According to current international climate change regime countries are responsible for greenhouse gas emissions, which result from economic activities within national borders, including emissions from producing goods for exports. At the same time imports of carbon intensive goods are not regulated by international agreements.
In this paper carbon emissions embodied in exports and imports of Russia were calculated with the use of inter-country input-output tables from WIOD database. It was revealed that Russia is the second largest exporter of emissions embodied in trade and the large portion of these emissions is directed to developed countries. The reasons for high carbon intensity of Russia’s exports are obsolete technologies (in comparison to developed economies) and the structure of commodity trade: Russian exports primarily fossil fuels and energy-intensive goods and imports products with relatively low energy intensity.
Because of large amount of net exports of carbon intensive goods the current approach to emissions accounting does not suit interests of Russia. On the one hand, Russia, as well as other large net emissions exporters, is interested in the revision of allocation of responsibility between producers and consumers of carbon intensive products. On the other hand, current technological backwardness makes Russia vulnerable to the policy of “carbon protectionism”, which can be implemented by its trade partners.
One of the fundamental concepts of financial theory is to find compromise between risk and return. In the traditional approach to ratio of risk and return - higher yield faces a higher risk. It does not take into consideration the timeframe of investments. Purpose of this article is to analyze the risk-profitability ratio of financial instruments depending on the investment period in developed and emerging markets. The analysis showed that the prolongation of the investment period reduces the risk indicators, and the yield remains almost constant. At long time periods shares indicate higher returns with lower risk.
The performance of mergers and acquisitions (M&A) is one of the key issues in corporate finance. We contribute to existing literature by examining the performance of M&A deals based on the economic profit model and comparing the results with ones obtained by means of traditional methods – accounting studies. Applying economic profit as an indicator of M&A performance allows us, in contrast to existing studies, to assess the impact of mergers and acquisitions on value of European companies in the long-run. Our study is based on the sample of 153 M&A deals initiated by companies from developed capital markets of Western Europe. Analyzing one of the latest periods, 2000-2011 years, we prove that the performance of combined firms improves subsequent to mergers and acquisitions. We find positive industry-adjusted differences between the post-acquisition and the pre-acquisition performance measures. The difference equals to significant 3.3% for EBITDA/Sales ratio and 3.1% for EBITDA/BVAssets ratio. The economic profit approach demonstrates similar results. Economic profit has increased due to M&A deals by $7.5 million. The obtained results indicate that companies in developed capital markets of Western Europe are able to achieve planned synergies and integrate successfully improving the operating performance and creating value of the combined firms.
The paper considers the parametric hedging of non-parallel shifts in the yield curve. In order to determine capital requirements and stress testing, Basel committee recommends taking into account the risk of non-parallel interest rate shifts. (Basel Committee on Banking Supervision, 2016). As of April 2017, only one Russian bank took this risk into account in calculating interest rate risk, and one was developing a methodology (Central bank of Russia, 2017). We use several term structure models for hedging non-parallel interest rate shifts. The study uses a 5-year span of Russian bond market data. We use VaR and MAE to assess the effectiveness of hedging approaches.
The novelty of the work lies in the application of different term structure models, most of which have not previously been used for parametric hedging. We also present an original methodology for assessing the effectiveness of hedging. For the first time a study is conducted on the Russian bond market.
Cross-validation shows that the Nelson-Siegel (and also its shortened version), Svensson and Cox-Ingersoll-Ross models within the parametric hedging problem give better results than the generally accepted Fisher-Weil duration model. The results of this work have practical significance for fixed income managers.
The welfare gain from the tariffs that reflect water resource scarcity is analyzed. The empirical results of the welfare gain from the efficient management of groundwater extraction relative to myopic policy are summarized. It is shown that efficiency gain increases when the backstop resource becomes more expensive but changes ambiguously with an increase in the groundwater stock or discount rate that make estimates for different aquifers hardly comparable. Numerical analysis demonstrates that differentiated tariffs that reflect differences in water consumption patterns may bring substantial welfare gain.
At first, we discuss whether the concept of economic cycles is at all applicable to the realities of the Russian economy. As for several subperiods during the last 35 years, it has been not only market but planned and transformed also, this issue is arguable. But in our opinion, all mid-term factors of total economic activity – positive as well as negative – may be divided into three groups: an exhaustion of old drivers for economic growth or an emergence of new ones; positive or negative external shocks; destructive or constructive decisions and actions made by monetary and non-monetary authorities. From this point on, mid-term fluctuations in the level of economic activity (and in the volume of output) may be described as a sequence of non-periodic expansions and contractions. In other words, as a phenomenon of cyclical economic movements with its peaks and troughs.
On these grounds, we established a reference chronology for the Russian economic cycle from the early 1980s to mid-2015. As there is no single monthly indicator available for the whole period, we used a set of indices. To be precise, six indices of industrial production and three indices of output by basic branches (official as well as non-official). We also tried two methods of seasonal adjustments (X-12-ARIMA and TRAMO/SEATS) and four methods for dating cyclical turning points (local min/max, Bry-Boschan, Harding-Pagan, and Markov-Switching model). As various combinations of initial data and various statistical methods usually led to different estimates of peaks and troughs, the final decision was made according to several additional qualitative criteria. The resulting set of turning points looks plausible and separates expansions and contractions in an explicable manner, but further investigations and discussions are needed to establish a consensus in the expert community.
Studies on job search in Russia regularly raise the problem of separating seekers from non-seekers and forming a sample for empirical analysis of job search. Different researchers provide different solutions to the problem, but there are two main approaches to constructing a sample. The first one is to use data only on registered unemployment, the second approach is to use data from surveys that include questions on whether a respondent is searching for job and is ready to start working after receiving an acceptable offer. This paper provides estimates of an empirical job search model that explains both decision whether to seek a job or not and a probability of a successful search. That decision is unobservable and may not coincide with answers that individuals give during the survey. The model is estimated using data from Russian Longitudinal Monitoring Survey (RLMS-HSE) for the 2000–2014 period. According to obtained estimates, most of the non-employed may be considered as job seekers. The results not only provide a new insight into economic activity of non-employed but also show a possibility to significantly enhance information base for empirical studies on job search.
The paper provides a theoretical model, which studies the influence of political institutions and economic inequality on barriers to entry on markets, a level of redistribution, technological progress and economic growth. The model combines two approaches of modern economic literature, endogenous growth models of creative destruction and the approach of the political economy of development, according to which political institutions determine a social choice of economic institutions, which influence long-term growth rates. On the first step of the game agents differing in their incomes, skills and political power, make a social decision about the level of redistribution and the level of barriers to entry on markets. On the second step agents make economic decisions on investment, production and consumption. Political regimes differ in the distribution of votes between agents. The model explains the empirical evidence, suggesting that the transition to democracy in short and middle term reduces inequality in incomes, but does not always lead to the formation of institutions, favoring the equality of opportunities. In the model the influence of political regimes on barriers to entry on markets depends on the initial level of inequality in incomes and skills, and also on the average level of skills. In a society with a high level of inequality in incomes and skills, the existence of a majority coalition, which support a high level of barriers to entry on markets is more probable. This coalition will include the richest agents and the least skilled agents. The results of the model explain different outcomes of democratization process in terms of its effect on barriers to entry on markets and economic growth. The paper also considers four examples of third-wave democratization, which illustrates the results of the model.
We study the consequences of opening trade between developed and developing countries. To this end, we develop a two-factor general equilibrium model of international trade with variable markups and two countries which differ in relative factor endowments. We show that the more developed country (a country with a higher relative capital endowment) is characterized by higher wages and lower capital price while total individual income is higher in this country than in the less developed one. Deeper asymmetries in relative factor endowment between countries lead to more intensive trade. We also show that opening trade between two countries similar in factor endowments results in welfare gains for consumers in both countries. Contrast to that, opening trade is detrimental for residents of developing country if countries have big enough differences in factors endowments while consumers in developed country still gain from trade. This result arises due to high income inequality between two countries’ residents. The additional source of welfare losses in the developing country is the high production cost of imported commodities, which reduces their purchasing power for imported goods. Thus, market equilibrium with free trade is optimal only in the case of identical individual incomes between countries. Additional export regulations in the developing country may reduce differences in purchasing power between countries. Therefore, appropriate regulatory measures could result in reduction in income inequality which lead to gains from trade for consumers in both countries.
International experience demonstrates that successful development of national economy is inseparably linked with the use of innovation potential of small business – the most dynamical and flexible sector of economic activity. However, in order to use the maximum extent possible and, consequently, increase the economic return it is necessary to have a profound array of realistic and operational information that includes numerous aspects and entrepreneurial behavior’s motivation. Within a post-crisis business environment its role in socioeconomic development of the country has significantly increased and pointed out the necessity and relevance of researches that study and analyze business climate. Available Russian statistical data collection reflecting the condition of small business primarily from a quantitative point of view is insufficient not only because of its coverage but also because of estimation methods, which reduces the possibilities of analysis of current changes. Unfortunately, modern studying and analyzing methods of considered subjects show an obvious informational gap in researches that are based on the regular environment surveys. Application of this tool is especially significant for the economy in the circumstances because of the limited opportunities to complete economic information by means of existing quantitative statistical practices. This paper presents a complex analysis of business climate in the manufacturing industries in 2013. The research is based on sample business environment surveys of more than 2.5 thousand small businesses in the field of industry (sections C, D, and E of the Russian Classification of Economic Activities) conducted by the Federal State Statistics Service for 2008-2013.