Institute for International Economic and Political Studies

We document that the expectations of households, firms, and professional forecasters in standard surveys simultaneously extrapolate from recent events and underreact to new information. Existing models of expectation formation, whether behavioral or rational, cannot account for these observations. We develop a rational theory of extrapolation based on limited attention, which is consistent with this evidence. In particular, we show that limited, asymmetric attention to procyclical variables can explain the coexistence of extrapolation and underreactions. We illustrate these mechanisms in a microfounded macroeconomic model, which generates expectations consistent with the survey data, and show that asymmetric attention increases business cycle fluctuations. (JEL C53, D83, D84, E23, E27, E32)

The paper discusses what we have learned from last year's currency crises in ERM and the Nordic countries about fixed exchange rates as a means to achieve price stability. After discussing the explanations for the crises, the paper concludes that fixed exchange rates are not a shortcut to price stability. Monetary stabiLity and credibility have to be built at home and cannot easily be imported from abroad. Fixed exchange rates are more fragile and difficult to maintain than previously thought They may even be in conflict with price stability, by inducing a procyclical destabilizing monetary policy, and by inducing an inflation bias. Building monetary credibility is even more imporumt with flexible exchange rates.

The last decades of the past century have been characterized by an appreciable rise in the participation of women in economic and political life. Representing more than half of the electorate, they are beginning to influence social choice to an ever greater extent. Suffice it to say that, on the one hand, women today own more than one-third of businesses and hire one-fourth of the labor force, and, on the other, constitute 55 percent of students at colleges and almost 50 percent at medical and law schools. In families with two workers, about one-fourth of the women earn more than their husbands.>sup>1>/sup> The share of women in ministerial posts doubled from 3.4 percent to 6.8 percent in just one decade (1987-96).>sup>2>/sup>

In the agricultural sector of Russia, a high proportion of insolvent organizations is currently maintained. Ensuring food independence of the country, the availability of high-quality and affordable food for the population are the main objectives of the development of the domestic agricultural sector. In agriculture, there is growing interest in the formation of universal approaches to the procedure for managing economic entities. The reform of insolvent agricultural producers based on the development of cooperation and integration processes by absorbing economically weak farms by successful agribusiness organizations is one of the methods to achieve these goals. The subject of the research is the methodology and management practice of reforming domestic agricultural organizations based on cooperation and integration of economic systems. Theoretical research and practical material is based on the results of economic activity and the experience of reforming in economic entities. Systemic and process approaches, statistical and economic methods were used mainly in obtaining research results.The purpose and objective of the study is the introduction of progressive methodological approaches to assess the effectiveness of reforming economic entities. The paper presents the conditions and factors, the organizational and managerial mechanism, methods and practical experience in implementing the reform process of insolvent agricultural organizations, as well as an assessment of the production and economic efficiency of reforming on the materials of the agricultural organization. The results of the study confirm the need to replicate the methodology and experience of reforming agricultural organizations through cooperation and integration of economic entities with the provision of state support in all its existing forms for this process. In particular, we propose the formation and legislative consolidation of a system of competitive reform of insolvent agricultural organizations.

We provide descriptive evidence on the level and within-state distribution of school capital expenditures over the past two decades. We relate these to the fiscal institutions governing capital funding across states. Within-state differences in capital expenditures between the highest-and lowest-income school districts fell considerably following the Great Recession. Spending declined in the highest-income districts, while state support for low-income districts remained stable. Suggestive evidence points to the importance of constraints on districts' ability to raise local funding and the structure of state support in explaining these differences and trends over time.

A common view states that central bank releases decrease central banks' own information about the economy and are harmful if about inefficient disturbances, such as cost-push shocks. This paper shows how neither is true in a microfounded macroeconomic model in which households and firms learn from central bank releases and the central bank learns from the observation of firm prices. Central bank releases make private sector and central bank expectations closer to common knowledge. This helps transmit dispersed information between the private sector and the central bank. As a result, the release of additional central bank information decreases the central bank's own uncertainty and can be beneficial, irrespective of the efficacy of macroeconomic fluctuations. A calibrated example suggests that the benefits of disclosure are substantial. (JEL D82, D83, D84, E12, E52, E58)

ABSTRACT The bulk of the literature on microcredit has focused on either not‐for‐profit lenders or assumes a perfectly competitive, zero‐profit market equilibrium. Yet the market has experienced a significant shift toward for‐profit lending and the assumptions of perfect competition are likely to be too strong in many locations. We review the state of the literature on for‐profit lending in microcredit, consider its implications for both conventionally ‘rational’ borrowers and for borrowers with behavioral biases, and point out directions for future research.

Abstract We argue that the conflicts in the Caucasus are the result of the abrogation by the elite of the earlier, Soviet era social contract. This process was accompanied by the collapse of the formal economy; evidenced by huge national income compression, falling public goods provision, and growing inequality and poverty. In the absence of state provision of basic amenities and governance, ordinary people are compelled to fall back on kinship ties. Declining standards of governance facilitate state‐sponsored corruption and criminality in a setting where the shadow economic activity is increasingly important to individual survival strategies. Oil pipelines and the right to control the transit of goods both legal and illegal also underlie conflict in the region. Criminality has replaced ethnicity as the major motivation for conflict and conflict per se has become a lucrative source of income. Copyright © 2003 John Wiley & Sons, Ltd.

The paper is based on the concept of integration as "integration of markets". It identifies factors, which make post-Soviet governments take suboptimal decisions to deny integration, despite significant resources of social integration. For this purpose three concepts of institutions are used - rational choice institutionalism, social constructivism institutionalism and mediated-conflict institutionalism. The paper analyses possible mechanisms of institutional design for common economic space. It considers relations between disintegration of the post-Soviet space and internal disintegration of markets in the CIS countries due to the deficit of trust and the deficit of law.

Under the conditions of the rising globalization of the life of society, international migration is playing an increasingly significant role. One natural consequence of this is the increased pace of the migration of scientific cadres between countries, the emergence of a specific phenomenon that is known as the "brain drain."

In the article conceptual and practical questions of natural rent are examined. Special attention is paid to the principles and mechanism of its forming and distribution in a market economy. Land rent is analyzed in more details. Methodical approaches and means of government regulation of rent mechanism, provision of equal economic terms and stimuli of effective production to producers are offered.

We propose a novel identification strategy to isolate exogenous immigration shocks across US counties, by interacting quasi-random variations in the composition of ancestry across counties with the contemporaneous inflow of migrants from different countries. We show a positive causal impact of immigration on local innovation and wages at the five-year horizon. The positive dynamic impact of immigration on innovation and wages dominates the short-run negative impact of increased labor supply. A structural estimation of a model of endogenous growth and migrations suggests the increased immigration to the United States since 1965 may have increased innovation and wages by 5 percent. (JEL J15, J22, J31, J61, O31, R11, R23)

This paper focuses on the analysis of Russia’s agenda in global and regional international economic institutions. Our aim is to reveal the main goals of Russia’s agenda in these institutions as well as their realisation and to find whether there is a contradiction or complementarity between Russian participation in global and in regional initiatives. We identify three of Russia’s main goals within the system of global and regional economic institutions as follows: increasing the role of Russia in global and regional economic governance; safeguarding the national economy from external shocks and facilitating its development; and ensuring the interests of Russian economic agents. We conclude that on the global level Russia has faced limitations on realising these goals and lacks its own agenda for international finance and trade issues. However, Russia has created and supported mechanisms for their realisation on the regional and trans-regional level.

The Washington Consensus presents a set of standard measures for economic policy, based on monetarist theory. Initially, it was designed for developing economies, already largely based on the market. Later on it was applied mechanically to post‐communist states. However, the latter differ from the former at least in two respects. First, at the initial stage, post‐communist economies are essentially non‐market economies, and simply dismantling central planning and liberalising prices cannot change this. Second, in contrast to developing economies, they are industrialised economies where allocation of resources has not conformed with market principles. This meant that they faced aunique problem of massive reallocation of the factors of production as a result of market transformation. Application of the Washington Consensus approach in Russia resulted in the advent of a strange, hybrid, quasi‐market system thatreacts in an unusual way to market signals and macroeconomic policies and is unable to get out of an unprecedented economic crisis. Thus, paradoxical as it may be, the recipes of the supporters of the Washington Consensus prevent the Russian economic system from being transformed into a genuine market economy.This means that major changes are needed.

A change of economic system is always very painful for a society. Not without reason an ancient Chinese surse says: “May you be condemned to live during great changes!” For this reason, it is very important to understand from what and to what model the transition is being made, what are the main obstacles and how they could be overcome.

(1991). New entrants in soviet foreign trade: Behaviour patterns and regulation in the transitional period. Soviet Studies: Vol. 43, No. 5, pp. 823-836.

From the point of view of the EU enlargement in 2004 the article considers selected aspects of Germany participation in international competition of economic environment. It summarizes the results of transformation of Eastern Germany economy and estimates the potential of this region in competition with the new EU members - CEE countries. The article concludes by making some corrections of existing assessments of market transformation in post-Soviet countries, including Russia.