Events at CERGE-EI

Dissertation Committee:
Jan Hanousek (chair)
Štěpán Jurajda
Sergey Slobodyan
Jan Švejnar
Gérard Roland

Abstract:

This thesis examines the relationship between different aspects of governance and economic outcomes. In particular, it studies the relation between bureaucratic corruption and firm performance; one mechanism to reduce entry barriers; and the propensity of countries to experience fiscal and political stress events.

In the first chapter I focus on bureaucratic corruption and examine how it affects the performance of firm in Central and Eastern European countries. While most previous research relies solely on data from the BEEPS (Business Environment and Enterprise Performance Survey), which suffers from excessive non-reporting of firm performance, I combine the data on bribery practices from the BEEPS with large, reliable firm performance data from the Amadeus database. Focusing on within-firm variation, I find that a higher bribery level negatively affects both the sales and labor productivity growth of firms. Nevertheless, conditional on a given level of bureaucratic corruption in a narrowly defined local market, a higher unevenness of firms' bribing behavior within such a market appears to facilitate firm performance. The chance to receive benefits from bribery may be one reason why corruption does not vanish in spite of its overall damaging effect.

In the second chapter, coauthored with Vahagn Jerbashian, we concentrate on the diffusion of telecommunication technologies as an instrument to reduce the costs of entry into markets. Utilizing the difference-in-difference strategy of Rajan and Zingales (1998), we empirically show that more intensive use and wider adoption of telecommunication technologies significantly increases the level of product market competition in services and goods markets. This result is consistent with the view that the use of telecommunication technologies can lower entry costs. In addition, we show that the estimated effect is stronger in countries with higher quality telecommunications infrastructure. The finding is robust to various measures of competition and a range of specification checks.

In the third chapter (with Carlos Caceres) we consider the quality of the governance and institutions of countries in a broad sense and analyze their relationship to countries' incidence to fiscal and political stress events. We introduce two innovative indicators to measure stress events. The results suggest that weaker governance quality, measured by the Worldwide Governance Indicators, is associated with a higher incidence of both fiscal and political stress events. In particular, internal accountability, which measures both corruption and the ability of governments to improve the quality of the provision of public services, is associated with fiscal stress events. All aspects of governance, especially external accountability capturing government accountability before the public through elections and the democratic process, seem to be important for political stress events.

Full Text: “Essays on Governance and Economic Performance” by Anna Kochanova