We analyze and quantify link between quality of the banking sector and sovereign risk in the stat... more We analyze and quantify link between quality of the banking sector and sovereign risk in the states of the European Union (EU) using data over 1999-2014. We employ two market-based measures of the sovereign risk along with several empirically and theoretically motivated variables that characterize banking sector. We perform Bayesian estimations on several panels of countries. Our results show that higher ratio of the non-performing loans represents the most important industry-specific variable that is linked with a heightened rate of the sovereign risk. On the other hand, findings related to the size and depth of the banking sector, along with the capital adequacy ratio, are less clear-cut. Higher penetration of the foreign banks and higher degree of competition characterize a diversified structure of the banking industry that seems to be beneficial for the banking sector stability and is linked with lower sovereign risk.
The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results ... more The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results of the CNB's research projects as well as the other research activities of both the staff of the CNB and collaborating outside contributors, including invited speakers. The Series aims to present original research contributions relevant to central banks. It is refereed internationally. The referee process is managed by the CNB Economic Research Division. The working papers are circulated to stimulate discussion. The views expressed are those of the authors and do not necessarily reflect the official views of the CNB.
This Working Paper should not be reported as representing the views of the IMF. The views express... more This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. We borrow a paradigm from the New Open Economy Macroeconomics literature and amend it to address specific features such as initial asymmetry in development and size of economies as well as different speed of capital accumulation. Using a calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently replicate dynamics in key macroeconomic variables that are essential inputs for commonly used "gap models" in monetary policy routine. Based on the calibration we draw implications for future convergence of the Czech economy.
This paper should not be reported as representing the views of the European Central Bank (ECB). T... more This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB.
The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results ... more The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results of the CNB's research projects as well as the other research activities of both the staff of the CNB and collaborating outside contributors, including invited speakers. The Series aims to present original research contributions relevant to central banks. It is refereed internationally. The referee process is managed by the CNB Research Department. The working papers are circulated to stimulate discussion. The views expressed are those of the authors and do not necessarily reflect the official views of the CNB.
We analyze the link between banking sector quality and sovereign risk in the whole European Union... more We analyze the link between banking sector quality and sovereign risk in the whole European Union over 1999-2014. We employ four different indicators of sovereign risk (including market-and opinion-based assessments), a rich set of theoretically and empirically motivated banking sector characteristics, and a Bayesian inference in panel estimation as a methodology. We show that a higher proportion of non-performing loans is the single most influential sectorspecific variable that is associated with increased sovereign risk. The sector's depth provides mixed results. The stability (capital adequacy ratio) and size (TBA) of the industry are linked to lower sovereign risk in general. Foreign bank penetration and competition (a more diversified structure of the industry) are linked to lower sovereign risk. Our results also support the wakeup call hypothesis in that markets re-appraised a number of banking sector-related issues in the pricing of sovereign risk after the onset of the sovereign crisis in Europe.
This Working Paper should not be reported as representing the views of the IMF. The views express... more This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. We borrow a paradigm from the New Open Economy Macroeconomics literature and amend it to address specific features such as initial asymmetry in development and size of economies as well as different speed of capital accumulation. Using a calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently replicate dynamics in key macroeconomic variables that are essential inputs for commonly used "gap models" in monetary policy routine. Based on the calibration we draw implications for future convergence of the Czech economy.
Znečištěné ovzduší má vliv na zdraví obyvatelstva. Proto existují programy, jako je Operační prog... more Znečištěné ovzduší má vliv na zdraví obyvatelstva. Proto existují programy, jako je Operační program Životní prostředí, jejichž cílem jsou investice ke snížení koncentrací znečišťujících látek v ovzduší. Tento článek se věnuje vyhodnocení dopadů prioritní osy 2 Operačního programu Životní prostředí. Konkrétně jde o odpověď na otázku, zda investice této prioritní osy vedly ke snížení znečištění ovzduší na Ostravsku. Pro odhad dopadů je použita metoda synthetic control method, která uměle vytváří srovnávací skupinu pro zkoumaný region. Na datech o měsíčních průměrných koncentracích znečišťujících látek PM2.5 a PM10 a investicích do kvality ovzduší je odhadován dopad na koncentrace polutantů po roce 2012. Výsledky ukazují, že realizace těchto investičních výdajů v tuto chvíli nemá prokazatelný pozitivní vliv na znečištění. Nicméně časová řada, která byla v tomto článku využita, byla příliš krátká s ohledem na dynamiku čerpání Operačního programu Životní prostředí.
This paper presents a dynamic multiregional CGE model to address commodity quantities and prices ... more This paper presents a dynamic multiregional CGE model to address commodity quantities and prices in the full fledged general equilibrium framework. This is important for various reasons. One of the reasons is the possible competition between food and biofuels, as biofuel promotion policies have become a hot policy topic over the globe. For example, the European Commission announced the aim of substituting of 10 percent of traditional fossil fuels with biofuels in transport by the year 2020. Generally, there exist several options of biofuel promotion measures and corresponding needs for their economic impact inquiry. The paper presents a computable general equilibrium model, which is characterized by three main features: multiregionality, intertemporality (adaptive expectations), and a quasi-fixed land supply (limited area of agricultural land as one of the production input of agricultural sector). Economic sectors and world regions are properly chosen to address the issue of product...
An apparent puzzle from the recent nancial crisis is that economies with less competitive labor ... more An apparent puzzle from the recent nancial crisis is that economies with less competitive labor markets seem to have su¤ered less in terms of unemployment. The present paper investigates this puzzle by focusing on the interactions between nancial and labor market imperfections. In particular, we augment a simpli ed version of Gertler and Kiyotaki (2010) by introducing imperfect competition in the labor market. We nd that a higher labour wedge reduces real variables volatility in the presence of nancial frictions. By using simple simulations, we also broadly explore the impact of the main factors driving the labor wedge to provide an intuition on the e¤ects of di¤erent institutions. Jel codes: E32, E44.
Policies that stimulate active transportation (walking and bicycling) have been related to heath ... more Policies that stimulate active transportation (walking and bicycling) have been related to heath benefits. This study aims to assess the potential health risks and benefits of promoting active transportation for commuting populations (age groups 16-64) in six European cities. We conducted a health impact assessment using two scenarios: increased cycling and increased walking. The primary outcome measure was all-cause mortality related to changes in physical activity level, exposure to fine particulate matter air pollution with a diameter <2.5 μm, as well as traffic fatalities in the cities of Barcelona, Basel, Copenhagen, Paris, Prague, and Warsaw. All scenarios produced health benefits in the six cities. An increase in bicycle trips to 35% of all trips (as in Copenhagen) produced the highest benefits among the different scenarios analysed in Warsaw 113 (76-163) annual deaths avoided, Prague 61 (29-104), Barcelona 37 (24-56), Paris 37 (18-64) and Basel 5 (3-9). An increase in walking trips to 50% of all trips (as in Paris) resulted in 19 (3-42) deaths avoided annually in Warsaw, 11(3-21) in Prague, 6 (4-9) in Basel, 3 (2-6) in Copenhagen and 3 (2-4) in Barcelona. The scenarios would also reduce carbon dioxide emissions in the six cities by 1,139 to 26,423 (metric tonnes per year). Policies to promote active transportation may produce health benefits, but these depend of the existing characteristics of the cities. Increased collaboration between health practitioners, transport specialists and urban planners will help to introduce the health perspective in transport policies and promote active transportation.
In the Czech Republic there has been invested a lot of money to the human capital through the Eur... more In the Czech Republic there has been invested a lot of money to the human capital through the European Social Fund. The Human Resources and Employment Operational Programme plays an important role by providing subsidies for the training of employees and an introduction of modern forms of management and human resource development. This paper summarizes the application of the regression discontinuity method to test whether there is an impact of EU assistance on employment in supported firms in 2009. The estimations were conducted with a sample with 1 176 supported and 87 rejected applicants. The estimation results suggest that the impacts of the intervention on employment is positive and statistically significant. The employment change in supported firms was on average about 10–15 p.p. higher than in unsupported firms.
What are the drivers of business cycle fluctuations? And how many are t here? By documenting stro... more What are the drivers of business cycle fluctuations? And how many are t here? By documenting strong and predictable co-movement of real variables during the business cycle in a sample of advanced economies, we argue that most business cycle fluctuations a re d riven b y o ne major factor. The positive co-movement of real output and inflation convincingly argues for a demand story. This feature-robust across time and space-provides a simple smell test for structural macroeconomic models. We propose a simple statistic that can compare data and models. Based on this statistic, we show that the recent vintage of structural economic models has difficulties replicating the stylized facts we document.
The promotional policies targeted at alternative fuels take different forms and are currently a v... more The promotional policies targeted at alternative fuels take different forms and are currently a very important policy issue integrating the environmental, economic, and fiscal concerns. While choosing different environmental policy mixes, almost all important world regions support production and use of biofuels. This paper introduces the first version of the computable general equilibrium (CGE) model aiming at the analysis of promotional policies focused on the first generation biofuels over the world. The model is suited for evaluation of impacts of such policies on the economy of the Czech Republic. The main features of the model, ie. multiregionality, intertemporality, and a quasi-fixed land supply (limited area of agricultural land as one of the production input of agricultural sector) deliberately adress the structure and nature of biofuel market. Countries are properly aggregated in order to underpin production and trade of biofuels over the world and also the ability of regio...
This paper evaluates the impact of selected biofuel promotion policies in a transition country – ... more This paper evaluates the impact of selected biofuel promotion policies in a transition country – the Czech Republic. To do that, the paper introduces a dynamic CGE model with three features. First, the model assumes heterogenous households and therefore it can analyze distributional effects of policy measures. Second, the model has a detailed agricultural sector to address the competition between biofuel feedstock and food production for arable land. Third, the model contains features specific for transition economies, such as real convergence, which affect the dynamics of relative prices. Therefore, the model is able to generate realistic scenarios and simulate them. In this paper, we simulate and compare alternative approaches to achieving the 10% target as dictated by the Directive 2009/28/EC. We consider a gradual introduction of subsidies for biofuel feedstock products so that the target is achieved by 2020. Our results suggest that if the subsidy is financed by the increase in...
Restructuring a state firm is often difficult, especially when it involves laying off a large num... more Restructuring a state firm is often difficult, especially when it involves laying off a large number of workers. In this paper, we conduct a case study on two coal mining regions, Ostrava and Jiu Valley, in the Czech Republic and Romania. We evaluate the restructuring paths by measuring the value of labor both inside and outside miners. The efficiency loss of the actual path, as a percentage of the maximum feasible benefit of restructuring, was 9% in Ostrava and 27% in Jiu Valley. We explain the delayed restructuring in Jiu Valley as the combination of a genuine policy mistake under an uncertain environment; the desire of the conservative faction of the government to keep the miners as a political ally; and the behavioral condition of miners to fight for the status-quo.
We conduct a case study of organized labor in the restructuring experience of two coal mining reg... more We conduct a case study of organized labor in the restructuring experience of two coal mining regions, Ostrava in the Czech Republic and Jiu Valley in Romania, in the 1990's. Under the similar external circumstances, the Ostrava region undertook a gradual restructuring from early on whereas in Jiu Valley there was no restructuring until 1997, followed by a massive layoff over two years. Our quantitative exercise shows that the delay in restructuring in Jiu Valley was grossly inefficient in view of the region's overall restructuring path and in comparision to the Ostravian path. The proximate reason for the delay was the Jiu Valley miners' action against restructuring. Essential for its success was the alliance with the conservative faction of the goverment; the alliance itself was ultimately arbitered by the Romanian electorate. We interpret the Jiu Valley miners' militancy as a behavioral pattern rather than as a rational strategy, which accords to their historical militancy in contrast to its absence among Ostravian miners.
Note: This Occasional Paper should not be reported as representing the views of the European Cent... more Note: This Occasional Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB
We analyze and quantify link between quality of the banking sector and sovereign risk in the stat... more We analyze and quantify link between quality of the banking sector and sovereign risk in the states of the European Union (EU) using data over 1999-2014. We employ two market-based measures of the sovereign risk along with several empirically and theoretically motivated variables that characterize banking sector. We perform Bayesian estimations on several panels of countries. Our results show that higher ratio of the non-performing loans represents the most important industry-specific variable that is linked with a heightened rate of the sovereign risk. On the other hand, findings related to the size and depth of the banking sector, along with the capital adequacy ratio, are less clear-cut. Higher penetration of the foreign banks and higher degree of competition characterize a diversified structure of the banking industry that seems to be beneficial for the banking sector stability and is linked with lower sovereign risk.
The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results ... more The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results of the CNB's research projects as well as the other research activities of both the staff of the CNB and collaborating outside contributors, including invited speakers. The Series aims to present original research contributions relevant to central banks. It is refereed internationally. The referee process is managed by the CNB Economic Research Division. The working papers are circulated to stimulate discussion. The views expressed are those of the authors and do not necessarily reflect the official views of the CNB.
This Working Paper should not be reported as representing the views of the IMF. The views express... more This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. We borrow a paradigm from the New Open Economy Macroeconomics literature and amend it to address specific features such as initial asymmetry in development and size of economies as well as different speed of capital accumulation. Using a calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently replicate dynamics in key macroeconomic variables that are essential inputs for commonly used "gap models" in monetary policy routine. Based on the calibration we draw implications for future convergence of the Czech economy.
This paper should not be reported as representing the views of the European Central Bank (ECB). T... more This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB.
The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results ... more The Working Paper Series of the Czech National Bank (CNB) is intended to disseminate the results of the CNB's research projects as well as the other research activities of both the staff of the CNB and collaborating outside contributors, including invited speakers. The Series aims to present original research contributions relevant to central banks. It is refereed internationally. The referee process is managed by the CNB Research Department. The working papers are circulated to stimulate discussion. The views expressed are those of the authors and do not necessarily reflect the official views of the CNB.
We analyze the link between banking sector quality and sovereign risk in the whole European Union... more We analyze the link between banking sector quality and sovereign risk in the whole European Union over 1999-2014. We employ four different indicators of sovereign risk (including market-and opinion-based assessments), a rich set of theoretically and empirically motivated banking sector characteristics, and a Bayesian inference in panel estimation as a methodology. We show that a higher proportion of non-performing loans is the single most influential sectorspecific variable that is associated with increased sovereign risk. The sector's depth provides mixed results. The stability (capital adequacy ratio) and size (TBA) of the industry are linked to lower sovereign risk in general. Foreign bank penetration and competition (a more diversified structure of the industry) are linked to lower sovereign risk. Our results also support the wakeup call hypothesis in that markets re-appraised a number of banking sector-related issues in the pricing of sovereign risk after the onset of the sovereign crisis in Europe.
This Working Paper should not be reported as representing the views of the IMF. The views express... more This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. We borrow a paradigm from the New Open Economy Macroeconomics literature and amend it to address specific features such as initial asymmetry in development and size of economies as well as different speed of capital accumulation. Using a calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently replicate dynamics in key macroeconomic variables that are essential inputs for commonly used "gap models" in monetary policy routine. Based on the calibration we draw implications for future convergence of the Czech economy.
Znečištěné ovzduší má vliv na zdraví obyvatelstva. Proto existují programy, jako je Operační prog... more Znečištěné ovzduší má vliv na zdraví obyvatelstva. Proto existují programy, jako je Operační program Životní prostředí, jejichž cílem jsou investice ke snížení koncentrací znečišťujících látek v ovzduší. Tento článek se věnuje vyhodnocení dopadů prioritní osy 2 Operačního programu Životní prostředí. Konkrétně jde o odpověď na otázku, zda investice této prioritní osy vedly ke snížení znečištění ovzduší na Ostravsku. Pro odhad dopadů je použita metoda synthetic control method, která uměle vytváří srovnávací skupinu pro zkoumaný region. Na datech o měsíčních průměrných koncentracích znečišťujících látek PM2.5 a PM10 a investicích do kvality ovzduší je odhadován dopad na koncentrace polutantů po roce 2012. Výsledky ukazují, že realizace těchto investičních výdajů v tuto chvíli nemá prokazatelný pozitivní vliv na znečištění. Nicméně časová řada, která byla v tomto článku využita, byla příliš krátká s ohledem na dynamiku čerpání Operačního programu Životní prostředí.
This paper presents a dynamic multiregional CGE model to address commodity quantities and prices ... more This paper presents a dynamic multiregional CGE model to address commodity quantities and prices in the full fledged general equilibrium framework. This is important for various reasons. One of the reasons is the possible competition between food and biofuels, as biofuel promotion policies have become a hot policy topic over the globe. For example, the European Commission announced the aim of substituting of 10 percent of traditional fossil fuels with biofuels in transport by the year 2020. Generally, there exist several options of biofuel promotion measures and corresponding needs for their economic impact inquiry. The paper presents a computable general equilibrium model, which is characterized by three main features: multiregionality, intertemporality (adaptive expectations), and a quasi-fixed land supply (limited area of agricultural land as one of the production input of agricultural sector). Economic sectors and world regions are properly chosen to address the issue of product...
An apparent puzzle from the recent nancial crisis is that economies with less competitive labor ... more An apparent puzzle from the recent nancial crisis is that economies with less competitive labor markets seem to have su¤ered less in terms of unemployment. The present paper investigates this puzzle by focusing on the interactions between nancial and labor market imperfections. In particular, we augment a simpli ed version of Gertler and Kiyotaki (2010) by introducing imperfect competition in the labor market. We nd that a higher labour wedge reduces real variables volatility in the presence of nancial frictions. By using simple simulations, we also broadly explore the impact of the main factors driving the labor wedge to provide an intuition on the e¤ects of di¤erent institutions. Jel codes: E32, E44.
Policies that stimulate active transportation (walking and bicycling) have been related to heath ... more Policies that stimulate active transportation (walking and bicycling) have been related to heath benefits. This study aims to assess the potential health risks and benefits of promoting active transportation for commuting populations (age groups 16-64) in six European cities. We conducted a health impact assessment using two scenarios: increased cycling and increased walking. The primary outcome measure was all-cause mortality related to changes in physical activity level, exposure to fine particulate matter air pollution with a diameter <2.5 μm, as well as traffic fatalities in the cities of Barcelona, Basel, Copenhagen, Paris, Prague, and Warsaw. All scenarios produced health benefits in the six cities. An increase in bicycle trips to 35% of all trips (as in Copenhagen) produced the highest benefits among the different scenarios analysed in Warsaw 113 (76-163) annual deaths avoided, Prague 61 (29-104), Barcelona 37 (24-56), Paris 37 (18-64) and Basel 5 (3-9). An increase in walking trips to 50% of all trips (as in Paris) resulted in 19 (3-42) deaths avoided annually in Warsaw, 11(3-21) in Prague, 6 (4-9) in Basel, 3 (2-6) in Copenhagen and 3 (2-4) in Barcelona. The scenarios would also reduce carbon dioxide emissions in the six cities by 1,139 to 26,423 (metric tonnes per year). Policies to promote active transportation may produce health benefits, but these depend of the existing characteristics of the cities. Increased collaboration between health practitioners, transport specialists and urban planners will help to introduce the health perspective in transport policies and promote active transportation.
In the Czech Republic there has been invested a lot of money to the human capital through the Eur... more In the Czech Republic there has been invested a lot of money to the human capital through the European Social Fund. The Human Resources and Employment Operational Programme plays an important role by providing subsidies for the training of employees and an introduction of modern forms of management and human resource development. This paper summarizes the application of the regression discontinuity method to test whether there is an impact of EU assistance on employment in supported firms in 2009. The estimations were conducted with a sample with 1 176 supported and 87 rejected applicants. The estimation results suggest that the impacts of the intervention on employment is positive and statistically significant. The employment change in supported firms was on average about 10–15 p.p. higher than in unsupported firms.
What are the drivers of business cycle fluctuations? And how many are t here? By documenting stro... more What are the drivers of business cycle fluctuations? And how many are t here? By documenting strong and predictable co-movement of real variables during the business cycle in a sample of advanced economies, we argue that most business cycle fluctuations a re d riven b y o ne major factor. The positive co-movement of real output and inflation convincingly argues for a demand story. This feature-robust across time and space-provides a simple smell test for structural macroeconomic models. We propose a simple statistic that can compare data and models. Based on this statistic, we show that the recent vintage of structural economic models has difficulties replicating the stylized facts we document.
The promotional policies targeted at alternative fuels take different forms and are currently a v... more The promotional policies targeted at alternative fuels take different forms and are currently a very important policy issue integrating the environmental, economic, and fiscal concerns. While choosing different environmental policy mixes, almost all important world regions support production and use of biofuels. This paper introduces the first version of the computable general equilibrium (CGE) model aiming at the analysis of promotional policies focused on the first generation biofuels over the world. The model is suited for evaluation of impacts of such policies on the economy of the Czech Republic. The main features of the model, ie. multiregionality, intertemporality, and a quasi-fixed land supply (limited area of agricultural land as one of the production input of agricultural sector) deliberately adress the structure and nature of biofuel market. Countries are properly aggregated in order to underpin production and trade of biofuels over the world and also the ability of regio...
This paper evaluates the impact of selected biofuel promotion policies in a transition country – ... more This paper evaluates the impact of selected biofuel promotion policies in a transition country – the Czech Republic. To do that, the paper introduces a dynamic CGE model with three features. First, the model assumes heterogenous households and therefore it can analyze distributional effects of policy measures. Second, the model has a detailed agricultural sector to address the competition between biofuel feedstock and food production for arable land. Third, the model contains features specific for transition economies, such as real convergence, which affect the dynamics of relative prices. Therefore, the model is able to generate realistic scenarios and simulate them. In this paper, we simulate and compare alternative approaches to achieving the 10% target as dictated by the Directive 2009/28/EC. We consider a gradual introduction of subsidies for biofuel feedstock products so that the target is achieved by 2020. Our results suggest that if the subsidy is financed by the increase in...
Restructuring a state firm is often difficult, especially when it involves laying off a large num... more Restructuring a state firm is often difficult, especially when it involves laying off a large number of workers. In this paper, we conduct a case study on two coal mining regions, Ostrava and Jiu Valley, in the Czech Republic and Romania. We evaluate the restructuring paths by measuring the value of labor both inside and outside miners. The efficiency loss of the actual path, as a percentage of the maximum feasible benefit of restructuring, was 9% in Ostrava and 27% in Jiu Valley. We explain the delayed restructuring in Jiu Valley as the combination of a genuine policy mistake under an uncertain environment; the desire of the conservative faction of the government to keep the miners as a political ally; and the behavioral condition of miners to fight for the status-quo.
We conduct a case study of organized labor in the restructuring experience of two coal mining reg... more We conduct a case study of organized labor in the restructuring experience of two coal mining regions, Ostrava in the Czech Republic and Jiu Valley in Romania, in the 1990's. Under the similar external circumstances, the Ostrava region undertook a gradual restructuring from early on whereas in Jiu Valley there was no restructuring until 1997, followed by a massive layoff over two years. Our quantitative exercise shows that the delay in restructuring in Jiu Valley was grossly inefficient in view of the region's overall restructuring path and in comparision to the Ostravian path. The proximate reason for the delay was the Jiu Valley miners' action against restructuring. Essential for its success was the alliance with the conservative faction of the goverment; the alliance itself was ultimately arbitered by the Romanian electorate. We interpret the Jiu Valley miners' militancy as a behavioral pattern rather than as a rational strategy, which accords to their historical militancy in contrast to its absence among Ostravian miners.
Note: This Occasional Paper should not be reported as representing the views of the European Cent... more Note: This Occasional Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB
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