to the first argument, then h∗(t, x) = h0(t) + h1(t)x for all t ∈ (a, b] and x ∈ R, where the functions h0, h1 ∈ BV [a, b] are left continuous. This result is of interest since, as is shown by examining the function h(t, x) = sinx, the space BV [a, b] cannot be replaced by the space C[a, b] of continuous functions and by the space L(a, b) of p-power (p ≥ 1) Lebesgue-integrable functions. The representation of the generating function h (often without applying a regularization) in the above form has been established by many authors in different spaces, namely, in the space of Hölder functions [13] and in the space of Lipschitzian functions [14] (where such a representation was found for the first time) and also in the space of Lipschitzian mappings [16], in the space of differentiable functions [15], in the space of functions of bounded second p-variation [17], in the space of functions of Riesz-bounded p-variation [19,20], in the space of mappings of bounded generalized variation of the Riesz–Orlicz type [3,4], and in some others (see also the references in [3]). The goal of the present paper is to describe generating Lipschitzian functions of Nemytskii composition operators mapping between spaces of mappings having bounded generalized variation in the sense of Wiener–Young–Orlicz. The generalized variation of this type was studied mainly for real-valued functions [8, 12, 21, 25, 26]. Much less is known about the properties of mappings of bounded generalized variation taking values in normed spaces (see, e.g., [1, 2, 7]), because of the fundamental difficulties. In Sec. 2, we develop the theory of mappings of bounded generalized variation, and then, in Sec. 3, we apply this theory for the characterization of composition operators satisfying the Lipschitz condition (Theorems 7 and 8 and Corollary 9). The results of the present paper were presented at the workshop “Theory of functions, its applications and related issues,” dedicated to the 130th anniversary of the birth of D. F. Egorov, held on September 13–18, 1999 in Kazan’ [5].

Innovations and Legacies in Russian Human Resource Management Practices: Surveys of 700 Chief Executive Officers

Abstract: In 1998 we administered a survey to 740 Russian chief executive officers (CEOs), which enabled us to raise the question of the current human resource management (HRM) practices in Russian industrial companies. In October-December 2000 we administered another survey among 735 Russian CEOs. This time we observed a major drive towards some modern instruments of HRM policies. However, an additional survey, devoted to the source of innovations in HRM, revealed that most HRM innovations are implemented on a trial and error basis, without reference to international practices.

Inflation and Monetary Policy in Russia: Transition Experience and Future Recommendations

Abstract: This paper seeks the main factors behind inflation in Russia over the period 1996–2001 It presents a succinct description of Russian monetary policy and inflation developments The econometric analysis establishes a long-run relationship between demand for the real money balances on the one side and the real income and short-term interest rate on the other side It also presents several specifications of modeling shortrun dynamics of inflation An account is made for the change in the exchange rate regime after the financial crisis of August 1998 It finds that apart from strong inertia, money expansion and exchange rate depreciation played a role in fueling the CPI However, there were significant shifts in the underlying trends driving inflation during the studied period Until 1999 fiscal policy posed the biggest obstacle to the disinflation process in Russia In 2000–2001 the main responsibility for sustained inflation pressure can be attributed to monetary policy trying to target money supply and exchange rate at the same time The way out from this policy trap leads through the adoption of one of the so-called 'corner' solutions, ie either a permanently fixed exchange rate, or independent monetary policy under a free float regime Taking into consideration a historically limited credibility of macroeconomic policy and the high level of dollarization, the first variant seems to be a better solution for Russia However, its implementation would require the accompanying fiscal, banking and other structural reforms creating a healthy policy-mix and flexible microeconomic environment

Superposition Operators in the Algebra of Functions of Two Variables with Finite Total Variation

Abstract: We show that the Hardy space of functions of two variables with finite total variation is a Banach algebra under the pointwise operations and a suitably chosen norm. Then we characterize Nemytskii superposition operators, which map the Hardy space into itself and satisfy the global Lipschitz condition.

On multi-valued mappings of finite generalized variation

Abstract: We study the mappings taking real intervals into metric spaces and possessing a bounded generalized variation in the sense of Jordan--Riesz--Orlicz. We establish some embeddings of function spaces, the structure of the mappings, the jumps of the variation, and the Helly selection principle. We show that a compact-valued multi-valued mapping of bounded generalized variation with respect to the Hausdorff metric has a regular selection of bounded generalized variation. We prove the existence of selections preserving the properties of multi-valued mappings that are defined on the direct product of an interval and a topological space, have a bounded generalized variation in the first variable, and are upper semicontinuous in the second variable.

The politics of local government in Russia: the neglected side of the story

Abstract: In the 1990s the government of Russia made an ostensible commitment to radical reforms in local government. Ten years later, however; Russia's localities still lack serious autonomy. Why has the project of post‐Soviet municipal reform failed? This paper concentrates on the crucial role of two major factors: (I) political opportunities inherited from late‐Soviet period and (2) strategic choices of political actors in the post‐Soviet period. Post‐Soviet Russian reformers faced the task of reorganising Soviet local governments, which had been ineffective, unpopular, and subordinate to higher levels of power The political regime that emerged in Russia after 1993 was far from being democratic, and the development of local government in Russia was hampered by the restrictions on democracy imposed both by the center and the regions. Thus the unfavorable initial conditions of reforms in local government in post‐Soviet Russia have been reinforced by the unfavorable outcomes of the transition. Limited and ...

Federal State Shareholdings in Russian Companies: Origin, Forms and Consequences for Enterprise Perfomance

Abstract: This paper studies the impact of federal state shareholdings on the performance of Russian companies. It differs from most similar studies in two respects. Firstly, it focuses on mixed ownership companies rather than conventional state enterprises. Secondly, it distinguishes between several types of federal state shareholdings, namely elected blocks, residual blocks (which may be held by two bodies with different functions - the Ministry for State Property and the Russian Fund for Federal Property) and golden shares. The paper describes the origin of federal state shareholdings and discusses their possible implications for company performance. Econometric analysis shows that companies with state ownership generally perform worse than the average firm in terms of labour productivity and profitability. However, there are remarkable differences in the performance of companies with different types of state shareholdings. Companies with residual blocks held by the Property Fund are the worst performers, followed by companies with residual blocks held by the Ministry for State Property. Companies with elected shareholdings as well as with golden shares do not differ from the average enterprises in the respective industries. These differences in performance are explained by the different degrees of control the federal state has over enterprises with various types of shareholdings - greater control is associated with better performance. The paper concludes that the government should avoid keeping equity stakes in companies unless there is a good reason to retain them. If the state wants to keep an ownership stake in a company, reliable control structures must be created. Finally, the issue of golden shares in strategically important companies seems to be a reasonable alternative to retaining some control over them through equity ownership.

Self-rated Economic Welfare in Russia

Abstract: Most of those Russian adults who feel that they are poor are not classified as such in the poverty statistics, and most of those who are classified as poor don't feel that way. We study the determinants of peoples' perceptions of their economic welfare in an unusually rich socioeconomic survey. While income is a highly significant predictor, subjective economic welfare is influenced by many other factors including health, education, employment, assets, relative income in the area of residence and expectations about future welfare. Insights are obtained into how objective data should be weighted in assessing economic welfare.

Transformational Recession and Structural Changes in Russian Industrial Production

Abstract: This work studies the transformational recession in Russian industrial production and its accompanying structural changes. It focuses on problems associated with measuring output behavior in the Russian transitional economy; constructing the indicators needed to analyze structural changes in industrial production; analyzing the course of transformational recession and discussing its causes and characteristics; studying the intensity, progress, and trends of structural change; analyzing the mutual impact of these changes and output behavior; discussing some general laws and their possible causes; and describing a series of new transformational effects. Finally, proposals for economic policy are formulated.

Information Revelation and Efficiency in Auctions

Abstract: We study the impact of information revelation on efficiency in auctions. In a constrained-efficient mechanism, i.e. a mechanism that is efficient subject to the incentive-compatibility constraint, any additional information available to bidders increases the expected efficiency of the mechanism. This result cannot be extended to a more general setup: In a second-price sealed-bid auction, revelation of information might lead to efficiency losses.

Political Determinants of Economic Reforms in Former Communist Countries

Abstract: The results of the first decade of economic transition are very uneven and are distributed according to a sub-regional pattern. The group of 'leading reformers' consists of middle-income countries of democratic capitalism of the Central Europe and Baltic region (CEB). The second group of less advanced reformers includes mainly lower- and lower-middle-income countries of the Commonwealth of Independent States (CIS) where both capitalism and democracy are still immature and sometimes heavily distorted. This differentiation can be explained mainly by the adopted transition strategies and political factors determining them. Also the perspective of the European integration has played an important leveraging role. Fast reforms allowed for shortening the period of a temporary system vacuum, breaking down the inertia of the old system, and exploiting maximally the initial political window of opportunity. The ability of individual countries to follow the effective (i.e. fast) reform strategy was determined by the scale of the initial political changes and further developments in the sphere of institutional and political reform. Generally, a very strong correlation between the progress in political and economic reforms could be observed. Looking at the role of specific institutional solutions one must underline the advantage of the parliamentary or parliamentary-presidential regime over the presidential or presidential-parliamentary system. The former helped to build the transparent and relatively stable system of the political parties while the latter contributed to political fragmentation, irresponsible legislature and oligarchic capitalism.

Two Russian Stock Exchanges: Analysis of Relationships

Abstract: Development of Russian financial markets is gradually becoming a subject for standard economic analysis. Accumulated statistics make it possible to pose some questions about features of development and operation of financial markets in Russia. This paper analyses relationships between the two leading Moscow stock exchanges, as well as analysing performance of their indices and trading volumes, and factors determining index changes. The authors are far from thinking that their work is comprehensive or gives final answers to the questions posed. On the contrary, the authors hope that the paper will be a starting point for development of a fruitful scientific discussion of the issues concerned. Russian stock exchanges, their trading volumes and share prices, offer material which makes it possible to search for clear and steady patterns of performance. Although the period of organised stock trading in Russia is quite short, the combined use of monthly, daily and hourly observations allows a variety of questions to be posed. For example, what is the relationship between the performance of the two exchanges as regards indices and trading volumes, and how are those related to international indices and important factors traditionally affecting levels of market activity, such as economic activity in Russia, commodity prices, etc.? One interesting aspect of stock index performance is the slow rate of index growth despite the relatively long-lasting economic recovery (Figure1).

Currency Crises in Emerging - Market Economis: Causes, Consequences and Policy Lessons

Abstract: Currency crises have been recorded for a few hundreds years but their frequency increased in the second half of the 20th century along with a rapid expansion of a number of fiat currencies. Increased integration and sophistication of financial markets brought new forms and more global character of the crises episodes. Eichengreen, Rose and Wyplosz (1994) propose the operational definition, which helps to select the episodes most closely fitting the intuitive understanding of a currency crisis (a sudden decline in confidence towards a specific currency). Among fundamental causes of currency crises one can point to the excessive expansion and over-borrowing of the public and private sectors, and inconsistent and nontransparent economic policies. Over-expansion and overborrowing manifest themselves in an excessive current account deficit, currency overvaluation, increasing debt burden, insufficient international reserves, and deterioration of other frequently analyzed indicators. Inconsistent policies (including the so-called intermediate exchange rate regimes) increase market uncertainty and can trigger speculative attack against the domestic currency. After a crisis has already happened, the ability to manage economic policies in a consistent and credible way becomes crucial for limiting the crisis' scope, duration and negative consequences. Among the dilemmas that the authorities face in such circumstances is the decision on readjustment of an exchange rate regime, as the previous regime is usually the first institutional victim of any successful speculative attack. The consequences of currency crises are usually severe and typically involve output and employment losses, fall in real incomes of a population, deep contraction in investment and capital flight. Also the credibility of domestic economic policies is ruined. In some cases a crisis can serve as the economic and political catharsis: devaluation helps to temporarily restore competitiveness and improve a current account position, the crisis shock brings the new, reform-oriented government, and politicians may draw some lessons for future. The responsible macroeconomic policy can help to diminish a risk of an occurrence of a currency crisis. It involves balanced and transparent fiscal accounts, proper monetary-fiscal policy mix, and low inflation, avoiding indexation of nominal variables and intermediate monetary/ exchange rate regimes. On the microeconomic level key elements include privatization, demonopolization and introduction of efficient competition policy, prudential regulation of the financial sector, trade openness, and simple, fair and transparent tax system. All the above should help elimination of soft budget constraints, overborrowing on the side of both private and public sector and moral hazard problems. All these measures need to be strengthened by legal reforms, efficient and fair judiciary system, implementation of international accounting, reporting and disclosure standards, transparent corporate and public governance rules, and many other elements. Reforms can be supported by the IMF and other international organizations, which on their part should depoliticize their actions and decision-making processes, sticking to the professional criteria of country assessment and their consequent execution.

Mapping HRM in Russia: The Results of Repeated Surveys of CEOs

Abstract: Head, Center for Organizational Studies State University – Higher School of Economics Russia, 125319, Moscow, Kochnovski Proezd, 3 Tel. 7-095-152-09-41, Fax 7-095-928-39-71 E-mail: Gurkov@hse.ru Home page: http://www.lodaos.ru Abstract In 1998, we administered a survey to 740 Russian CEOs, which enabled us to raise the question about the current HRM practices in Russian industrial companies. In OctoberDecember 2000, we administered another survey among 735 Russian CEOs. This time we observed a major drive towards some modern instruments of HRM policies. However, HRM innovations are implemented on “trial and error” basis, without reference to the modern international practices.

Optimal and Admissible Programs of Credit Control

Abstract: The study of optimal credit policy of a developing enterprise was continued with the aim of establishing and analyzing the finite formulas for the final boundary problem of the maximum-principle procedure. Advisability of the pulse crediting as opposed to the continuous crediting and no-credit development, as well as the advantages of the optimal relay payment of debt as compared with the admissible uniform payment were estimated from the point of view of enterprise. The qualitative features stemming from the nonlinearity of the enterprise production function were discussed. Considerations on managing credits in an unstable economic environment were presented.

Formal definition of self-reproductive systems

Abstract: Formal definition of self-reproduction may have importance the Alife research program, especially for application of its achievements outside the discipline. The paper examines two formal definitions of self-reproduction, suggested by McMullin and Lofgren. It is pointed out that these definitions form two major branches of self-reproduction analysis, described by ancestor-progeny and system-environment relationship. The ancestor-progeny definition allows to distinct between the exact / inexact reproduction. The system-environment definition brings in the original classification also allowing to differentiate between major classes of self-reproducers.

Rich and Powerful? Subjective Power and Welfare in Russia

Abstract: Does "empowerment" come hand-in-hand with higher economic welfare? In theory, higher income is likely to raise both power and welfare, but heterogeneity in other characteristics and household formation can either strengthen or weaken the relationship. Survey data on Russian adults indicate that higher individual and household incomes raise both self-rated power and welfare. The individual income effect is primarily direct, rather than through higher household income. There are diminishing returns to income, though income inequality emerges as only a minor factor reducing either aggregate power or welfare. At given income, the identified covariates have strikingly similar effects on power and welfare. There are some notable differences between men and women in perceived power. This paper - a product of the Poverty Team, Development Research Group - is part of a larger effort in the group to explore broader measures of well-being. The authors may be contacted at mlokshin@worldbank.org or mravallion@worldbank.org.

Management innovations in Russian export-oriented companies: The results of large-scale surveys conducted in Russian enterprises

Abstract: Nutzungsbedingungen: Die ZBW räumt Ihnen als Nutzerin/Nutzer das unentgeltliche, räumlich unbeschränkte und zeitlich auf die Dauer des Schutzrechts beschränkte einfache Recht ein, das ausgewählte Werk im Rahmen der unter → http://www.econstor.eu/dspace/Nutzungsbedingungen nachzulesenden vollständigen Nutzungsbedingungen zu vervielfältigen, mit denen die Nutzerin/der Nutzer sich durch die erste Nutzung einverstanden erklärt. Terms of use: The ZBW grants you, the user, the non-exclusive right to use the selected work free of charge, territorially unrestricted and within the time limit of the term of the property rights according to the terms specified at → http://www.econstor.eu/dspace/Nutzungsbedingungen By the first use of the selected work the user agrees and declares to comply with these terms of use.