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1688 and all that: Property rights, the Glorious Revolution and the rise of British capitalism

Geoffrey M. Hodgson

In a seminal 1989 article, Douglass North and Barry Weingast argued that by making the monarch more answerable to Parliament, the Glorious Revolution of 1688 helped to secure property rights in England and stimulate the rise of capitalism. Similarly, Daron Acemoglu, Simon Johnson, and James Robinson later wrote that in the English Middle Ages there was a “lack of property rights for landowners, merchants and proto-industrialists” and the “strengthening” of property rights in the late 17th century “spurred a process of financial and commercial expansion”. There are several problems with these arguments. Property rights in England were relatively secure from the 13th century. A major developmental problem was not the security of rights but their feudal nature, including widespread “entails” and “strict settlements”. 1688 had no obvious direct effect on property rights. Given these criticisms, what changes promoted the rise of capitalism? A more plausible answer is found by addressing the post-1688 Financial and Administrative Revolutions, which were pressured by the enhanced needs of war and Britain’s expanding global role. Guided by a more powerful Parliament, this new financial system stimulated reforms to landed property rights, the growth of collateralizable property and saleable debt, and thus enabled the Industrial Revolution.

Changes in household deposits structure: Liquidity and stability of bank liabilities

Trofimov Dmitry

This paper presents comparative analysis of the impact of changes in the economic and social situation in Europe on the volume and structure of bank liabilities generated by households. It also identifies downside risks to deposits volume and structure analyzing deposits dynamics in Russia. The approach to liquidity calculation indicators and stable part of banks’ liabilities definition based on the use of portfolio of homogeneous deposits of mass categories of households is also proposed.

Contract institutions in the Russian economy: The sphere of state, municipal, and regulated procurement

Anchishkina Olga

The article synthesizes information on database analysis of state, municipal, and regulated procurement through which Russian contract institutions and the market model are investigated. The inherent uncertainty of quantity indicators on contracting activities and process is identified and explained. The article provides statistical evidence for heterogeneous market structure in state and municipal procurement, and big player’s dominance. A theoretical model for market behavior, noncooperative competition and collusion is proposed, through which the major trends are explained. The intrinsic flaws and failure of the current contracting model are revealed and described. This ineffectiveness is regarded to be not a limitation, but a challenge to be met. If responded to, drivers for economic growth and market equilibrium will be switched on.

Fiscal rules as an instrument of balanced budget policy

Kudrin Alexey, Sokolov Ilya

In the article the authors attempt to understand the extent to which fiscal rules that were applied earlier in Russia and are in force at the present time are systemic and balanced, which requirements must be met by an effective fiscal rule in current conditions. So, according to the authors, fiscal rules should allow to adapt the budget to the requirements of financing structural changes in the economy and to maintain control over long-term budgetary sustainability. However, the new fiscal rules, introduced in July 2017, imposing excessively tight restrictions on the volume of federal budget expenditures, will not allow to provide the necessary amount of expenditures for economic development and financing of structural reforms. In this regard, a consistent transformation of the current version of fiscal rules to the framework on the basis of a zero structural balance is justified. The preparation of federal budget, balanced on a cyclical basis, can provide a relatively stable level of expenditure, regardless of the volatility of oil prices and the economic cycle, thereby realizing the countercyclical nature of fiscal policy and reducing the budget vulnerability to internal and external shocks. The effectiveness of the proposed fiscal rule is verified through modeling on data for 2007-2016. In particular, if we had used the proposed rule starting from the second half of the 2000s, it would have been possible to curb the growth of federal budget expenditures that began with the anti-crisis measures of 2009, halve the level of public debt and accumulate sovereign reserves in the amount of up to 25% of GDP. At the same time, the proposed rule requires high quality of macroeconomic and budgetary forecasting.

Information policy of the Bank of Russia:The influence of the press releases on the interbank rate

Merzlyakov Sergey, Khabibullin Ramis

This paper examines the impact of the main regular communication channel of the Bank of Russia - press releases after the Bank of Russia Board of Directors meetings on monetary policy issues - on the Moscow Prime Offered Rate (MosPrime Rate). It is shown that these press releases can have a significant impact on this rate and its volatility.

Is technological change a devourer of jobs?

Kapeliushnikov Rostislav

The paper provides a critical analysis of the idea of technological unemployment. The overview of the existing literature on the employment effects of technological change shows that on the micro-level there exists strong and positive relationship between innovations and employment growth in firms; on the sectoral level this correlation becomes ambiguous; on the macro-level the impact of new technologies seems to be positive or neutral. This implies that fears of explosive growth of technological unemployment in the foreseeable future are exaggerated. Our analysis further suggests that new technologies affect mostly the structure of employment rather than its level. Additionally we argue that automation and digitalisation would change mostly task sets within particular occupations rather than distribution of workers by occupations.

Societal and economic effects of linguistic diversity

Weber Shlomo, Davydov Denis

We discuss the various approaches to identification and quantitative measurement of linguistic diversity. Through the examination of theoretical underpinnings of diversity indices and the empirical measurement of diversity, we analyze how the linguistic differences alter economic behavior of various individuals and groups. We then turn to the impact of linguistic diversity on economic and social outcomes, such as economic development, growth, and quality of the institutions on regional and country level.

Tolerance, collaboration, and economic growth

Polterovich Victor

Institutional (in particular, political) pluralism is a fundamental feature of modern developed societies. Its cultural basis is the tolerance of citizens. The paper proposes to distinguish between legal, evaluative and interactive tolerance. This distinction makes it possible to explain the contradictory results obtained in econometric studies of tolerance and its links with the economic growth. Legal tolerance is the basis of competitive pluralism, and interactive one is the prerequisite for the formation of consensus pluralism, based on the collaboration of various social forces. Struggle for resources, intra- and intercountry inequality, “history wars” and prejudices prevent the strengthening of tolerance. Attention is drawn to the “paradox of political correctness”: dogmatic tolerance generates intolerant behavior. It is noted that interactive tolerance in developing countries is significantly correlated with technological progress and the level of well-being. The existence of this relationship, which is realized through collaboration mechanisms, gives the ground for supposition that, despite the contradictory dynamics of the tolerance level in the past 25 years, tolerance will be strengthening in the long run.

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