Ukrainian Economist

Interview with Ricardo Caballero - The Region - Publications & Papers | The Federal Reserve Bank of Minneapolis

2011-06-10T12:37:00.000+03:00

Interview with Ricardo Caballero - The Region - Publications & Papers | The Federal Reserve Bank of Minneapolis

Caballero talks about current state of macro and possible steps to move forward.

China Currency Reserves Rise to Record $2.85 Trillion - Bloomberg

2011-01-11T07:40:00.000+02:00

China Currency Reserves Rise to Record $2.85 Trillion - Bloomberg: "China’s foreign-exchange reserves climbed 18.7 percent to a world-record $2.85 trillion"

Why Has America’s Economic Recovery Stalled? - Project Syndicate

2010-10-26T10:32:00.000+03:00

Why Has America’s Economic Recovery Stalled? - Project Syndicate: "The United States’ import bill now exceeds $2.4 trillion a year, more than twice that of China and greater than that of the 27 European Union countries combined"

The causes of slow recovery by Martin Feldstein

Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes

2010-10-21T21:28:00.000+03:00

Google’s income shifting -- involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization

Hong Kong Losing to Shanghai Means Goodbye to Long Lunch - Bloomberg

2010-10-18T06:34:00.000+03:00

Hong Kong Losing to Shanghai Means Goodbye to Long Lunch - Bloomberg: "Equities traders in Hong Kong may soon have to say goodbye to lunches of sauted ostrich and crispy pigeon at Michelin-starred restaurants and settle for a sandwich at their desks instead."

FT.com / Technology - Google to map inflation using web data

2010-10-13T12:47:00.000+03:00

FT.com / Technology - Google to map inflation using web data: "Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics."

It would be really cool if Google grants open access to the data for researchers.

Ъ - НДС выводят начистоту // Общая задолженность по возмещению налога достигает 20 млрд грн

2010-10-07T12:23:00.000+03:00

Ъ - НДС выводят начистоту // Общая задолженность по возмещению налога достигает 20 млрд грн: "Как выяснил Ъ, долг правительства по возмещению НДС намного превышает заявленные 3 млрд грн, просроченные свыше двух месяцев. Общая сумма НДС, подтвержденная проверками, на начало октября составляла 9,1 млрд грн, а проверяются еще 10 млрд грн."

Правительство стало в позу страуса.

balticbusinessnews.com - Ukraine PM invites investments, but has no time for S�rumaa

2010-10-06T10:28:00.000+03:00

balticbusinessnews.com - Ukraine PM invites investments, but has no time for Soorumaa: "Mykola Azarov said during his recent visit to Tallinn that Ukraine needs $1 trillion to modernize...

He said that shipbuilding, the aviation industry and the energy sector particularly required investment

Azarov also noted that tax reform was being conducted in Ukraine, and proposed that Estonia invest in Ukraine.

One of Estonia's richest businessmen Urmas Sõõrumaa was disappointed yesterday when Azarov cancelled a breakfast meeting that had been planned for Wednesday. "We had planned to eat breakfast together tomorrow, but this meeting has been cancelled. "

Really unprofessional. I wonder how this 1trln dollar number was taken by Estonians.

Украина стала еще более непривлекательной для инвесторов - ЛІГА.Новости

2010-10-06T10:20:00.000+03:00

Украина стала еще более непривлекательной для инвесторов - ЛІГА.Новости: "качественных изменений инвестиционного климата после президентских выборов в Украине не состоялось."

в третьем квартале индекс инвестиционной привлекательности страны снизился с 3,25 до 3,20 по пятибалльной шкале.

Инвесторы отмечают, что улучшилась ситуация с возмещением НДС, тем не менее и дальше ухудшается процесс упрощения таможенных процедур и техническое регулирование. Остальные показатели: реформирование судебной системы, земельная реформа, валютное регулирование - остались на протяжении квартала без изменений.

FT.com / Columnists / Martin Wolf - How to fight the currency wars with stubborn China

2010-10-06T09:58:00.000+03:00

FT.com / Columnists / Martin Wolf - How to fight the currency wars with stubborn China: "Has the time for a currency war with China arrived? The answer looks increasingly to be yes."

Martin Wolf is going to war.

Ezra Klein - Infrastructure: The best deal in the economy

2010-10-06T09:56:00.001+03:00

Ezra Klein - Infrastructure: The best deal in the economy: "Because of the recession, construction materials are cheap. So, too, is the labor. And your borrowing costs? They've never been lower."

Taking the advice from Klein, Ukraine should also build infrastructure by borrowing from abroad and domestically (this is what the government is doing). It is a gamble, of course, because unlike for US, long-term perspectives of Ukraine as a country and its long-term economic growth are unclear.

Finance for all? Banking structure reform may not be the way | vox - Research-based policy analysis and commentary from leading economists

2010-10-06T09:39:00.000+03:00

Finance for all? Banking structure reform may not be the way by Beck and Brown, voxEU|

What really surprised me that in 2006 only 15 percent of Ukrainian households had a bank account. I think that the number is unrealistically low. In Azerbaijan , Kyrgyzstan and Tajikistan less than 5 percent of households had a bank account in 2006.

Beck and Brown 2010

From currency warfare to lasting peace | vox - Research-based policy analysis and commentary from leading economists

2010-09-30T12:29:00.000+03:00

From currency warfare to lasting peace by Barry Eichengreen VoxEU

A piece of advise on what small emerging economies can do when the giants are fighting currency wars.

"A better solution would be to encourage the domestic demand for manufactures. Demand could be encouraged through, inter alia, tax credits for purchases of household appliances like those with which Japan has experimented. Married with some further appreciation of the currency, this would leave the demand for manufacturing products unchanged.
Better still would be to figure out exactly which manufacturing sectors are sources of learning-by-doing and technology spillovers. Not all manufacturing sectors, presumably, are. Only those which generate these favourable external effects for growth should be the recipients of preferential tax treatment."

FT.com / Columnists / Martin Wolf - Currencies clash in new age of beggar-my-neighbour

2010-09-29T11:31:00.000+03:00

FT.com / Columnists / Martin Wolf - Currencies clash in new age of beggar-my-neighbour: "Currencies clash in new age of beggar-my-neighbour"

Martin Wolf makes a good point on the currency war between US and China

Impact of kindergarten on career

2010-09-28T17:00:00.001+03:00

A new NBER paper have found that the early childhood development has a long-lasting effect on our careers.

How Does Your Kindergarten Classroom Affect Your Earnings? Evidence From Project STAR Raj Chetty, John N. Friedman, Nathaniel Hilger, Emmanuel Saez, Diane Whitmore Schanzenbach, and Danny Yagan, NBER Working Paper No. 16381

"First, kindergarten test scores are highly correlated with outcomes such as earnings at age 27, college attendance, home ownership, and retirement savings. Second, students in small classes are significantly more likely to attend college, attend a higher-ranked college, and perform better on a variety of other outcomes. Class size does not have a significant effect on earnings at age 27, but this effect is imprecisely estimated. Third, students who had a more experienced teacher in kindergarten have higher earnings. Fourth, an analysis of variance reveals significant kindergarten class effects on earnings. Higher kindergarten class quality – as measured by classmates' end-of-class test scores – increases earnings, college attendance rates, and other outcomes. Finally, the effects of kindergarten class quality fade out on test scores in later grades but gains in non-cognitive measures persist. We conclude that early childhood education has substantial long-term impacts, potentially through non-cognitive channels."

EU trade policy

2010-09-27T10:33:00.000+03:00

Simon J Evenett has a nice piece on the EU trade policy. Here is the key paragraph for Ukrainian RTA:

EU RTA policy runs into two constraints. First, EU negotiating objectives are far too diffuse, ranging from traditional tariff considerations to new behind-the-border rules to "sustainable development" and a plethora of other non-economic goals. The latter are often wrapped up in patronising language about promoting European values. Second, some of the RTA partners are large enough that they too have demands, demands which the EU probably cannot deliver. (Indian demands for visas being a case in point.) Both factors have eroded, if not eliminated, the basis of the deal in many negotiations. In fact, the EU negotiating package seems best suited for other industrialised countries that have either defensive agricultural interests (Korea) or are willing to forgo their offensive agricultural interests (Canada). The problem is that there aren't many such countries left for the EU to negotiate RTAs with! As far as the large emerging markets are concerned, little should be expected.

Overall, unless there is a substantial streamlining of EU negotiating demands and occasionally a willingness to make serious concessions to negotiating partners, the EU's RTA and EPA negotiations will remain a sideshow. These negotiations may afford opportunities for experimentation but there aren't enough deals in the works to dramatically scale up any innovative provisions.

Ukraine is emerging country with an agenda to promote its agricultural products to EU. That is exactly a combination of factors, EU is not prepared to deal with.

Ukrainian household spent 58 percent on food

2010-09-20T13:02:00.001+03:00

In 1st quarter of 2010 Ukrainian household spent 58 percent on food, 33 percent on other goods and services.

Very sad numbers: 1.5 percent of total consumption was spent on entertainment and culture, 1.6 percent spent on eating out. There is no life for Ukrainian households.

Minister of Finance has no clue

2010-09-17T13:02:00.000+03:00

Minister of Finance has no clue about what human capital means:

"Предусматривается создание условий для обновления производственных мощностей, что будет стимулировать инвестиции в человеческий капитал и рост заработных плат."

As a matter of fact the term "human capital" was introduced to show difference between investing in productive capacity (physical capital) and investing in education (human capital).

LB.ua: Перекрывать дороги в Сумах будут по приказу Госхраны - Политика

2010-09-16T14:04:00.000+03:00

LB.ua: Перекрывать дороги в Сумах будут по приказу Госхраны - Политика: "Как подчеркнул Резников, если будут основания, то ГАИ будет действовать согласно закону"

Does it mean that generally it does not follow the law?

Министр АПК: Я гречку еще лет пять есть не смогу - Интервью на ЛІГА.Новости

2010-09-16T13:46:00.000+03:00

I can't stop laughing. Our minister of agriculture can be a professional stand-up comedian.

Министр АПК: Я гречку еще лет пять есть не смогу - Интервью на ЛІГА.Новости: "Проверки дисциплинируют и возвращают к демократии."

Министр АПК: Я гречку еще лет пять есть не смогу - Интервью на ЛІГА.Новости

2010-09-16T13:42:00.000+03:00

Министр АПК: Я гречку еще лет пять есть не смогу - Интервью на ЛІГА.Новости: "Кабинет Министров принял решение срочно внести в Верховную Раду соответствующий законопроект о внутренней торговле, который даст возможность урегулировать ситуацию с ценами"

Министр АПК: Я гречку еще лет пять есть не смогу - Интервью на ЛІГА.Новости

2010-09-16T13:38:00.000+03:00

Министр АПК: "Рынок не может саморегулироваться."

"...мы приступили к созданию Научного института аналитики, прогнозирования и балансов. Ведь принцип "рынок сам все отрегулирует" не срабатывает. Рынок не может саморегулироваться. Мы все убедились в этом на примере продуктового ажиотажа."

СМИ: Реформы Табачника вернули коррупцию в школы - ЛІГА.Новости

2010-06-07T16:17:00.000+03:00

СМИ: Реформы Табачника вернули коррупцию в школы - ЛІГА.Новости: "СМИ: Реформы Табачника вернули коррупцию в школы"

Really cool would be to write a paper if this is true

It’s the general equilibrium, stupid | vox - Research-based policy analysis and commentary from leading economists

2010-05-21T08:28:00.000+03:00

It’s the general equilibrium, stupid | vox - Research-based policy analysis and commentary from leading economists: "While the focus of commentators and policymakers is on secondary (although still important) regulatory and corporate governance issues, the fundamental problem in the current global macroeconomic and financial equilibrium is one of asset shortages. In particular, there is a shortage of safe “AAA” assets. The world seems to need more US Treasury-like instruments than are available."

Yanukovich ordered Ukraine to grow

2010-05-18T14:20:00.000+03:00

Янукович поставил перед собой амбициозную цель � Новости экономики – Корреспондент: "экономика страны будет развиваться в соответствии с планами долгосрочной программы."

Since policy makers never have full control over the growth rate of a country, I wonder what would he do if the actual growth rate deviates from the planned one.

Wishful thinking?

2010-05-18T12:55:00.000+03:00

Kyiv Post. Independence. Community. Trust - Ukraine - Medvedev: Russia, Ukraine need annual trade volume of $100 billion: "Medvedev: Russia, Ukraine need annual trade volume of $100 billion"

Here is the figure of actual bilateral trade in 2001-2009, plus projection for 2010 of 40 bln US$ that both presidents expressed as realistical target, plus what Medvedev called as a long term goal of 100 bln US$ for the future (I defined the future as 2020 at my own discretion).

If one believes that both economies will come back to the trend they had before 2009, the 100 bln US$ in 2020 looks feasible. However, I do believe that Russia and Ukraine are on another long term equilibrium path now, and I bet that the level of bilateral trade of 2008 (35 bln US$ ) will not be reached neither this year nor in 2011. Speaking about the long run goal, 100 bln US$ is possible, but meaningless goal. If, as some economist warn us, we entering a phase with high inflation, value of 100 bln US$ can be reached pretty quickly but the volume of trade will not grow 5 times in foreseeable future.

IMF Fiscal Monitor

2010-05-17T05:45:00.000+03:00

IMF issued a fiscal monitor and projections of future fiscal deficits. This graph projects how public debt and government balance change in 2007-2015

Return to the Abyss - Project Syndicate

2010-05-17T05:35:00.000+03:00

Return to the Abyss - Project Syndicate: "If fiscal imbalances are not addressed through spending cuts and revenue increases, only two options remain: inflation for countries that borrow in their own currency and can monetize their deficits; or default for countries that borrow in a foreign currency or can’t print their own."

Минэкономики ограничило рентабельность аренды торговых площадей � Новости рынка недвижимости – Корреспондент

2010-05-07T15:30:00.000+03:00

Минэкономики ограничило рентабельность аренды торговых площадей � Новости рынка недвижимости – Корреспондент: "Министерство экономики установило рентабельность цен на арендную плату за торговые помещения на уровне 20%."

That is the new ministry of economy in action. Price controls is the worst regulatory policy out of all available options, but the new team of "professionals" did not study Economics 101

Here comes deflation

2010-05-07T08:56:00.000+03:00

Ukrainian CPI in April is 99.7 percent of the price level in March. It is usually the case that inflation slows down or even turns negative in summer when local fruits and vegetables become cheaper. This time it is not seasonal, it reflects the overall depression of aggregate demand.
Moderate deflation caused by seasonal factors is not bad. However, if deflation is caused by some fundamental factors that depress the aggregate demand, it can lead to a protracted period of depressed economic activity.

Op-Ed Columnist - A Money Too Far - NYTimes.com

2010-05-07T08:49:00.000+03:00

Op-Ed Columnist - A Money Too Far - NYTimes.com: "The bad news is that Greece’s problems are deeper than Europe’s leaders are willing to acknowledge, even now — and they’re shared, to a lesser degree, by other European countries. Many observers now expect the Greek tragedy to end in default; I’m increasingly convinced that they’re too optimistic, that default will be accompanied or followed by departure from the euro."

Wild day on Wall Street leaves electronic exchanges under scrutiny

2010-05-07T06:05:00.000+03:00

Wild day on Wall Street leaves electronic exchanges under scrutiny: "The shares of Accenture, a consulting firm, fell from $40 to a single penny and then back to $40 again. Procter & Gamble traded at $54 on the New York Stock Exchange. But at the same time, Nasdaq was reporting that the company's shares were selling for $39."

It's all about Euro

2010-05-07T05:25:00.000+03:00

U.S., Asia Stocks Plunge as Debt Concern Spurs Electronic Rout - Bloomberg.com: "“It’s all about Europe,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “There’s a perception that what’s going on in Europe will be dragging the region back into a recession. The question is how much of that is going to be contagious to the rest of the world.”"

Ukrainian agriculture gets a boost

2010-05-06T22:17:00.000+03:00

Kyiv Post. Independence. Community. Trust - Business - General - In sign of investor confidence, three agribusiness giants raise $350 million in two-day period: "“It looks like a good week for Ukrainian agriculture,” said Oleksandr Paraschiy of BG Capital brokerage, talking up the nearly $350 million raised by three major companies in a 48-hour period on April 28-29."

Kyiv Post. Independence. Community. Trust - Ukraine - Azarov meets with Turkish Foreign Minister Ahmet Davutoglu

2010-05-06T13:43:00.000+03:00

Kyiv Post. Independence. Community. Trust - Ukraine - Azarov meets with Turkish Foreign Minister Ahmet Davutoglu: "Azarov meets with Turkish Foreign Minister Ahmet Davutoglu"

I see here a sign that the new government takes the free trade zone with the EU seriously. To get a free trade with EU, all loopholes should be closed. Namely, Turkey as well as some European countries that are not members of the EU have free trade agreements with the EU. If Ukraine joins the free trade area, it should sign agreements with EU and other countries that have free trade status.

ECB’s Weber Sees Threat of ‘Grave’ Greek Contagion (Update2) - Bloomberg.com

2010-05-06T09:57:00.000+03:00

ECB’s Weber Sees Threat of ‘Grave’ Greek Contagion (Update2) - Bloomberg.com: "Contagion from the Greek crisis swept through European markets today, triggering a surge in the cost of insuring European banks against default to a one-year high and driving Spanish and Portuguese debt swaps wider."

More bad news from the EMU zone. in 2008 Europeans said that the US is the source of crisis and the burden of reforming financial sector is on the US. I have talked to some German economists in summer of 2008 and they were convinced that nothing could possibly happen to Germany exports, because they are the best in making perfect products. I would love to hear their opinion today. Germans and Chinese fail to understand that they are as responsible for the current situation as any other country.

Some people think that China is on the road to hell

2010-05-06T09:51:00.000+03:00

China May ‘Crash’ in Next 9 to 12 Months, Faber Says (Update3) - Bloomberg.com: "China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month. As much as 60 percent of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fueled bubble in China may trigger a regional recession within a decade."

Until now, Asia was a bright spot on the gloomy economic picture. If China goes to recession, we will see the deepening of the crisis, likely to be more severe than in 2008-2009

Putin jokes

2010-04-30T18:20:00.000+03:00

During the meeting with Ukrainian prime-minister Azarov, Putin "jokingly" suggested merging Gazprom and Naftagaz. Stock market reacted:

Hey, Eurosceptics told you so!

2010-04-30T12:53:00.000+03:00

Op-Ed Columnist - The Euro Trap - NYTimes.com: "membership in the euro, which had encouraged markets to love the crisis countries not wisely but too well, turned into a trap."

Krugman explains how lack of flexible monetary policy disarms countries in Southern Europe. Is leaving the Euro zone an option for Greece? Krugman says that now it is possible.

High and Low Finance - Rescuing Greece to Protect Germany - NYTimes.com

2010-04-30T02:59:00.000+03:00

High and Low Finance - Rescuing Greece to Protect Germany - NYTimes.com: "About the only thing Europe has so far accomplished is to make the International Monetary Fund look good. When the I.M.F. does a bailout, it imposes strict austerity terms, which makes it wildly unpopular, but it provides money at very low rates. Europe wants strict austerity and high rates. Subsidizing the irresponsible Greeks is simply wrong, or so they say in Germany."

On Euro problems from New York

Ukraine Yet to Fulfill All IMF Fiscal, Bank Goals (Update1) - Bloomberg.com

2010-04-29T00:23:00.000+03:00

Ukraine Yet to Fulfill All IMF Fiscal, Bank Goals (Update1) - Bloomberg.com: "Ukraine’s efforts to shore up its finances and rebuild its banking industry have yet to fulfill the terms of the country’s International Monetary Fund program"

Preservation Follies by Edward L. Glaeser, City Journal Spring 2010

2010-04-26T09:58:00.000+03:00

Preservation Follies by Edward L. Glaeser, City Journal Spring 2010: "To get an idea of the way that historic districts can freeze a city, consider two recent episodes. In 1999, Citibank sold a one-story branch bank on the corner of 91st and Madison Avenue to a developer who planned a 17-story tower for the site. But the corner was within the prestigious Carnegie Hill Historic District, whose distinguished residents didn’t like the idea of another tower in their neighborhood. Woody Allen made a short video protesting the plan."

Historic centers and development of cities

Goldman Sachs e-mails show bank sought to profit from housing downturn

2010-04-25T00:37:00.000+03:00

Goldman Sachs e-mails show bank sought to profit from housing downturn: "Sen. Carl Levin (D-Mich.), chairman of the Permanent Subcommittee on Investigations, said four internal e-mails released Saturday contradict Goldman's assertion that it didn't seek to profit from the housing downturn. 'Goldman made a lot of money by betting against the mortgage market,' Levin said."

Kyiv Post. Independence. Community. Trust - Business - General - Yanukovych: Russia to pay Ukraine annually $98 million in cash for naval base rent starting 2019

2010-04-22T17:29:00.000+03:00

Kyiv Post. Independence. Community. Trust - Business - General - Yanukovych: Russia to pay Ukraine annually $98 million in cash for naval base rent starting 2019

I am sure one can find plenty of guys who would outbid the Russian Government and rent the whole place for $100 million per year. That's cheap.

Natural gas deal

2010-04-21T18:57:00.001+03:00

Presidents Yanukovich and Medveded signed a deal that lowers the price of gas for Ukraine in exchange for prolongation of stay of the Russian Black see fleet. A market reaction? Negative.

World Bank data access is really cool!

2010-04-21T12:23:00.000+03:00

I have just checked the new World Bank data site and it works! I just downloaded the loans from the BIS reporting banks to Ukrainian banks and produce a figure. It took less than a minute:

Data | The World Bank

2010-04-20T19:03:00.000+03:00

Data | The World Bank

World Bank is opening its vast data storage.

Кинах просит Азарова возобновить работу Совета предпринимателей - ЛІГА.Новости

2010-04-20T17:34:00.000+03:00

Кинах просит Азарова возобновить работу Совета предпринимателей - ЛІГА.Новости: "Мы, как эскпортно-ориентированная страна, должны иметь гарантированную государством систему экспортной и кредитной поддержки, страхования рисков', - добавил он."

Not exactly sure what does he mean by introducing state guaranteed support of export and credit, but sounds really dangerous. If I am a private company, I should bear full responsibility for my actions, including exporting and external financing.

Ukraine May Cut Interest Rates, Central Banker Says (Update1) - Bloomberg.com

2010-04-20T17:29:00.000+03:00

Ukraine May Cut Interest Rates, Central Banker Says (Update1) - Bloomberg.com: "April 20 (Bloomberg) -- Ukrainian monetary policy makers may lower the benchmark interest rate, the highest in Europe, if inflation slows, said Valeriy Lytvytskyi, an adviser to central bank Governor Volodymyr Stelmakh."

Finally, the NBU tries to manage domestic interest rate, which is killing the recovery of the economy by depressing investment. Unfortunately, inflation is still high despite considerable negative shock to the aggregated demand. The high inflation can be partially explained by the 2008 sharp hryvna devaluation followed by another devaluation in 2009. Still, the exchange rate pass-through should be already fully adjusted, yet high inflation persist despite stabilization of exchange rate.

Imports of Ukraine in Jan-Feb 2010, Ukrstat

2010-04-19T11:58:00.003+03:00

As usual, fossil fuels and natural gas take 36 percent of all Ukrainian exports. It is really a shame, taking into account huge territory, large than France or Poland. Really, what are the chances there is no oil and gas hidden somewhere in Ukraine?

Construction materials are on the rise, growing 376 percent. It is a good sign of economic recovery

Umbrellas are the hottest Ukrainian exports

2010-04-19T11:57:00.004+03:00

Umbrellas are the hottest Ukrainian exports , growing 8966% relative to the same period of 2009

Source: Ukrstat

Is the crisis in Ukraine over? I do not think so

2010-04-16T12:48:00.000+03:00

Ukrstat reports:

Industrial production in January-March 2010 grew 11%
but
Retail trade in January-March is 3% below the same period of 2009 and 17% below the level of 2008
and the really bad piece of statistics
Construction in January-March 2010 is 80% of the 2009 level and only 34% of the 2008 level

Therefore, I see that the externally oriented industries are moving towards the healthy recovery but internal demand and investments are still in very bad shape.

Kyiv Post. Independence. Community. Trust - Business - General - IMF proposes to Ukrainian authorities to increase discount rate, toughen bank refinancing

2010-04-16T12:35:00.000+03:00

Kyiv Post. Independence. Community. Trust - Business - General - IMF proposes to Ukrainian authorities to increase discount rate, toughen bank refinancing: "IMF proposes to Ukrainian authorities to increase discount rate, toughen bank refinancing"

The document really suggests revolutionary changes to the Ukrainian Central Bank role and policies. The government should be desperately in need of external financing if they agree to sign this document.

Links, April 16

2010-04-16T06:43:00.001+03:00

Ukranian News - Industrial Output Up By 13.8% In March: "Industrial Output Up By 13.8% In March"

Ukranian News - Tihipko Predicts Tax Code To Be Adopted In July - August: "Tihipko Predicts Tax Code To Be Adopted In July - August"

Януковичу предложат сократить треть исполнительной власти - ЛІГА.Новости: "Рабочая группа по законодательному и институционному обеспечению реформ Комитета по экономическим реформам при Президенте Украины будет рекомендовать главе государства сократить на треть количество центральных органов исполнительной власти."

Global crisis to hurt trade for up to 2 years-WTO Reuters: "Global trade will face lingering protectionism for up to two years, as the job market reels from the global financial crisis"

Правительство усилило независимость НБУ - Макроэкономика - Макроэкономические показатели Украины / Торговое сальдо // Delo.UA

2010-04-15T15:32:00.000+03:00

Правительство усилило независимость НБУ - Макроэкономика - Макроэкономические показатели Украины / Торговое сальдо // Delo.UA: "правительство внесло изменения: определение ценовой стабильности как основной цели НБУ, финансовой стабильности как второстепенной цели."

Finally, the government is listening to the IMF -- fighting inflation should be given a priority.

Налоговики собрали 619 млн.грн. "зарплатных" штрафов - ЛІГА.Новости

2010-04-15T15:31:00.000+03:00

Налоговики собрали 619 млн.грн. "зарплатных" штрафов - ЛІГА.Новости: "Налоговики собрали 619 млн.грн. 'зарплатных' штрафов"

According to the report, the tax irregularities related to payments of wages were found in 97.6% of all cases! I have mixed feelings. On the one hand it indicates an extremely high rate of tax evasions and room for increase in tax base, on the other hand it means that no one can feel safe under the current tax system.

China GDP Grows 11.9%, Highlighting Overheating Risk (Update3) - Bloomberg.com

2010-04-15T12:27:00.000+03:00

China GDP Grows 11.9%, Highlighting Overheating Risk (Update3) - Bloomberg.com: "China GDP Grows 11.9%, Highlighting Overheating Risk...Investment contributed 6.9 percentage points to growth, consumption accounted for 6.2 points and net exports deducted 1.2 points, the statistics bureau said today. "

В Украине появится Министерство науки - ЛІГА.Новости

2010-04-14T22:15:00.000+03:00

В Украине появится Министерство науки - ЛІГА.Новости: "'Итак, инновационной Украине - быть', - заявил Вице-премьер-министр."

Creation of the ministry of science is probably the stupidest idea this government came up with so far. What is next? Probably, the ministry of science will develop a five year plan to increase production of nanotechnologies by 500% and creation of perpetuum mobile by next century.

Prospects Weekly: Global inflation up 2% in Dec 09, US 10-year treasuries yields rising, possible fall in future ODA | A forward looking analysis of the global economy.

2010-04-14T22:08:00.000+03:00

Prospects Weekly: Global inflation up 2% in Dec 09, US 10-year treasuries yields rising, possible fall in future ODA | A forward looking analysis of the global economy.: "Headline inflation in low-income countries jumped in late-2009 (y/y), as the negative base effects from the collapse in food and fuel prices during the acute phase of the crisis (from a year prior) fade."

IMF Survey: Capital Surges Can Be Difficult For Recipient Countries

2010-04-14T05:26:00.001+03:00

IMF Survey: Capital Surges Can Be Difficult For Recipient Countries: "The unprecedented liquidity created by countries to fight the economic crisis could create problems for policymakers in some advanced and emerging market economies with relatively strong growth prospects and higher interest rates, the International Monetary Fund said in a new report."

Ukraine, deregulating financial market, goes against the overall trend. Given the amount of liquidity the IMF warns us, Ukraine will be a primary destination of foreign financial assets. The surge of liquidity is likely to lead to inflation and asset bubbles. What can be done? The IMF advice goes exactly against of what the government of Ukraine is doing right now:

Countries’ policy responses

There are a number of potential policy responses to mitigate risks related to capital inflow surges, which include

• More flexible exchange rate policies, especially when the exchange rate is undervalued. A floating exchange rate provides a natural buffer against surges in global liquidity by making it more expensive for foreign investors to purchase assets and, as a result, reducing valuation pressures on domestic assets.

• Official reserve accumulation. By adding to reserves governments, in effect, hold on to some of the capital inflows.

• Reducing interest rates, if the inflation outlook permits, to lessen the attraction for investors seeking higher returns.

• Tightening fiscal policy when the overall macroeconomic policy stance is too loose.

• Reinforcing prudential regulation in the financial system.

Links of the day, April 13

2010-04-13T18:16:00.000+03:00

How Has the Monetary Transmission Mechanism Evolved Over Time? Jean Boivin, Michael T. Kiley, and Frederic S. Mishkin NBER Working Paper No. 15879

Monetary Policy and Unemployment, Jordi Galí, NBER Working Paper No. 15871
The Return of Industrial Policy, Dani Rodrik

The credits in foreign currency are back

2010-04-13T18:11:00.000+03:00

The parliament of Ukraine has voted on lifting the restrictions on loans in foreign currency (link in Russian). In addition, the MPs simplified the procedures that are required for foreign investments in Ukraine.
It seems that nothing has been learnt from the crisis and more strict regulations of financial markets is not what on the table. To the contrary, the ruling coalition hopes to attract more foreign capital inflows. While it is good to overcome lack of financing of the current government deficit, it will create the situation similar to the one that led to the collapse of the economy in 2008.

No tender requirements on preparations to Euro 2012

2010-04-13T18:03:00.000+03:00

Local and state governments are allowed to spend on purchases of goods and services related to the Euro 2012 without tenders (link in Russian). This is a very strange decision that goes against the declaration to make government procurement mechanism more transparent.
The likely rationale for the decision is to expedite preparation to the competition which goes behind the schedule.

Origin of trust

2010-04-12T06:08:00.000+03:00

In "CULTURAL BIASES IN ECONOMIC EXCHANGE?" Guiso, Sapienza, and Zingales estimate how trust between nations is determined in a gravity type of model, and report the fixed effects of trust by country of origin

Scandinavians are the most friendly towards other nations, while Southern Europeans suffer from being suspisious towards foreigners.

Entrepreneurship monitor

2010-04-11T15:33:00.000+03:00

For future reference, a site on the global entrepreneurship monitor.

Silicon valley in Skolkovo

2010-04-11T15:30:00.000+03:00

NY times has a large article on new government sponsored program aimed to promote innovations in Russia. As I see it, over the last decade the Russian government made all possible to kill small businesses and promote large, better state owned corporations. After the task was successfully accomplished, it is very hard to reverse the course.
Hayek argued that it is impossible to have an economic freedom without political freedom. Once the government limits political freedoms, the economic freedoms suffer as well. Of course every rule has an exception. China is one of them, but the argument should be tested over the longer horizon and China yet has to demonstrate the stability of its current model in the long run.

World Bank advice to the new government

2010-04-08T16:08:00.000+03:00

World Bank drafted a document that outlines major challenges and set up steps and schedule of reforms needed in Ukraine over the last 3 years. Unfortunately, there are no signs that the government will follow the recommendations.

"Professional" Minster of Economics wants to control prices

2010-03-26T14:31:00.000+02:00

Министерство экономики Украины требует от областных управлений Госценинспекций усилить контроль за ценами, delo.ua

The current Minister of Economics used to be Minister of Interior Affairs in 2007. It seems that he wants to apply his previous experience to Economics. That is really unprofessional as many suspected.

Why have developing-country data on real incomes been revised so much? | vox - Research-based policy analysis and commentary from leading economists

2010-03-26T06:44:00.000+02:00

Why have developing-country data on real incomes been revised so much? | vox - Research-based policy analysis and commentary from leading economists: "Why have developing-country data on real incomes been revised so much?"

Martin Ravallion explains why GDP per capita of China in 2005 was revised downward

Capital inflows to Ukraine is picking up again

2010-03-25T11:13:00.000+02:00

НБУ обяжет иностранных инвесторов замораживать 30% средств на счетах в банках - delo.ua

This measure aims to cool down the demand for the Ukrainian government short-term debt

Op-Ed Columnist - A Tea Party Without Nuts - NYTimes.com

2010-03-24T07:51:00.000+02:00

Op-Ed Columnist - A Tea Party Without Nuts - NYTimes.com: "Alternative voting allows you to rank the independent candidate your No. 1 choice, and the Democrat or Republican No. 2. Therefore, if the independent does not win, your vote is immediately transferred to your second choice, say, the Democrat."

I really like the idea

Ukranian News - EU Foreign Relations Council Eyes Approval Of Plan For Introduction Of Visa-Free Regime With Ukraine

2010-03-23T13:00:00.001+02:00

Ukranian News
- EU Foreign Relations Council Eyes Approval Of Plan For Introduction Of Visa-Free Regime With Ukraine: "EU Foreign Relations Council Eyes Approval Of Plan For Introduction Of Visa-Free Regime With Ukraine"

I can't believe it is happening. Just a nice illustration that only the credible threat of joining Russian-centered economic union makes European bureaucrats act.

Europe and Central Asia - Migration and Development: Europe and Central Asia (ECA)

2010-03-23T09:54:00.000+02:00

Europe and Central Asia - Migration and Development: Europe and Central Asia (ECA): "Migration and Development: Europe and Central Asia (ECA)"

The World Bank has launched a new webpage on migration in ECA region. There are only two countries with positive population growth and positive net migration inflows. Ukraine is located in the third quadrant - negative population growth and net outflows.

Tigipko as a scapegoat for Azarov

2010-03-17T13:00:00.000+02:00

Азаров возложил на Тигипко ответственность за стабилизацию цен - ЛІГА.Новости

Tigipko will not last even three months in this government. Azarov already asked him to improve trade balance. Now he asks Tigipko to stop price increase. Both tasks are impossible and Azarov surely knows this.

Long Swings in Global Growth Drivers | A forward looking analysis of the global economy.

2010-03-16T04:59:00.000+02:00

Long Swings in Global Growth Drivers | A forward looking analysis of the global economy.: "Growth in the first half of the 21st century is likely to be driven by the inexorable rise of new growth poles in the emerging economies of the world; countries such as China and India, and other emerging economic powerhouses."

Interpipe to supply pipes for terminal at Ukraine's Boryspil airport

2010-03-15T18:36:00.000+02:00

Interpipe to supply pipes for terminal at Ukraine's Boryspil airport: "Interpipe to supply pipes for terminal at Ukraine's Boryspil airport"

Example of Keynesian type of economic stimulus, so rare in Ukraine.

Kyiv Post. Independence. Community. Trust - Ukraine - SBU head calls for decriminalization of contraband trade

2010-03-15T18:35:00.000+02:00

Kyiv Post. Independence. Community. Trust - Ukraine - SBU head calls for decriminalization of contraband trade: "SBU head calls for decriminalization of contraband trade"

There are similar news on fighting shadow economy and tax evasions which points that the government has chosen repressive mechanisms as economic policy tools. I do not mind being tough on criminal activities, but giving them a priority as a policy instrument would be a big mistake. Instead of deregulating the tax system, no match to any other system in the world in its intentional rigidity and extreme cumbersomeness, which was created by Azarov, the government have chosen the Putin style PR campaign of playing tough without really reforming the economy and taking unpopular steps.

Spatial distribution of fast food

2010-03-04T05:55:00.000+02:00

Spatial clusters of fast food restaurants on the map

Tarantino will win best picture, if history can be believed. - By Grady Hendrix - Slate Magazine

2010-03-04T05:35:00.000+02:00

Tarantino will win best picture, if history can be believed. - By Grady Hendrix - Slate Magazine: "Want to win an Oscar for best picture? Easy. Just release an R-rated period musical about a dead military figure that's based on a book and make sure it runs for two hours and 10 minutes."

I have not seen Inglourious Basterds, but I would vote for Avatar. It is a revolutionary movie in many dimensions. I am not sure about the best movie, but I bet Avatar will get the most Oscars in all nominations.

Ukraine parliament votes out PM Tymoshenko's government | Reuters

2010-03-03T16:42:00.000+02:00

Ukraine parliament votes out PM Tymoshenko's government
| Reuters: "Ukraine parliament votes out PM Tymoshenko's government
Wed Mar 3, 2010 6:42am EST
KIEV, March 3 (Reuters) - Ukraine's parliament voted out on Wednesday the government of Prime Minister Yulia Tymoshenko as her newly elected rival, President Viktor Yanukovich, tries to consolidate power in the assembly."

Timoshenko left, leaving the new president and his team to fight the economic crisis. It looks as a good outcome for Ukraine because it will give an opportunity for a new government to concentrate on economic reforms. Still, the problems can be too big to handle and recovery can be slow, giving Timoshenko the chance to come back.

Крым попросил Медведева помочь с туристами - ЛІГА.Новости

2010-03-03T05:47:00.000+02:00

Крым попросил Медведева помочь с туристами - ЛІГА.Новости: "Крым попросил Медведева помочь с туристами... в документе говорится о целесообразности направлять россиян на оздоровление и отдых в Крым за счет фонда социального страхования России."

Those people think that the main problem of Crimea resorts is lack of advertisement and lack of good publicity. Why don't they go to Turkey to learn how this business should be run.

State-owned enterprises in China: How profitable are they? | Making development work for all

2010-03-02T11:32:00.001+02:00

State-owned enterprises in China: How profitable are they? | Making development work for all: "State-owned enterprises in China: How profitable are they?"

As it turns out that they are not as profitable as privately owned companies. Here is the figure

Минюст подсчитал количество сделок на рынке жилья - Новости BIZ.liga.net

2010-03-02T09:32:00.000+02:00

Минюст подсчитал количество сделок на рынке жилья - Новости BIZ.liga.net: "В течение прошлого 2009 нотариусы Украины заверили почти 246,5 тыс. договоров купли-продажи жилой недвижимости, что на 27% ниже, чем показатели 2008г."

One of the indicators of economic activity in the housing market available for analysis.

Why ‘Avatar’ Is Not the Top-Grossing Film - Economix Blog - NYTimes.com

2010-03-02T05:48:00.000+02:00

Why ‘Avatar’ Is Not the Top-Grossing Film - Economix Blog - NYTimes.com: "Before World War II, the average American went to the movies about once a week. Today — when people can entertain themselves with cable television, rented movies, the Web and so much more — the average American goes to the movies less than once a month."

How the Men Reacted as the Titanic and Lusitania Went Under - NYTimes.com

2010-03-02T05:41:00.000+02:00

How the Men Reacted as the Titanic and Lusitania Went Under - NYTimes.com: "On one boat, it seems, the men thought only of themselves; on the other, they were more likely to help women and children. This occurred for one key reason, researchers said: time. The Lusitania sank in about 18 minutes, while the Titanic took nearly three hours. Women and children fared much better on the Titanic."

Chilean Quake Likely Shifted Earth’s Axis, NASA Scientist Says - Bloomberg.com

2010-03-02T05:37:00.000+02:00

Chilean Quake Likely Shifted Earth’s Axis, NASA Scientist Says - Bloomberg.com: The earthquake that killed more than 700 people in Chile on Feb. 27 probably shifted the Earth’s axis and shortened the day, a National Aeronautics and Space Administration scientist said. "“It’s what we call the ice-skater effect,” David Kerridge, head of Earth hazards and systems at the British Geological Survey in Edinburgh, said today in a telephone interview. “As the ice skater puts when she’s going around in a circle, and she pulls her arms in, she gets faster and faster. It’s the same idea with the Earth going around if you change the distribution of mass, the rotation rate changes.”

The magnitude 9.1 Sumatran in 2004 that generated an Indian Ocean tsunami shortened the day by 6.8 microseconds and shifted the axis by about 2.3 milliarcseconds, Gross said."

Technology Review: Putting the Web in a Spreadsheet

2010-03-01T17:37:00.000+02:00

Technology Review: Putting the Web in a Spreadsheet: "Putting the Web in a Spreadsheet
A new tool can be used to collect, analyze, and visualize large quantities of data."

IBM hopes that a new tool, called BigSheets, will help users analyze Web data more easily. The company has developed a test version of the software for the British Library.

FT.com / Columnists / Martin Wolf - The eurozone’s next decade will be tough

2010-03-01T11:41:00.000+02:00

FT.com / Columnists / Martin Wolf - The eurozone’s next decade will be tough: "The eurozone’s next decade will be tough
By Martin Wolf"

The crisis in the eurozone’s periphery is not an accident: it is inherent in the system. The weaker members have to find an escape from the trap they are in. They will receive little help: the zone has no willing spender of last resort; and theeuro itself is also very strong. But they must succeed. When the eurozone was created, a huge literature emerged on whether it was an optimal currency union. We know now it was not. We are about to find out whether this matters.

There is an obvious incompatibility problem: it is hard to have an independent fiscal policy and open capital flows, when there is no monetary policy independence.

Yet another explanation of the crisis

2010-02-26T06:38:00.000+02:00

Did Woodstock hippies lead to US financial collapse? / The Christian Science Monitor - CSMonitor.com: "“The people who were at Woodstock turned into the yuppies of the '80s and the junk bond traders of the '90s and the Wall Street executives of the 2000s,” he says. “They went from Woodstock to driving a Jaguar.”"

And Google Begat

2010-02-26T06:33:00.000+02:00

And Google Begat... - BusinessWeek: "More than 40 ex-Googlers have invested in about 200 fledgling companies since 2005, according to the research firm YouNoodle and reporting by Bloomberg BusinessWeek."

One Man to feed them all.

2010-02-25T13:58:00.000+02:00

This is so ridiculous:

В.Янукович: "Мы выполним задолженность по заработным платам и пенсиям, чего так и не сделало действующее правительство. Учитывая катастрофическую ситуацию с государственными финансами, мы сделаем это за счет сокращения расходов на бюрократическую систему и начнем с себя. Одним из моих первых указов на посту Президента Украины будет указ о сокращении расходов на Секретариат Президента и другие структуры, которые обеспечивают его деятельность"

How much money can one save cutting expenses on running the Presidential Office? President can fire couple of guys, buy less glossy staples, what else? By the way, firing guys during a recession is not what Keynes and Azarov would recommend. And unemployed bureaucrats of such high rank should be getting nice bonuses and pensions.

Links February 25, 2010

2010-02-24T23:12:00.000+02:00

9% of Ukrainians opposed to simplification of visa regime between Ukraine and EU I wonder what the rational to oppose the visa liberalization would be? Those are probably bureaucrats who are afraid of losing the income tax base.
The past and future of export-led growth by Shahid Yusuf
European Parliament may call on EU Council to draft roadmap towards visa-free travel for Ukraine

Links of the day, February 22

2010-02-22T17:35:00.000+02:00

EU ponders 'what to offer' to Ukraine "Paradoxically, the European Union may seek to be more generous to Ukraine now that the country has a new pro-Russian president" EU looks like a woman who feels offended when ignored even if she does not like the guy.

Links of the day, February 19

2010-02-19T17:20:00.000+02:00

Moscow daily: Ukraine to join customs union with Russia The EU is letting us down, and here comes Moscow
Tigipko: Ukraine shouldn't join Customs Union of Russia, Belarus and Kazakhstan, KyivPost Tigipko disagrees

Links of the day, February 17

2010-02-17T18:27:00.000+02:00

Ukraine's Debt Is Manageable, Tomas Fiala "After the crisis erupted, debt remained stable at around $100 billion but the contraction of GDP pushed the ratio to an estimated 90% by end-2009. On this measure, Ukraine has a considerably more secure position than emerging European Union peers such as Hungary (186% by 3Q09), Bulgaria (123%) or Slovenia (119%)."

Industrial production in Ukraine in January 2010 is 11.8% up relative to January 2009 Metallurgy took the lead with around 30% growth. Regionally, Dnepropetrovsk region grew by 35%.

I do not want to live on the bridge

2010-02-17T10:46:00.000+02:00

Yanukovych in WSJ:

Let me say here, a Yanukovych presidency is committed to the integration of European values in Ukraine. Ukraine should make use of its geopolitical advantages and become a bridge between Russia and the West. Developing a good relationship with the West and bridging the gap to Russia will help Ukraine. We should not be forced to make the false choice between the benefits of the East and those of the West. As president I will endeavor to build a bridge between both, not a one-way street in either direction. We are a nation with a European identity, but we have historic cultural and economic ties to Russia as well. The re-establishment of relations with the Russian Federation is consistent with our European ambitions. We will rebuild relations with Moscow as a strategic economic partner. There is no reason that good relations with all of our neighbors cannot be achieved.

He did not say anything new, the main message is Ukraine should be a bridge between EU and Russia, and his main agenda to restore economic growth by: 1) creating jobs, 2) stabilizing prices, and 3) increasing social transfers.
My argument against the main message is that nobody wants to live on the bridge, people like to build on a solid rock. There is a clear trade-off that can not be avoided: either integrate with EU or integrate with Russia, in both cases there is something to lose and something to gain. Staying in between is a shaky and non-stable equilibrium.

Trade policy under new president

2010-02-17T07:22:00.000+02:00

There are rumors in the press (link in Russian) that our new president, Yanukovich, plans to join the Customs Union with Russian, Belarus, and Kazakhstan and gives it a high priority. In this paper, I argue that any integration is better than the status quo of being lost between EU and Russia. However, deeper integration with other CIS countries will slow down Ukrainian perspectives to join free trade agreement with EU which would be much more attractive for Ukraine.

V. Surkov speaking

2010-02-16T06:05:00.000+02:00

Now infamous interview with V. Surkov:
Kremlin says tight control key to modernising economy, KyivPost "We have a school that teaches that political modernisation -- by which is meant political debauchery, 'anything goes' -- is the key to economic modernization," Surkov told the Vedomosti business daily.
"There is a different concept, to which I hold, which considers the consolidated state as a transitional instrument, a tool for modernization," he said. "Some call it authoritarian modernization. I do not care what it is called."

Full version in Russian

Links of the day, February 15

2010-02-15T16:08:00.000+02:00

What the World’s Leaders Did on their Winter Vacation: Nothing, by Mark Toma "Davos was an excellent opportunity to demonstrate unity and commitment to reforming the financial sector and reducing the chance of another crisis. Instead, however, participants at Davos failed to do any of this and simply revealed the growing divisions among nations.
This Financial Meltdown, and the Next One, by Harvard Magazine Niall Fergusson :" ... the decoupling of the West and the East—the ability of Asian nations, pursuing different economic policies, to rebound—had been the saving factor. This, he said, was a “profound” event, signaling the end of a 500-year period when “the West has dominated the rest.”
ПР будет больше давать денег населению, чтобы повысить внутренний спрос, Delo.ua "В среднесрочной перспективе, по словам Азарова, необходимостью является снижение ставок налога на прибыль — с 25 до 20%, налога на добавленную стоимость — с 20 до 16%, налоговые каникулы для малого и среднего бизнеса, освобождение от налогообложения передовых технологий."

IMF Explores Contours of Future Macroeconomic Policy

2010-02-15T14:16:00.000+02:00

Olivier Blanchard, one of the authors of a paper, “Rethinking Macroeconomic Policy,” has been interviewed:

On main findings:

The basic elements of the pre-crisis policy consensus still hold. Keeping output close to potential and inflation low and stable should be the two targets of policy. And controlling inflation remains the primary responsibility of the central bank. But the crisis forces us to think about how these targets can be achieved.

The crisis has made clear, however, that policymakers have to watch many other variables, including the composition of output, the behavior of asset prices, and the leverage of the different participants in the economy. It has also shown that they have potentially many more instruments at their disposal than they used before the crisis. The challenge is to learn how to use these instruments in the best way. The combination of traditional monetary policy and regulatory tools, and the design of better automatic stabilizers for fiscal policy, are two promising routes.

On the role of exchange rates:

Blanchard: In many emerging market countries, while monetary authorities describe themselves as inflation targeters, they clearly care about the exchange rate beyond its effect on inflation.

They probably have good reasons to do so. Isn’t it time to reconcile practice with theory, and to think of monetary policy more broadly, as the joint use of the interest rate and sterilized intervention, to protect inflation targets while reducing the costs associated with excessive exchange rate volatility?