BOFIT Discussion Papers (1999- )


BOFIT Discussion Papers is a series devoted to academic studies by BOFIT economists and guest researchers. The focus is on works relevant for economic policy and economic developments in transition / emerging economies. >> More information.

Recent Submissions

  • Ru, Hong; Zou, Kunru (2020)
    BOFIT Discussion Papers 21/2020
    This paper investigates how politicians’ patronage connections affect privatizations in China. The connections to top political leaders (i.e., Central Committee of the Communist Party of China) make local politicians engage more in rent-seeking by selling state-owned enterprises (SOEs) at substantial discounts. These connected local politicians are also more protected in anti-corruption investigations, thus extracting more rents by selling SOE assets at substantial discounts. Consequently, the privatizations conducted by the local politicians with patronage connections achieve significantly lower gains in efficiency and performance. To identify the role of patronage connection in privatization, we use the mandatory retirement age cut-offs of Central Committee members in the regression discontinuity design. We find drops in price discounts of privatization deals and jumps in efficiency for privatized SOEs when local politicians lose connections to Central Committee members around the retirement age cut-offs.
  • Hao, Liang; Rong, Wang; Haikun, Zhu (2020)
    BOFIT Discussion Papers 20/2020
    Economic activities have always been organized around certain ideologies, yet little is known about how ideology shapes corporate behavior and how it is different from other political forces. We investigate the impact of politicians’ ideology on corporate policies by exploring a unique setting of ideological change in China from Mao’s ideology to Deng’s around 1978. Using textual analysis based on keywords in People’s Daily, we find a discontinuity in ideological exposure among people who later became city mayors. Those who were at least 18 years old in 1978 and had joined the Chinese Communist Party (CCP) are more likely to have adopted Mao’s ideology, and those who did not join by 1978, due to age limit, but joined soon thereafter were more likely to have adopted Deng’s ideology. This ideological difference has had an enduring effect on contemporary firm and city policies. Firms in cities governed by mayors with Mao’s ideology have made more social contributions, lowered within-firm pay inequality, and pursued less internationalization than those with Deng’s. These effects are stronger in firms with political connections, less state ownership, and more government subsidies as well as in regions that are more market-oriented and not “revolutionary bases.” Our results are robust to OLS regressions with various pair fixed effects besides regression discontinuity. We further find that corporate policies promoted by Mao’s ideology are associated with slower firm growth but greater stakeholder engagement.
  • Funke, Michael; Zhong, Doudou (2020)
    BOFIT Discussion Papers 19/2020
    The political hyperglobalisation trilemma asserts that a government cannot simultaneously opt for deep international integration, national sovereignty and democratic politics, but rather is constrained to choosing two of the three at most. This paper presents a new and comprehensive cross-country panel dataset operationalising the multifaceted three vertices of the trilemma. After an explorative data analysis, we employ panel error-correction techniques to uncover the mutual interdependencies among the variables in the system. The econometric evidence supports the existence of a long‐run relationship between economic integration, national sovereignty and democratic politics as postulated in the political globalisation trilemma.
  • Wang, Hao; Fidrmuc, Jan; Luo, Qi (2020)
    BOFIT Discussion Papers 18/2020
    Grandparenting duties can affect the well-being of the elderly both positively and negatively. This paper disentangles the interactions between grandparenting, quality of life, and life satisfaction in China. Using a panel dataset of 3,205 respondents in three waves of the China Health and Retirement Longitudinal Study (CHARLS) in 2011, 2013, and 2015, we find that grandparents who look after grandchildren are less at risk of depression, receive more financial and in-kind transfers from their children, and report greater life satisfaction than grandparents who do not look after grandchildren. These benefits vary across gender and rural-urban status, however. The positive effect of grandparenting is driven mainly by the direct effect with negligible mediating effect attributable to better quality of life.
  • Pyle, William (2020)
    BOFIT Discussion Papers 17/2020
    This article links Russians’ individual experiences during the late-Gorbachev and early-Yeltsin years to the beliefs those same individuals espoused in the Putin era, over a decade later. Drawing on questions, some of which are retrospective, from the first wave of the Life in Transition Survey, I show that a range of attitudes – including diminished support for markets and democracy and stronger support for reducing inequality – can be explained by whether an individual suffered labor market hardships (wage cuts, arrears, and/or unemployment) in the half decade from 1989 to 1994. More recent labor market disruptions, surprisingly, bear no such relationship to beliefs in 2006. Relative to the rest of the former Soviet Union, this pattern is unique. Though an explanation is difficult to pin down, one speculative hypothesis is that Russians were uniquely impressionable during this exit-from-communism period. Individual economic hardship, in conjunction with the dissolution of the Soviet Union, may have been particularly disorienting for those living in the country in which communism first took root. Life experiences during these years of instability, uncertainty, and diminished status may have left a uniquely deep and enduring impression.