Wednesday, December 30, 2009

More on Promises

"However, 73 percent of Ukrainians do not believe any of these promises given by the current presidential hopefuls, while 70 percent are convinced they can make their life better relying only on their own resources."

Tuesday, December 29, 2009

New Year Resolutions

New Year is not only a time of holidays and parties, it’s also a time to contemplate the past year, to see what went right and what went wrong, but also, what one achieved and what one didn’t achieve. Such thoughts often then turn into New Year resolutions, plans to improve one’s behavior in the upcoming year.

Making New Year resolutions is popular – a poll in the US found that about half of the survey respondents made New Year resolutions. According to MyGoals.com, last year in the US, the most popular resolutions for 2009 were ‘to lose weight’, followed by ‘to pay back debt’. For 2010, losing weight remains number one and resolutions related to ‘personal growth’, including reading more and spending more time on hobbies, have become increasingly popular. For 2008, 21% of goals set were related to career advancement, but for 2010, only 12% of goals are related to this, indicating that even New Year resolutions seem affected by the economic crisis.

Despite all good intentions, most people have troubles sticking to their promises. The above mentioned survey for example found that about 75% of people never or infrequently are able to keep to their resolutions. Given these statistics, George Bush should probably have been more careful when saying in his December 29, 2007 radio address that his New Year resolution for 2008 was ‘to work with Congress to keep our economy growing …’

If fulfilling New Year resolutions is so difficult, why do people make them? Or, more general, why do people make promises? Economists view promises as commitment devices – by promising ‘to lose weight’ one imposes extra losses on one’s self in case one does not lose weight. Indeed, if one fails to lose weight, one will not only face the consequences of being overweight but also of losing one’s reputation for being trustworthy. Hence, by promising something, one makes not achieving one’s goal more costly, which stimulates the person who makes a promise to put more effort to achieve his/her goals.

That so many people don’t stick to their resolutions seems to suggest that losing reputation is not too powerful a deterrence. To solve this problem, some economics professors have recently started a website, www.stickk.com, a website that allows people to attach money to their promises and in this way, put their money where their mouth is. If they don’t fulfill their promise, they not only lose reputation but also the money committed.

It would be nice if Ukrainian politicians start visiting that website…

Thursday, December 24, 2009

Randomizing the Ballot Order


"The Supreme Administrative Court of Ukraine has ruled in favor of the Central Election Commission and reversed a decision of the Kyiv Administration Court of Appeals that prohibited the CEC from placing numbers next to presidential candidates' names on the ballot."

In fact, the focus here is likely on the wrong thing - rather than whether the number is made explicit, it seems the place itself is important - with candidates being higher up, receiving more votes - one solution is to randomize the order of candidates on the ballot, instead of using an alphabetic ordering.

There is quite some research on the effect of ballot order on voting outcomes, for example

Wednesday, December 23, 2009

The Effect of Replacing a Soccer Coach

"Ukraine have not renewed the contract of coach Olexiy Mykhaylychenko after the national team failed to qualify for next year's World Cup in South Africa."

http://soccernet.espn.go.com/news/story?id=717195&sec=europe&cc=5739

Teams sometimes hope to improve their performance by replacing their trainer. There's quite some economics research on whether this actually works. One example is


Another


It seems most of this research shows replacing the coach is not improving (nor deteriorating) the sports performance of the football club.


Monday, December 21, 2009

A Bold Forecast


"KYIV, December 21 /UKRINFORM/. At the year start, the hryvnia rate will strengthen from UAH 7.75 at the year start to 7.05 by the year end, such was a forecast of the Dragon Capital Investment Company made public by company Director Tomas Fiala."



Saturday, December 19, 2009

When does Politics Matter

An interesting hypothesis which one regularly hears about Ukraine: when the economy does well, there's no influence of politics on economics, but when things go bad economically, politics can make a difference. It would be interesting to test this and see whether this is just an optical illusion (that is, politics matters always and growth would have been even more positive if politics was done well) or whether there is indeed an asymmetric effect.

Corruption

This story on Afghanistan could as well be on Ukraine...

Wednesday, December 16, 2009

The Economics of Shame

The Ukrainian government wants to make public the names of corrupt officials

http://www.ukrinform.ua/eng/order/?id=176595

Privat bank makes public some of the names of its debtors

http://www.ukrinform.ua/eng/order/?id=175269&ulq=bank%20website

One can wonder whether this is helpful in deterring 'crime', that is to what extent shame is an effective weapon in the fight against crime.

In economics, there is some literature on how peer pressure can help to reduce free-riding in groups. See for example the work by Dora Costa and Matthew Kahn

http://press.princeton.edu/titles/8734.html

Tuesday, December 15, 2009

Election Probabilities

Place your bets!

"According to bwin Web site, the odds that Yanukovych will become the next president of Ukraine are 1.67/1, while the odds on Tymoshenko are 2.07/1.

This means that chances of the leading candidates are roughly equal, although Yanukovych has a slight lead.

The other leaders of the election race are Arseniy Yatseniuk (23/1), current President Viktor Yuschenko (27/1) and Sergiy Tigipko (30/1)."

http://www.kyivpost.com/news/politics/detail/55187/

Monday, December 14, 2009

Economics Rules


note that five out of ten are economy-related!

Top 10 most strange promises of candidates to President’s post


1. Victor Yanukovych: “My aim is 50 million citizens of Ukraine in year 2020”.

2. Inna Bogoslovska: “Ukraine will make “Kyiv initiative” concerning carrying out in Kyiv the negotiations of the world community on new world order topic”.

3. Volodymyr Lytvyn: “Key task – is providing correlation of minimal and maximum wage in proportion 1 to 5”.

4. Petro Symonenko: “ The minimum share of salaries in the product prime cost will be set at 60%.

5. V. Yushchenko: “A hryvnia will become the only payment means in Ukraine. There will be no foreign currency transactions and prices in the home market”.

6. Oleg Tyagnybok: “European Ukrainian-centrism – strategic course of the government”.

7. Anatoliy Hrytsenko: “I will make an official to speak with people in the language, he/she is addressed”.

8. Oleksandr Pabat: “The state monopoly on main land resources will be renewed and the state will take the land on long-term lease”.

9. Yulia Tymoshenko: “Immediately after the crisis we will resume a long term housing mortgage loans at 2-4% per annum for 10-30 years”.

10. Lyudmyla Suprun: “The schools will turn to multimedia scientific-cultural centers of education and development of personality”.



Sunday, December 13, 2009

Setting Exchange Rates

"Prime Minister Yulia Tymoshenko promises to increase hryvnia rate to UAH 6-6.50 per one dollar if elected the president.

The prime minister said during a meeting with Ukrprombank's depositors.
"If political row ends successfully, we will set the hryvnia rate at 6 - 6.50 per one dollar," the prime minister said. This is a real and reasonable rate for the Ukrainian currency, she added.

However, the government cannot influence the currency rate since this is National Bank's competence with whom, according to Tymoshenko, she has strained relations.

"I am not only at odds with the National Bank, we do not say hello to each other," Tymoshenko said.

At the same time she mentioned about inadequate policy the National Bank was pursuing.

As Ukrainian News reported, Tymoshenko said in September about a reasonable maximum hryvnia rate of 7-7.5 UAH/USD. "

It's interesting to notice how politicians think it's their task to 'set' the exchange rate and that they think they now what's 'the real and reasonable rate' is.

Saturday, December 12, 2009

Milk

Another article that could use some more economics education


the article indicates that the foreign milk industry is more developed and that the Ukrainian milk industry is outdated, and that therefore the agricultural producers need subsidies.

Two questions are obvious here - first, is it necessary for a country to have a local milk industry - what's wrong with importing milk? I don't see any clear reason why one could not import milk

Second, are subsidies for agricultural producers a good way to help the milk industry if one thinks that it's important to have a good local milk industry? I guess it would make more sense to stimulate investments in the milk industry so it can upgrade its production process.

Thursday, December 10, 2009

The Worst or the Best?

One article claims 'Emirates agency: Kyiv found among greenest cities in Europe'


when you go to the actual data

and the text

you'll see Kyiv does worst of the 30 cities that were evaluated...

Interesting Articles on 20 Years of Transition


The latest Development and Transition Newsletter


has several interesting articles on 20 years of transition.


Wednesday, December 9, 2009

How China Won and Russia Lost

An interesting paper comparing China (Success) to Russia (much less so) - unfortunately, Ukraine resembles Russia more than China...

http://www.hoover.org/publications/policyreview/72997307.html

The Economics of Prizes

Victor Pinchuk has decided to start a prize for young artists


Economists have done quite a lot of work on prizes, f.e.


and my own article

http://student.ulb.ac.be/~tcoupe/prize.pdf

Tuesday, December 8, 2009

Smuggling and Cigarette Taxes

The Ukrainian tobacco companies argued that a tax increase in Ukraine would increase smuggling - in Hungary they seem to have a different view...


"Illegal products have an estimated 10% of the cigarette market. Most smuggled cigarettes come from Ukraine, where lower taxes mean cigarettes are cheaper."

Monday, December 7, 2009

A Testable Hypothesis

Economists have tested many hypotheses about the determinants of football matches - but this hypothesis has so far been neglected:

""It's impossible not to notice these trends. As soon as Yuschenko and Yanukovych appear at the stadium, one can expect misfortune. One should recollect the Ukraine-Greece match when our team lost their place [in the World Cup finals] in South Africa... Why? Because two 'lucky' politicians attended a decisive match and passed their lucky aura to the whole Ukrainian team," she said.

"Metalist Kharkiv is a brilliant team. The guys have played well for the whole year... This might have continued if their dear guests - [Regions Party leader] Viktor Fedorovych [Yanukovych] and [President] Viktor Andriyovych [Yuschenko] - had not once come to see them. The latter, I think, is also a very 'lucky' man. As a result, Metalist lost to Obolon," Tymoshenko said.

"Given this, I have a proposal. I want to ban the state's top-ranking officials and odious politicians from attending football matches, especially decisive ones. Let them stay at home and watch the matches on TV, especially alone, rather than together, and only recorded matches as live broadcasts are also dangerous. Perhaps, 'this' [misfortune] is transmitted via TV," she said.


Saturday, December 5, 2009

Small Steps

another 10 years of progress needed....



"Particularly, the agency reported about results of the study on 30 major banks. The results show that, in spite of pessimistic expectations, the index of information transparency of Ukrainian banks grew from 45% to 49% against 2008, S&P says."



see also

Friday, December 4, 2009

Migration Picking Order


"Hayloft Plants director Derek Jarman said: "There is a labour-supply issue. Pre-EU enlargement we used labour from the old Soviet countries Ukraine and Belarus under the Seasonal Agricultural Workers Scheme (SAWS). When the EU enlarged we got SAWS workers from Romania and Bulgaria. The problem as an industry is that, when the economy of Europe picks up and Poles return to Poland, growers will be faced with a potential shortage of labour"

"Concordia and HOPS have links with Ukrainian universities and were supplying 200 to 300 workers a year to the UK until two or three years ago. There are very few coming now because of UK political changes. We were in the Ukraine to tell them 'don't give up'. Concordia still has a scheme bringing in 20 students who spend half the time in a teaching environment and half earning money."

He added: "We're concerned for the future. There is no problem this year and for 2010 for labour but we had a problem three years ago with strawberries left to rot in the fields due to labour shortages. Agriculture and horticulture are the first to suffer because people don't want to work outside. At Hayloft we needed 12 to 16 seasonal workers but could only recruit one locally."

Jarman explained that it was important to maintain links with Ukrainian labour sources. He said: "SAWS brought in 15,000 to 20,000 people from outisde the EU, but in five years' time the eastern European economy may be stronger and they will go back. Then we will need workers from Ukraine again."

http://www.hortweek.com/channel/OrnamentalsProduction/article/971466/Growers-visit-Ukrainian-universities-maintain-links-seasonal-workers/

Doing Business in Ukraine

The below news is a good example of smth that looks good for some businessmen but bad for the country - buying 1400 buses for a one time event looks silly from a country's perspective, but very profitable nevertheless for some businessmen...


***


According to the Transport and Communications Ministry estimates, Ukraine needs 1.4 thousand passenger buses for transportation services during the Euro-2012 European Football Championship Finals, 850 of those being large-capacity and 350 medium-capacity buses.


This news is positive for the local bus producers after the Customs Tariff Council has dismissed a proposal to import passenger buses for transportation services during the Euro-2012 European Football Championship Finals. One of them is Bogdan Automobile Plant <>. We do not doubt that the presence of the LUAZ owner Mr. Petro Poroshenko in the Cabinet of Ministers will make it easier for this bus manufacturer to get a significant portion of this State order.

Wednesday, December 2, 2009

More on Garlic Prices

"According to reports in China Business News, prices in Jinxiang, China’s garlic-growing capital, have seen a fortyfold increase since March. Further down the supply chain, garlic prices have jumped tenfold on wholesale markets in big cities and fourfold nationwide."

Tuesday, December 1, 2009

2 Kopeks



"Next year the team of [Mayor] Leonid Chernovetsky will initiate a rise in fares for Kyiv public transport, describing as "economically grounded" the following numbers: UAH 2.52 for one trip in the subway, and UAH 1.90 for one trip in above-ground transport," the press service of the BYT faction in Kyiv Council reported.

http://www.interfax.com.ua/eng/eco/26586/

In have no objections against the price increase as such but an economically grounded price for a metro token should not end on 2 kopeks... The transaction costs of these 2 kopeks in terms of longer queues and confusion by far outweigh the extra value they will generate.