Jacek Cukrowski

Theory of Comparative Advantage: Do Transportation Costs Matter?

In this paper we present a formal analysis that incorporates returns to transportation into a Ricardian framework to predict trade patterns. The important point gained from this analysis is that increasing returns to transportation, coupled with appropriate distances between trading partners, can be shown to reverse Ricardian predictions even when there are no international differences in tastes, technology, or factor endowments. Additional gains from trade may emerge from reductions in aggregate delivery costs owing to scale economies.

Russian oil: the role of the sector in Russia's economy

Russias oil sector is critical to the countrys overall economic development at present and may affect the whole Russian economy in the next several years. Nevertheless, like all other energy sectors in the Russian Federation, it faces a number of problems, including low domestic prices, a poor regulatory framework, little competition, underinvestment and environmental failure. There is little know‐ledge of the real needs and problems of the sector, including high production costs, weak transport infrastructure, low investment and obsolete technical equipment, but instead there is permanent political pressure to increase the tax burden. In this context the analysis presented in the article contributes to ongoing discussions and presents a number of numerical estimations relating to the current situation of the oil sector in Russia, including overall sector revenue, cost estimates, total tax burden, present level of investment etc., and simulations of the situation in the sector under different future oil price scenarios.

Perfect competition and intra-industry trade

The paper presents a formal study of how risk aversion can be applied to analysis of international trade. It seeks to illustrate, amongst other things, that risk-averse firms operating in perfectly competitive markets with uncertainty of demand tend to diversify markets and that this provides the basis for international trade in identical commodities between identical countries. The paper argues that such trade may be welfare-improving, despite efficiency losses due to cross-hauling and transportation costs. Moreover, the analysis shows that reduction of tariff per unit of imported goods (e.g., due to the organization of custom unions) increases trade flows but does not necessarily improve total welfare. Therefore, in some particular cases, the use of sophisticated government intervention can lead to better outcomes than can free trade.

Central bank seigniorage in the Czech Republic

The concept of total gross seigniorage is used to analyse sources and uses of central bank seigniorage in the Czech Republic during the period 1993–1997. A comprehensive framework for measuring total seigniorage and its main components is presented and estimates of seigniorage revenues (sources and uses) are computed and analysed. The study explains why the concept of monetary seigniorage should not be used as an estimate of government gains from money creation and shows that seigniorage revenues have never been extensively used as a tool for financing expenditures of the Czech government.

Determinants of Foreign Direct Investment in Georgia

Foreign direct investment (FDI) brings host countries capital, productive facilities, and technology transfers, as well as new jobs and management expertise. Thus it is important to understand why in many countries FDI inflow is lower than it would be expected. The goal of this study is to investigate factors determining flow of FDI in Georgia. The key point of the analysis is the impact of stability of economic and legal environment on the pattern of FDI. In particular, we show that (i) the variability of basic macroeconomic fundamentals decreases the flow of FDI, (ii) high volatility of fiscal, business regulations makes FDI smaller, (iii) unstable economic environment does not attract long term investors but mainly speculative capital. Based on theoretical findings we formulate clear message to policy makers stating that in order to expect significant flow of long term and non-speculative foreign capital, first of all, a stable economic and legal environment is needed.

Seigniorage Wealth and Redistribution in Central and Eastern European Countries

The analysis presented in this article focuses on seigniorage revenues in five Central and Eastern European Countries: Bulgaria, the Czech Republic, Hungary, Poland and Romania. A comprehensive discrete period accounting framework for measuring the sources and uses of seigniorage in the 1990s is presented. The framework is based upon the gross concept of seigniorage that defines seigniorage in the broadest possible sense as the sum of revenues resulting from the monopoly power to issue money. Legal, institutional and operational details which are relevant for the creation of base money in a country are taken into account. The article reveals similarities and differences in seigniorage wealth between the countries under scrutiny, evaluates the magnitude of seigniorage and shows that accession to the European Monetary Union will create significant once-and-for-all gains of seigniorage wealth for the countries resulting from redistributing seigniorage wealth.

Central Bank Seigniorage: Czech Republic 1993-1997

In this paper the concept of total gross seigniorage is used to analyze sources and uses of central bank seigniorage revenues in the Czech Republic during the period 1993-1997. A comprehensive framework for measuring total gross seigniorage and its main components is presented and estimates of seigniorage revenues (sources and uses) are computed and analyzed. The study shows that the conventional concept of monetary seigniorage should not be used as an estimate of government gains from money creation. Moreover, the analysis of the scope of budget deficit financing through money printing in the considered period in the Czech Republic presented in the paper shows that revenue from the creation of money has never been extensively used as a tool for financing government expenditures.

From Transition to Monetary Integration: Revenues from Seignorage in Poland

The analysis presented in the paper focuses on seigniorage revenues in the period of transition to market economy and fiscal consequences of European monetary integration. A comprehensive framework for a measurement of seigniorage revenues in transition eriod is presented and estimates of its sources and uses in the period 1990–2000 are computed and analyzed. The analysis reveals that in Poland at the end of the last decade revenues from the money creation have not been extensively used as a tool for financing government expenditures. Furthermore, it is shown that, in contrary to the transition period, an accession to European Monetary Union will be accompanied by significant fiscal gains resulting from redistribution of seigniorage wealth between member countries.

Government Gains from Central Bank Seigniorage in Transition Economies: A Comparative Study

This article presents a comparative study of the creation and distribution of central bank seigniorage in selected countries of the Commonwealth of Independent States (CIS) (Georgia, Kyrgyzstan, Belarus) and selected Central European countries (Poland, Czech Republic) during the transition to a market economy. A comprehensive framework for measuring seigniorage revenues is presented, and estimates of its sources and uses are computed and analyzed. It is shown that the conventional concept of monetary seigniorage does not reflect government gains from money creation in transitional economies. The study also reveals sources of fiscal seigniorage during periods of macroeconomic stabilization accompanied by tight monetary policy. In particular, contrary to the common view, the analysis shows that typically revenues from money creation have not been extensively to finance government expenditures. Nevertheless, the flow of resources from central banks to state budgets in CIS countries remains significant, mainly due to small nongovernment debt portfolios and quasifiscal operations of central banks.

Monitoring Processes of National Development in the Kyrgyz Republic

The purpose of the paper is to develop a formal method for monitoring and assessment of the process of sustainable national development. In particular, we apply cluster analysis to develop procedures of formal assessment of development gaps, and show how they can be applied for monitoring processes of sustainable development (the method proposed could also be applied for inter-country comparison and assessment of the impact of technical cooperation projects and different internal and external shocks on national development). A formal method is described and implemented for the analysis of national development processes in the Kyrgyz Republic in the period 1992-2000. The study reveals that although in the second part of the nineties many development indicators in the country improved significantly, the development path observed in this period can hardly be classified as sustainable.