Featured publications

Working Paper 6/2018: Changes in sovereign debt dynamics in Central and Eastern Europe

Juan Carlos Cuestas
Eesti Pank

The aim of this paper is to shed some light on the degree of sustainability of fiscal debt for a group of Central and Eastern European countries. We apply a battery of time series econometrics methods to show how the financial crisis has affected the debt-to-GDP ratio and how the ratio has behaved recently. The results give us important insights into how governments in Central and Eastern Europe have reacted to the accumulation of debt. We distinguish between two groups of countries; one group where the sovereign debt stock stabilised after the crisis, and another where debt has been accumulated more quickly in recent years. The results provide important policy lessons for the authorities responsible. 


Working Paper 4/2018: Spillovers from Euro Area Monetary Policy: A Focus on Emerging Europe

Soňa Benecká, Ludmila Fadejeva, Martin Feldkircher
Latvijas Banka

This paper investigates the international effects of a euro area monetary policy shock, focusing on countries from Central, Eastern, and Southeastern Europe (CESEE). To that end, we use a global vector autoregressive (GVAR) model and employ shadow rates as a proxy for the monetary policy stance during normal and zero-lower-bound periods. We propose a new way of modelling euro area countries in a multi-country framework, accounting for joint monetary policy, and a novel approach to simultaneously identifying shocks. Our results show that in most euro area and CESEE countries prices adjust and output falls in response to a euro area monetary tightening, but with a substantial degree of heterogeneity.


Working Paper No. 292: How do firms adjust to rises in the minimum wage? Survey evidence from Central and Eastern Europe

Katalin Bodnar, Ludmila Fadejeva, Stefania Iordache, Liina Malk, Desislava Paskaleva, Jurga Pesliakaitė, Nataša Todorović Jemec, Peter Toth, Robert Wyszyński
Narodowy Bank Polski

We study the transmission channels for rises in the minimum wage using a unique firm-level dataset from eight Central and Eastern European countries. Representative samples of firms in each country were asked to evaluate the relevance of a wide range of adjustment channels following specific instances of rises in the minimum wage during the recent post-crisis period. The paper adds to the rest of literature by presenting the reactions of firms as a combination of strategies, and evaluates the relative importance of those strategies. Our findings suggest that the most popular adjustment channels are cuts in non-labour costs, rises in product prices, and improvements in productivity. Cuts in employment are less popular and occurs mostly

through reduced hiring rather than direct layoffs. Our study also provides evidence of potential spillover effects that rises in the minimum wage can have on firms without minimum wage workers.


Focus on European Economic Integration Q4/18

Oesterreichische Nationalbank

Developments in selected CESEE countries: Economic activity still in full swing, but headwinds are increasing, Josef Schreiner

Outlook for selected CESEE countries: CESEE-6 economic growth robust but moving sideways, Russia recovering only slowly, Antje Hildebrandt

A simple approach to nowcasting GDP growth in CESEE economies, Aleksandra Riedl and Julia Wörz


CNB WP 13/2018: How Do Large Banking Groups Manage Efficiency of Their Subsidiaries? Evidence from CEE – forthcoming

Václav Hausenblas, Jitka Lešanovská
Czech National Bank

BOFIT Discussion Papers 22/2018: The slow road from serfdom : Labor coercion and long-run development in the former Russian Empire

Johannes C, Buggle, Steven Nafziger
Bank of Finland

This paper examines the long-run economic consequences of Russian serfdom. Employing data on the intensity of labor coercion at the district level in just prior to emancipation in 1861, we document that a greater legacy of serfdom is associated with lower economic well-being today. Our estimates imply that increasing historical serfdom by 25 percentage points reduces household expenditure today by up to 17%.

The analysis of different types of labor coercion reveals substantial heterogeneity in the long-run effects of serfdom. Furthermore, we document persistence of economic development measured by city populations over the period 1800 - 2002 in cross-sectional regressions and panel estimations. Exploring mechanisms, our results suggest that the effect of serfdom on urbanization in Imperial Russia was perpetuated in the Soviet period, with negative implications for structural change, the spatial distribution and productivity of firms, and human capital investment.