Publications

This paper studies the organisational structure of contracting out transportation operations to a vertical partnership between local authorities and a vertically integrated monopoly. Pricing decisions are delegated to the partnership operating in the downstream market as a socially concerned firm that maximises a weighted sum of social welfare and profits. The price for essential input required to produce each unit of the transportation service is determined by the monopoly in the upstream market for rolling stock and crew leasing. A forward ownership interest in the vertical partnership held by the monopoly yields a partial rebate of the downstream margin. In turn, the local authorities can extract the upstream monopoly rent via a franchise fee which can be determined ex post. Our theoretical model predicts that local authorities with a relatively high share in the partnership should decrease the net transfer from the budget by increasing the franchise fees if the upstream profit margins are high. The empirical evidence for the impact of the ownership structure on contractual regime is found in the panel data for 25 suburban passenger companies in Russia in 2011-2015, where partial cost recovery and inappropriate compensation plays the role of pseudo-franchising contracts

We investigate the consequences of excessive international debt overhang as they relate to both debtor and creditor countries. In particular, we assess the impact of monetary policy on financial stability and how it can be used to smooth borrowers, as well as creditors, consumption over the business cycle. Based on [Goodhart, Peiris, Tsomocos, 2018], we establish that an independent countercyclical monetary policy, that contracts liquidity whenever debt grows whereas it expands it when default rises, reduces volatility of consumption. In effect, monetary policy provides an extra degree of freedom to the policymaker. We implement our approach to the Czech and Eurozone area economies during the 1990s. In our model, we introduce endogenous default ά la [Shubik, Wilson, 1977], whereby debtors incur a welfare cost in renegotiating their contractual debt obligations that is commensurate to the level of default. However, this cost depends explicitly on the business cycle and it should be countercyclical. Hence, contractionary monetary policy reduces the volume of trade and efficiency, thus increasing default. This occurs as the default cost increases the associated default accelerator channel engenders higher default rates. On the other hand, lower interest rates increase trade efficiency and, consequently, reduce the amplitude of the business cycle and benefit financial stability. In sum, the appropriate design of monetary policy complements financial stability policy. The modeling of endogenous default allows us to study the interaction of monetary and macroprudential policy.

Most discussions of the Greek debt overhang have focussed on the implications for Greece. We show that when additional funds released to the debtor (Greece), via debt restructuring, are used efficiently in pursuit of a practicable business plan, then both debtor and creditor can benefit. We examine a dynamic two country model calibrated to Greek and German economies and support two-steady states, one with endogenous default and one without, depending on creditors expectations. In the default steady state, debt forgiveness lowers the volatility of both German and Greek consumption whereas demanding higher recovery rates has the opposite effect.

Innovation infrastructure plays a crucial role in the establishment of links among knowledge producers, intermediaries, and exploiters to deal with socio-economic challenges. Traditionally, the representatives of the public sector, business and academia have been considered as the key stakeholders; however today there is a shift of interest towards end users or consumers of products and services. Users, especially citizens, are able to bring new insights into their experience while taking part in the testing and validation of innovative products and/or services. Hence, it is essential to decide, which forms of innovation infrastructure units enable the successful involvement of users in the design and innovation process. Since mid-2000, the European Union has successfully introduced a platform for testing and experimentation based on the users’ engagement – a living laboratory. The study investigates the features of living labs, including their possible business applications, and searching for the living labs’ analogous among the existing forms of innovation infrastructure units in Russia. Business Model Canvas and comparative analysis are employed to do the research. Taken together, our results support the idea that a living lab is a very special form of innovation infrastructure unit, since it brings a product, technology, or service closer to the market, based on the insights from the end users’ engagement in testing and experimentation.

This study is focused on gaps in the theory of capital structure research regarding the phenomenon of zero-debt behavior. On the sample of firms from 21 countries with emerging capital markets over the period of 2010–2015, we show that the zero-debt policy choice is firstly driven by financial flexibility motive, while financial constraints could be regarded as the second motive. We show that major determinants of the zero-leverage choice are growth opportunities, profitability, business risk and cash holdings. We find that all these firms are smaller, less profitable, riskier and possess high cash holdings. Moreover, we find that macroeconomic conditions have lower influence on the debt policy decision in comparison with corporate determinants.

Financial constraints reduce the lawyer's ability to file lawsuits and bring cases to trial. As a result, access to justice for victims, pretrial bargaining, and potential injurers' precaution might be affected. We study civil litigation using a model that allows for asymmetric information, financially-constrained lawyers, third-party lawyer lending, and a continuum of plaintiff's types. We contribute to the economic analysis of law by generalizing seminal models of litigation (Bebchuk, 1984, Bebchuk, 1988; Katz, 1990), offering the first formal definition of access to justice, and presenting comprehensive social welfare analysis of relevant public policy. We provide complete equilibrium characterization and identify necessary conditions for the existence of the mixed- and pure-strategy PBE. Access to justice is denied to some victims under the mixed-strategy equilibrium. We then study the social welfare effects of policies aimed at relaxing lawyers' financial constraints, and identify a necessary and sufficient condition for a welfare-enhancing effect.

Confidence and overconfidence are essential aspects of human nature, but measuring (over)confidence is not easy. Our approach is to consider students' forecasts of their exam grades. Part of a student's grade expectation is based on the student's previous academic achievements; what remains can be interpreted as (over)confidence. Our results are based on a sample of about five hundred second-year undergraduate students enrolled  in a statistics course in Moscow. The course contains three exams and each student  produces a forecast for each of the three exams. Our models allow us to estimate overconfidence quantitatively. Using these models we find that students' expectations are not rational  and that most students are overconfident, in agreement with the general literature. Less obvious is that overconfidence helps: given the same academic achievement students with larger confidence obtain higher exam grades. Female students are less overconfident  than male students, their forecasts are more rational, and they are also faster learners in the sense that they adjust their expectations more rapidly.  

In the late 2000s, a number of analysts were optimistic about Brazil’s future. Their expectant analyses did not bear out, however, as a political and economic crisis developed just as Brazil was gearing up to host two mega-events, the World Cup in 2014 and the Olympic Games in 2016. This paper has two aims. The first is to deepen our understanding of the crisis through examining one of the foremost civil society actors to emerge in this period: the Landless Workers’ Movement (Movimento de Trabalhadores Sem-Teto, MTST). The second is to use this case to consider the potential for the sociology of critical capacity - a field of theory that emerged out of the Political and Moral Sociology Research Group in Paris in the 1980s - to contribute to theorising the ‘justification work’ of social movements.

“Default is to macro-economics what sin is to theology: regrettable but central and essential”. The contemporaneous assessment of both liquidity and default within a framework of missing financial markets, multiple currencies, heterogeneous economic actors (i.e., investors, firms and intermediaries) and multiple externalities is warranted for analysing the interplay of financial and price stability. Thus, the complementarity and substitutability of regulatory and monetary policies can be identified and dissected. The optimal policy mix may be subsequently determined given the objectives of the fiscal and monetary authorities.

In both the late Soviet and post-Soviet periods, femininity and beauty were traits often attributed to the ideal working mother portrayed and promoted in state media. But with greater exposure to global beauty ideals in the post-communist era, the sexualized and beautified female body acquired a social value that was independent of its role in the reproductive process. In this paper, I analyse changes in the way care for the female body was represented in two Russian women’s magazines Rabotnitsa and Krest’yanka (1970s–1990s). Over this period, the ideal of the working mother figures less prominently and there is an increasing focus on the ways that women-consumers ought to work on their individual body-projects. This might appear to be a radical change. But by analysing the representations of women more carefully, I show that the move towards the privatization of the body project was already under way in the late Soviet period, but only for some categories of women. That is, non-Slavic women of various ages could be working mothers, but individual consumption was a realm reserved for their Slavic countrywomen.

Ambiguity attitudes have been prominently used in economic models, but we still know little about their demographic correlates or their generalizability beyond the West. We analyze the ambiguity attitudes of almost 3,000 students across thirty countries. For gains, we find ambiguity aversion everywhere, while ambiguity aversion is much weaker for losses. Ambiguity attitudes change systematically with probabilities for both gains and losses. Much of the between-country variation can be explained through a few macroeconomic characteristics. In contrast, we find massive unexplained variation at the individual level. We also find much unexplained heterogeneity in individual responses to different decision tasks.

he paper proposes a two-stage mixed duopoly model of exhaustible resource market where at the first stage the government decides on the degree of privatization of public firm and at the second stage the public and private firms decide simultaneously on the two-period extraction paths. It is demonstrated that if the two firms have symmetric technologies with increasing marginal extraction costs and the same resource stocks, then neither full nationalization of any of the two firms nor full privatization will be socially desirable. It is shown that the presence of a semi-public firm improves intertemporal allocation of the fixed resource stock. Thus, partial privatization is optimal even under exogenously fixed total outputs of each firm. For asymmetric cost case, when the public firm is less efficient than the private firm, we derive the conditions under which full nationalization or full privatization is optimal.

 

Unconventional monetary policy, by relaxing restrictions on the composition of the balance sheet of the central bank, compromises control over the stochastic path of inflation; or, in open economies, over the stochastic path of exchange rates. If the composition of the balance sheet is unrestricted then the path of inflation is indeterminate. This is the case under pure quantitative easing, where the target is the size of real money balances. In contrast, credit easing policies restrict the composition of the portfolio by targeting a specific expansion in the maturity profile of bonds bought, and thus can implement a determinate path of inflation. The composition of the portfolios traded by monetary-fiscal authorities also determines premia in asset and currency markets.

We exploit variation in consumer price inflation across 71 Russian regions to examine the relationship between the perceived stability of the domestic currency and financial dollarization. Our results show that regions with higher inflation experience an increase in the dollarization of household deposits and a decrease in the dollarization of loans. The impact of inflation on credit dollarization is weaker in regions with less integrated banking markets. This suggests that the currency-portfolio choices of households and firms are constrained by the asset-liability management of banks.

Innovative companies are a major driver of the global economy. The typical major owner is an institutional investor. In recent years the stakes of institutional owners have increased, which should increase the role of institutional investors. Institutional investors, however, differ. Traditional investment managers, banks, insurance companies and hedge funds have different goals and strategies, so their roles in firms differ significantly. In this article we analyze the difference between technology and non-technology companies to find out the reason for the success of fast-growing corporations. This research uses a Generalized Least Square model on a sample of 12,565 firm-year observations 2004–15, to justify the assumption that different types of investors have different effects on the performance of innovative companies. The research reveals a distinction between the type of investor and the investor strategy. By focusing on the concentration of ownership, we demonstrate the performance effect on different blockholders. Our findings suggest, first, that grey investors decrease firm value; second, that passive independent institutions enhance firm performance in virtue of their active monitoring and long-term investment horizons; third, that innovative firms have different ownership patterns to traditional ones.

I model the choice between a negotiated block trade and a public tender offer as means of acquiring control in a firm with a large minority blockholder. Potential acquirers differ in their (privately known) value-creation ability. In equilibrium, block trades are made by lower ability acquirers compared to tender offers. The equal opportunity rule (EOR) and the "freezeout" rule are complements in promoting efficiency of control transfers. Stronger investor protection may hamper value-increasing takeovers when the EOR is present. The model also delivers predictions about announcement returns and the incidence of block trades and tender offers under different legal regimes.

A method based on various linear and nonlinear state space models used to extract global stochastic financial trends (GST) out of non-synchronous financial data is introduced. These models are constructed in order to take advantage of the intraday arrival of closing information coming from different international markets so that volatility description and forecasting is improved. A set of three major asynchronous international stock market indices is considered in order to empirically show that this forecasting scheme is capable of significant performance gains when compared to standard parametric models like the dynamic conditional correlation (DCC) family.

Wage adjustments for employees are a reaction mechanism to changing market conditions and form a significant part of pay policy. Though various attempts to explore wage levels and wage differentials have been made, wage adjustment policies remain an understudied topic. This paper analyses the determinants of wage adjustments based on data from Russian enterprises 2015–17. The analysis is based on detailed data from an employer survey which covers more than 5,000 firms in both the public and private sector. The study adopts probit models to identify the reasons which determine wage revisions, depending on internal employer characteristics and external labour market conditions.  The results are in line with previous research on the topic (Bayo-Moriones et al., 2016) and suggest that both internal and external factors influence wage adjustments. A wage adjustment is a reflection of the ability to pay meaning that revisions are often made by successful firms with high employee turnover. Institutional frameworks, especially trade union activity, affects the firm’s decision to adjust wages despite the general opinion on the insignificance of unions in Russia. This study contributes to the limited literature by analysing the determinants of wage policies depending on the firm’s characteristics. This is the first study of its kind based on extensive Russian data.