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- International Economics M.A. (25) (remove)
After the breakdown of the Union of Soviet Socialist Republics, the Kyrgyz Republic started its transition period. During the Soviet Union Kyrgyzstan was one of the fifteen states having planned economic system which was later transited into the market driven mechanism. Consequently, Kyrgyzstan like a number of Commonwealth Independent States (CIS) suffered from primary drastic decline in economic development as well as from considerable transformation in the whole economic system. There was a severe increase in the unemployment situation, rising inequality and poverty and decrease in real wages. In spite of the fluctuations in the economic system, stagnation involving poverty and inequality lasted till 2000s. Therefore the national government had to undertake a number of reforms destined for economic recovery. Moreover, Kyrgyz government stated attracting international donors to help with the situation. The transition period was especially hard for kyrgyz women. There were not equal number of employment opportunities for women compared to men. Also, wage disparities resulted in income inequality for women. It is important to note that due to the more popularised beliefs of patriarchal values in the country, women were obliged to stay at home and do child care rather than pursue their career in social, economic or political spheres. The data is taken from national and international organisation’s sources.
The road to the euro: Bulgaria’s economic development since 1989 under currency board conditions
(2018)
The goal of this paper is to provide a comprehensive analysis of the key economic developments in Bulgaria over the last three decades, capturing the multidimensionality of the transition process and defining the current economic trajectory of the country under currency board conditions.
With the implosion of the socialist regime and the loss of its main external market the Bulgarian economy failed to regain lost ground and slipped into deep economic crisis. The aggravating macroeconomic imbalances culminated in a severe ‘triple’ crisis combining a crash in public finances, ruined banking system and foreign exchange crisis, as a result of a collapse of the currency, all of which gave rise to a hyperinflationary hike in early 1997.
Introduced as a stabilization instrument and disinflation device, following the severe economic crisis, the implications of the Bulgarian currency board for the economy have been mixed. On the one hand, living up to the expectations a remarkable turnaround in terms of inflation has been achieved and macroeconomic and financial stability has been restored. However, the disinflation came at the cost of enlarging external debt and appreciation of the real exchange rate, which is a primary prerequisite for potential loss of competitiveness of the economy.
Trade, foreign direct investments and inequality: development perspective for emerging markets
(2018)
Is an Interest Rate Cap Warranted in Kenya? An Assessment Through a Vector Error Correction Analysis
(2018)
This paper investigates whether policy rates have an impact on bank lending rates and whether bank lending rates have an impact on credit to the private sector in Kenya. The analysis is based on a vector error correction model (VECM) on a data sample for Kenya over 1996-2016. This investigation was motivated by the recent interest rate capping law that necessitated the reexamination of this channel of monetary transmission. The empirical evidence shows a significant and robust long-run relationship between the policy rate and the bank lending rate. The short-run relationship is significant though less
robust. Similarly there is a significant and robust long-run relationship between credit and the lending rate; the short run relationship is also significant but less robust. These results
indicate that monetary transmission from policy rates to credit is effective in the long run but less so in the short run. Therefore, the interest rate capping law may somehow be justified as a means of containing the cost of credit to stimulate access to credit.
This Master’s thesis aims to explain the causes of rapidly increasing prices in Venezuela and establish whether the current episode can be considered to be of hyperinflationary nature from the post-Keynesian theoretical approach. The chosen approach highlights the role of distributive conflict, indexation mechanism, balance of payments constraint, devaluation expectations and gradual rejection of national currency in favour of foreign currency. We argue that the root cause of the precarious economic situation in Venezuela lies in the long term failure to implement structural changes ensuring industrial diversification and lessening the dependency on oil exports. The symptoms of the Dutch disease are observed in the prolonged currency overvaluation during the high oil revenue periods. In the face of growing external constraint the authorities introduce severe foreign currency rationing (and/or devalue the exchange rate) which ignites inflation due to external bottlenecks since many sectors face supply constraints as they depend on imports of inputs of production. This leads to a regressive distribution of income, which contributes to the growing distributive conflict and fuels inflation further, as workers oppose to the lowering of real wages. Moreover, the currency rationing puts pressure on the black market for exchange as the devaluation expectations increase, leading to a parallel market devaluation-inflation spiral, which threatens to turn into hyperinflation. Nevertheless, we argue that hyperinflation, according to the proposed post-Keynesian framework (the flight to foreign currency), does not materialise despite skyrocketing prices because of the particular institutional setting – the exchange controls, which have been in place since 2003, prevent full currency substitution.
Towards a Fiscal Capacity in the Euro Area. A Critical Assessment of the Recent Policy Proposals.
(2018)
Historically high and rising level of external debt raises concerns among policymakers and academics around the globe. This master thesis proposes to examine several questions. Firstly, the paper attempts to provide the analysis of the current status quo of external debt in developing and emerging countries. Secondly, it attempts to determine the risks attached to low-quality debt structure. Lastly, the paper attempts answer whether expanding debt market through regional integration of local currency bond markets can increase financial stability and reduce “original sin”.
The thesis discusses financialization and secular stagnation in the U.S. economy since the 1980s. The theoretical part outlines the historical approach of the main scholars who have discussed secular stagnation before and since the emergence of financialization.
It illustrates the shortcomings of the current mainstream debate. Furthermore, it then focuses on the relationship between the two phenomena on the basis of heterodox approaches. Both Marxian and Post-Keynesian researchers consider financializaion to be responsible for producing stagnation tendencies. They agreed about the temporary counteracting role of financial expansion in addition to its role in producing bubbles and contradictions. They agree about the channel of accumulation but each of them views it in a different way. Further, they agree also on the impact of income inequality but again each of them recognizes this in a different way. However, they differ in describing the structure of financialization and in how they explain the relationship between policy and that structure.
The thesis finds that the Steindlian model finds some common ground between the two paradigms. The data presented illustrates the validity of the model. It is found that the stagnation trend before crisis was pushed by decreasing accumulation in capital stock and increasing inequality. However, despite the existence of increasing inequality household expenditure increased since the compensating factor, “household debt”, was increasing. After the crisis Stagnation tendencies reemerged because of the slowing down of household expenditure. Household expenditure was therefore negatively influenced by increasing inequality and this post-crisis fall in debt. The accumulation channel also contributed to stagnation since the increase in investment was small.