Ülo Ennuste Economics

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Draft 16.IX 16 (do not quote)

Draft 16. IX 16 (do not quote – comment and contribute pro bono publico: ylo.ennuste@mail.ee ) 

 COMPILATION of EXCERPTS: Importance in the Hybrid-War and Brexit etc increasing uncertainty and context to categorise informally  monetarily quantified long-term occupational repressions damages for the National Sustainabilty Stability Probability in Eastern-European Countries by former USSR – on the bases of modern macro- socio-cybernetics –  fragmental Estonian empirical illustrations

 

Abstract

 This raw narrative preliminary in telegram style compiles and preliminary examines for consultation purposes some excerpts of the contemporary sociocybernetic methodological approaches (Beyond GDP/Institutional/Comparative/Coevolutional/Stochastic/ICT/Bayesian/Meta-mathematical etc) to estimate informally in first large approximation monetarily long-term occupation/colonization (Fucuyama 2014, etc) damages/losses/consequences on Estonia – in 1940-1991 by Stalinist barbaric communist Command Regime (e.g. genocides and deportations mainly of the National Elite members (Rahi-Tamm 2005)  – and later in the developed socialism mainly in the form of Russification and erosion of national sustainability by KGB operations decaying the population physically and mentally (Noor 2005) – and eroding National Economy with dysfunctional colonization institutions (Hodgson (2007), Brutus and Ennuste (1965) and some fragmentary Estonian empirical monetary quantified illustrations in the comparative economics approach with civilized liberalized economies (Kukk 2005, etc)).

It is argued that the breakdown of the pre-existing system of production and distribution, changes in political power, and the displacement of property rights (especially confiscation of land from private ownership ) – and especially current Hybrid-War on cyberattack front from Kremlin (Kissinger 2014) and in information- and ideological-trolling sectors introduces uncertainty into people’s lives – and anxieties asymmetrically in different ethnic groups (Kirch et al. 2008 and 2011).

The narrative preliminarily explores two GDP satellite account questions in the contemporary context the long-term occupational USSR damages and in what proportions: a) in the Hybrid-War context accompanied by increasing uncertainty affect people’s beliefs about their own well-being? and b) how does the anxiety created by these processes impact different ethnic and ideological groups? c) how much have been Estonia’s occupational damages monetarily underestimated in the conventional XX century macroeconomic studies – compared with estimations of XXI century sociocybernetics results taking into consideration coevolution of socioeconomic activities and institutional developments in the game theoretic context with uncertainties and considering predatory/imperial agents (defined by Wiener, North, Hodgson, Aoki, Krugman, Tirole  etc).

 

Keywords: Human Assets, Human Capital, Human Reproductions Assets, Social Capital, Population Ethnical Structure, Occupation’s Genocides, Colonization, Ethnic Anxiety, National Knowledge Structure, Cultural Upheavals, Terrorist Occupational Distortions of Populating Ethnical Structure, Transitional Anxieties, Repressive Deportations, Repressive Confiscations, Government’s Socio-Economic-Institutional Policy Failures, Social Trust, Institutional Assets, Economic Capital, Infrastructure Assets, Systems Transitions, Shadow Prices, Implementations Models, Bayesian Estimations, Formal and Informal Assessments, Satellite Accounts, Standard GDP (SGDP), Genuine GDP (GGDP), Social Progress Indicator (SPI), Quality of Life, Economic Inequality, Income Inequality, Assets Inequality, Special Inequality, Human Capital Inequality, Political Environment, Predatory Agents, Trolling Agents, Hybrid-War, Sanctions-War, Subsidies, Taxation Systems, Public Sector Forecasting, Accuracy of Forecasting, Correlated States, Political Environment, Analogues States, Parallel Societies, Transformation of Macrodata, Flows and Stocks, Capital Flight, Analogues Data, Information Asymmetry, Moral Hazards, Secret Agents, Actual Individual Consumption, National Satisfaction, Convergence, National Sustainabilty Stability Probability, Macro-Socio-Economic-Institutional Damages, National Existential Damages, National Significant Damages, National Minor Damages, Damages of National Knowledge Structures, Lagrangean Relaxations, Truth-Telling, Negative Activity, Negative Institutions, Mechanisms Design, Detail Free Coordination, Field Studies, Long- and Short-Term Occupation Damaged, Long-Term Occupational Fallouts on National Capital Stocks  Erosion, European Union, Soviet Union Occupation of Estonia 1940-1991, GULAG.

 

  1. Preliminary Introduction and Conclusions

A) Introduction

In this paper we start from the assumption that it is now widely accepted that hierarchical macro institutions, broadly defined as systems of established social rules and the statutory body etc (incl. jurisdiction), play a major role in explaining in coevolution of real economy nation’s policy behavior and national sustainability stability probabilities. Although scholars generally agree that institutions coordinate nations/states behavior and to a certain extent mould it into recognizable patterns, there is much less consensus regarding the precise mechanisms involved. We also have yet to fully understand the ways in which alternative international rule systems and behavioural patterns emerge, persist and evolve to create our complex social system. In  this paper we are endogenizing institutional designs and changes (Aoki 2007) into our basic model – “institutions matter” and “history matters” (HANSEN, BRADLEY A. and MARY ESCHELBACH HANSEN 2016) – meaning that institutional change matters and occupation may be in this context modeled as colonizational external enforcement of repression institutions and destruction of the aggregate independent national state institution. And operezionaling institutions in models by formation of optimal institutional clusrers without details according KUNČIČ, ALJAŽ (2014) „Institutional quality dataset“ –  Journal of Institutional Economics / Volume 10 / Issue 01 / March 2014, pp 135-161.

Endogenezing institutions we classify occupation models according Fukujama (2014 p30-33) as colonization and have to focus first of all on estimation damages of local national institutional distortions – and distortions of local population structure – in our context colonization of democratic capitalist European small country by non-Western communist emporium – enforcing radically different dysfunctional institutional structures – “killing off ingenious peoples throe war and disease, and setting their lands with foreigners.”

In our context long- term losses of ingenious human resources include also brutal deportations and anomaly emigration due to the brutal occupation – and as the losses macro economically ubiquitous forced immigration of economically low quality foreigners masses (White Book, 2005).  Among the long term institutional capital losses we have to take into consideration losses of National Knowledge Structure (Ennuste, 2008) and in Social Capital Structure (OECD, 2016).

The institutional chanages may be analysed with powerful aggregated institutional cross country macroeconomic regression models  (see in detail e.g.: Chapter 1 by Teet Rajasalu in Ennuste et al. 2002:

https://iweb.cerge-ei.cz/pdf/gdn/RRCII_34_paper_01.pdf ).

It is now widely accepted that macro indicators based on Standard GDP (SGDP) and its index-derivatives are not sufficient and adequate aggregated proxies for rigorous analyses of national sustainabilty stability probability estimates in the increasing uncertainty environments – and should be substituted first of all by the “Beyond GDP” indicators. Broadly defined as systems of Genuine GDP (GGDP) and Genuine NNI (GNNI)  indicators including additionally informal income flows from the households in the form of investments to national human capital stocks and social capital stocks etc. Importantly: from the sustainability angle the most important economic indicators are Domestically Useable GNNI pc indicators – meaning that from the GNNI are subtracted Estonian fraudulent investments to the foreign countries (national economic institutional system and governmental policy failures).

By now it is now widely accepted that macro indicators based on SGDP Macrodata is almost adequate formally (officially) statistically measured – but Beyond GDP etc Macrodata are not – so much of this kind of statically dada has to be by scholars created informally and in great approximates – to be in this context credible only in cooperating of scholars of several correlative and analogues countries. In Estonian empirical case needs cooperative study of correlated analogues countries: the European border countries of Russia – especially Baltic-States + Poland and Finland (as analogous countries but correlated as without Russian occupation) + in spe International Research Centres (e.g. as in form of parallel paper by Schmid-Schmidsfelden, Hubertus and Kristina Potapova (2016) The Bear in Sheep’s Clothing: Russia’s Government-Funded Organisations in the EU. Wilfried  Martens Centre for European Studies. – etc).

Theoretical and empirical research into these important topics needs to draw on insights from multiple independent academic disciplines, including macroeconomics, institutional economics, politology, demography,  ethnology, history, human geography, law, linguistics, risk management, philosophy, psychology (Coetzee and Kurtz, 2015) and sociology and involvement of correlated countries scholar centres.

The study is organized as follows: This Section 1 “COMPILATION” (to be composed in Summer 2016) gives a brief methodological review of the study conceptions and contains several preliminary raw technical Excerpts and Notes with possible references. There are subsections: 1. Introduction, 2. Beyond GDP (GGDP GenuinGDP, National Sustainability Stability Probability etc), 3. National Resources (Human Capital, Social Capital, Natural Assets, National Institutional Assets, National Knowledge Assets 4. Methods and Models, 5. Historical Remarks, 6. Examples of Estonian Empirical Studies, Notes (Collections of raw excerpts on satellite themes), References and Annexes (categorisation not completed yet)

In Section 2 “COMPENDIUM“ (composed in the second half of the year) in spe by several pro bono scholar from correlated EU28 Member-Countries co-authors teams in hierarchical coordination (revising the White Book (2005) and extending the Notes of this text into research chapters – to prove the main hypotheses based on empirical findings in accordance with Estonia’s current idiosyncrasies as the member of  EU and NATO in the situation of actual Hybrid-War – from the point of view of 21 century standard mainstream sociocybernetics and coevolutionary macroeconomic disciplines  – giving special importance to uncertainties and risks in the case of national sustainability studies). Importantly these chapters should be composed first of all in unison with Latvian-Lithuanian-Polish-Finnish scholars and first of all to study long term damages made in the sense of national sustainability by the terrorist Russification of the local national ethnicity structures – and …

B) Short Preliminary Conclusions

……

  1. Beyond GDP

 A) HANSEN, BRADLEY A.and MARY ESCHELBACH HANSEN (2016) „The historian’s craft and economics“ –

Abstract

History refers both to the past and to the systematic study of the past. Attempts to make a case for history in economics generally emphasize the first definition. There are benefits from increased attention to the past. This paper argues that significant benefits can be gained from increased attention to the systematic study of the past, the historian’s craft. The essence of the historian’s craft is the critical evaluation of sources. Failure to critically evaluate sources has the potential to lead to erroneous conclusions, whether one is using historical documents or more recently created data.

NB! Respectability and benefits of the economic historical studies can be gained by objective systematic studies – i.e. by critical independent teams – indeed: economic patriotism may easily lead to erroneous interpretations of approximate historical economic data (Ennuste 2008a: e.g. monetary losses are much more negentrophic than human losses in numbers of persons etc – and in standard approaches are taking account as complex numbers).

 

BOX 1.

The Economist 14.V 2016 

“… Since 2011 The Office for National Statistics has been developing wider measures of economic well-being. These include household “satellite accounts” that estimate the value of unpaid labour, such as volunteering and informal child care, that fall outside the scope of GDP as informal social activities. In 2014 the value of this activity amounted to £1 trillion … compared with a British GDP of £1.8 trillion. We have also been publishing quarterly information on economic well-being since December 2014 that brings together a number of indicators to give a more rounded and comprehensive picture. These include net domestic product and net national disposable income per person that adjust GDP for the depreciation of assets, the net flows of profits into and out of the country and population.

JONATHAN ATHOW
Deputy national statistician for economic statistics

London“

 

NB: a) the monetary estimates household „satellite accounts“ (for formal definition in the field of national accounts see: INTERNATIONAL MONETARY FUND (2009) Balance of Payments and International Investment Position Manual Sixth Edition (BPM6)) that fall outside the scope of GDP as informal (not in official statistics) social activities  – are in this example seemingly more approximate than conventional GDP components statistical indicators: Here the British GDP value amounted to £1,8 tn => 1,8(+/-0,05) or with relative error almost +/-3%  – compared to 1(+/-0,5) or with relative error 50% – that brings together (1,75÷1,85)+(0,5÷1,5)=2,25÷3,35 => the average 2,80 with relative error ca 20% b) informal visible child care is only one of satellite accounts that should be additionally connected to conventional GDP to amount to the Genuine Socioeconomic Gross Domestic Product (GSGDP) in the logic of „Beyond GDP“: but so should several visible and invisible other activities. E.g. additional satellite accounts may be added like invisible “human capital” and “social capital” informal creation in the form of learning children and grandchildren or to taking care of the feeble ones in the families plus visible activities like cooking, heating and gardening etc.

 

B) Theoretically excellent (fragmentary) introduction by Kubiszewski et al. (2013) for the Beyond GDP:

 

“Nations need indicators that measure progress towards achieving

their goalseconomic, social, and environmental. Standard economic

indicators like gross domestic product (GDP) are useful for measuring

just one limited aspect of the economymarketed economic activity

but GDP has been mistakenly used as a broader measure of welfare

(Costanza et al., 2009; Stiglitz et al., 2010). GDP was never designed to

measure social or economic welfare, and yet, today, it is the most commonly

used indicator of a country’s overall performance (Kuznets,

1934; Marcuss and Kane, 2007; McCulla and Smith, 2007).

GDP’s current role poses a number of problems. A major issue is that it

interprets every expense as positive and does not distinguish welfare enhancing

activity from welfare-reducing activity (Cobb et al., 1995;

Talberth et al., 2007). … GDP also does not account for the distribution of

income among individuals, which has a considerable effect on individual

and social well-being (Wilkinson and Pickett, 2009).

A more comprehensive indicator would consolidate economic, environmental,

and social elements into a common framework to show net

progress (Costanza et al., 2004). A number of researchers have proposed

alternatives to GDP that make one or more of these adjustments

with varying components and metrics (Smith et al., 2013). Some have

also noted the dangers of relying on a single indicator and have proposed

a dashboardapproach with multiple indicators.

One such alternative indicator that has been commonly used is the

Genuine Progress Indicator (GPI). While GDP is a measure of current

production, the GPI is designed to measure the economic welfare generated

by economic activity, essentially counting the depreciation of community

capital as an economic cost. The GPI is a version of the Index of

Sustainable Economic Welfare (ISEW) first proposed in 1989 (Daly and

Cobb, 1989). … “

 

NB!:  from the point of occupation damages is most important the following remarks: 1)

GDP’s current role poses a number of problems. A major issue is that it

interprets every expense as positive and does not distinguish welfare enhancing

activity from welfare-reducing activity … “ – very good  2) the other problem is that GDP formal statistic is not taking into account the GDP and financial leakages from the domestic country 3) by definition is GPI indicator still fragmentary for our tasks because it is not taking into account e.g. households wealth (social, intellectual, material etc) and not wakening into account its distribution.

 

 C) EU Commission in the unison with Eurostat has started the applied Beyond GDP Project officially 2008 –  Eurostat (2015):

 

Abstract (extracts)

 

Quality of life in Europe — facts and views presents different aspects of people’s well-being combining for the first time objective indicators with subjective evaluation of individuals’ situations and covering various aspects of quality of life. The indicators are analysed together with different elements affecting quality of life such as educational level, activity, health status or family and financial situation. The emphasis in this publication has been placed on the data collected through the 2013 ad-hoc module on subjective well-being, which was added to the statistics on income and living conditions (EU-SILC). Data

are presented for the European Union and its Member States as well as for the EFTA countries. Quality of life in Europe — facts and views provides an overview of the wealth of information that is available on Eurostatis website and within its online databases.”

 

NB!: However, for our purposes –  1) monetary estimation of long-term occupational damages in XXI century sociocybernetics study – in this paper we should use more wide approach including Institutional/Cybernetic activities and officially human assets in formal monetary form – the “Beyond Beyond GDP” approach –  to take adequately into account all USSR’s last century filthy year occupation damages to Estonia’s national sustainability and that may be adequately formally modelled like colonization process (Kukk 2005) 2) according to ETLA (1993) and Kukk (2005 p188): “As there are no suitable statistical data about Estonia, we necessarily have to resort to some simplification to make such calculations possible.” In other words without large scale statistical ad-hoc fieldworks about the occupation period statistics – there is no hope to make credible monetary micro-calculations about damages done that belong to Beyond GDP repertoires – and we have here to resign informal approximate Bayesian shadow price estimations (Piketty 2014) .

 

 

D) A resent excellent theoretical introduction for institutional economics has been presented by   Gagliardi (2016) – extract:

 

„There is now widespread consensus among scholars and policy makers that institutions are a crucial determinant of economic performance, and that the mechanisms involved in the processes of institutional emergence and change can generate solutions to socio-economics problems that enhance economic growth ( Acemoglu et al., 2005; North, 2005 ). Both the conceptual frameworks focusing on the study of institutions and the large body of existing empirical literature on the topic show that a country’s long-term economic performance critically depends not just on its institutional environment but also on complementarities between different kinds of institutions ( Gagliardi, 2015 ). Historical evidence also suggests that the causality from economic development to institutions may be even stronger than the one running from institutions to economic development. Economic development changes institutions through a number of channels. While increased wealth due to growth may create greater demands for higher-quality institutions, and may make better institutions more affordable, economic development creates also new agents of change, demanding new institutions ( Chang, 2011 ). From a theoretical point of view, two broad approaches have been proposed in economics to study institutional issues. The first, pioneered by North (1990) and other new institutional economists, and referred to here as the “historical approach”, conceptualizes institutions as the rules of the game, and integrates economic theory and economic history. The emphasis placed on the historical context comes from the observation that much of the developmental trajectory of societies is conditioned by their past in a path dependent way, with the implication that institutions are historically specific. It follows that historical contexts must always be taken into account, especially when dealing with the issue of institutional change ( Alston, 1996 ). The historical approach furthermore combines a theory of human behaviour with a theory of transaction costs. Its central result is that institutions determine the structure for exchange that influences the level of transaction costs, thereby affecting the feasibility and profitability of engaging in economic activity. It is through this mechanism that institutions are the underlying determinant of long-run economic performance. In other words, by defining and constraining the opportunity sets available to economic agents, institutions structure incentives in human exchange, provide a stable structure to human interaction, and reduce uncertainty by fostering convergent expectations ( Gagliardi, 2008 ). The second analytical framework is the “comparative institutional analysis approach” associated with Aoki (1996) that also draws on historical information while at the same time making extensive use of game theory. Institutions are here conceptualized as the endogenously emerging equilibrium outcome of a game and the focus is on the interdependencies existing across economic, political, social and organizational domains. In addition attention is given to interdependencies arising across institutions linking different domains. The core issue is how the rules of the game are generated and become self-enforcing through the strategic interaction of the agents, whose behaviour is influenced by the self-enforcing constraints determined within the existing set of rules …“

 

 

NB!: and here also we have to apply some kind of „Beyond Institutions“ approach: taking into consideration of risks connecting with institutions and anxieties for different groups of agents coursed with the changes of institutions/regimes (Ott and Ennuste 1996 and N4).

Now the mainstream theoretical frameworks focusing on the study of national socio-economic sustainabilty stability problems and the large body of existing empirical literature on the topic show that a country’s long-term economic performance analyses adequately shoud be tackled with the large scale stochastic dynamic computational models – containing interdependencies not just between socio economic activities – but also its institutional and demographic/ethnic environment and complementarities between different kinds of institutions (repressive occupation) and ethnic groups, differentiating e.g. between human capital and social capital, between ethnicity groups (occupationally forced Russification  immigration) etc (Aoki 1996, Hodgson 20…, Gagliardi 2015, Kirch et al 2008, White Book 2005, Ott-Ennuste 1996 etc). By the way – the occupation regimes may be adequately modelled and analysed in formalised contexts as destructive institutions (…): ….

The crucial methodological issue in the “Beyond GDP” approach is that the GDP indicator is based mainly on formal marketed activities and formal market prices transactions and not considering informal social activities without monetary transactions Meta-GDP: so absolutely not adequate to be a proxy for national quality of life or sustainability analyses in the risky situations.

The trouble is that in the traditional macroeconomics many social activities and services have no formal National price tags and this makes in official statistical practice impossible to estimate the monetary volumes of most produced social or institutional values in combative ways with real market activities and transactions – in contradiction to social-market fundamental humanity principles. This problem is easily solved with “shadow prises” in the modern sociocybernetic with the Lagrangean relaxation and Lagrangean multipliers – and importantly makes possible in our context e.g. to approximate social/human values/losses monetarily (see for details Note N3) etc.

Standard applied twenty-first century sociocybernetic methodological problems of macroeconomic and sociocybernetic imputed/notional/factoid monetary Bayesian estimation of long-term National Sustainability Damages of occupations: introductory remarks on preliminary postulates and conjectures and Estonian hypothetical empirical rudimentary case-study Examples for the period 1939-2015.

Mainly based on White Book (2005) up-dating and extensions and ScienceDirect.Com Journals and current Estonian occasional papers etc.

 

This narrative is partly purely objective Bayesian statistical and partly imaginary (administrative statistics is of fully sparse not only demographically (Rahi-Tamm 2005) and also economically (Hansson 2016) applied research and no political economics or social-cybernetic theoretical or ideological/philosophical original frameworks are tackled within it. We explore only extinct applied methodological and statistical possibilities to test on the Estonian data the main hypotheses such as 1) once occurred occupational national damages and losses may have long-term after effects additional to instantaneous aggression effects – especially in the conditions if part of the occupying repressive aggressor nation is planning with significant probability to restore the previous one – and part of the occupying main ethnic group members and their offspring’s are in significant quantities previously  here active in anti-western mentality 2) with previously  increasing uncertainty – especially connected with Putin-Kremlin Hybrid-War against West – and so giving considerable rise inter-ethnic tensions in the previously occupied countries (Kirch et al. 2008) – especially if the ethnicity structure is in the occupation period was repressively distorted with ethnic cleansing and genocides and inserting occupants as residents etc 3) all these by direct occupations and their fallouts caused national damages and losses may be only extremely approximately estimated and imputed noticionally also in the money terms in contemporary currencies – and among these volumes the human fortune/capital losses are obviously super dominating the genuine economic losses and damages like real and natural capital, environmental damages caused by occupation army etc – especially accordingly from the contemporary long-term consequences 3) Anyway Piketty (2014) has managed to restore informally economic data for centuries ago in reasonably correct way for contemporary mainstream macroeconomic public.

 

  1. Methodology: models and methods

 

In the 21. century the GDP volume in market prices indicator is generally not viewed by policy makers any more as sufficiently adequate criteria proxy for national socio-economic well-being and development – and the prevailing sentiment or the mainstream standard theoretical understanding is supporting the so called “Beyond the GDP” approach (see for latest results, authors and some application details in the first note: N1).

 

Accordingly in the case of adequate genuine total occupational national economic losses (GTL) estimations we have to distinguish between 1) direct market domestic income losses e.g. proxies by the lost GDP volumes in the official statistics market prices terms and … 2) and total losses and damages of all national development resources – ingredients generally without actual market prices statistics: inc e.g. human losses in imputed monetary value volumes (in natural numerals preliminarily: national fixed-capital assets ; national social capital losses, national institutional capital losses (e.g. in banking assets, taxing system values), national knowledge structure quality losses in money terms – etc.

 

The main methodological problems in these economic assessment cases is the absence of the actual market prices statistics for the non-tradable ingridiente – but the main methodology to overcome this difficulty is in the technical mathematical-cybernetics to apply “optimal shadow prices” (also called Lagrange multipliers, dual prices, notional prices – and cyber prices in the case socio-institutional mechanisms types are among optimized variables  etc (see excellent Wikipedia introduction in  N3:

 

 “…In mathematical optimization, the method of Lagrange multipliers (named after Joseph Louis Lagrange[1]) is a strategy for finding the local maxima and minima of a function subject to equality constraints.

For instance (see Figure 1), consider the optimization problem

maximize f(xy)

subject to g(xy) = 0.

We need both f and g to have continuous first partial derivatives. We introduce a new variable (λ) called a Lagrange multiplier and study the Lagrange function (or Lagrangean) defined by

where the λ term may be either added or subtracted. If f(x0y0) is a maximum of f(xy) for the original constrained problem, then there exists λ0 such that (x0y0λ0) is stationary for the Lagrange function (stationary points are those points where the partial derivatives of   are zero). However, not all stationary points yield a solution of the original problem. Thus, the method of Lagrange multipliers yields necessary for optimality in constrained problems.[2][3][4][5][6] Sufficient conditions for a minimum or maximum also exist. ,,,  “).  … “

 

According to decomposed complex (tangible and intangible resources)planning theories (see some of most rudimentary and simplified approaches in the conditions of risks and uncertainties in Ennuste (1969) (1989) and Ennuste-Matin (1998)) in the case of decomposed (according agents activities x(j) j=1…n) and solution processed via Lagrangean relaxation and gradient vise movement – the lambda (λ vector) terms i=1…m  (shadow prices) may also be also calibrated/estimated separately by agents (experts) separately in the centrally coordinated gradient wise movement (see for example N3 for estimation calibrated  human values volumes in shadow prises terms): this will be here the main method for estimation lambda prices and monetary volumes of by agents on the basis of e.g. Bayesian statistical prognostics (inc outside information – method probably widely used in Piketty (2014) and presently theoretically developed by …. ): in sum – in our case the modelling should start from the disdaining of general coevolutionary (inc institutions) model for East-European countries by the Centre and decomposed/separated firstly according countries – and secondly according activities and institutions etc – and iteratively coordinated by the Centre.

 

 

Importantly is to tell that Eurostat is suggesting and estimating more than 130 Hierarchy National Sustainability Indicators  with  couple of dozen headline indicators (http://ec.europa.eu/eurostat/web/sdi/indicators) and so in the same mode the EU Commission (… )

 

But 1) these indicators are still e.g. missing monetary sectors 2) not considering e.g. HW situations and 3) not considering longevity occupational repressions damages e.g. Russification damages etc. In the Table 1 we preliminarily suggest some rudimentary approximate indicators to be more adequate in the Estonian Sustainability Stability Policy optimization contexts.

 

Table 1. Complex Indicators and Ingredients

 

Market/Real/Tangibles/etc                        Social/Imaginary/Intangibles/etc

Flows:

 

GDP pc (per capita)

NNI pc

Investments pc

Balance of Payments pc

Investments Outflow from Estonia pc

(inc 0-profit tax arrangements)

Working Population Outflow %

Employment decline %

Foreign Investments into Estonia pc

Estonia’s International Net Lending pc

Estonia’s International Investment- Position pc

National Financial Account

Financial Fragility of National- Economy

Transactions

Trade-War grade

Sanction-War grade

Business Corruption grade

 

Flows:

 

Investments by Public Education pc

Investments by Public Medicine pc

R&D investments pc

Defence expenditures

Households Investments into informal Child Care, Human Capital, Social Capital, etc pc

Public Communication %

Social Communication %

Destructive Informational Activities

Actual Individual Consumption %

Quality of Life

 

 

 

 

 

 

 

 

 

 

Stocks:

 

National Workforce Assets

Employment %

Human Professional Capital

Land and Natural Resources pc

Technological Institutions capital

Technology Adaption Quality

Technological Institutions Quality

Defence and Police Institutions

Households’ Wealth

Institutional Wealth

Production’s Fixed-Capital

Universities, Churches etc Fixed-  Assets, Uncertainties and Risks

Infrastructure Assets

Computers

Stingers

Tanks

Prisons

International Investment Position %

 

 

Stocks:

 

National Social Assets

National Social Capital

Households Social Capital

Institutional Social Capital

Infant Mortality Rate

Social Reproduction Assets

Life Expectancy

Migration indexes

Households Financial Account pc

National Knowledge Structure Quality

National Ethical Structure Quality

Country’s Ethnicity Structure-Social Synergies

Income inequality

Wealth inequality of Households

Regional inequality

Financial Fragility of Households

Political Corruption

Criminality and Actions of Fifth- Columns grade

Convergence/Divergence grade

Current National General Subjective Bayesian Probability of Imminent Conventional Military Attack (inc N-Attack) in the HW

Ethnic Heterogeneity

Russification of Population

National Museums, Statues, Parks

National Libraries, Theatres, etc

Anxieties

Churches

Graveyards

 

 

 

International Environment:

 

Membership in International Economic and Defence Org.

Trade Wars

Sanctions Wars

Technology Cyberattack

Military Conflicts

 

 

International Environment:

 

Membership in Cultural Intern. Org.

Ideological Wars

Socially Barbaric Imperial Neighbour

Military Conflicts

 

 

 

 

… : … :

 

Standard method for Baltic Countries + Poland case for central coordination in the applied decomposed optimal planning theories (Ennuste 1978) suggest probably that: the best solution in our approach  would be to organize internationally funded Coordination Centre in Poland (for justification of this suggestion see Internet Publication:

http://www.communistcrimes.org/en/Database/Poland/Historical-Introduction ) – and – in this Centre to applied for complex-compound losses assessments first comparable analogy models (Ennuste 1993 and Kukk 2005): Occupied Poland compared e.g. with Sweden and Baltic Countries with Finland etc.

 

 

 

 

 

 

     4. Historical and demographic/ethnicity prerequisites in the Macro-Institutional context

 

Estonia’s recent history, not unlike that of its Baltic neighbours (White Book 2005, Zubkova 2009 etc) and also Poland – is marred by occupations of two ethnic groups – Russian and German – and even under the intersections or double occupations in 1941-44. The secret protocols of the 1939 Molotov-Ribbentrop Pact put Estonia first of all for the period 1940-1991 ipso facto under Kremlin brutal terrorist repressions with huge irreversible human losses (Rahi-Tamm 205) and under dysfunctional command economic colonization institution (Brutus & Ennuste (1965) and Mau (1996)) with confiscations of all private land properties (with accommodating inefficiencies: as analogues see YOO, DONGWOO and RICHARD H. STECKEL (2016) „Property rights and economic development: the legacy of Japanese colonial institutions“ –  Journal of Institutional Economics) and of private production assets and destruction of domestic market institutions and banking/currency systems and international trade institutions. And 1941-1944 additionally was ipso facto overlapped by the Nazi German Genocide occupation: Both terrorist occupations inflicted instantiations and longevity tremendous losses and damages to the Estonia’s National sustainability duration probability – especially to the National Ethnic and demographical structures in the long-term context (Rahi-Tamm 2005). In Post-Stalinist or in the Developed Socialist period the Leninist (Krugman 1990 pp101-2) industrialization strategy begin for importing forcefully Russian speaking labour into Estonia for the full Russification and eroding Estonia’s National Sustainabilty in the long-term perspective – and with many permanent repression health damages (Noor 2005).

 

From the macroeconomics point of view in the USSR occupation period in Estonia we have to distinguish at least to sub-periods: 1) Terrorist-Stalinist were macroeconomic official statistics in credible form is absolutely missing (Estonia and Finland 1993) and hypothetically we may claim that monetarily human losses absolutely dominate the other losses here in the form of Stalinist genocides and war crimes: in this period two Estonian partisan wars against Soviet Armed Forces have taken place – Summer wars 1941 and 1944 with great population losses (Estonia 1940-1945 (2006) and H. Lindmäe (2007; 2015) 2) the After-Stalinist period in which KGB was distorting/manipulating official regional macro-statistics according to ideological/political purposes (e.g.: occasional economic inequality statistics was top secret, so was mainly with heavy industry, transport, interregional trade, movement of finances/capital etc). So here we have also resort to informal approximate data production etc e.g. to estimate long-term damages done to Estonia’s population ethnical structure, environmental quality, population repressions in many forms, cultural inheritance wealth, industry structure, fisheries etc by colonization and Russification: in the attempt to destroy Estonian National Sustainabilty.

In this second period many short-term damages from the first have been “compensated”: e.g. to build apartments for the Russian speaking immigrants – and in this context we may these consider to be not significant any more.

The Estonian post-communist double transitional period 1987-2006 institutional coevolutionary developments/reforms may be chronologically followed e.g. form Ennuste (2007) “Dual Market-Transition in Estonia 1987-2006: Institutional Mechanism Analysis Approach” In: EUROPE AFTER HISTORICAL ENLARGEMENT. The Proceedings of 5th Audentes Spring Conference, Apr. 28 2007, Tallinn, 60-126: : http://www.ies.ee/iesp/No3/

 The main crucial economical policy failure in this period seems to be implementation of 0-profit tax: http://elsa.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf

In the current Hybrid-War period (for Estonia started in 2005 with President Putin statement: “The collapse of  the Soviet Union was the biggest geopolitical catastrophe … “ and  with aggressive Russia first cyber attack on  Estonian Government already in 2007 (Kissinger 2014 – Estonia NATO member from 2004) great uncertainty situation in Estonia – were neighbour country – predatory (Tirole 1992: 372-3) Imperial Russia is seemingly trying restore the USSR in the Stalinist borders – and again to make attempts to destroy Estonia’s national sustainability – first of all by ideological war (claiming: there has been no occupation and any national damages have not been done on Estonian soil) and by threats of conventional military interventions with tactical nuclear weapons and trade-wars etc fuzzy our national knowledge structure and produce anxieties etc: it is extremely important to understand objectively/ sociocybernetically how the last century long-term USSR occupation by criminal Russification of Estonian population and destruction of the National infrastructure (inc National knowledge structure etc) as the destruction of households wealth (including informal social wealth) and so on in the public infrastructure sphere – have been connected with the long-term effects of the occupation – and how much so with current sociocybernetic governmental incompetent policy errors (including incompetent cybernetic mechanism (e.g. unbalanced tax system, facilitating e.g. indirectly substitution of sanctionised corporations under the Russian controls, Estonian official statistics) implementations – that should be in war situation instantly liquidated.

 

The occupations had most profound negative effects on the ethnic composition of the Estonian population – e.g. via brutal Russification – nowadays by far the largest non-ethnic Estonian group is Russian nationals or Russian Speakers – and presently among them probably a significant group of diversion putinoids-trolls to  distort information and create informational asymmetry – in the putinoids columns have been active supporters of the Kremlin Cyber attack against Estonia e.g. in 2007 March (Kissinger 2014, alas the economic damage of this attack was never discussed) and in the same style distorting Estonian National Knowledge Structure. It goes without saying – the Baltic Countries’ and Poland’s adequate occupations crime studies should be conducted in the unison and in coordinated framework: for Estonia the Hybrid-War (HW) started with 2007 Cyber attack and activated after that in the fields of trade and sanctions (Ennuste 2014) – and previously even the probabilities of potential conventional military conflicts (inc tactical nuclear attacks are rising) (Lucas 2014). All these increasing uncertainties have increased local ethnical anxieties and interethnic tensions (see e.g.: Kirch et al. 2008 and 2011).

One of the most damaging long-term occupational fallouts is that presently firms under Russian control as a rule criminally avoid to pay profit taxes in Estonia (Ennuste 2009, 2012).

Most importantly – The Economist 30.VII 16:

 

” … Russia does not want to reconquer the Baltics. But it might want to use the hybrid-warfare tactics it employed in Ukraine (such as disinformation, political subversion, cyber-attacks and the use of special forces without insignia) to demonstrate that the West is reluctant to defend its most vulnerable allies. If, for example, Russia sent forces into a Russian-speaking area of Estonia, NATO would be faced with an existential dilemma: to fight back and risk nuclear war, or to capitulate and destroy its own credibility. … ”

It is really important to know from the Estonian National Sustainabilty aspect: how  match Russia does want to do this or that on the bases of former occupational damages and how much these actions are induced by policy failures of Estonian Governments in the last quarter of century.

 

 

  1. Estonian Fragmental Empirical Illustrations

 

 A) Kukk (2005) has published excellent methodological and statistical formal fragmental paper on the basis of official statistical standard flows GDP and official currency rates etc. data – especially on assessments of long-term monetary GDP losses in comparison with Finland (also on the base of ETLA (1993) rapport and Eurostat GDP statistics 1964-2003):

 

“…  there are no suitable statistical data about Estonia, we necessarily

have to resort to some simplifications to make such calculations possible.

Thus, the author of this report has, in an earlier treatment56 on the years

of 196987, conditionally considered the development level of Estonia

and Finland in 1968 as equal (there were logical grounds to believe that

the per capita GNP of these two countries was USD 1720 in current prices

that year) and further supposed (again a simplification) that the increase

in this respect  in 196987 in Estonia was linear. The per capita GNP in

1987 was estimated to be 3700 roubles in Estonia and various exchange

rate scenarios were used to if  out this value in US dollars. In the most

plausible version, Estonia’s per capita GNP was taken to be equal to

that of Hungary (USD 2240). In that case, the calculated exchange rate

in 1987 would have been 1 US dollar = 1.65 roubles; the exchange rates

of the years between 1969 and 1987 were interpolated with the use of

the official exchange rate in 1961: 1 US dollar = 0.90 roubles. As the per

capita GNP of Finland in 1987 was already USD 14,370, the calculated

(with the above-described simplifications) loss in the GNP of Estonia

would have been 153 (± ?) billion US dollars in 196987 or 73 % of the

GNP value, which Estonia could have reached „in Finnish conditions”.

The significance of this figure is also illustrated by the fact that only in

1996 did the GNP of Estonia exceed USD 4b. To this damage, we have

to add the damage done to the environment by polluting and wastefully

exploiting natural resources, which has still not been compensated for,

as well as the damage proceeding from the distortion of moral values

of people.

This is but one example about a relatively short period, and a quite

hypothetical one, as such; we can estimate its statistical reliability, but

these values, like the model itself, have only „theoretical” meaning. The

question is in the basic presumptions of our model. The selection of those

presumptions is extremely conditional and subjective. If one considers

that Eurostat estimated the per capita GDP in 2004 to be 50.5 % of the

average value of the European Union (on the basis of the purchasing power

parity; in the current prices which show the international purchasing

power of an economy, the figure is about half of that), the total damage

to Estonia resulting from the income not earned is even greater. The

per capita GDP of Estonia is lower than that of any old Member State of

the EU (the corresponding figures for Portugal and Greece in that year

were 73,4% and 81,2 %). For comparison, Finland exceeded the average

level of the European Union by 15 % respectively.

If the history had taken another turn and Estonia could have developed

in the same political and economic conditions as Finland, and supposing

that the development level of Estonia were equal to that of Finland

(measured as the per capita GDP), then Estonia’s GDP should have been

EUR 37.2b in 2003. The actual GDP of Estonia was only EUR 8.0 bn or one                                                                      fifth of that hypothetical value that year. In 2003 the per capita GDP of

Estonia and Finland were 5941 and 27 496 euro respectively.

Ülo Ennuste (Reference 57) has employed a similar approach to assess the long-term

damage done to Estonia’s economy, that is, he compared Estonia’s development

with the market-based development of neighbouring countries.

The development of Estonian economy after Estonia regained independence

is illustrated in Table 13 with the aid of comparative assessments

of the per capita GDP of the former USSR republics, made by The

Economist Intelligence Unit Ltd in 1998 on the basis of the purchasing power

parity (see also Table 12). Pursuant to these data, Estonia was the

only former Soviet Republic that managed to exceed the level of 1989

after the transformation crisis (the lowest point of the crisis in Estonia

was in 1993). … “

 

NB!: 1) only 2016 was in Estonia published first official statistical study to asses households domestic assets on the 2013 statistical data basis by Meriküll-Rõõm (2016) and considering this Report Kukk has missed at least one loss about euro 50-150 milliard – it was before the 2007 as “Beyond GDP” Project by  EU Commission was started and this approach was acknowledged the mainstream mythology – making important monetary assessments imaginary national well-fare and sustainability resources – such as: national social and human capital stability and downward risks probabilities; national knowledge structure quality; outflows from the country labour and finances etc 3) it was before 2006 Russia actually started the imperial cold Hybrid-War to erode Estonia’s national sustainability with ideological attacks declaring that has never been any Russian occupation or Justification 4) it has been long before restart of the Russia’s hot Hybrid-War 2007 with cyber attacks (Kissinger 2014) and criminal huliganity ….mainly by ethnic Russian mobs and before the start of the Trade- and Sanction-War (Ennuste 2014).

 

BOX 2.

 White Book (2005:22): “… Kalev Kukk has made calculations to estimate the long-time economic harm … in the interval from 1969 to 3003 – the unrecieved GDP was approximately 153 billion dollars … “

 

NB!: 1) Kukk (2005) has fractionally calculated in 2004 formally absolutely correctly (based on official Eurostat statistics and Estonian and Finland official statistics of standard GDP – fractionally in the macroeconomic sense: omitting national assets and other resource stocks (incl. human resources) losses) and has fractionally chousen short period 1969-2003 – prudently in the realm of credible GDP official data and to avoid Estonian Governments economic policy errors to take into account 2) In  informal and contemporary 2016 Beyond GDP and national recourse stocks losses of the occupation approach this 153 bn has to be multiplied in preliminary assessments at  least n …m times. 3) Indeed: (to be continued – in the first approximation hypothetically 4-6 times: so very approximately probably in the interval from 0,6 as high as 0,9 tn eur) ….. 4)  Alas in Estonian official statistics much monetary data on economic/infrastructural and institutional (inc National Knowledge and cultural structure) assets/stokes is missing – and in this study expensive  field work to restore this retrospective data is absolutely impossible. We have at presented only claimed that from the long-term point of view much of these damages have been reversible short-term and presently not significant – but not all of these: to demolish libraries and destroy statues and robbery of national mussels by occupants are  irreversible losses and should be compensated by Russia.

 

 

 

B) Meriküll-Rõõm (2016) Have given us by micro field work monetary data creation and macro aggregation about household assets (as regular official statistics is missing) the first occasional formal possibility to estimate 95% trustfully (seemingly practically in +/-15% error intervals) the national occupational losses of households net material wealth compared with some data transformations from Finland Statistics:

 

Meriküll, Jaanika; Tairi Rõõm (2016) The assets, liabilities and wealth of Estonian households:

Results of the Household Finance and Consumption Survey. Occasional Paper Series 1/2016, Bank of Estonia.

 

“Non-technical summary

Micro data on households’ assets and liabilities have always been recognised

as a valuable tool for analysing financial stability. The importance of

this type of dataset has increased further in the aftermath of the Great Recession

as the concentration of debt to high-risk borrowers in the US was missed

by policy-makers and became one of the triggers for the crisis. The need to

understand the distribution of the assets and liabilities of euro area households

motivated the European Central Bank to launch the Household Finance

and Consumption Survey (HFCS), which is conducted by all the euro area

national central banks.

The HFCS is a longitudinal survey that is carried out at three-year intervals.

The first wave of the survey took place during the years 2008 – 2010.

Since Estonia only became the member of the euro area in 2011 we started

participating in the survey from the second wave. The fieldwork for the Estonian

survey was carried out in the first half of 2013, while most of the other

euro area countries conducted their fieldwork for the second wave later and

their results are not yet available for comparison. Therefore the results of the

Estonian HFCS are compared with the findings from the first wave for other

euro area countries in the current overview. The data were collected from

2220 Estonian households, covering 4675 individuals.

This paper shows the main descriptive statistics for Estonian households’

real and financial assets, collateralised and non-collateralised debt, financial

fragility, net wealth, income, consumption and credit constraints. The paper

follows closely the structure of the article describing the euro area survey

results from the first wave of the HFCS (Eurosystem Household Finance and

Consumption Network (2013b)); however, topical sections for Estonia such

as high levels of home-ownership, recent rapid debt accumulation, and

wealth inequality receive more discussion in the Estonian report. The paper

provides many descriptive that can be used as a starting point for research

papers or policy analyses. In what follows we summarise only some basic

findings that may have higher policy value or that were not known from earlier

micro studies.

First, real assets from the dominant part of total assets in Estonia and financial

assets play a much smaller role. This finding is affected by the high

home ownership rate of Estonian households, which in turn can be related to

the privatisation of household dwellings in the 1990s or to households’ strong

preference for owning rather than renting their home. In Estonia, 77% of

households own their main residence, while only 60% of euro area households

own their home on average. The household main residence is the most

important component of assets, meaning that the value of the home is the

most influential factor for household wealth. Self-employment business

wealth also plays an important role among real assets in Estonia; 20% of total

real wealth consists of self-employment businesses, while this share is about

two times lower in the euro area. Financial assets are poorly diversified and

mainly consist of deposits. The findings of the relatively high home ownership

rate and poor diversification of financial assets are not unique to Estonia,

as they are also characteristic of other countries with lower than average income

levels in the euro area, namely Slovakia, Slovenia, Portugal, Malta and

Greece.

Second, credit market participation in Estonia is relatively similar to participation

in the euro area, while the debt is more concentrated in young and

high-income households. Participation in debt is somewhat lower in Estonia

than in the euro area, as the participation rate is 37% in Estonia and 44% in

the euro area. The concentration of debt, especially mortgage debt, to young

households is again related to the privatisation process that took place in the

1990s in Estonia and enabled older cohorts to become home owners without

mortgages, and it also arises because the market for housing loans was essentially

absent before the 2000s.

Third, the financial fragility of households is relatively low in Estonia, and

debt to asset and debt to income ratios are below the euro area averages.

Low-income indebted households are vulnerable, but debt participation is

very low among these households. There are also some indicators that show

households’ financial vulnerability to be higher in Estonia than in the euro

area. The median loan to value ratio of the household main residence in Estonia

exceeds the euro area median value, which is probably due to the more

recent mortgage loans and to the majority of loans being issued during the

years of the housing price boom. In addition, the financial buffers of Estonian

households are low; the median household holds liquid assets worth a bit

more than one month’s gross income.

Fourth, the Estonian households’ median net wealth is one of the lowest

among the euro area countries while the inequality of net wealth is above the

euro area average. The median net wealth of Estonian households is 43.6

thousand euro with 95% confidence bounds between 39.3 and 47.9 thousand

euro. The average net wealth is much higher at 97.1 thousand euro with

95% confidence bounds between 83.8 and 110.4 thousand euro. Unlike in

other countries with high home ownership rates, wealth inequality is high in

Estonia, and the Gini coefficient of net wealth is 0.69. There are vast regional

differences in net wealth that are caused mainly by strong disparities in real

estate prices across Estonian regions. Net wealth is much higher in the two

largest towns, Tallinn and Tartu, and in the summer resort islands; the rest of

the regions sometimes have two to three times lower median levels of net

wealth despite.”

 

NB: Fractional 1) families’ human capital, social wealth and human recreation assets are here not accounted 2) households economic/material wealth destroyed and confiscated by the fatty year occupation has not been significantly never compensated.

 

BOX 3.

 “Approximately the median net wealth of Estonian households was in 2013 about … 44 th eur  and in Finland 88 th eur  – the difference 44 th eur – and the Estonian comparable loss with 95% confidence bounds may approximately be (taking account the different inequalities of the net wealth in countries) approximately hypothetically may the Estonia’s estimated occupational loss of households be in the interval: 16÷24 bn eur and pc 12÷19 th eur (with apparent macroeconomic governmental policy losses in this century – caused mainly by bad quality of the occupation era dwelling buildings). Considering the last loss as the long-term national income factor loss –  we may estimate preliminary the compound income loss at least pc:

50x(12÷19)10¤3/10×2= (30÷48) th eur – and nationwide: 1,3×10¤6x(30÷48)10¤3=(30÷ 48) bn eur.

 

 NB!: Approximately the median real net wealth of Estonian households was in 2013 about 44 th eur and in Finland 88 th eur  – the difference 44 th eur – and the Estonian comparable occupational loss with 95% confidence bounds may approximately be (taking account the different inequalities of the net wealth in countries) approximately hypothetically may be estimated Nationally in the interval: 16÷24 bn eur – and pc 10÷20 th eur. NB: human- and social- capital included preliminarily hypothetically in kit Nationally 50÷70 bn eur and pc 30÷60 th eur: in sum Nationally seemingly in the interval 66÷94 bn eur in 2013 current market prices.

 

 

D)Estonian illustrations of some long-term environmental damages caused by 1040-91 terrorist occupations may be firstly given by excerpts from Raukas (2005 p139):

 

3 . 6 . THREE IMPORTANT CONCLUSIONS

On the basis of the above, and especially on the example of Sillamäe,

we can draw three important conclusions: 1) the environmental damage

caused by the Soviet Union and Russia is huge; 2) neutralisation of this

damage is a long-term process (sic! in the case of contamination with nuclear waste very long term – üe); 3) the damage can be neutralised only with the assistance of international cooperation. The present review includes only a limited selection of the cases of environmental damage

done by the occupation army. The real situation is even worse. It is

possible that we are unaware of the real situation, because the Russian

Army, which left Estonia in 1994, did not leave any documents about their

pollution; on the contrary, it tried to conceal its deeds. We know virtually

nothing of pollutants dumped into the sea, and the bowels of the earth

may still conceal many unpleasant things in Estonia.“

 

NB:  a)Ten years ago there has been still much uncertainty about long-term environmental damages caused in Estonia by 1940-91 terrorist occupation – especially caused by Soviet troops and with armament production nuclear waste not properly storage in conforming of proper standards etc – consequently this chapter by Raukas needs presently certainly fundamental updating – to be the basis for real contemporary rationale political decisions b) approximate monetary estimates of these long-term socio-economic national damages/risks  may be formally (on the basis of official regular statistical data etc) and standard (mainstream macro-economically) comparably without significant approximations calculated with necessarily accompanying liquidation costs etc – based mainly on direct physical measurements and current market prices – transferring e.g. missing statistics  from analogues cases from the correlative countries.

 

 E) Mägi et al. (2016):

Abstract

BACKGROUND

Most studies of the ethnic composition of destination neighbourhoods after residential moves do not take into account the types of moves people have made. However, from an individual perspective, different types of moves may result in neighbourhood environments which differ in terms of their ethnic composition from those in which the individuals previously lived.

OBJECTIVE We investigate how the ethnic residential context changes for individuals as a result of different types of mobility (immobility, intra-urban mobility, suburbanisation, and long-distance migration) for residents of the segregated post-Soviet city of Tallinn. We compare the extent to which Estonian and Russian speakers integrate in residential terms.

METHODS

Using unique longitudinal Census data (2000‒2011) we tracked changes in the individual ethnic residential context of both groups.

RESULTS We found that the moving destinations of Estonian and Russian speakers diverge. When Estonians move, their new neighbourhood generally possesses a lower percentage of Russian speakers compared with when Russian speakers move, as well as compared with their previous neighbourhoods.  Russian speakers in their residential surroundings decreases only for those who move to the rural suburbs or who move over longer distances to rural villages.

CONCLUSIONS & CONTRIBUTION

By applying a novel approach of tracking the changes in the ethnic residential context of individuals for all mobility types, we were able to demonstrate that the two largest ethno linguistic groups in Estonia tend to behave as ‘parallel populations’ and that residential integration remains slow.

  1. Introduction

Today, Russian speakers form almost one third of the 1.3 million people living in Estonia, giving Estonia one of the highest proportions of ethnic minorities in Europe. The Russian speaking minority population in Estonia has its roots in the intensive immigration that took place from other Soviet republics in the period when the country was part of the Soviet Union (1940–1991). Culturally this minority is rather homogeneous, consisting mainly of Russians, but with large groups of Ukrainians and Byelorussians. Even those who have been living in the country for two or three generations generally use Russian in their daily communication. The Estonian case is very interesting for studying the processes of ethnic segregation because of the unique historical backdrop provided by its Soviet past. In essence, the residential patterns of Russian speakers differed from those of the majority population during the Soviet period because central planners (sic! first of all Russian military commands under the  orders of Communist Party Central Comity (White Book 2005) – üe) distributed migrants to major administrative, military, and industrial centres, such as the capital city of Tallinn, where they now form almost half of the city’s population, and to urban industrial areas in the North East of Estonia, where they are now a majority group. In all of these cities, Russian speakers were usually accommodated in large housing estates built during the Soviet era. The societal conditions of the Soviet years thus shaped the current ethnic landscape in Estonia in a unique way, because central planners exogenously created the residential pattern of the minority population.

There are both similarities and fundamental differences between Estonian cities and other ethnically segregated cities in Western Europe and North America. In the latter case, ethnic residential differentiation typically reflects the differences between the consumption capacity and preferences of the different ethnic groups as well as the discrimination practices in these societies (e.g., Massey and Denton 1985; Johnston, Forrest, and Poulsen 2002). Ethnic segregation in Soviet cities was not originally driven by such factors and it was, to a large degree, a function of housing allocation by central planning authorities. Thanks to industrialisation and militarisation, “

 

NB: a) for Estonian-Russian contemporary segregation studies we need mainly informally created data and non-standard original research methods b) putting monetary values on segregation processes in Tallinn – especially in case of e.g. emigration of Estonians into Finland and causing tremendous losses to the national domestic socio-economic potencies (emigration caused partly by fears based on  present Kremlin aggression Hybrid-War  for the restoration of occupation – and considering Nation’s memory on national sustainabilty risks and increasing interethnic tensions) – comparable abatement costs cannot be based on formal prices or standard methods.

 

BTW: paper by Mägi et al. (2016) needs badly independent competent historical terrorist occupational/colonalisation etc  experts in many fields of macroeconomics, ethnicity, psychology etc corrections – first of all e.g. on the basis of collections:

 

White Book (2005) chapters, Portal CommunistCrims.org databases, Estonia 1940-1945 (2006), Lindmäe (2007 and 2015), Kirch et al. (2008 and 2011) etc.

 

The present content is in great amount politically biased and erroneous – take for example excerpt from p 1162:

 

“Today, Russian speakers form almost one third of the 1.3 million people living in Estonia, giving Estonia one of the highest proportions of ethnic minorities in Europe. The Russian speaking minority population in Estonia has its roots in the intensive immigration that took place from other Soviet republics in the period when the country was part of the Soviet Union (1940–1991).“

a)“the country was part of the Soviet Union (1940-1991)“ – was under the predatory communist Russian occupation: WB pp 9-25.

b)“The Russian speaking minority population in Estonia has its roots in the intensive immigration that took place from other Soviet republics … “ – has its roots mainly and first of all in the intensive mass destruction of Estonian population by communist Kremlin genocides, war crimes and crimes against humanity: WB pp 25-47 –  ca 1/3 of initial 1040 population was lost (mainly elites) and these communist crimes are the main roots/factors/regressors of segregation – segregation that involves also anomalous emigration of nationals especially in the conditions of the previous Hybrid-War  with nuclear Russia.

c)“intensive immigration that took place“ – was mainly not free willing but deportation of Russian speakers by Kremlin from GULAG camps etc for the total Russification of Estonian genuine population and destruction of Estonian national sustainabilty: BTW in Estonia immigrants are economically less effective then nationals (Eurostat 6.VI 2016).

And so the „, ethnic residential differentiation typically reflects the differences between the consumption capacity and preferences of the different ethnic groups as well as the discrimination practices in these societies (e.g., Massey and Denton 1985; Johnston, Forrest, and Poulsen 2002) … ethnic residential differentiation typically reflects the differences between the consumption capacity and preferences of the different ethnic groups as well as the discrimination practices in these societies (e.g., Massey and Denton 1985; Johnston, Forrest, and Poulsen 2002).“ – these kind of residential differentiation are in Estonia presently spontaneously widening (Eurostat: economic inequality is presently in Estonia growing) – with accommodating discrimination practices.

 

F)Remark on relatively macro economically short-term losses and damages in the long-term occupation

 

White Book (2005 p22-23):

 

“Three occupation regimes in more than 50 years brought immense

economic loss to the people of Estonia, it is difficult to give a scientific

estimation about such a long period. Scientists estimate the economic

loss of the last Soviet occupation period to exceed 100 billion US dollars.

According to the information of the Ministry of Defence, the damages

caused to the natural environment of Estonia by the Army of the Soviet

Union and of its legal successor, the Russian Federation, are about

4 billion US dollars.25

In the chapter of the White Book describing economic losses, the

author Kalev Kukk has made calculations to estimate the long-time

economical harm of the occupation periods. The losses reach hundreds

of billions of dollars. For instance in the interval from 1969 to 1987 the

unrecieved GDP was 153 billion dollars in the accounting value. 26

A thorough assessment of the economic damage of the first Soviet

occupation was carried out during the German occupation. Estonia was

greatly damaged by the war in the summer of 1941 as a result of J. Stalin’s

tactics of burnt land, applied by the destroyer battalions, NKVD units

and the Red Army. Heavy damage was caused by evacuation of assets

and treasures to the Soviet Union and taking over Estonian property

in foreign states. Demolition of a developed economic system, in order to

be replaced with the uneconomic soviet system, caused serious economic

damage already during the first year. These losses are recorded in the

collection „Eesti rahva kannatuste aasta” (The Year of Suffering for the

Estonian Nation).

A committee formed by the State Special Committee assessed the

damages caused by the German occupation in 1941—1944. The results

were published in 1947 in a book „Saksa fashistlik okupatsioon Eustis

aastail 1941—1944” (German Fascist Occupation in Estonia in 1941

1944). Study of archive documents has proved that the information of the

Special Committee is to a great extent a falsification and that the Soviet

Government has accused the Nazi regime of many of its own crimes and

destructive acts. Thus the Red Army Air Force bombed Narva, Tallinn

and Tartu, which led to destruction of 3326, 1885 and 2432 houses,

respectively. However, the committee reported these to be crimes of the

German occupants. All the above mentioned destruction was presented

to the International Court of Nuremberg as damage done by Nazi Germany.

Additional research work is necessary to assess the war damage.

On 31 August 1994 the last armed forces of Russia, the legal successor

of the Soviet Union, left the territory of Estonia. For the people of

Estonia, this concluded the gloomy period of three successive occupation

regimes that had lasted for 54 years and 75 days. The World War II has

come to an end.“

 

NB: a) pp17-18:

“In February 1944, when the Soviet troops reached

Narva and a new Soviet occupation became a reality, Jüri Uluots’ radio

interview was the first statement by a national-minded Estonian politician

in support of the mobilisation proclaimed by the Germany-appointed

Estonian Self Government. He called upon the men of Estonia to enlist in

the army and defend their fatherland against the danger coming from the

East. The call was received with enthusiasm and the mobilisation brought

together more men than previously expected. Three Estonian battalions

— the 1st Battalion of the 45th Regiment, the Tallinn Regiment formed of

the mobilised, and the Nord Army Group — were hastily brought to Narva

where they stopped the invaded enemy in the battles held in February.

On 6 March 1944, the last enemy foothold on the front line between

Narva and Narva-Jõesuu was taken. The front remained under Narva for

five months and the plan of the Soviet Army General Staff to conquer the

whole territory of Estonia in February 1944 failed.

This was followed by a revenge action of terror attacks on Estonian

towns. On the same night of 6 March, the Soviet Air Force carried out

such massive bombing attack on the town of Narva, that the town was

razed to the ground. The civilian population had been almost entirely

evacuated from the town by that moment. The artillery of the Estonian

Corps also took part in the destruction. Factory buildings were left

untouched during the bombing. On 8 March, Russian aircraft attacked the

towns of Jõhvi and Tapa. On 9/10 March 1944, Tallinn was bombed in

an attack, which lasted from the evening to the next morning, and in

which more than 750 people were killed, 5073 buildings were destroyed,

1540 of them completely. More than 20,000 people were left without

shelter. The Estonia Theatre, one of the symbols of the Estonian nation,

was destroyed; St. Nicholas Church and the valuable medieval documents

of the Tallinn City Archives were burned.15 This attack was also

clearly aimed against the civilian population because the Port of Tallinn

and industrial buildings were not attacked. On the night of 26 March,

the town of Tartu was bombed with disastrous results and 67 of its

inhabitants were killed. Altogether, at least 130 people are registered in

Tartu Family Archive as victims of bombings who perished in the terrorist

attacks of red pilots during the war.16 According to the Death Register,

2409 people perished in Estonia as a result of bombings during the period

1941—1945.“

 

Indeed: a) tremendous damages to nationally unique civilian buildings and infrastructure assets – but as these attacks started a new long-term period of occupation and annexation – much of this destroyed living shelter and building assets have been in relatively short-term (twenty years or so) somehow substituted by new soviet style blunt large housing estates built during the Soviet era (partly built by Russian speaking soviet prisoners) not as to compensate the destroyed assets but to accommodate partly with force imported hundreds of thousands Russian speakers from other Republics b) p82: “Estonia was

greatly damaged by the war in the summer of 1941 as a result of J. Stalin’s

tactics of burnt land, applied by the destroyer battalions, NKVD units

and the Red Army. Heavy damage was caused by evacuation of assets

and treasures to the Soviet Union and taking over Estonian property

in foreign states. Demolition of a developed economic system, in order to

be replaced with the uneconomic soviet system, caused serious economic

damage already during the first year. These losses are recorded in the

collection „Eesti rahva kannatuste aasta” (The Year of Suffering for the

Estonian Nation).“ – the destroyer battalions caused first of all tremendous human losses (long-term) among civil population and to fight them Estonian patriots started victorious Partisan war in summer 1941 (Lindmäe (2007) „Second Independents War“).

 

In this narrative we have compiled various standard  macroeconomic and sociocybernetic methodological approaches that are making informally possible to test some of the claims made by „Beyond GDP“ and “Beyond Human- and Social-Capital” theories and „Beyond Institutional“ theories concerning the wide indicator clusters approximate comparative informal evaluations of long-term occupational losses and damages quantifiably monetarily.

 

So-called informal „shadow price“ powerful techniques are providing comparative heightening systems on monetary scale facilitating statistical analysis of different satellite indicators like GDP and Human Capital, Social Capital, Economic Inequality, Quality of Life etc. Econometric methods, in particular those using cointegration- and coevolution-based approaches, techniques for studying the quantitative comparisons  e.g. of regime rules with financial variables over extended time periods, and for distinguishing between short-term and long-term effects of legal change – comparisons of anxieties from the institutional changes with fiscal changes etc.

 

These quantitative techniques nevertheless have their limits. As a case studies of  Estonian occupational long-term monetary informal losses and damages demonstrated, field work and face-to-face interviewing are needed to clarify the role of informal institutions, beyond the reach of formal statistics and formal laws

and regulations, in shaping actors’ behaviour. The patterns revealed may exist elsewhere; but a purely quantitative calibration approach might never uncover them. Approaches of the kind should therefore be understood as the methodological state of the art and extremely approximate for institutional research – not fit for comparative ordering of countries but only for grouping. That means the adequate objective outcomes may be achieved only by large international expert groups and rigorous hierarchical coordination of these from one research centre: seemingly preferably from Poland (see e.g.:

https://en.wikipedia.org/wiki/Communist_crimes_(Polish_legal_concept) ).

 

A further implication of our analysis is that when empirical methods are

brought to bear on questions of institutional evolution, some of the claims made

in the literature on law and finance do not stand up. In particular, claims that

corporate governance works best when managers act as shareholders’ agents, that

civil law institutions are inherently less adapted to the needs of market economies

than common law ones and that legal systems worldwide are converging on a

supposedly more efficient common law model of legal and economic governance,

are not borne out by recent analyses. As improved empirical methods are brought

to bear on these issues, we may expect to become better informed on the role

institutions play in supporting economic development and growth, and on the

scope for legal reforms to improve economic outcomes (Diamond and Saez 2011)

 

Last but not least: a policy recommendation – in a Hybrid-War situation it should be a mast to implement instantly large scale soft censorship with moral and material incentives to avoid putinoids trolls to fuzzy and decay our National Knowledge Structure (Ennuste 2008).

 

BOX 4. (preliminary)

From Macro Socio-Economic angle informally so fare seemingly two most significant long-term losses (Compound GGDP Flows and Human Resources) in current Lambda prices probably are in the interval:

 

 [(0,6;0,9)+(0,9;1,4)+….]10¤12>(1,5;2,3) tn eur

 

 P.S.: Looking at the Beyond methods and extent Estonian empirical studies a) it seems the previously estimated formal occupational monetary losses may probably be many times or magnitude less of the informal hypothetical  ones b) for the border countries of RF the most important damages in the Hybrid-War conditions are hypothetically in the last century brutally Russificated ethnic structures and national knowledge structures – the comparative economic values of these are as a rule not been estimated until now.

 

6. Conclusions (preliminary)

 

In this narrative we have compiled various standard  macroeconomic and sociocybernetic modern mainstream  methodological approaches that are making informally possible to test some of the claims made by „Beyond GDP“ and “Beyond Human- and Social-Capital” theories and „Beyond Institutional“ theories concerning the wide indicator clusters approximate comparative informal evaluations of long-term occupational losses and damages quantifiably monetarily.

 

So-called informal „shadow price“ powerful techniques are providing comparative heightening systems on monetary scale facilitating statistical analysis of different satellite indicators like GDP and Human Capital, Social Capital, Human Reproductive Capital, Economic Inequality, Quality of Life etc. Econometric methods, in particular those using cointegration- and coevolution-based approaches, techniques for studying the quantitative comparisons  e.g. of regime rules with financial variables over extended time periods, and for distinguishing between short-term and long-term effects of legal change – comparisons of anxieties from the institutional changes with fiscal changes etc. The main obstacle here is that formal official statistics is lagging behind the developments of the Beyond GDP and Institutional Economics etc innovations – and forcing macro scholars to use informal more approximate databases: From this aspect the the  standard and formal approaches produce many times less estimates of macro-monetary national losses and damages of occupations  in comparison even of informal extremely approximate assessments. Understandingly – because informal assessments take take into consideration irreversible human losses as economic resources (human capital, social capital and biological reproductive capital etc), Beyond GDP or Genuine GDP losses – and Institutional Capital damages etc. Alas to estimate these less approximately assumes  coordinated team works of many countries.

These macro quantitative techniques nevertheless have their limits. As a case studies of  Estonian occupational long-term monetary informal losses and damages demonstrated, field work and face-to-face interviewing are needed to clarify the role of informal institutions, beyond the reach of formal statistics and formal laws and regulations, in shaping actors’ behaviour. The patterns revealed may exist elsewhere; but a purely quantitative calibration approach might never uncover them. Approaches of the kind should therefore be understood as the methodological state of the art and extremely approximate for institutional research – not fit for comparative ordering of countries but only for grouping. That means the adequate objective outcomes may be achieved only by large international expert groups and rigorous hierarchical coordination of these from one research centre: seemingly preferably from Poland (see e.g.:

https://en.wikipedia.org/wiki/Communist_crimes_(Polish_legal_concept) ).

A further implication of our analysis is that when empirical methods are brought to bear on questions of institutional evolution, some of the claims made in the literature on law and finance do not stand up. In particular, claims that corporate governance works best when managers act as shareholders’ agents, that civil law institutions are inherently less adapted to the needs of market economies than common law ones and that legal systems worldwide are converging on a supposedly more efficient common law model of legal and economic governance, are not borne out by recent analyses. As improved empirical methods are brought to bear on these issues, we may expect to become better informed on the role institutions play in supporting economic development and growth, and on the scope for legal reforms to improve economic outcomes (Diamond and Saez 2011)

Last but not least: a policy recommendation – in a Hybrid-War situation it should be a mast to implement instantly large scale soft/positive  censorship with moral and material incentives to avoid putinoid trolls to fuzzy and decay our National Knowledge Structure (Ennuste 2008): e.g. to reverse bluffs that there has been no occupations at all – especially no occupational losses and damages.

 

BOX 5. (preliminary)

 From Macro Socio-Economic angle informally so fare seemingly two most significant long-term losses (Compound GGDP Flows and Human Resources) in current Lambda prices probably are in the interval:

 

 [(0,6;0,9)+(0,9;1,4)+….]10¤12>(1,5;2,3) tn eur

 

 

P.S.: Looking at the Beyond GDP methods and extent Estonian empirical studies a) it seems the previously estimated formal occupational monetary losses may probably be many times or magnitude less of the informal hypothetical  ones b) for the abhorring border countries of RF the most important damages in the Hybrid-War conditions are hypothetically in the last century brutally Russificated ethnic structures and national knowledge structures – the comparative economic values of these are as a rule not been estimated until now.

 

 

 

Acknowledgement: Compilers (Ülo Ennuste DSc and … ) wishe (in spe) to acknowledge Anne Appelbaum, Andras Inotai (HU), Ardo Hansson, Urmas Heinaste, Geoffry Hodgson (UK), Alar Karis, Kerstin Kari laid, Aksel Kirch, Erik-Niiles Kross, Paul Krugman, Kalev Kukk, David Laitin (mailto.dlaitin@stanford.edu), Edward Lucas (UK), Jaanika Meriküll, Jaanika Merilo, Joseph Mullat, Thomas Piketty,  Aigi Rahi-Tamm, Attiat F. Ott (USA), Kristina Potapova, Ilmar Raag, Anto Raukas, Hannes Rumm, Urmas Reinsalu, Helir-Valdor Seeder, Rein Taagepera, Indrek Tarand, Tarmo Tuisk, Jaak Valge, Urmas Varblane, Andres Võrk, Jelena Zubkova, Jouko Ylä-Liedenpohja (FI),  … (PL), … (LT), … (LV), … (DE) etc, and also anonymus referees for pro been  helpful comments and co-authorships, suggestions/corrections etc.

The research for this COMPILATION was supported strongly morally and with modest funding (0,9 th eur) by the Publisher VALGE RAAMAT – and was generously supported by the …. .

 

 

NOTES

 

N1. – Beyond the GDP and Resources and Estimation of Errors and Risks

 

A)Eurostat (2015) “Quality of Life”

 

Abstract

Quality of life in Europe — facts and views presents different aspects of people’s well-being combining

for the first time objective indicators with subjective evaluation of individuals’ situations and covering

various aspects of quality of life. The indicators are analysed together with different elements affecting

quality of life such as educational level, activity, health status or family and financial situation. The

emphasis in this publication has been placed on the data collected through the 2013 ad-hoc module on

subjective well-being, which was added to the statistics on income and living conditions (EU-SILC). Data

are presented for the European Union and its Member States as well as for the EFTA countries.

Quality of life in Europe — facts and views provides an overview of the wealth of information that is

available on Eurostat’s website and within its online databases.

Editors

Jean-Louis Mercy, Agnieszka Litwinska, Didier Dupré, Stephen Clarke, Georgiana Aurelia Ivan and

Colin Stewart

Eurostat, Unit F4 — Quality of life

Philippe Bautier, Fabienne Montaigne, Louise Corselli-Nordblad, Catherine Coyette, Isabelle Fiasse,

Annika Johansson, Lucie Peterkova and Helene Strandell

Eurostat, Unit B4 — Dissemination

Contact details

Eurostat

Batiment Joseph Bech

5, rue Alphonse Weicker

L-2721 Luxembourg

LUXEMBOURG

E-mail: estat-user-support@ec.europa.eu

Production

This publication was produced by:

Catherine Kesy, Franz Eiffe, Dovile Minkeviciute, Dimitris Mazonakis, Nikkie Yiokari, Giota Anastasiou,

Asanoula Chatzimakri, Kathrin Gärtner, Ivo Ponocny — ICON-INSTITUT Public Sector Gmbh in

consortium with Statistik Austria and Quantos S.A.

William Helminger, Alain Mahieu, Bruno Scuvée — CRI (Luxembourg) S.A.

For more information please consult

Eurostat website: http://ec.europa.eu/eurostat

Statistics Explained: http://ec.eurostat.eu/eurostat/statistics-explained

the members of the steering group for this publication — Mariana Kotzeva, Gallo Gueye, Emanuele

Baldacci, Anne Clemenceau, Timothy Allen, Baiba Grandovska — and to those involved closely in the

editorial work for each chapter — Lucian Agafitei, Marta Beck, Boyan Genev, Marina Grillo, Jakub Hrkal.

 

B)Kubiszewski et al. (2013)  “Measuring and achieving global genuine progress”

 

Abstract

While global Gross Domestic Product (GDP) has increased more than three-fold since 1950, economic welfare,

as estimated by the Genuine Progress Indicator (GPI), has actually decreased since 1978. We synthesized

estimates of GPI over the 19502003 time period for 17 countries for which GPI has been estimated. These 17

countries contain 53% of the global population and 59% of the global GDP. We compared GPI with Gross

Domestic Product (GDP), Human Development Index (HDI), Ecological Footprint, Biocapacity, Gini coefficient,

and Life Satisfaction scores. Results show a significant variation among these countries, but some major trends.

We also estimated a global GPI/capita over the 19502003 period. Global GPI/capita peaked in 1978, about the

same time that global Ecological Footprint exceeded global Biocapacity. Life Satisfaction in almost all countries

has also not improved significantly since 1975. Globally, GPI/capita does not increase beyond a GDP/capita of

around $7000/capita. If we distributed income more equitably around the planet, the current world GDP

($67 trillion/yr) could support 9.6 billion people at $7000/capita. While GPI is not the perfect economic welfare

indicator, it is a far better approximation than GDP. Development policies need to shift to better account for real

welfare and not merely GDP growth. © 2013 Elsevier B.V. All rights reserved.

 

  1. OECD May (2016)

How’s Life in Estonia? (Preliminarily PDE format Tables here in Word)

Additional information, including the data used in this country note, can be found at: http://www.oecd.org/statistics/Better-Life-Initiative-2016-country-notes-data.xlsx 2

 

 

The OECD Better Life Initiative, launched in 2011, focuses on the aspects of life that matter to people and that shape the quality of their lives. The Initiative comprises a set of regularly updated well-being indicators and an in-depth analysis of specific topics, published in the How’s Life? report. It also includes an interactive web application, the Better Life Index, and a number of methodological and research projects to improve the information base towards a better understanding of well-being trends and their drivers.

The OECD Better Life Initiative:

 Helps to inform policy making to improve quality of life.

 Connects policies to people’s lives.

 Generates support for needed policy measures.

 Improves civic engagement by encouraging the public to create their own Better Life Index and share their preferences about what matters most for well-being.

 Empowers the public by improving their understanding of policy-making.

 

This brochure presents selected findings for Estonia from the OECD Better Life Index 2016 (page 3), the How’s Life? report (pages 4-5) and shows what Estonian users of the Better Life Index are telling us about their well-being priorities (page 6). A supporting Excel file with the data underlying the graphs shown in this note and further information is available here: http://www.oecd.org/statistics/Better-Life-Initiative-2016-country-notes-data.xlsx.

HOW’S LIFE?

How’s Life?, published every two years, provides a comprehensive picture of well-being in OECD countries and other major economies by bringing together an internationally comparable set of well-being indicators that the OECD considers as essential to a good life. It looks at people’s material conditions and quality of life across the population in eleven dimensions including: income and wealth; jobs and earnings; housing; health status; work-life balance; education and skills; social connections; civic engagement and governance; environmental quality; personal security; and subjective well-being. The How’s Life? 2015 report includes for the first time a set of indicators to measure the stocks of resources that help to support well-being over time. The report also contains three special chapters focusing on child well-being, volunteering and regional well-being. 3

 

Estonia

House-hold income

Homicides

Employment

Life satisfaction

Labour market insecurity

Financial wealth

Earnings

Feeling safe at night

Long-term unemployment

Working hours

Time off

Rooms per person

Housing affordability

Basic sanitation

Water quality

Air quality

Social support

Cognitive skills

Years in education

Educational attainment

Voter turnout

Perceived health

Life expectancy

HEALTH STATUS

WORK-LIFE BALANCE

INCOME AND WEALTH

SUBJECTIVE WELL-BEING

SOCIAL CONNECTIONS

JOBS AND EARNINGS

ENVIRONMENTAL QUALITY

EDUCATION AND SKILLS

PERSONAL SECURITY

HOUSING

CIVIC ENGAGEMENT AND GOVERNANCE

Stakeholder engagement

HOW’S LIFE IN ESTONIA IN 2016?

Estonia has one of the lowest levels of average household net adjusted disposable income per capita in the OECD as well as a low level of household net financial wealth. At 69.6%, the employment rate is however above the OECD average and only 3.3% of Estonian employees work very long hours, compared to 13% in the OECD on average.

In Estonia, 7.2% of people still live in dwellings without basic sanitation (defined as homes without an indoor flushing toilet for the sole use of the household), which is much higher than the OECD average, however, housing affordability is among the highest in the OECD area. Between 2009 and 2013, life expectancy increased by 2.1 years to 77.3 years, which is still lower than the OECD average of 79.9 years. Estonia has one of the highest levels of educational attainment: 91% of the adult working-age population have completed at least an upper secondary education. Estonia’s rate of homicides is the third highest in the OECD area and life satisfaction in Estonia is among the lowest in the OECD.

Current well-being in Estonia

This chart shows areas of well-being strengths and weaknesses in Estonia, based on a ranking of all OECD countries. Longer lines show areas of relative strength, while shorter lines show areas of relative weakness. For more details, see http://www.oecd.org/statistics/Better-Life-Initiative-2016-country-notes-data.xlsx.

Source: OECD calculation based on the OECD Better Life Index 2016 database, http://stats.oecd.org/Index.aspx?DataSetCode=BLI.

Resources for future well-being in Estonia Beyond measuring well-being today, How’s Life? 2015 looks at some of the resources (or “capital stocks”) that will shape people’s well-being in the future. These include aspects of natural capital, human capital (sic! population(x)value, üe) social capital (sic! cooperation- and national knowledge structure, population reproduction etc üe) and economic capital (sic! real infrastructure assets, institutional and cyber mechanisms assets etc, üe).

For example, trust in other people is an important component of social capital. In Estonia trust in others is the same as in the average European OECD country: on a scale from 0 (“you do not trust any other person’’) to 10 (‘’most people can be trusted’’), the average score given by Estonians is 5.8.

 

16.3

9.4

22.4

12.4

5%

10%

15%

20%

Estonia

OECD

Inequalities in personal security Percentage of children aged 11, 13 and 15 who report that they have been bullied at least twice over the last 2 months

11.2

11.0

17.1

18.4

5%

10%

15%

20%

Estonia

OECD

Inequalities in health status

Percentage of children aged 11, 13 and 15 with self-perceived fair or poor health

 

HOW’S LIFE FOR CHILDREN IN ESTONIA? Giving children a good start in life is important both for well-being today, and in the future.

Child well-being in Estonia Ranking of Estonia compared to other OECD countries top third middle third bottom third Income and Wealth Disposable income of households with children

Child income poverty

Jobs and Earnings Children in workless households

Children with a long-term unemployed parent

Housing conditions Average rooms per child

Children in homes that lack basic facilities

Environmental quality Children in homes with poor environmental conditions
Health status Infant mortality Low birth weight Self-reported health status Obesity Adolescent suicide rate

Teenage birth rate

Education and Skills Reading skills among 15 year olds (PISA)

Creative problem solving among 15 year olds (PISA)

Youth neither in employment nor education/training

Educational deprivation

Civic engagement Intention to vote

Civic participation

Social and family environment Children who find it easy to talk to their parents Students reporting having kind classmates

Students feeling a lot of pressure from schoolwork Students liking school Sense of belonging in school at 15 years old (PISA)

Time children spend with parents

Personal security Child homicide rate

Bullying

Subjective well-being Life satisfaction

 

 

 

 

 

D) Estimation of the estimation errors

 

Blattman, Christopher et al. (2013)

 

Empirical social science relies heavily on self-reported data, but subjects may misreport behaviours, especially

sensitive ones such as crime or drug abuse. If a treatment influences survey misreporting, it biases causal estimates.

We develop a validation technique that uses intensive qualitative work to assess survey misreporting

and pilot it in a field experiment where subjects were assigned to receive cash, therapy, both, or neither. According

to survey responses, both treatments reduced crime and other sensitive behaviours. Local researchers spent

several days with a random subsample of subjects after surveys, building trust and obtaining verbal confirmation

of four sensitive behaviours and two expenditures. In this instance, validation showed survey underreporting of

most sensitive behaviours was low and uncorrelated with treatment, while expenditures were under reported

in the survey across all arms, but especially in the control group. We use these data to develop measurement

error bounds on treatment effects estimated from surveys.

© 2016 Published by Elsevier B.V.

 

Introduction

 

The trouble with many survey topics, whether it’s abortion, drug

use, crime, domestic violence, or support for terrorism, is that people

may not tell the truth. This makes survey data on any sensitive topic

suspect. Even without incentives to misreport, self-reported data are

often inaccurate. Studies show people even misreport their gender

and education.1Whenmeasuring subjects that can embarrass or endanger

the respondent, we worry that people might misreport their attitudes

or actions.2

When we are interested in the impact of a program or event,

measurement error will also affect our ability to estimate unbiased

causal effects. In dependent variables, random measurement error

reduces precision but won’t bias estimates.3 Systematic reporting errors,

however, generally bias causal estimates, especially when the measurement

error is correlated with the treatment or exogenous event of

interest. For instance, people who receive an anti-crime message or an

addiction treatment might be more likely to respond that they are

non-violent or drug free, both because it’s socially desirable and because

of perceived experimenter demand (where participants conform to the

expectations of the people who ran the program).

Journal of Development Economics 120 (2016) 99–112

 

SUNSTEIN, CASS R. and REID HASTIE (2015) „Garbage in, garbage out? Some micro sources of macro errors“ – Journal of Institutional Economics / Volume 11 / Issue 03 / September 2015, pp 561-583

 

 E) Estimation of the risks

 

Journal of Development Economics 120 (2016) 182–208

 

Witchcraft beliefs and the erosion of social capital:

Evidence from Sub-Saharan Africa and beyond_

Boris Gershman

Department of Economics, American University, 4400 Massachusetts Avenue NW, Washington, DC, 20016-8029, USA

A R T I C L E I N F O

Article history:

Received 4 April 2015

Received in revised form 26 November 2015

Accepted 28 November 2015

Available online 4 December 2015

Keywords:

Culture

Persistence

Social capital

Superstition

Trust

Witchcraft

A B S T R A C T

This paper examines the relationship between witchcraft beliefs, a deep-rooted cultural phenomenon,

and various elements of social capital. Using novel survey data from nineteen countries in Sub-Saharan

Africa we establish a robust negative association between the prevalence of witchcraft beliefs and multiple

measures of trust which holds after accounting for country fixed effects and potential confounding

factors at the individual, regional, and ethnic-group levels. This finding extends to other metrics

of social capital, namely charitable giving and participation in religious group activities. Such coexistence

of witchcraft beliefs and antisocial attitudes stands in stark contrast to a well-explored alternative

cultural equilibrium characterized by religious prosociality. Evidence from societies beyond Africa

shows that in preindustrial communities where witchcraft is believed to be an important cause of illness,

mistrust and other antisocial traits are inculcated since childhood. Furthermore, second-generation

immigrants in Europe originating from countries with widespread witchcraft beliefs are generally less

trusting.

© 2015 Elsevier B.V. All rights reserved.

 

 

F)The Economist (16.VII 2016) “Econometrics: It is not easy to compare the size of economies – even across the Channel”

 

FRANCE is renowned, fairly or not, for its long holidays and short working weeks, subsidised farmers and unionised workers, high culture and higher taxes. Less than two-thirds (64%) of its working-age population was employed last year, according to the OECD, compared with almost three-quarters (73%) in Britain. But is France’s well-lunched workforce of 26.4m now producing more than Britain’s harried 31.1m employees?

Many people seem to think so. France’s GDP in 2015 was about €2.18 trillion. Britain’s was a little over £1.86 trillion. On July 6th the pound fell below €1.17 on the currency markets, rattled by Britain’s vote to leave the European Union (EU). Since 1.86 multiplied by the exchange rate of July 6th is less than 2.18, many commentators jumped to the conclusion that Britain’s economy had slipped overnight from fifth-biggest in the world to sixth. It was one more humiliation among many.

Comparing the size of national economies can be a frustrating exercise. The measuring tape is not always consistent from place to place or period to period. This week Ireland’s statisticians added over 19% to last year’s GDP after folding multinationals’ aircraft and intellectual property into its economy. Both China and India, two of the biggest economies in the world, have recently revised their methods for calculating GDP, bringing them closer to international standards agreed on in 2008. India’s controversial overhaul recalculated everything from manufacturing output (drawing on a new database of corporate e-filings) to the value of dung. (This latter revision added over $180m to India’s GDP, assuming an “evacuation rate” of 0.3kg a day for goats and rather more for sheep.)

China, for its part, last week added R&D spending to its measure of economic size (just as advanced countries already do). It also took the opportunity to revise its figures all the way back to 1952 (see chart). The new numbers suggest that China’s GDP was over 68 trillion yuan last year, compared with only 478 billion yuan in 1952 (at 2015 prices). The difference between those two numbers, however sketchy they may be, represents the greatest economic story of the modern age. But the statisticians keep fiddling with the earlier chapters.

When laypeople reflect on the size of their national economy, they may think of a vast inventory of productive assets: humming factories, gleaming skyscrapers, fertile lands, cosy homes and teeming workers, full of brains and brawn. Similarly, when they look at a chart of GDP, like China’s above, it may remind them of a pile of money accumulating steadily over time, like an unusually successful stock portfolio.

Viewed this way, it may seem natural to recalculate the value of an economy in the light of sudden currency fluctuations, like the yuan’s decline since August or the pound’s since June 23rd. Why not mark these economies to market? It seems unobjectionable to reprice Britain’s GDP at the lower July 6th exchange rate, just as a Frenchman in London might recalculate the diminished euro value of his sterling bank account or his Battersea flat.

But such an exercise betrays a misunderstanding of GDP. This deceptively familiar gauge of economic size does not represent a stock of assets but a flow of goods and services. It is more akin to the wages and interest someone earns during a year than to the money in an account at the end of the year. It cannot therefore be valued at a point in time, like a bank balance, dwelling or stock portfolio. It must instead be evaluated over a span of time.

Most often, this span is a year (which obviates the need for seasonal adjustment) or a quarter. Other periods are possible, both longer and shorter. From 1952 to 2015 China’s GDP amounted to over 809 trillion yuan (at 2015 prices), according to our calculations, based on the government’s revised figures. Incredibly, of all the goods and services ever produced by the People’s Republic of China, over half were produced from 2008 onwards.

Shorter time spans are also possible: Canada publishes a monthly GDP estimate. In theory, one could even calculate the output of Britain and France in the few weeks since the EU referendum. But weekly GDP figures do not exist and would be hideously volatile if they did.

Explore our interactive guide to Europe’s troubled economies

Because GDP represents a flow of goodies over time, it makes sense to value it at the exchange rates that prevailed during that time. It seems odd, in contrast, to reprice what happened last year at an exchange rate that arose only last week. Many of the items that constitute GDP are perishable, disappearing shortly after their creation. Hot meals and long journeys, a stirring night at the theatre, a warm radiator on a winter’s morning—Britain produced many such necessities and conveniences over the course of 2015. But these items left nothing behind that could be marked to market in July 2016.

This is not to deny that the pound was overvalued. Its strength was rooted not in the international appeal of British goods but in the widespread appeal of British assets—including gilded homes and gilt-edged securities. Foreign purchases of these assets added little directly to British output (because GDP includes only newly built homes and factories, not financial securities or pre-existing properties or companies sold to new owners). But these buyers did bid up the currency in which GDP was priced.

Liberty, fraternity, purchasing-power parity

The size of Britain’s GDP, when converted into euro, thus reflected an uneasy amalgam of demand for its goods and services and a somewhat separate demand for the pounds required to buy British assets. The combination made Britain an expensive place to visit: all told, its prices were about 16% higher than France’s last year, according to the World Bank and the IMF. As it happens, if similar items were priced similarly in both countries (bringing their purchasing power into parity with each other), France’s GDP would have been almost the same size as its neighbour’s in 2015, even before Britain’s recent setbacks and indignities.

F) Paul Krugman Blog  JUL 12 9:37 AM Jul 12 9:37 am 209

Still Confused About Brexit Macroeconomics

OK, I am still finding it hard to understand the near-consensus among my colleagues about the short- and medium-term effects of Brexit. As I’ve tried to point out, while there are clear reasons to believe that Brexit will make Britain somewhat poorer in the long run, it’s not completely obvious why this should lead to a recession in the short run. I got some thoughtful responses, but they raised more questions in my mind. And I have to say that quite a lot of the reaction I’ve received has involved strange failures of reading comprehension; it’s as if economists simply can’t process the proposition that what’s bad in the long run might not have obviously bad consequences in the short run.

So let me give an example of the kind of analysis that I think should raise eyebrows: Blackrock’s dire warnings about UK slump:

Britain will fall into recession over the coming year and growth in each of the next five years will be at least 0.5 percentage points lower as a result of Britain leaving the European Union, Blackrock said on Tuesday.

“Our base case is we will have a recession,” Richard Turnill, chief investment strategist at the world’s largest asset manager, told reporters at the firm’s investment outlook briefing.

“There’s likely to be a significant reduction of investment in the UK,” he said, adding that Brexit will ensure political and economic uncertainty remains high.

When we say “uncertainty”, what do we mean? The best answer I’ve gotten is that for a while, until things have shaken out, firms won’t be sure where the good investment opportunities in Britain are, so there will be an option value to waiting.

Let’s be slightly spuriously concrete. Suppose you think Brexit might have seriously adverse effects on service exports from the City of London. This would mean that investment in, say, London office buildings would become a bad idea. On the other hand, it would also mean a weaker pound, making investment in industrial properties in the north of England more attractive. But you don’t know how big either effect might be. So both kinds of investment are put on hold, pending clarification.

OK, that’s a coherent story, and it could lead to a recession next year.

At some point, however, this situation clarifies. Either we see financial business exiting London, and it becomes clear that a weak pound is here to stay, or the charms of Paris and Frankfurt turn out to be overstated, and London goes back to what it was. Either way, the pent-up investment spending that was put on hold should come back. This doesn’t just mean that the hit to growth is temporary: there should also be a bounce-back, a period of above-normal growth as the delayed investment kicks in.

And again, since some people seem unable to read what I’m saying, this should happen even if the negative scenario holds; it’s the resolution that should produce the delayed boom, whichever way that resolution goes.

But that’s not what BlackRock, or almost anyone else, seems to be saying; they’re projecting lower growth as far as the eye can see.

They could be right. But I still don’t see the logic. It seems to me that “uncertainty” is being used as a catchall for “bad stuff”.

 

 

 

N2 – Ethnicity does play a significant role, and so does the occupational repression distortion of the national ethnicity and demographic structures

 

A)Thorsten Janus, Daniel Riera-Crichton (2014) “Economic shocks, civil war and ethnicity” – JOCE Elsevier.

 

A b s t r a c t

 

Using a novel cross-country panel dataset, we show that commodity terms of trade declines cause civil war in countries with intermediate (sic! üe) ethnic diversity. The civil war effects for highly diverse or homogenous societies are negative and insignificant. Since the size of the largest ethnic group explains 96% of the variation in the ethnic

diversity measure, we conjecture that a key problem may be ethnic dominance: countries where the ethnic plurality is large, but not so large it cannot be challenged, may be most vulnerable to economic shocks. The findings may help to bridge the partly distinct literatures linking ethnicity and economic factors to conflict.

© 2015 Elsevier B.V. All rights reserved.

 

  1. B) Kirch, Aksel; Marika Kirch, Tarmo Tuisk, Hanna-Hulda Reinkort and Aimar Altosaar (2008) Etics, Emics, Estonians and Russians in Contemporary Estonia: Is the Past still Dominating the Present?

Presentation at IACCP Congress 27-31 July, 2008 Bremen, Germany: Working Papers of the Institute for European Studies International University Audentes No 1:

http://www.ies.ee/iaccp2008/Kirch_et_al_paper.pdf

http://www.digar.ee/arhiiv/nlib-digar:30058

 

 

C) Ott and Ennuste (1996)

Abstract

This article examines some of the consequences of the liberalization of command economies. It is argued that the breakdown of the pre-existing system of production and distribution, changes in political power, and the displacement of property rights introduces uncertainty into people’s lives. The article explores two questions: (1) How does the prospect for political and economic liberalization accompanied by increasing uncertainty affect people’s beliefs about their own well-being? and (2) How does the anxiety created by the process of liberalization impact different ethnic groups? Estonia’s experience during the transitional period is used to explore these questions. On the basis of two surveys, anxiety measures are calculated. To test the theoretical model a probit model is estimated. The study findings suggest that ethnicity does play a significant role in perceptions about “own” well-being and in the development of anxiety.

D) Aksel Kirch, Marika Kirch, Tarmo Tuisk, Hanna-Hulda Reinkort and Aimar Altosaar (2008) “Etics, Emics, Estonians and Russians in Contemporary Estonia: Is the Past still Dominating the Present?”

Presentation at IACCP Congress 27-31 July, 2008 Bremen, Germany: Working Papers of the Institute for European Studies International University Audentes No 1.

 

Abstract

 

Given Estonia’s gaining EU membership in 2004 and joining the European single labour

market and being within the Schengen treaty space, the assumption of our research was that

historical context would hold reduced salience for the two main ethnic groups of Estonia,

giving way to perceptions, expressions and nuances of some more modern, common

European identity. Such assumptions are fore grounded by a number of social, economic and

demographic shifts since having joined the EU, not least, the dramatic halving of Estonian

youth unemployment to just 10%.

In researching the inter-relationships between ethics, emics, Estonians and Estonian Russians

in contemporary Estonia – with particular interest in the contemporary orientation towards,

and patterns of identification with, Estonia’s past – domains of interest included ‘Estonians’,

‘Russians in Estonia’, ‘Russians in Russia’ and ‘Estonian Government’; while themes

embraced constructions of the past, including the context of the Soviet Union’s role in WW

  1. Findings suggest that recent events on the streets of Tallinn (April 2007) appear to be

related to the role of the Soviet Union in WW II inter alia, where its construction as ‘occupier

of Eastern Europe (as opposed to ‘liberator’) forms a ‘core evaluative dimension of identity’

for the Estonians, together with the ‘Bronze Soldier’ having no symbolic salience or relation

to the Estonian identity. Findings, such as Estonian Russians expressing much stronger

idealistic identification with ‘Estonians’ than with their own “titular” group, will be used to

further demonstrate ISA ethic concepts that incorporate emic values and beliefs, in

contemporary Estonia.

 E) Gregory, Paul R., Philipp J.H. Schröder, Konstantin Sonin (2011) „Rational dictators and the killing of innocents: Data from Stalin’s archives“ – Journal of Comparative Economics 39 (2011) 34–42.

 

‘‘Because it is not easy to recognize the enemy, the goal is achieved even if only five percent of those killed are truly enemies’’

Joseph Stalin

 

 

a b s t r a c t

 

We posit a rational choice model of dictatorship to explain the tendency of dictators to

repress innocent citizens. This model demonstrates that, when the quality of information

about regime enemies is low, a rational dictator will knowingly kill and imprison citizens

who are not real enemies. We use the formerly secret Stalin archives to test this proposition

against the stylized facts of Stalin’s three major repressions. Journal of Comparative

Economics 39 (1) (2011) 34–42.

 

 

  1. Introduction

Dictatorial regimes have engaged in mass killing and imprisonment of citizens. According to one estimate, Marxist–Leninist regimes killed more than 110 million persons in the twentieth century, more than ninety percent were their own citizens, while democratic regimes rarely kill their own citizens (Heinsohn, 1998, p. 53). Stalin’s Russia, Mao’s China, Pol Pot’s Cambodia, and the current dictators of North Korea have subjected their citizens to mass execution and gulags. Contemporary

dictators tend to use exile, a milder form of elimination of perceived enemies. Castro pushed thousands of ‘‘undesirables’’   into emigration as have dictators in former Soviet republics, such as Alexander Lukashenko of Belarus or the late Islam Karimov of Uzbekistan. Cross-sectional empirical analysis also suggests that violence against citizens is linked to dictatorship

(Mulligan et al., 2004). In 2008, Freedom House rated thirty four nations as ‘‘not free’’ (http://freedomhouse.org/). Dictatorships appear to be on the rise (Levitsky and Way, 2010).

 

A particularly striking feature of dictatorial repressions is that they strike persons, who appear to be ‘‘innocent,’’ even by the dictator’s own standards. In Stalin’s repressions, most of his victims had no idea why they were selected. In Pol Pot’s … .

 

  1. F) Pelle Ahlerup and Gustav Hansson. 2011.„Nationalism and government effectiveness“ –Journal of Comparative Economics Volume 39, Issue 3, September 2011, Pages 431–451

 

Abstract

Nation-building is believed to have a positive influence on economic and political outcomes, especially in countries with ethnically fragmented populations. Yet nationalism, an indicator of successful nation-building, has been empirically linked to protectionism and intolerance, which suggests that dismal performance is a more likely outcome. This paper empirically identifies an inverted U-shaped relationship between nationalism and government effectiveness. The results suggest that the level of nationalism in the population is higher than optimal in most countries. It is further shown that nationalism may mitigate the negative effects of ethnic heterogeneity in former colonies. We find no clear linkages between nationalism and trade openness.

Highlights

► We study the relationship between nationalism and government effectiveness. ► We empirically identify a robust inverted U-shaped effect of nationalism. ► One implication is that most countries have too nationalistic populations. ► Nationalism may mitigate negative effects of ethnic heterogeneity in former colonies.

Keywords

  1. Ethnic diversity;
  2. Government effectiveness;
  3. Nation-building;
  4. Nationalism;
  5. Protectionism

 

X)Reigl, Nicolas (2016) Forecasting the Estonian Rate of Inflation using Factor Models. Eesti Pank. Working Paper Series, ISSN 1406-7161; 8/2016:

http://www.eestipank.ee/publikatsioon/toimetised/2016/82016-nicolas-reigl-eesti-inflatsioonimaara-prognoosimine-faktormudelite-abil

 

Abstract

The paper presents forecasts of the headline and core inflation in Estonia with

factor models in a recursive pseudo out-of-sample framework. The factors are constructed

with a principal component analysis and are then incorporated into vector

autoregressive forecasting models. The analyses show that certain factor-augmented

vector autoregressive models improve upon a simple univariate autoregressive model

but the forecasting gains are small and not systematic. Models with a small number

of factors extracted from a large dataset are best suited for forecasting headline

inflation. In contrast models with a larger number of factors extracted from a small

dataset outperform the benchmark model in the forecast of Estonian headline and,

especially, core inflation.

JEL classification: C32, C38, C53

Keywords: Factor models, factor-augmented vector autoregressive models, factor

analysis, principal components, inflation forecasting, forecast evaluation, Estonia

 

Non-technical summary

Inflation dynamics have been an important topic for Estonian central bankers and policy

makers. Forecasting the inflation rate with simple models which rely only on few variables

has proven challenging, given the small and open structure of the Estonian economy. In

recent years, more macroeconomic and financial time series have become available to

researchers. One way to incorporate the increasing amounts of data is by using factor

models. Factors summarise the information of large numbers of variables contained in an

extensive dataset.

First, this paper examines whether and how factor models can be used to forecast the

Estonian headline and core inflation rates. Second, I analyse how the number of factors

in the forecast equation influences the forecast performance. And third, I investigate the

impact of excluding presumably important variables from the large dataset on the factors

and consequently on the forecasting results.

This paper uses a large dataset of 388 macroeconomic, microeconomic and financial

time series spanning 2004 to 2014 to extract factors, which are then incorporated in a

model to forecast the quarterly Estonian inflation rate from 2011 to 2014. To examine the

effects of the size of the dataset on forecasting performance, I exclude domestic and foreign

price indicators in the large dataset, creating a second smaller dataset of 246 variables.

The extracted factors are later incorporated in what is called a factor-augmented vector

autoregressive model, which also contains the inflation rate itself. The forecasts obtained

from this factor model are compared to an autoregressive model, where the inflation rate

is forecast using only its own history. The forecast errors are calculated by comparing

both the factor and autoregressive model forecasts to the actual inflation rate.

The results show that factor model forecasts improve upon the autoregressive forecasts

in many cases but the difference in forecast performance is rather small. In addition, the

results show that including one factor in the model is sufficient for it to outperform the

autoregressive benchmark model when the factor is extracted from the large dataset.

Factor models fail to improve substantially upon the benchmark model when Estonian

core inflation is forecast.

Removing domestic and foreign consumer price indicators from the dataset does not

worsen the forecasting performance of the factor models. However, the results indicate

that the first, second and third factors have to be included in the forecasting equation

to obtain similar forecast results as in the benchmark case. Surprisingly, using the same

three factor model shows forecasting errors that are up to 27 percentage points lower when

the core inflation rate is forecast. However, robustness tests show that the distribution of

the forecasting errors is less stable for models including the first three factors when those

factors are extracted from the small dataset.

In conclusion, factor models can help to forecast the Estonian headline and core inflation

rates. The forecast performance is dependent on the size of the dataset and the

number of factors incorporated in the forecasting equation. For Estonia, the findings

provide evidence in favour of using a fairly large dataset to extract the first factor, which

should then be incorporated, together with the inflation rate, in a factor-augmented vector

autoregressive forecasting equation.

 

 

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

 

 

 

N3 – Human Losses and Imputed Lambda-Value Volumes

 

A) Rahi-Tamm (2005) pp 37-39:

 

Table 2 PDF (here preliminary in the Word format):

http://www.digar.ee/arhiiv/nlib-digar:8192 )

 

Estonia’s losses of population (estimated)

 

No. Category Total Survived Irreversible losses

  1. Re-settlers to Germany 20 000 0 20 000

1st Soviet occupation 1940 – 41

  1. Arrested: 8 000 200 7 800

2.a • murdered in Estonia 2 400

2.b • perished in the

Soviet Union

5 400

  1. Deported 10 000 4 000 6 000
  2. Forced mobilisation

by the Soviet Union

34 000 10 000 24 000

4.a • perished en route 2 000

4.b • perished in the Red Army 10 000

4.c • perished in the work

battalions

12 000

  1. Evacuated to the Soviet Union 25 000 20 000 5 000
  2. Went missing 1 100 1 100
  3. Fled abroad 500

German occupation 1941– 44

  1. Fell in the army 10 000 10 000
  2. Executed civilians 7 800 7 800
  3. Sent to labour service 800 200
  4. Sent to prison camps 4 000 1 040
  5. Fled to Finland: 6 000 4 000

12.a • returned to Estonia as

„Boys from Finland”

1 800

  1. Evacuated coastal ethnic

Swedes

7 900 7 900

  1. Fled to the West 70 000 70 000
  2. Civilians perished in the

Soviet air raids

800 800

  1. Soldiers executed by

the Soviet Army

in Czechoslovakia and

Germany

1 000 1 000

 

2nd Soviet occupation 1944 – 89

  1. Arrested 30 000 20 000 10 000
  2. Deported 23 000 20 000 3 000
  3. Perished during the

guerrilla war

3 000 3 000

  1. Arrested for political

reasons 1953—88

500

 

The Department of History of the University of Tartu, the Bureau

of the Register of the Repressed of Estonia, and the Estonian

International Commission for the Investigation of the Crimes

against Humanity continue their work in ascertaining the population

losses of Estonia.

No. Category Total Survived Irreversible

Losses

 

NB: The Table needs urgently a) data updating – first of all on the bases of: Estonia 1040-1945 (2006) and Lindmäe, Herbert  (2015) SUVESÕDA HARJUMAAL 1941. Tartu, 648 p.

a)„Prof. Lindmäe’s ninth (sic! – üe) created the book on this topic, and could be like the summary of the guerrilla war against the Soviet Army in 1941, which grabbed the all counties in Estonia. After 14 in June 1941, the barbaric and massive deportation of the Estonian Population to Siberia, broke out at the nation, the military leader of the opposition to the spontaneous Soviets. The whole of the Nation had been covered by the resistance-is-the best evidence of the fact that the Estonian People had not been in any way free willingly joined in the 1940s in the Soviet Union, a terrorist.

With numerous facts and many of the sources (> 700) this BOOK gives an overview of the true and sound narrative of the Estonian victories to achieve independence. In the Harjumaa County and in Tallinn, where casualties have been especially large – and by Prof. Lindmäe the very precise factually rich information on the fate of the Estonian citizens in this Region in these times is extremely valuable historically as well politically and presently extremely actual  also. …“

By P. Varju (automatic translations)

c)In the National long-term human losses shoud be taken into account also the permanent distortions of the population ethnical structure etc.

P.S.: 1) In the Table are estimated losses presented in approximate numbers – as it seems in the +/-10% intervals –  based on the state of mainstream national knowledge by the end of 2004. At the present time (see e.g. “Estonia 1940-45” 2006) we may estimate that at least partly these numbers may be probably trusted only in the limits of +/-20%  2) in this Table completed in the end of 2004 a number of Categories are missing – see e.g.: Estonia 1940-1945 (2006) pp 1122-1123.

 

P.S.P.S.: The value estimates of total human losses in the contemporary Northern European context have to be researched – but also it is my connection that these probably should be with great approximate in the interval imputed of € 0,5-1,5 tn (tn=trillion=one followed by twelve zeros=10¤12;here ¤ meaning on the power of):

 

Illustrative example on the basis of:

 

  • According to ESA Statistics (http://pub.stat.ee/px-web.2001/Dialog/Saveshow.asphttp://pub.stat.ee/px-web.2001/Dialog/Saveshow.asp ) in 2015 the explicit statistical amount of the population working hours in the Estonia’s domestic market sector was about 1,2 milliard hours by 0,62 M employed – and respective Fragmental GDP volume in current market prices has been approximately € 20 milliard
  • Accordingly to the same statistics total respective implicit volume of social working hours (nursing and educating children’s, dealing with self-education and rising human capital, cocking meals, dealing with socialization activities (e.g. national song festivals etc) and so rising national social/trust capital etc – was approximately … – meaning that the total Genuine socio-economic GDP volume may have been hypothetically at least about five-six times more – or per capita (pc) life-time socio-economic implicit GDP production volume in 2015 current prices may be in very thirst approximation at least € 2 M
  • In Finland (Eurostat) the same indicator € 4 M – in lifetime (25 years employment 1(10¤8) and
  • those in the Finnish efficiency and Estonian employment in 2015 current prices the loss of GGDP may be estimated hypothetically about 6(10¤5)x2(10¤6)=1,2(10¤12) eur and in +/-20% approximation intervals:

 

(0,9; 1,4)10¤12 tn eur.

 

B)Maurizio Conti, Giovanni Sulis (2016)

 

a b s t r a c t

 

Using data for a large sample of manufacturing and service sectors in 14 EU countries, this

paper shows that the value added and TFP growth rate differential between high and low

human capital intensive industries is greater in countries with low than countries with

high levels of employment protection legislation. We also find that such negative effect

of EPL is slightly stronger for countries near the technology frontier, in the manufacturing

sector and after the 1990s. We interpret these results suggesting that technology adoption

depends on the skill level of the workforce and on the capacity of firms to adjust employment

as technology changes: therefore, firing costs have a stronger impact in sectors where

technical change is more skill-biased and technology adoption more important.

 

 

D) Deformation of the population ethnic structure

 

Eurostat (110/2016 – 6 June 2016) Migrant integration in the EU labour market in 2015.

 

Activity rate for non-EU citizens lower than for nationals…

…with a higher unemployment rate and a lower employment rate

In 2015 in the European Union (EU), the proportion of people economically active (employed and unemployed) stood just below 70% for non-EU citizens aged 20 to 64 (69.8%), while the activity rate was above 77% for citizens of the reporting country (77.3%), referred to as “nationals”. A similar pattern is observed in most EU Member States. In detail, non-EU citizens aged 20 to 64 were faced with a notably higher unemployment rate and lower employment rate than nationals. The picture was very different when analysing the labour market situation of nationals compared with that of citizens of another EU Member State.

This information comes from a publication issued by Eurostat, the statistical office of the European Union, with data, broken down by citizenship and country of birth, on a wide range of indicators related to the labour market outcomes of the migrant population, of which only a small selection is shown in this News Release. Migrant integration indicators available at Eurostat also include social inclusion, education and active citizenship.

 

G) Parr, Nick, Guest, Ross (2014) „A Method for Socially Evaluating the Effects of Long-Run Demographic Paths on Living Standards“

Abstract

The paper is motivated by the need for improved social evaluation of prospective demographic change in order to better inform policies that are designed to reduce the very long-run costs of population ageing and to achieve sustainable economic development.

OBJECTIVE: What is the very long-run social value of a given demographic path? What is the value of hanges in mortality, immigration, fertility, and labour force participation? How important are shorter-term demographic changes relative to very long-term effects in determining the social value ofthe demographic path?

METHODS: A new simulation method is applied for socially evaluating demographic paths, by separating a demographic path into a stable population component and a transition path component. Sensitivity analyses are conducted with respect to demographic assumptions, labour force participation assumptions, and consumption needs by age, returns to scale, andintergenerational value judgements.

RESULTS: The application to Australia shows the considerable social cost, in terms of the loss of discounted consumption per capita, of improvements in mortality and gains from higher immigration and increased participation. The effect of fertility, however, is very sensitive to assumptions about the age-specific consumption needs of the population and social value judgements aboutintergenerational equity.

CONCLUSIONS: Our method socially evaluates the very long-run implications of specified constant fertility, mortality, and migration, giving consideration to both the transition path and the ultimate stable state. Mortality improvement is costly and higher immigration is beneficial. The impact of higherfertility is sensitive to assumptions about consumption needs and intergenerational equity.

  1. Introduction

This paper proposes a method for socially evaluating the trajectories of long-run populationprojections. Governments in developed countries have, in recent decades, become increasinglyconcerned about the future population ageing that is reflected in their population projections,and which has implications for national prosperity, government budgets3, and sustainableeconomic development. A range of public policies have been introduced to either slow downpopulation ageing or to ameliorate its effects on national prosperity and government budgets.Policies to slow down ageing include pro-fertility policies such as child subsidies of various kinds(McDonald 2006; Gauthier 2007; Guest and Parr 2010; Parr and Guest 2011; Guest and Parr2013) and pro-immigration policies (Malmberg 2006). Policies to boost both supply and demandfor older workers (OECD 2006)4 are designed to reduce the national economic burden of ageing.Population is also seen as a mediating factor in sustainable economic development. TheAustralian Government, for example, produced a Sustainable Population Strategy in 2011(Commonwealth of Australia 2011). Such strategies, however, typically sidestep any socialevaluation of the nation’s prospective demographic path, and rather focus on the implications ofdemographic paths for the ‘needs’ of the population in terms of infrastructure such as water,energy, transport and communication, of government services, education, and training, and ofenvironmental amenity.

It is the public policy attention to the economic effects of demographic change that motivates thesocial evaluation of alternative demographic paths proposed in this paper. The standardapproach taken to such evaluations in the population economics literature is to embeddemographic structure into an intertemporal macroeconomic model of optimal economic growthand then simulate the long-run effects of demographic change. The seminal study is Cutler et al. (1990), which has spawned a large literature. A key feature of these models is optimising behaviour of either individual agents or a social planner. …

F) Mägi, Kadi; Kadri Leetmaa, Tiit Tammaru, Maarten van Ham (2016) „Types of spatial mobility and change in people’s ethnic residential contexts“ – DEMOGRAPHIC RESEARCH VOLUME 34, ARTICLE 41, PAGES 1161−1192 PUBLISHED 28 JUNE 2016 http://www.demographic-research.org/Volumes/Vol34/41/ DOI: 10.4054/DemRes.2016.34.41.

 

Excerpts:

 

Abstract

BACKGROUND

Most studies of the ethnic composition of destination neighbourhoods after residential moves do not take into account the types of moves people have made. However, from an individual perspective, different types of moves may result in neighbourhood environments which differ in terms of their ethnic composition from those in which the individuals previously lived.

OBJECTIVE We investigate how the ethnic residential context changes for individuals as a result of different types of mobility (immobility, intra-urban mobility, suburbanisation, and long-distance migration) for residents of the segregated post-Soviet city of Tallinn. We compare the extent to which Estonian and Russian speakers integrate in residential terms.

METHODS

Using unique longitudinal Census data (2000‒2011) we tracked changes in the individual ethnic residential context of both groups.

RESULTS We found that the moving destinations of Estonian and Russian speakers diverge. When Estonians move, their new neighbourhood generally possesses a lower percentage of Russian speakers compared with when Russian speakers move, as well as compared with their previous neighbourhoods. For Russian speakers, the percentage of other Mägi et al.: Types of spatial mobility and change in people’s ethnic residential contexts 1162 http://www.demographic-research.org

Russian speakers in their residential surroundings decreases only for those who move to the rural suburbs or who move over longer distances to rural villages.

CONCLUSIONS & CONTRIBUTION

By applying a novel approach of tracking the changes in the ethnic residential context of individuals for all mobility types, we were able to demonstrate that the two largest ethnolinguistic groups in Estonia tend to behave as ‘parallel populations’ and that residential integration remains slow.

  1. Introduction

Today, Russian speakers form almost one third of the 1.3 million people living in Estonia, giving Estonia one of the highest proportions of ethnic minorities in Europe. The Russian speaking minority population in Estonia has its roots in the intensive immigration that took place from other Soviet republics in the period when the country was part of the Soviet Union (1940–1991). Culturally this minority is rather homogeneous, consisting mainly of Russians, but with large groups of Ukrainians and Byelorussians. Even those who have been living in the country for two or three generations generally use Russian in their daily communication. The Estonian case is very interesting for studying the processes of ethnic segregation because of the unique historical backdrop provided by its Soviet past. In essence, the residential patterns of Russian speakers differed from those of the majority population during the Soviet period because central planners distributed migrants to major administrative, military, and industrial centres, such as the capital city of Tallinn, where they now form almost half of the city’s population, and to urban industrial areas in the North East of Estonia, where they are now a majority group. In all of these cities, Russian speakers were usually accommodated in large housing estates built during the Soviet era. The societal conditions of the Soviet years thus shaped the current ethnic landscape in Estonia in a unique way, because central planners exogenously created the residential pattern of the minority population.

There are both similarities and fundamental differences between Estonian cities and other ethnically segregated cities in Western Europe and North America. In the latter case, ethnic residential differentiation typically reflects the differences between the consumption capacity and preferences of the different ethnic groups as well as the discrimination practices in these societies (e.g., Massey and Denton 1985; Johnston, Forrest, and Poulsen 2002). Ethnic segregation in Soviet cities was not originally driven by such factors and it was, to a large degree, a function of housing allocation by central planning authorities. Thanks to industrialisation and militarisation, Soviet cities grew …

 

BTW: this DP paper by Mägi et al. (2016) needs independent competent historical terrorist occupational/colonalizational experts corrections – first of all e.g. on the basis of collection:

 

White Book (2005): The White Book: Losses Inflicted on the Estonian Nation by Occupation Regimes 1940–1991”(2005) State Committee on the Investigation into Repression Policy of Occupation, Tallinn: Estonian Encyclopaedia Publishers: 171: http://www.digar.ee/arhiiv/nlib-digar:8192

 

The present content is in great amount politically biased and erroneous – take for example excerpt from p 1162:

 

“Today, Russian speakers form almost one third of the 1.3 million people living in Estonia, giving Estonia one of the highest proportions of ethnic minorities in Europe. The Russian speaking minority population in Estonia has its roots in the intensive immigration that took place from other Soviet republics in the period when the country was part of the Soviet Union (1940–1991).“

a)“the country was part of the Soviet Union (1940-1991)“ – was under the predatory communist Russian occupation: WB pp 9-25.

b)“The Russian speaking minority population in Estonia has its roots in the intensive immigration that took place from other Soviet republics … “ – has its roots mainly and first of all in the intensive mass destruction of Estonian population by communist Kremlin genocides, war crimes and crimes against humanity: WB pp 25-47 –  ca 1/3 of initial 1040 population was lost (mainly elites) and these communist crimes are the main roots/factors/regressors of segregation – segregation that involves also anomalous emigration of nationals especially in the conditions of the previous Hybrid-War  with nuclear Russia.

c)“intensive immigration that took place“ – was mainly not free willing but deportation of Russian speakers by Kremlin from GULAG camps etc for the total Russification of Estonian genuine population and destruction of Estonian national sustainabilty: BTW in Estonia immigrants are economically less effective then nationals:

http://ec.europa.eu/eurostat/news/news-releases?p_p_id=101_INSTANCE_jtJORfNw4amk&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_count=1&_101_INSTANCE_jtJORfNw4amk_delta=20&_101_INSTANCE_jtJORfNw4amk_keywords=&_101_INSTANCE_jtJORfNw4amk_advancedSearch=false&_101_INSTANCE_jtJORfNw4amk_andOperator=true&p_r_p_564233524_resetCur=false&_101_INSTANCE_jtJORfNw4amk_cur=2

And so the „, ethnic residential differentiation typically reflects the differences between the consumption capacity and preferences of the different ethnic groups as well as the discrimination practices in these societies (e.g., Massey and Denton 1985; Johnston, Forrest, and Poulsen 2002) … ethnic residential differentiation typically reflects the differences between the consumption capacity and preferences of the different ethnic groups as well as the discrimination practices in these societies (e.g., Massey and Denton 1985; Johnston, Forrest, and Poulsen 2002).“ – these kind of residential differentiation are in Estonia presently spontaneously widening (Eurostat: economic inequality is presently in Estonia growing) – with accomodating discrimination practices.

 

 

Rapidly, fuelled by immigration, and new neighbourhoods were purpose-built for the growing urban population. Under market conditions since 1991, this inherited ethnic landscape in Estonia has allowed members of both the majority and minority populations to choose between minority-rich or majority-dominated destinations when they move.

While the inherited ethnic context was created by different means in Soviet Estonia compared with Western Europe and Northern America, the mechanisms of ethnic segregation in place today are quite similar. As elsewhere, for example, prejudice between ethnic groups may be fuelled by their living in separate areas and not having many opportunities to meet members of other ethnic groups (Harrison, Law, and Phillips 2005), which in turn can prevent the creation of cross-cultural contacts between ethnic groups. Consequently, reducing ethnic segregation is often rather difficult, and segregation can persist over generations (Heckmann 2005: 17). Although many authors have challenged the notion of a straightforward link between spatial and social integration (Bolt, Özüekren, and Phillips 2010; Musterd 2003), there is evidence that people with immigrant backgrounds living in minority-rich neighbourhoods are indeed hampered in their attempts at integration and that ethnically diverse neighbourhoods offer better opportunities for contact and social integration between different ethnic groups (Gijsberts and Dagevos 2007; Martinovic, Tubergen, and Maas 2009). Thus, the neighbourhood context and how it changes for those people who move, or also who do not move, is very important for understanding the process of ethnic integration.

Most studies investigating the ethnic composition of destination neighbourhoods after residential moves fail to take into account the types of moves people have made. In the present paper, we address the need to investigate the effects of intra-urban moves, suburbanisation, long-distance migration, and immobility on changes in the ethnic context of where people live. We argue that from the perspective of each individual, different types of moves may lead to different environments (destination neighbourhoods) in terms of the ethnic composition compared to the place the person lived before (origin neighbourhood). We wish to learn which types of moves contribute more to residential integration. We also investigate the ethnic contexts of stayers, which may change as a result of others moving and contributing to residential segregation and integration. Taking these considerations into account, we aim to answer the following research question: How does the individual ethnic residential context change as a result of different types of mobility (immobility, intra-urban mobility, suburbanisation, and long-distance migration) for Estonian and Russian speakers living in the post-Soviet segregated capital city Tallinn; in other words, to what extent does residential integration occur as a result of different types of mobility?

Using a unique database with linked individual-level data from the 2000 and 2011 Estonian censuses, we track the ethnic residential environments of individuals living in Mägi et al.: Types of spatial mobility and change in people’s ethnic residential contexts 1164 http://www.demographic-research.org

the capital city of Tallinn (with 400,000 inhabitants) in 2000, who by 2011 were either still living in their original neighbourhoods, or had moved within the city or within the Tallinn metropolitan area, or had moved from Tallinn to other regions of Estonia. We begin, however, ….

 

G1) Eurostat (2016): Activity rates differ most between non-EU citizens and nationals in the Netherlands, Finland and Germany

In a majority of Member States, the activity rate of nationals was higher than for non-EU citizens, except in particular in Greece (72.6% for nationals compared with 80.7% for non-EU citizens) and Slovenia (75.7% vs. 83.5%), followed by Slovakia (76.2% vs. 81.3%), Italy (67.9% vs. 72.6%), Spain (78.7% vs. 82.0%), Cyprus (79.3% vs. 81.5%), Portugal (79.0% vs. 80.9%), the Czech Republic (78.7% vs. 79.2%) and Hungary (73.8% vs. 74.1%).

In 2015 across Member States, the most significant differences between the activity rates for non-EU citizens and for nationals were recorded in the Netherlands (59.7% for non-EU citizens compared with 82.2% for nationals, or -22.5 percentage points), Finland (-18.8 pp) and Germany (-18.3 pp), followed by France (-15.7 pp), Denmark (-15.6 pp), Sweden (-15.3 pp) and Belgium (-14.6 pp). On average in the EU, the difference between the activity rate for non-EU citizens (69.8%) and for citizens of the reporting country (77.3%) was -7.5 percentage points in 2015.

 

(Table)

 

Activity rates of population aged 20-64, by citizenship, 2015 Citizens of the reporting country (nationals) Foreign citizens Of which:
Citizens of another EU Member State                                                      Non-EU citizens
EU 77.3 74.8 81.6 69.8
Belgium 74.0 68.7 74.6 59.4
Bulgaria 73.9 (49.0) : :
Czech Republic 78.7 80.6 82.3 79.2
Denmark 82.1 74.6 85.8 66.5
Germany 83.0 72.4 81.9 64.7
Estonia 82.3 77.0 67.7 77.3
Ireland 76.2 73.3 78.8 63.0
Greece 72.6 79.8 75.6 80.7
Spain 78.7 82.2 82.7 82.0
France 78.1 67.1 77.2 62.4
Croatia 71.7 (51.7) : (45.0)
Italy 67.9 74.3 78.0 72.6
Cyprus 79.3 82.2 82.7 81.5
Latvia 81.6 74.1 81.9 73.9
Lithuania 80.8 74.0 : 77.4
Luxembourg 71.9 79.5 80.8 68.6
Hungary 73.8 74.1 74.1 74.1
Malta 71.3 69.8 70.8 69.0
Netherlands 82.2 70.3 81.6 59.7
Austria 79.5 74.2 81.9 65.9
Poland 73.2 71.1 83.0 67.1
Portugal 79.0 81.0 81.7 80.9
Romania 70.8 : : :
Slovenia 75.7 81.7 70.8 83.5
Slovakia 76.2 81.3 81.2 81.3
Finland 80.3 70.3 82.9 61.5
Sweden 87.0 77.2 85.8 71.7
United Kingdom 80.9 78.6 85.9 69.2

 

 

BOX 5 (first draft)

 

###########################################

Official/formal Eurostat differences between activity rates (Table) of Estonian citizens (nationals) and of non-EU nationals aged 20-64, 2015 (in percentage points) are about 5%: approximately 2015 the loss of the volume of GDP from Russification of population is approximately 0,2 bn eur or so: in  20 years 1÷3 bn eur.

 

Informally – considering the higher crime rates of foreign citizens and taking into consideration GGDP (genuine – including production of human and social (human wealth) capital etc) these losses may be preliminarily estimated approximately 3÷9 bn eur.

 

############################################

 

BOX 6 (preliminary draft).

 

 

Siia tuleb kaotatud inimvara rahaline hinnang (esialgselt hüpoteetiliselt – kui pöördumatu kaotuse puhul esimeses lähenduses nt (0,1 mn inimest) loeks rahvuslikuks kaotuseks inimese kohta 5 mn eur – siis see fragmentaarne kaotus oleks kokku ligikaudu 0,5 tr eur – ja tagasipöördujate (0,1 mn inimest) oleks 3 mn eur seega 0,3 tr eur + venekeelsete sundsisserändamise tõttu elanikkonna kvaliteedi langemise tõttu kahju 0,2 tr eur – siis kokku 1 tr eur – see vajab põhjalikku põhjendust … NB!: arvestatud et rahvusliku eliidi liikme keskmise väärtusega rahvuslikult Soome tingimustes kus pikajalist okupatsiooni ei olnud!

 

 

 

N4 – Conceptual and methodological remarks and risks and uncertainties

 https://en.wikipedia.org/wiki/Lagrange_multiplier :

 

„Lagrange multiplier

From Wikipedia, the free encyclopaedia

In mathematical optimization, the method of Lagrange multipliers (named after Joseph Louis Lagrange[1]) is a strategy for finding the local maxima and minima of a function subject to equality constraints.

For instance (see Figure 1), consider the optimization problem

maximize f(xy)

subject to g(xy) = 0.

We need both f and g to have continuous first partial derivatives. We introduce a new variable (λ) called a Lagrange multiplier and study the Lagrange function (or Lagrangean) defined by

where the λ term may be either added or subtracted. If f(x0y0) is a maximum of f(xy) for the original constrained problem, then there exists λ0 such that (x0y0λ0) is stationary for the Lagrange function (stationary points are those points where the partial derivatives of   are zero). However, not all stationary points yield a solution of the original problem. Thus, the method of Lagrange multipliers yields necessary for optimality in constrained problems.[2][3][4][5][6] Sufficient conditions for a minimum or maximum also exist.

Introduction

One of the most common problems in calculus is that of finding maxima or minima (in general, “extreme”) of a function, but it is often difficult to find a closed form for the function being eternized. Such difficulties often arise when one wishes to maximize or minimize a function subject to fixed outside conditions or constraints. The method of Lagrange multipliers is a powerful tool for solving this class of problems without the need to explicitly solve the conditions and use them to eliminate extra variables.

Consider the two-dimensional problem introduced above:

maximize f(xy)

subject to g(xy) = 0.

The method of Lagrange multipliers relies on the intuition that at a maximum, f(xy) cannot be increasing in the direction of any neighbouring point where g = 0. If it were, we could walk along g = 0 to get higher, meaning that the starting point wasn’t actually the maximum.

We can visualize contours of f given by f(xy) = d for various values of d, and the contour of g given by g(xy) = 0.

Suppose we walk along the contour line with g = 0. We are interested in finding points where f does not change as we walk, since these points might be maxima. There are two ways this could happen: First, we could be following a contour line of f, since by definition f does not change as we walk along its contour lines. This would mean that the contour lines of f and g are parallel here. The second possibility is that we have reached a “level” part of f, meaning that f does not change in any direction.

To check the first possibility, notice that since the gradient of a function is perpendicular to the contour lines, the contour lines of f and gore parallel if and only if the gradients of f and g are parallel. Thus we want points (xy) where g(xy) = 0 and

,

for some λ

where

are the respective gradients. The constant λ is required because although the two gradient vectors are parallel, the magnitudes of the gradient vectors are generally not equal. (The negative is traditional). This constant is called the Lagrange multiplier.

Notice that this method also solves the second possibility: if f is level, then its gradient is zero, and setting λ = 0 is a solution regardless fog.

To incorporate these conditions into one equation, we introduce an auxiliary function

and solve

Note that this amounts to solving three equations in three unknowns. This is the method of Lagrange multipliers. Note that   implies g(xy) = 0. To summarize

The method generalizes readily to functions on   variables

which amounts to solving   equations in   unknowns.

The constrained extreme of f are critical points of the Lagrangean  , but they are not necessarily local extreme of   (see Example 2below).

One may reformulate the Lagrangean as a Hamiltonian, in which case the solutions are local minima for the Hamiltonian. This is done in optimal theory, in the form of Pontryagin’s minimum principle.

The fact that solutions of the Lagrangean are not necessarily extreme also poses difficulties for numerical optimization. This can be addressed by computing the magnitude of the gradient, as the zeros of the magnitude are necessarily local minima, as illustrated

 

Mathematical complication here start with coevolutionary digit variable models (e.g.: Ennuste 2003) with the necessity to resort to informal fuzzy meta-mathematical solutions (e.g.: Ennuste 2008) and decomposed implementation theoretic iterative deductive quantification of Lagrangean multipliers e.g.:

 

Matsushima, Hitoshi (2008) Role of honesty in full implementation – Journal of Economic Theory 139 (2008) 353 – 359: www.elsevier.com/locate/jet

 

Abstract

This paper introduces a new concept of full implementation that takes into account agents’ preferences

for understanding how the process concerning honest reporting works. We assume that the agents have

intrinsic preferences for honesty in the sense that they dislike the idea of lying when it does not influence

their welfare but instead goes against the intention of the central planner. show that the presence of such

preferences functions in eliminating unwanted equilibria from the practical perspective, even if the degree

of the preference for honesty is small. The mechanisms designed are detail free and involve only small fines.

© 2007 Elsevier Inc. All rights reserved.

JEL classification: C72; D71; D78; H41

Keywords: Intrinsic preferences for honesty; Detail-free mechanisms; Full implementation; Small fines; Permissive result.

 

Introduction

 

„ … Matsushima / Journal of Economic Theory 139 (2008) 353 – 359…

these agents by designing a mechanism, according to which each agent makes announcements

about their private signals. Full implementation requires that the values of the social choice

function, i.e., the desired alternatives, are induced by the unique Bayesian Nash equilibrium.

The previous works have constructed mechanisms that are not only based on the social choice

functions but also tailored to the finer detail of specifications such as the probability functions

and the utility functions in complicated ways. This complexity makes it difficult to put the implementation

theory into practice. 1 For instance, let us consider the mechanisms provided by Abreu

and Matsushima [5–7], in which the agents are required to make multiple announcements about

their private signals at the same time. The central planner regards their first announcements as

a reference and fines a small monetary amount to any agent who is the first to deviate from this

reference. As long as the agents are honest during their first announcements, this device of small

fines functions to incentivize the agents to keep their all other announcements honest. Incentivizing

the agents to keep their first announcements honest at the outset might be a more problematic

issue. In order to solve this issue, Abreu and Matsushima incorporated an additional incentive

scheme into the device of small fines, which is, however, not detail free, i.e., it depends heavily

on the finer detail of specifications such as the probability function and the utility functions. The

failure to make the mechanisms detail free is the main drawback of the implementation theory

from the practical perspective. 2

The purpose of this paper is to demonstrate the possibility of implementing social choice

functions without harming the detail free concept of mechanism design. The crucial assumption

is that each of these agents has an intrinsic preference for honesty in the sense that she/he dislikes

the idea of telling white lies that do not influence her welfare but instead go against the intention

of the central planner. With the intrinsic preference for honesty in this sense, we do not need to

incorporate any additional incentive scheme with the device of small fines. All we have to do is just

to keep the agents’ first few announcements irrelevant to the alternative decision. Hence, by using

only detail-free mechanisms, we can fully and exactly implement any incentive compatible social

choice function in iterative dominance. Apart from incentive compatibility, we do not require any

condition on social choice functions. These features are in contrast with the previous works in

the implementation literature, where agents’ intrinsic preferences for honesty were not generally

taken into account. 3

Several experimental economics researches such as Gneezy [10] emphasized that the role

of intrinsic preferences in this manner is non-negligible in economic decisions. Charness and

Dufwenberg [11], on other hand, raised the alarm that agents’ intrinsic preferences to influence

their decisions are heavily dependent on contexts and framings. For instance, agents’ intrinsic

costs of lying may not be significant as long as they expect that the central planner believes that

they lie. Moreover, since each agent makes so many announcements at once, it is inevitable that

her/his intrinsic cost of lying for each single announcement is severely limited. … “

 

And taking account of „correlated types“ of the occupied countries:

 

Barelli, Paulo; John Duggan (2015) „Purification of Bayes Nash equilibrium with correlated types and interdependent payoffs“ –  Games and Economic Behavior 94 (2015) 1–14.

 

We establish purification results for Bayes–Nash equilibrium in a large class of Bayesian games with finite sets of pure actions. We allow for correlated types and interdependent payoffs and for type-dependent feasible action sets. The latter feature allows us to prove existence and purification results for pure Bayes–Nash equilibria in undominated strategies. We give applications to auctions, global games, and voting to illustrate the usefulness of our results.

 

 

„Purification is a potentially powerful tool for obtaining existence of a pure strategy Bayes–Nash equilibrium (BNE) in games of incomplete information. It ensures, under non-atomicity of the underlying distribution of types and some other regularity conditions, that for every BNE in mixed strategies, there exists an equivalent BNE in pure strategies. Thus, insofar as existence of a BNE in mixed strategies has been established in great generality (cf. Balder, 1988, 2002), it suffices that one verifies the conditions needed for purification for a BNE in pure strategies to exist. Unfortunately, the extra regularity conditions for purification provided in the literature are quite restrictive: in particular, types are required to be independent conditional on a finite environmental state variable, and no correlation or interdependence of payoffs in addition to this environmental state variable is allowed. A further limitation of this approach is that known existence results do not adhere to common refinements used in applied modelling, such as the requirement that players use undominated strategies. We address these issues by proving a purification result that allows for general forms of correlation of types and of interdependence of payoffs, and by establishing existence (and purification) in the class of undominated BNE. We illustrate our results with applications to auctions, global games, and voting with incomplete information.

We consider games of incomplete information among n players who choose from finite sets of pure actions, in which the types of each player i can be decomposed into two components, tiand ui. The first is a general component that affects the payoffs of every player; the second is a private-value component that affects only player i’s payoffs and moreover is …. “

 

 

 

 

 

       

N5 – Institutions, Infrastructures, Sanctions etc

 

A) Gagliardi, Francesca (2016?) Institutions and economic change.-

 

 

„There is now widespread consensus among scholars and policy makers that institutions are a crucial determinant of economic performance, and that the mechanisms involved in the processes of institutional emergence and change can generate solutions to socio-economics problems that enhance economic growth ( Acemoglu et al., 2005; North, 2005 ). Both the conceptual frameworks focusing on the study of institutions and the large body of existing empirical literature on the topic show that a country’s long-term economic performance critically depends not just on its institutional environment but also on complementarities between different kinds of institutions ( Gagliardi, 2015 ). Historical evidence also suggests that the causality from economic development to institutions may be even stronger than the one running from institutions to economic development. Economic development changes institutions through a number of channels. While increased wealth due to growth may create greater demands for higher-quality institutions, and may make better institutions more affordable, economic development creates also new agents of change, demanding new institutions ( Chang, 2011 ). From a theoretical point of view, two broad approaches have been proposed in economics to study institutional issues. The first, pioneered by North (1990) and other new institutional economists, and referred to here as the “historical approach”, conceptualizes institutions as the rules of the game, and integrates economic theory and economic history. The emphasis placed on the historical context comes from the observation that much of the developmental trajectory of societies is conditioned by their past in a path dependent way, with the implication that institutions are historically specific. It follows that historical contexts must always be taken into account, especially when dealing with the issue of institutional change ( Alston, 1996 ). The historical approach furthermore combines a theory of human behaviour with a theory of transaction costs. Its central result is that institutions determine the structure for exchange that influences the level of transaction costs, thereby affecting the feasibility and profitability of engaging in economic activity. It is through this mechanism that institutions are the underlying determinant of long-run economic performance. In other words, by defining and constraining the opportunity sets available to economic agents, institutions structure incentives in human exchange, provide a stable structure to human interaction, and reduce uncertainty by fostering convergent expectations ( Gagliardi, 2008 ). The second analytical framework is the “comparative institutional analysis approach” associated with Aoki (1996) that also draws on historical information while at the same time making extensive use of game theory. Institutions are here conceptualized as the endogenously emerging equilibrium outcome of a game and the focus is on the interdependencies existing across economic, political, social and organizational domains. In addition attention is given to interdependencies arising across institutions linking different domains. The core issue is how the rules of the game are generated and become self-enforcing through the strategic interaction of the agents, whose behaviour is influenced by the self-enforcing constraints determined within the existing set of rules.“

B)      YOO, DONGWOO and RICHARD H. STECKEL (2016)

 

Abstract

 

„Several studies link development to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights on some of its Asian colonies. In 1939, Japan began to register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia, robust economic development followed only in Palau where individual property rights were well defined. We show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for irrigation systems. Considering Japanese colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.“

 

C) Ennuste (2014)

 

„the reason sanctions are popular is not that they are known to be

effective, but “that there is nothing else between words and military

action if you want to bring pressure upon a government”

 

Jeremy Greenstock

 

In economic literature, one of the first examples of economic international

sanctions is provided by the measures taken by the U.K. government in the

Rhodesia independence conflict (Bannock et al., 1978, p. 174).

As we can see also in current publications in recent Wikipedia definitions,

Economic sanctions are domestic penalties applied by one country

(or a group of countries) on another country (or a group of countries).

Economic sanctions may include various forms of trade barriers and

restrictions on financial transactions. Economic sanctions are not

necessarily imposed because of economic circumstances—they

may also be imposed for a variety of political and social issues.

Economic sanctions can be used for achieving domestic political

gain. (Wikipedia, nod.)

 

Actually, the most recent example for the EU-28 is provided by the third round

of measures presently implemented in unison as partners by the EU and the USA

in the camp against the Russian Federation in the case of the Russian aggression

in South-East Ukraine (EU, 2014).

While this sanctioning seems to develop as a many-stage process (the preparation

of the next round was announced by the European Council on 30 August 2014,

and on 12 September all this was published in the Bulletin of European Union

(EC, 2014), there may be still time to analyze the structure of the sanctioning

process mechanism design in an economic union with sovereign national

member states—theoretically in the spectre of modern stochastic coordinated

game theoretical and institutional economic, etc. methods (Appendix A), and

make corrective suggestions….”

D) NB!: Sophisticated Probabilistic Information Transfer Toolkit

Dear Colleagues,

Book by

Olga Zeydina and Bernard Beauzamy: Probabilistic Information Transfer. ISBN: 978-2-9521458-6-2, ISSN : 1767-1175. Size 15,3 x 24 cm. Hardcover, 208 pages.

In real life situations, one rarely has desirably detailed information.

It is sometimes incomplete and fragmental, sometimes corrupted and distorted, or with missing or erroneous data, sometimes fuzzy  etc.

Conversely, some pieces of information do exist. Therefore, there is a natural wish: to try to use the existing information in order to reconstruct some missing items.

However, this should be done with two constraints:

First, one should not add any artificial information or fuzzy logic, such as model assumptions (for instance, that some growth is linear, or that some law is Gaussian) without rigorous proof  and not calculating connected risks;

Second, the result should be of probabilistic nature: we do not want a precise value for the reconstruction, but a probability law, which allows estimation of the uncertainties and risks explicitly

The book gives one possibly credible way to deal these kind of topics like that.

P.S.: http://www.scmsa.eu/archives/BB_Archimedes_Weighing_2013_07.pdf

 

This is precisely the topic of this book.

We show how to “propagate” the information, from a place where it exists to a place where we want to use it;

this propagation deteriorates with the distance, somewhat as a gravitational field decreases with the distance.

The book is organized in three parts:

the first part presents the basic rules, accessible with no specific expertise in probabilities;

the second presents the applications to real world problems, and the third part gives the theory.

This is a situation not so common these days: a new mathematical theory, developed by us, in order to meet a need initially expressed by the industry (namely Framatome, 2003).

Existing applications are now numerous: classifying industrial objects (Air Liquid), evaluating a pollution (Total), estimating water quality in rivers (European Environment Agency), controlling the safety in a nuclear reactor (Institute de Radioprotection et de Surete Nucleaire), and so on.

The book can be bought on line.

Thank you for your interest

Prof. Bernard Beauzamy

Chairman and CEO,

Societe de Calcul Mathematique SA

111 Faubourg St Honoré

75008 Paris – France

+33 1.42.89.08.91

assistante@scmsa.e

 

E) Azrieli, Yaron; Ehud Lehrer (2008) “The value of a stochastic information structure” – Games and Economic Behavior 63 (2008) 679–693.

 

Abstract

Upon observing a signal, a Bayesian decision maker updates her probability distribution over the state

space, chooses an action, and receives a payoff that depends on the state and the action taken. An information

structure determines the set of possible signals and the probability of each signal given a state. For a

fixed decision problem, the value of an information structure is the maximal expected utility that the decision

maker can get when the observed signals are governed by this structure. Thus, every decision problem

induces a preference order over information structures according to their value. We characterize preference

orders that can be obtained in this way. We also characterize the functions defined over information

structures that measure their value.

© 2006 Elsevier Inc. All rights reserved.

 F) PAGANO, UGO and MASSIMILIANO VATIERO (2015) Costly institutions as substitutes: novelty and limits of the Coasian approach“ – Journal of Institutional Economics / Volume 11 / Issue 02 / June 2015, pp 265 – 281

DOI: 10.1017/S1744137414000198, Published online: 27 May 2014:

http://journals.cambridge.org/abstract_S1744137414000198

 

Abstract

One of the main contributions of Ronald H. Coase was to demonstrate

how mainstream economics was based on a contradictory amalgam of costly

physical inputs and free institutional resources, and to give origin to the

economics of institutions: each institution is a mode of allocation and

organization of economic resources that is to be investigated. In particular, none

of the institutions (including the market) is a free lunch. The Coasian approach

regards institutions as costly substitutes and provides a fundamental starting point

for comparative institutional analysis. However, Coase neglected two issues

deriving from the observation that institutions are not cost-free. First, when

institutions are costly, one should not only consider their possible substitutes but

also how complementary institutions affect their costs, as well as the costs of the

possible institutional substitutes. Second, the economic analysis should also take

into account that the transition from one institutional setup to another cannot

occur in costless meta-institutions. The initial conditions may substantially affect

the final institutional arrangements. Both the novelty of Coase’s approach and its

limits were grossly undervalued. In particular, the costly institutions assumption

requires a view of economics as a historical discipline.

“You will not float down, like a sickly fish, with the tide . . . you enjoy

considerable mental vigour and are not a passive instrument in the hands

of others. [ . . . ] you are more inclined to think and work for yourself”

a phrenologist to Coase, when he was 11 years old

(R.H. Coase, 1992)

 G) DOSI, GIOVANNI and LUIGI MARENGO (2015) „The dynamics of organizational structures and

performances under diverging distributions of knowledge and different power structures“ – Journal of

Institutional Economics, 11, pp 535-559:

http://journals.cambridge.org/JOI, IP address: 90.190.39.14 on 10 Jun 2016

 

Abstract

 

In this work we analyze the characteristics and dynamics of

organizations wherein members diverge in terms of capabilities and visions they

hold, and interests which they pursue. In particular we examine how different

forms of power can achieve coordination among such diverse capabilities, visions,

and interests while at the same time ensuring control and allowing mutual

learning. By means of a simple simulation model of collective decisions by

heterogeneous agents, we will examine three different forms of power, ranging

from the power to design the organization, to the power to overrule by veto or fiat

the others’ decisions, to the power to shape the very preferences of the members

of the organization. We study the efficiency of different balances between the

three foregoing mechanisms, within a framework in which indeed organizations

‘aggregate’ and make compatible different pieces of distributed knowledge, but

the causation arrow goes also the other way round: organizations shape the

characteristics and distribution of knowledge itself, and of the micro ‘visions’ and

judgements.

 

H)ting Europe’s

omic and

Monetary Union

The Euro Summit of October 2014 underlined the

fact that ‘closer coordination of economic policies

is essential to ensure the smooth functioning of the

Economic and Monetary Union’ (EMU). It called for

work to continue to ‘develop concrete mechanisms for

stronger economic policy coordination, convergence and

solidarity’ and ‘to prepare next steps on better economic

governance in the euro area’.

This report has been prepared by the President of the

European Commission, in close cooperation with the

President of the Euro Summit, the President of the

Eurogroup, the President of the European Central Bank,

and the President of the European Parliament.

It has benefitted from intense discussion with Member

States and civil society. It builds on the report ‘Towards

a Genuine Economic and Monetary Union’ (the so called

‘Four Presidents’ Report’), on the Commission’s

‘Blueprint for a Deep and Genuine EMU’ of 2012, which

remain essential references for completing EMU as well

as on the Analytical Note ‘Preparing for Next Steps on

Better Economic Governance in the Euro Area’ of 12

February 2015.

This report reflects the personal deliberations and

discussions of the five Presidents. It focuses on the euro

area, as countries that share a currency face specific

common challenges, interests and responsibilities. The

process towards a deeper EMU is nonetheless open to

all EU Members. It should be transparent and preserve

the integrity of the Single Market in all its aspects. In

fact, completing and fully exploiting the Single Market in

goods and services, digital, energy and capital markets

should be part of a stronger boost towards economic

union, as well as more jobs and higher growth.

A complete EMU is not an end in itself. It is a means to

create a better and fairer life for all citizens, to prepare

the Union for future global challenges and to enable

each of its members to prosper.

Introduction

The euro is a successful and stable currency. It is shared

by 19 EU Member States and more than 330 million

citizens. It has provided its members with price stability

and shielded them against external instability. Despite

the recent crisis, it remains the second most important

currency in the world, with a share of almost a quarter

of global foreign exchange reserves, and with almost

sixty countries and territories around the world either

directly or indirectly pegging their currency to it.

Europe is emerging from the worst financial and

economic crisis in seven decades. The challenges of

recent years forced national governments and EU

institutions to take quick and extraordinary steps. They

needed to stabilise their economies and to protect all

that has been achieved through the gradual and at

times painstaking process of European integration. As

a result, the integrity of the euro area as a whole has

been preserved and the internal market remains strong.

However, as economic growth and confidence return to

much of Europe, it is clear that the quick fixes of recent

years need to be turned into a lasting, fair and

democratically legitimate basis for the future. It is also

clear that, with 18 million unemployed in the euro area, a

lot more needs to be done to improve economic policies.

Europe’s Economic and Monetary Union (EMU) today

is like a house that was built over decades but only

partially finished. When the storm hit, its walls and

roof had to be stabilised quickly. It is now high time to

reinforce its foundations and turn it into what EMU was

meant to be: a place of prosperity based on balanced

economic growth and price stability, a competitive social

market economy, aiming at full employment and social

progress. To achieve this, we will need to take further

steps to complete EMU.

The euro is more than just a currency. It is a political

and economic project. All members of our Monetary

Union have given up their previous national currencies

once and for all and permanently share monetary

sovereignty with the other euro area countries. In return,

countries gain the benefits of using a credible and

stable currency within a large, competitive and powerful

single market. This common destiny requires solidarity

in times of crisis and respect for commonly agreed rules

from all members.

However, this bargain only works as long as all

members gain from it. For this condition to hold,

countries have to take steps, both individually and

collectively, to compensate for the national adjustment

tools they give up on entry. They must be able, first, to

better prevent crises through high quality governance

at European and national level, sustainable fiscal

and economic policies, and fair and efficient public

administrations. Second, when economic shocks occur,

as they inevitably will, each country has to be able to

respond effectively.

They must be able to absorb shocks internally through

having suitably resilient economies and sufficient

fiscal buffers over the economic cycle. This is because,

with monetary policy set uniformly for the whole euro

area, national fiscal policies are vital to stabilise the

economy whenever a local shock occurs. And with all

countries sharing a single exchange rate, they need

flexible economies that can react quickly to downturns.

Otherwise they risk that recessions leave deep and

permanent scars.

Yet relative price adjustment will never occur as quickly

as exchange rate adjustment. And we have seen

that market pressures can deprive countries of their

fiscal stabilisers in a slump. For all economies to be

permanently better off inside the euro area, they also

need to be able to share the impact of shocks through

risk-sharing within the EMU. In the short term, this risk sharing

can be achieved through integrated financial

and capital markets (private risk-sharing) combined

with the necessary common backstops, i.e. a last resort

financial safety net, to the Banking Union. In the

medium term, as economic structures converge towards

the best standards in Europe, public risk-sharing should

be enhanced through a mechanism of fiscal stabilisation

for the euro area as a whole.

Preventing unsustainable policies and absorbing shocks

individually and collectively did not work well before or

during the crisis. Though several important institutional

improvements have since been made, the legacy of the

initial shortcomings persists. There is now significant

divergence across the euro area. In some countries,

unemployment is at record lows, while in others it is at

record highs; in some, fiscal policy can be used counter cyclically,

in others fiscal space will take years of

consolidation to recover.

Today’s divergence creates fragility for the whole Union.

We must correct this divergence and embark on a new

convergence process. The success of Monetary Union

anywhere depends on its success everywhere. Moreover,

in an increasingly globalised world, Member States have

a responsibility and self-interest to maintain sound

policies and to embark on reforms that make their

economies more flexible and competitive.

Progress must happen on four fronts: first, towards

a genuine Economic Union that ensures each

economy has the structural features to prosper within

the Monetary Union. Second, towards a Financial

Union that guarantees the integrity of our currency

across the Monetary Union and increases risk-sharing

with the private sector. This means completing the

Banking Union and accelerating the Capital Markets

Completing Europe’s Economic and Monetary Union 5

Union. Third, towards a Fiscal Union that delivers

both fiscal sustainability and fiscal stabilisation.

And finally, towards a Political Union that provides

the foundation for all of the above through genuine

democratic accountability, legitimacy and institutional

strengthening.

All four Unions depend on each other. Therefore, they

must develop in parallel and all euro area Member

States must participate in all Unions. In each case,

progress will have to follow a sequence of short- and

longer-term steps, but it is vital to establish and agree

the full sequence today. The measures in the short term

will only increase confidence now if they are the start

of a larger process, a bridge towards a complete and

genuine EMU. After many years of crisis, governments

and institutions must demonstrate to citizens and

markets that the euro area will do more than just

survive. They need to see that it will thrive.

This longer-term vision needs the measures in the

short term to be ambitious. They need to stabilise the

European house now and prepare the ground for a

complete architecture in the medium term. This will

inevitably involve sharing more sovereignty over time.

In spite of the undeniable importance of economic and

fiscal rules and respect for them, the world’s second

largest economy cannot be managed through rule-based

cooperation alone. For the euro area to gradually evolve

towards a genuine Economic and Monetary Union, it will

need to shift from a system of rules and guidelines for

national economic policy-making to a system of further

sovereignty sharing within common institutions, most

of which already exist and can progressively fulfil this

task. In practice, this would require Member States to

accept increasingly joint decision-making on elements of

their respective national budgets and economic policies.

Upon completion of a successful process of economic

convergence and financial integration, this would pave

the way for some degree of public risk sharing, which

would at the same time have to be accompanied by

stronger democratic participation and accountability both

at national and European levels. Such a stage-based

approach is necessary as some of the more ambitious

measures require changes to our current EU legal

framework – some more profound than others – as well

as significant progress in terms of economic convergence

and regulatory harmonisation across euro area Member

States.

The aim of this report is two-fold: to lay out the first

steps that will launch this process today, and to provide

a clear orientation for the longer-term measures.

The process would be organised in two consecutive

stages (see Roadmap in Annex 1):

Stage 1 (1 July 2015 – 30 June 2017): In this first

stage (‘deepening by doing’), the EU institutions

and euro area Member States would build on existing

instruments and make the best possible use of the

existing Treaties. In a nutshell, this entails boosting

competitiveness and structural convergence, completing

the Financial Union, achieving and maintaining

responsible fiscal policies at national and euro area

level, and enhancing democratic accountability.

Stage 2: In this second stage (‘completing EMU’),

concrete measures of a more far-reaching nature

would be agreed to complete EMU’s economic and

institutional architecture. Specifically, during this second

stage, the convergence process would be made more

binding through a set of commonly agreed benchmarks

for convergence that could be given a legal nature.

Significant progress towards these standards – and

continued adherence to them once they are reached

– would be among the conditions for each euro area

Member State to participate in a shock absorption

mechanism for the euro area during this second stage.

Final Stage (at the latest by 2025): At the end

of Stage 2, and once all the steps are fully in place,

a deep and genuine EMU would provide a stable and

prosperous place for all citizens of the EU Member

States that share the single currency, attractive for

other EU Member States to join if they are ready to do

so.

The Presidents of the EU institutions will follow up on

the implementation of the recommendations in this

report. To prepare the transition from Stage 1 to Stage

2, the Commission will present a White Paper in spring

2017 assessing progress made in Stage 1 and outlining

the next steps needed, including measures of a legal

nature to complete EMU in Stage 2. The White Paper

will draw on analytical input from an expert consultation

group, which will further explore the legal, economic

and political preconditions of the more long term

proposals contained in this report. It will be prepared

in consultation with the Presidents of the other EU

institutions.

This report puts forward ideas which, following further

discussion, can be translated into laws and institutions.

This requires a broad, transparent and inclusive process

– a process which should begin without delay.

 

I) Jay W. Forrester (1998) Designing the Future. Universidad de Sevilla, Spain, December 15, 1998, Copyright © 1998 by Jay W. Forrester, Permission granted for copying and electronic distribution for non-commercial educational purposes.:

„ …. The Profession of Social System Design

Social-system design will become a recognized profession. It will require the

same kind of intensive education that is necessary in other professions. Only

fragments of a system-designer education now exist. Teaching materials are

available for no more than a two-year sequence in system dynamics. Many

academic levels now teach system dynamics—in precollege schools, in

undergraduate programs, and in graduate schools. However, the different

educational levels all start with students as beginners. The programs are not

cumulative. Education in the behaviour of social systems is now at about the same

point of development as was education in medicine and engineering a hundred years

ago.

Social system design presents a major challenge to the educational

establishment. Precollege schools from kindergarten through age seventeen are

now pioneering the use of system dynamics as a foundation under most subjects.

Teachers and students are building simulation models of environmental, family, city,

and political systems. English teachers are experimenting with simulation of plots in

literature. Students are fascinated with the insights gained by modelling

psychological dynamics as in Shakespeare’s “Hamlet.”

After observing progress in learning about systems in kindergarten through

high school, many of us believe that everything now known in the field of system

dynamics can be learned by age 14. If all that we now know about systems can be learned before high school, we lack material for the four years of high school, and the four years of undergraduate education, and three years of graduate study. We must create at least eleven years more of educational materials before we can claim to have a curriculum for training social-system designers.

During the past century, the frontier of human advancement has been the

exploration of science and technology. Science and technology are no longer

frontiers, they have receded into the fabric of everyday activity. I believe that we

are now embarking on the next great frontier, which will lead to a far better understanding of social and economic systems.“

J) Schmid-Schmidsfelden, Hubertus and Kristina Potapova (2016) The Bear in Sheep’s Clothing:

Russia’s Government-Funded Organisations in the EU.

 

Excecutive Summary

 

This paper sheds light on organisations operating in Europe that are funded by the Russian government,

whether officially or unofficially. These include government-organised non-governmental organisations

(GONGOs), non-governmental organisations (NGOs) and think tanks. Their number and activities

have been growing, but their financing is often complex and hidden from the public eye. Their goal is to shift

European public opinion towards a positive view of Russian politics and policies, and towards respect for

its great power ambitions. In light of Russia’s annexation of Crimea, Russian aggression in Eastern Ukraine

and concerns over the militarisation of the country under President Vladimir Putin, the overt or covert support

for GONGOs, NGOs and think tanks in the EU must become a matter of concern to the EU.

Russian and Russia-funded GONGOs, NGOs and think tanks belong within the framework of a particular

vision of ‘soft power’. It is one that relies on coercion more than on attraction, opposes democracy and

human rights, offers ‘traditional values’ and ‘a strong leader’, and promotes the narrative that the US is a

common enemy for Russia and Europe. This paper reveals the broad range of methods and institutions that

the Russian government is using to influence decision-makers and public opinion in the EU. The methods

range from using anti-Americanism in France and focusing on business ties in Italy to emphasising the

common Orthodox faith in the Eastern Balkans.

The different categories of organisation—GONGOs, NGOs and think tanks—serve somewhat different

aims in promoting Russia’s strategy in the EU. These are described in individual sections of the paper. The

GONGOs—for example, the Russkiy Mir Foundation and Rossotrudnichestvo—are based in Russia but

can have numerous branches in the EU. They tend to focus on Russian speakers abroad; some of them

provide grants to promote the spread of Russian culture and political ideas. These GONGOs are overseen

by high-level political figures, such as Konstantin Kosachev, chair of the foreign affairs committee in the

Federation Council; Russian Foreign Minister Sergey Lavrov; and Vitaly Ignatenko, deputy chair of the

Foreign Affairs Committee of the Federation Council. This shows how closely these organisations are tied

to Russian foreign policy.

Official Russian think tanks, such as the Valdai Discussion Club, are based in Russia; some have

branches in the EU. They produce analyses for the government and the president, and their analyses often appear in the Russian media.

 K)Ennuste, Ülo; Alar Kein and Teet Rajasalu (2002) INSTITUTIONAL DETERMINANTS OF CONVERGENCE: CONCEPTUAL FRAMEWORKS AND EMPIRICAL STUDIES OF ESTONIAN

INSTITUTIONAL HARMONISATION AND SOCIOECONOMIC CONVERGENCE WITH THE EU.

CERGE-EI GDN programm project No. 34, 2002 Final Report. Estonian Institute of Economics at Tallinn Technical University:

https://iweb.cerge-ei.cz/pdf/gdn/RRCII_34_paper_01.pdf

Executive summary

Our main policy implication findings in the three parts of the Project are as follows:

Part One by Teet Rajasalu: Indicators of Economic Freedom and Economic

Structure as Determinants of Growth and Convergence in Enlarging EU and

priorities for Estonia can be summarised as follows:

  1. General indicators of institutional development like education, health of population

and labour force, political rights and civil liberties cannot explain cross-country

differences in growth rates within the enlarging EU well enough. Institutional

determinants that have been proved to be statistically significant determinants of

growth rates by many authors in worldwide sample countries or in various samples

of transition economies do not perform so well in EU member states and candidate

countries where the harmonisation process has induced a rather high similarity in

general institutional development. More closely economy related indicators of

economic freedom were better correlated with the growth differentials and

convergence within the enlarging EU. The findings confirm Estonia’s rather good

prospects for further growth and convergence with the EU as its economic freedom

ranking is high and initial income level low.

  1. Besides economic freedom indices, some structural indicators of the economy

deserve attention in the evaluation of economic growth and convergence prospects.

It happened that regressions augmented by structural indicators explained growth

rates better. However, these regressions failed to prove long run income

convergence in enlarging EU.

  1. Additionally to overall indicators of economic freedom and sub-indices of fiscal

burden, foreign capital movement regulations and monetary stability, structural

indicators like the percentage share of gross capital formation in GDP and share of

high technology exports in total manufacturing exports deserve special attention.

However, high shares of the aforementioned structural indicators can be also

interpreted as results of advancements in building up institutions that promote high

investment ratios and high technological level of exports. These policy relevant

findings were helpful in targeting Estonia’s institution design.

Part Two by Alar Kein: Estonian Institutional Harmonisation and Socio-Economic

Convergence with the EU: the Aspects of Development, Credibility and

Consistency of Estonian Capital Markets

  1. The securities market development in Estonia has reached a new phase –

international integration stage, which is characterised by the strengthening of links

with foreign markets and market participants. Although this process should be

viewed generally as a positive one from the point of view of securities market

development, there could be also several unwanted developments that might

accompany this process. Our primary concern is that the strengthening of integration

with foreign markets and market participants may also lead to increasing

transmission of instability from foreign markets to the domestic market. Such

potential danger calls for policies that are aimed at reduction of transmission of

instability from international markets.

  1. The transformation from a pay-as-you-go pension system to a funded pension

system, which was launched in Estonia in 2001, opens up new prospects for the

securities market development. With the expected annual flows of hundreds of

millions of Estonian kroons into pension funds already in the near future it clearly

enhances (triggers) the demand for securities and can potentially serve as a catalyst

for securities market development. Given the current state and structure of primary

market as well as the predominantly small-scale nature of the corporate sector (i.e.

lack of qualified potential corporate issuers) there is great concern that this increase

in demand would not be adequately met by the domestic supply of new securities.

As a result, larger outflow of domestically accumulated funds than desirable from

the point of view of domestic economy would occur. The supply constraints could

be eased by privatisation of major large-scale state-owned infrastructure enterprises

(such as Estonian Energy) or by issuing Government (or its agencies’) securities

(bonds). Other ways to alleviate the problem could be assets securitisation and

financial innovation in general in the domestic market.

  1. In 2002 the new Secur ities Markets Act, which strengthened the investor protection,

became effective and unified supervision over financial sector began operating. As a

result of these major changes the Estonian securities market has “potentially”

undergone remarkable improvements from the point of view of its credibility and

consistency with internationally recognised general principles. We emphasise

“potentially” since such evaluation is conditional that supervisory authority will also

enforce the principles laid down in the regulations and prove its effectiveness. At

least the preconditions for this have been established by regulatory and

organisational changes, although the increasing international integration with

foreign markets and its participants calls also for more extensive co-operation with

international supervisory authorities.

  1. Considering the adjustment processes that have already occurred in the regulatory

framework, the EU membership would affect the development of Estonian securities

market primarily via its impact on the real economy. The prospects opened up (or

closed) for the Estonian corporate sector by the EU membership are definitely

another critical (underlying) factor that determines the development of Estonian

securities market. Considering this, it is highly important to adopt or negotiate

policies that increase the competitiveness of the Estonian corporate sector.

Part Three by Ülo Ennuste: A LP Analysis of Economic Sector Institutional

Structure

  1. Many changes take place in institutional structures of economic sectors in the

transition and accession countries. Contrary to the popular policy beliefs that these

changes of separate institutions are not significantly interconnected and should not

be carefully synchronised, the more rigorous modelling analysis of this problem

verifies the economic importance of considering and co-ordinating the compatibility

and complementarity aspects of changes in the institutional structures. Surprisingly

little research has been done in this field. What distinguishes our work here is that

we consider a planner who is implementing an optimal institutional structure in the

economic sector, which will in its turn design an optimal market allocation situation.

  1. The linear planning model synthesised in the project for institutional design analyses

of the national economic sector should help to arrange and systematise the lines of

reasoning in this field and help to quantify the mysterious interconnection effects of

institutional arrangements. The model may be a useful complementary tool in the

design analysis of national industrial institutional structures.

  1. Decomposition analysis of this type of institutional macro-models combined with

the modern implementation theory will help to deduce micro-economic “political

agents market games” or normative considerations for national mechanisms and

rules for social institutional design implementations.

The rules of these games demonstrate that for the implementation of social

institutional choices it is necessary A) to introduce the informational side-payments

systems for the designing agents to induce their truth-telling and B) for coordination

of agents policy choices to introduce some kind of national institutional

shadow price system.

  1. We give some Estonian case model specification illustrations mainly to demonstrate

the broad spectre of issues that may be involved in this analysis. The results of this

paper also suggest that for the quantification of the institutional design data the

inelegant engineering like data calibration methods may come as most convenient.

  1. With the help of the model we are now in the position to pursue several further

directions in this field. One direction is to explore the use of this model in the case

studies as a simple planning tool. In this case the experts have to submit the

perspective institutional input-output data to the social institutional planner and

institutional side-payments for the truth-telling should be applied.

There are several other directions. On the basis of decomposition analysis of the

model it is fairly easy to show a shadow-price and side-payment co-ordination

mechanism and rules for the decentralised solution of the model by individual

institutional design agents and its application in the national economy.

 

PART 1. Indicators of Economic Freedom and Economic Structure as

Determinants of Growth and Convergence in Enlarging EU and Priorities for

Estonia

 

Abstract

Estonia and many other candidate countries will join the European Union with

remarkably lower income levels. They will face a rather long- lasting catching-up

process that is expected to be driven by convergence. The paper studies some more

general indicators of institutional development as determinants of conditional betaconvergence

in the European Union and candidate countries including some indicators

of education and health, political rights and civil liberties. Indicators of economic

freedom are studied more thoroughly. To reach better approximation of growth rates,

panel estimates of economic freedom indicators are complemented with some structural

indicators of economy. Estonia’s prospects for catching-up and convergence with the

European economies are assessed using most relevant institutional development and

structural indicators.

Journal of Economic Literature (JEL) Classification numbers: C2, E6, F02, F15, O17,

O52

Keywords: Candidate countries, convergence, cross-sectional data, economic growth,

econometric analysis, European Union, institutional development.

1.1. Introduction

Estonia’s GDP per capita at purchasing power parity (PPP) is much lower than in the

European Union member states. The fact makes catching up and real convergence with

the EU income levels one of the most urgent tasks of Estonia’s economic policy.

According to the European Commission (2001, p. 19) estimations it will take 19 years

before Estonia may reach 75% of the EU-15 GDP per capita level at purchasing power

standards (PPS). Building of efficient and credible institutions is thought to be one of

the factors that can accelerate catching up and pave the way to real beta-convergence.

Institutional development in candidate countries is also to increase coherence in the

integrating Europe and reduce idiosyncrasies in responses to European monetary and

fiscal policies.

The current study tries to estimate contribution of some aggregate institutions to

economic growth within the traditional conditional beta-convergence approach. Various

indicators that are treated as proxies of institutional development are fitted into

conditional convergence equations to find out which of them are topical in the EU

enlargement context. We also try to assess Estonia’s prospects considering institutional

development indicators that prove to be best determinants of real convergence. …

 

  1. x) Advertisement:

World Interdisciplinary Network for Institutional Research

Third WINIR Conference

2-5 September 2016

Seaport Boston Hotel, Boston, Massachusetts, USA

It is now widely accepted that institutions, broadly defined as systems of established social rules, play a major role in explaining human behaviour. Although scholars generally agree that institutions coordinate human behaviour and to a certain extent mould it into recognizable patterns, there is much less consensus regarding the precise mechanisms involved. We also have yet to fully understand the ways in which alternative rule systems and behavioural patterns emerge, persist and evolve to create our complex social systems.

Theoretical and empirical research into these important topics needs to draw on insights from multiple academic disciplines, including anthropology, economics, ethnology, history, human geography, law, linguistics, management, philosophy, politics, psychology and sociology.

The Third WINIR Conference will provide a forum for leading scholars to advance the ongoing conversation about these and other key issues in the growing area of institutional research.

Keynotes lectures, representing five academic disciplines, will be given by:

Darin Acemoglu (MIT, economics)
John L. Campbell (Dartmouth, sociology)
Margaret Gilbert (UC Irvine, philosophy)
Henry Hangman (Yale, law)
Wendy Wood (USC, psychology)

Abstract submissions about institutions (or organisations), and/or institutional thought from any discipline or theoretical approach are welcome (300 words max.).

Unconfined to any single academic discipline or any particular methodology, WINIR accepts contributions from any approach that can help us understand the nature and role of institutions. WINIR aims to promote creative conversations across disciplinary boundaries in order to build an adaptable and interdisciplinary theoretical consensus concerning core issues, which can be a basis for cumulative learning and scientific progress in the exciting and rapidly-expanding area of institutional research.

Submissions will be evaluated by the WINIR Scientific Quality Committee: Peter Boettke (George Mason University, economics), Simon Dakin (University of Cambridge, law), Geoff Hodgson (University of Hertfordshire, economics), Timur Kuran (Duke University, economics),Uskali Mäki (University of Helsinki, philosophy), Katharina Pistor (Columbia University, law), Sven Steinmo (European University Institute, politics), Wolfgang Streeck(Max Planck Institute Cologne, sociology).

L)Hansen, Bradley A. and Mary Eschelbach Hansen (2015) „The historian’s craft and economics“ Journal of Institutional Economics, DOI: http://dx.doi.org/10.1017/S1744137415000363, Published online: 10 September 2015

Abstract

History refers both to the past and to the systematic study of the past. Attempts to make a case for history in economics generally emphasize the first definition. There are benefits from increased attention to the past. This paper argues that significant benefits can be gained from increased attention to the systematic study of the past, the historian’s craft. The essence of the historian’s craft is the critical evaluation of sources. Failure to critically evaluate sources has the potential to lead to erroneous conclusions, whether one is using historical documents or more recently created data.

Linked references

  1. Blasius andJ. Friedrichs (2012), ‘Faked interviews’, in S. Salzborn, E. Davidov and J. Reinecke (eds.), Methods, Theories, and Empirical Application in the Social Sciences: Festschrift for Peter Schmidt, Wiesbaden: Springer VS.
  2. J. Boettke ,C. J. Coyne andP. T. Leeson (2008), ‘Institutional Stickiness and the New Development Economics’, American Journal of Economics and Sociology, 67 (2): 331–358.

 

 

  1. lasius andJ. Friedrichs (2012), ‘Faked interviews’, in S. Salzborn, E. Davidov and J. Reinecke (eds.), Methods, Theories, and Empirical Application in the Social Sciences: Festschrift for Peter Schmidt, Wiesbaden: Springer VS.
  2. J. Boettke ,C. J. Coyne andP. T. Leeson (2008), ‘Institutional Stickiness and the New Development Economics’, American Journal of Economics and Sociology, 67 (2): 331–358.

N6 Long-term expensive environmental damages

 

A)Raukas (2005):

 

„3 . 5 . SILLAMÄE INDUSTRIAL COMPLEX AND WASTE DEPOT

The processing of uranium ore in Sillamäe began in 1948. At first, local

Dictyonema argillite was used as raw material. As the uranium content

of the ore is low (0.03 % in average), it was later replaced by a more rich

ore imported from Eastern Europe. The plant’s administration maintains

that more than 4 million tonnes of uranium ore have been processed at

Sillamäe. In parallel, the plant started processing loparite, a radioactive

mineral mined in the Kola Peninsula, in order to separate from it rare earth

metals, niobium, tantalum etc. In first years of production, the processing

waste was deposited on the low coastal terrace of Päitenina. Construction

of a waste storage separated from the sea with a dam was started

there in 1959; later, the storage has been enlarged to correspond to the

growing need. According to assessments, the volume of the storage is

about 8 million m3 at present; one-half of this amount is made up by the

processing waste of uranium ore. There was a danger that water trickling

through waste layers could create a sliding plane on the Cambrian clay,

the layer which lies under the storage and is tilted towards the sea; as a

result, the radioactive waste could slide into the Gulf of Finland. Heavy

storms increasingly destabilised the dam by eroding the coastal terrace.

As the environmental security of the Sillamäe waste storage concerns

all the Baltic Sea states, a working group of experts, SIERG, was established

in 1997 on the initiative of Sweden; the group included specialists

from Sweden, Finland, Norway and Estonia. On 13 October, 1999, the

Minister of Environment of Estonia, representatives of the governments

of the Nordic countries and NEFCO signed an agreement on sanitation of

the storage. According to the agreement, this most hazardous pollution

source of the Baltic Sea region will be made safe by 2006. The project

is funded by the European Commission (EUR 5m), the Governments of

Norway (USD 2m), Sweden (EUR 1m), Denmark (USD 1m), Finland (USD

1m) and Estonia (EUR 3m), as well as by NEFCO (EUR 2m). A long-term

environmental loan of EUR 5m from the Nordic Investment Bank to

Estonia is to be added to this sum. The total cost of the project is about

EEK 320m.

3 . 6 . THREE IMPORTANT CONCLUSIONS

On the basis of the above, and especially on the example of Sillamäe,

we can draw three important conclusions: 1) the environmental damage

caused by the Soviet Union and Russia is huge; 2) neutralisation of this

damage is a long-term process (sic! in the case of contamination with nuclear waste very long term – üe); 3) the damage can be neutralised only with the assistance of international cooperation. The present review includes only a limited selection of the cases of environmental damage

done by the occupation army. The real situation is even worse. It is

possible that we are unaware of the real situation, because the Russian

Army, which left Estonia in 1994, did not leave any documents about their

pollution; on the contrary, it tried to conceal its deeds. We know virtually

nothing of pollutants dumped into the sea, and the bowels of the earth

may still conceal many unpleasant things in Estonia.“

 

NB!                                                                 

Ten years ago there has been still much uncertainty about long-term environmental damages caused by 1940-91 terrorist occupation – especially by Soviet troops and with nuclear waste etc – consequently this chapter by Raukas needs presently certainly fundamental updating – to be the basis for real contemporary political decisions.

 

 

 

 

 

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ANNEX 1: Futher Readings

                                    

A)In JOCE 2016+ https://uloennuste.wordpress.com:

 

http://www.journals.elsevier.com/journal-of-comparative-economics/recent-articles

+ https://uloennuste.wordpress.com

 

https://uloennuste.wordpress.com/2016/01/18/projekti-orurkvalgeraamat-uurimuste-taienduslaiendus-lahte-kontsepsioon-visand-18-i-2016-taiendamiseks-mitte-levitamiseks-voi-viitamiseks/

 

B)References from Kirch et al. (2008)

 

Candidate Countries Eurobarometer (CCEB) 2003.4. (Fieldwork: Oct-Nov 2003; Publ.:

February 2004). European Commission.

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Estonian National Electoral Committee (2003): Voting results. Available at:

http://www.vvk.ee/rh03/tulemus/enght.html

Eurobarometer 67: Public Opinion in the European Union. (Fieldwork: April-May 2007;

Publ.: Nov 2007) http://ec.europa.eu/public_opinion/archives/eb/eb67/eb67_en.pdf

Issakov, S. (2004) Mõtteid eestivene kultuuri olemusest – “Eesti Päevaleht”, 28. veebr.

Kirch, A.; Rull, E.; Tuisk, T. (2001). Group identity dynamics of Estonian and Polish students

in the EU integration process. – Trames, 5 (55/50),4, 321 – 335.

Kirch, A; Talts, M.; Tuisk, T. (2004). The Identity Dynamics of the Estonians and the

Russians Living in Estonia Before and After the EU Referendum. In: Ethnicity Studies 2004 :

Perceptions of European Integration.- Centre of Ethnic Studies of the Institute for Social

Research.- Vilnius, 2004. 33-47.

Kirch, A.; Tuisk, T. (2007). European Identity: A study using the method of Identity Structure

Analysis. In: Europe – after historical enlargement. The Proceedings of the 5th Audentes

Spring Conference 2006 and other papers on Europe’s current political, legal, economic and

social affairs. Tallinn: Institute for European Studies, International University Audentes, Vol

3, 282 – 303.

Korostelina, K. V. (2007). Readiness To Fight in Crimea: How It Interrelates with National

and Ethnical Identities. In: James L. Peacock, Patricia M. Thornton, Patrick N. Inman (Eds.)

Identity Matters. Ethnic and Sectarian Conflict. Berghahn Books: New York, Oxford, 49-72.

Maldre, Patrik (2016) THE RUSSIAN CYBER THREAT: VIEWS FROM ESTONIA:   http://upnorth.eu/the-russian-cyber-threat-views-from-estonia/

Pettai, Ü. (2008). Estonian Labour Force Survey, 2007. – Eesti Statistika Kuukiri – Monthly

Bulletin of Estonian Statistics, No 2, 2008, 42.

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Office of Population Minister] (2007). – Rahvussuhted & integratsioonipoliitika väljakutsed

pärast pronkssõduri kriisi [Interethnic Relations and Challenges of Integration Policy after

Bronze Soldier Crisis], July 2007, 69 p.

Tilly, C. (2008). Democracy. Cambridge: Cambridge University Press, 234 p.

Tuisk, T. (1994) Methodological Aspects of Research. In: Kirch, Marika and Laitin, David

(Eds.) Changing Identities in Estonia. Sociological Facts and Commentaries. Estonian

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Studies, 25-30.

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Päevaleht, 26 Apr, 2008.

Vihalemm, T. and Masso, A. (2003). Identity Dynamics of Russian-speakers of Estonia in

the Transition Period. – Journal of Baltic Studies, Vol. XXXIV, (Spring), 92-117.

Weinreich, P. (1980/1986) Manual for Identity Exploration using Personal Constructs (2nd

edn). Warwick: Centre for Research in Ethnic Relations, University of Warwick, Economic

and Social Research Council, Centre for Research in Ethnic Relations.

Weinreich, P., (2003) Identity structure analysis. – In: Weinreich P. and Saunderson W.

Analysing Identity: Cross-cultural, Societal, and Clinical Contexts. Routledge, London and

New York.

Weinreich, P., (2003a) Identity exploration: Theory into practice. – In: Weinreich P. and

Saunderson W. Analysing Identity: Cross-cultural, Societal, and Clinical Contexts.

Routledge, London and New York.

 

B)Publicher VALGE RAAMAT Series Digital Publications

https://uloennuste.wordpress.com/2015/05/13/webdigital-publications-on-the-losses-inflicted-on-the-estonian-nation-by-occupation-regimes-1940-91/

 

Appendix 2: ABBREVIATIONS

iCountries and regions

EU European Union

EA euro area

BE Belgium

BG Bulgaria

CZ Czech Republic

DK Denmark

DE Germany

EE Estonia

IE Ireland

EL Greece

ES Spain

FR France

HR Croatia

IT Italy

CY Cyprus

LV Latvia

LT Lithuania

LU Luxembourg

HU Hungary

MT Malta

NL The Netherlands

AT Austria

PL Poland

PT Portugal

RO Romania

SI Slovenia

SK Slovakia

FI Finland

SE Sweden

UK United Kingdom

JP Japan

US United States of America

CIS Commonwealth of Independent States

EFTA European Free Trade Association

MENA Middle East and North Africa

ROW Rest of the World

Economic variables and institutions

CPI Consumer price index

ESI Economic Sentiment Indicator

GDP Gross Domestic Product

GNI Gross National Income

HICP Harmonised Index of Consumer Prices

NPL Non-performing loan

PMI Purchasing Managers’ Index

VAT Value-Added Tax

ECB European Central Bank

Fed Federal Reserve, US

IMF International Monetary Fund

OECD Organisation for Economic Cooperation and Development

OPEC Organisation of the Petroleum Exporting Countries

Other abbreviations

APP Asset purchase programme

FDI Foreign Direct Investment

Formal Accordind to official regular

FY Fiscal year

GGDP Genuine GDP (GDP+ Satellite Accounts)

Informal Not in the official regular statistics

NFC Non-Financial Corporations

SAFE Survey on the Access to Finance of Enterprises

SME Small and medium-sized enterprises

Graphs/Tables/Units

bbl Barrel

bn Billion

  1. /bps. Basis point / points

lhs Left hand scale

mn Million

  1. / pps. Percentage point / points
  2. / pts. Point / points

Q Quarter

q-o-q% Quarter-on-quarter percentage change

rhs Right hand scale

Satellite Account IMF(2009)

th Thausend

tn Trillion

y-o-y% Year-on-year percentage change

÷ in the interval

(10¤i) 10ⁱ

üe Ülo Ennuste

 

C)Useful Links

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975809236&_sort=r&_st=13&view=c&md5=c8cbd80ce3c89f76826648e113e4c244&searchtype=a

Web/Digital Publications on the Losses Inflicted on the Estonian Nation by Occupation Regimes 1940-91

http://www.faz.net/aktuell/wissen/weltrettung-im-namen-ihrer-exzellenz-13682781.html

https://ec.europa.eu/jrc/en/event/beyond-gdp-measuring-progress-true-wealth-and-well-being-nations-7763  beyond the GDP JRC

http://www.communistcrimes.org/en/Database/Estonia/Estonia-Communist-Era

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975442800&_sort=r&_st=13&view=c&md5=03b881af964314d34505e67fcd6ef272&searchtype=a

NWI and proxies

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975432977&_sort=r&_st=13&view=c&md5=e6fee6167689260d555ab20411ed394a&searchtype=a

beyond the gap

http://www.sciencedirect.com/science/journal/aip/09218009 ecological econ jour

http://www.sciencedirect.com/science/journal/01640704/45 social macro

http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=9160033&fileId=S1744137413000349 Buchannan

http://statistika.eestipank.ee/?lng=et#listMenu/1877/treeMenu/MAKSEBIL_JA_INVPOS/145/300

http://www.eestipank.ee/en/publication/occasional-papers/2016/jaanika-merikull-tairi-room-assets-liabilities-and-wealth-estonian-households-results-household

http://europa.eu/rapid/press-release_IP-16-1349_et.htm  maksud 12.IV

http://statistika.eestipank.ee/?lng=et#listMenu/1873/treeMenu/MAKSEBIL_JA_INVPOS/146

http://statistika.eestipank.ee/?lng=et#listMenu/1950/treeMenu/MAKSEBIL_JA_INVPOS/145/436

 

NB! – http://europa.eu/rapid/press-release_IP-16-1349_et.htm

 

http://statistika.eestipank.ee/?lng=et#listMenu/1877/treeMenu/MAKSEBIL_JA_INVPOS/145/300

Wolf, Martin (2016): https://next.ft.com/content/c72960f0-088c-11e6-a623-b84d06a39ec2

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975809236&_sort=r&_st=13&view=c&md5=c8cbd80ce3c89f76826648e113e4c244&searchtype=a

https://ec.europa.eu/jrc/en/event/beyond-gdp-measuring-progress-true-wealth-and-well-being-nations-7763  beyond the GDP JRC

http://www.communistcrimes.org/en/Database/Estonia/Estonia-Communist-Era

 

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975442800&_sort=r&_st=13&view=c&md5=03b881af964314d34505e67fcd6ef272&searchtype=a

NWI and proxies

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975432977&_sort=r&_st=13&view=c&md5=e6fee6167689260d555ab20411ed394a&searchtype=a

http://www.sciencedirect.com/science/journal/aip/09218009 ecological econ jour

http://www.sciencedirect.com/science/journal/01640704/45 social macro

http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=9160033&fileId=S1744137413000349 Buchannan

http://statistika.eestipank.ee/?lng=et#listMenu/1877/treeMenu/MAKSEBIL_JA_INVPOS/145/300

http://europa.eu/rapid/press-release_IP-16-1349_et.htm  maksud 12.IV

http://statistika.eestipank.ee/?lng=et#listMenu/1873/treeMenu/MAKSEBIL_JA_INVPOS/146

http://statistika.eestipank.ee/?lng=et#listMenu/1950/treeMenu/MAKSEBIL_JA_INVPOS/145/436

http://europa.eu/rapid/press-release_IP-16-1349_et.htm

http://statistika.eestipank.ee/?lng=et#listMenu/1877/treeMenu/MAKSEBIL_JA_INVPOS/145/300

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975442800&_sort=r&_st=13&view=c&md5=03b881af964314d34505e67fcd6ef272&searchtype=a

http://www.sciencedirect.com/science?_ob=ArticleListURL&_method=list&_ArticleListID=-975432977&_sort=r&_st=13&view=c&md5=e6fee6167689260d555ab20411ed394a&searchtype=a

http://www.sciencedirect.com/science/journal/aip/09218009 ecological econ jour

http://www.sciencedirect.com/science/journal/01640704/45 social macro

http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=9160033&fileId=S1744137413000349 Buchannan

http://statistika.eestipank.ee/?lng=et#listMenu/1877/treeMenu/MAKSEBIL_JA_INVPOS/145/300

http://www.eestipank.ee/en/publication/occasional-papers/2016/jaanika-merikull-tairi-room-assets-liabilities-and-wealth-estonian-households-results-household

http://europa.eu/rapid/press-release_IP-16-1349_et.htm  maksud 12.IV

http://statistika.eestipank.ee/?lng=et#listMenu/1873/treeMenu/MAKSEBIL_JA_INVPOS/146

http://statistika.eestipank.ee/?lng=et#listMenu/1950/treeMenu/MAKSEBIL_JA_INVPOS/145/436

 

http://europa.eu/rapid/press-release_IP-16-1349_et.htm

http://statistika.eestipank.ee/?lng=et#listMenu/1877/treeMenu/MAKSEBIL_JA_INVPOS/145/300

 

 

 

 

 

 

 

ANNEX Y

Making the Eurozone more resilient: What is needed now and what can wait?

Resiliency Authors 25 June 2016

Britain voted to leave the EU. This is terrible news for the UK, but it is also bad news for the Eurozone. Brexit opens the door to all sorts of shocks, and dangerous political snowball effects. Now is the time to shore up the Eurozone’s resiliency. The situation is not yet dire, but prompt action is needed. This Voyeur column – which is signed by a wide range of leading economists – identifies what needs to be done soon, and what should also be done but can probably wait if markets are patient. 

 

Related

Giancarlo Corsetti, Lars P Feld, Ralph S.J. Koijen, Lucrezia Reichlin, Ricardo Reis, Hélène Rey, Beatrice Weder di Mauro

Christopher Pissarides

Richard Baldwin, Francesco Giavazzi

Rebooting Consensus Authors

Richard Baldwin, Francesco Giavazzi

The UK’s choice to leave the EU was, we believe, a historic mistake. But the choice was made; we must now turn to damage control – especially when it comes to the euro.

The Eurozone is growing, albeit slowly. If all goes as forecast, economic health will eventually be restored, unemployment will decrease, and the periphery countries will regain competitiveness.

But things rarely go as forecast – as we were so forcefully reminded last week. Brexit was the latest – but certainly not the last – shock that will challenge the monetary union.

The question is: Is the Eurozone resilient enough to withstand the bad shocks that it is likely to face in the months and years to come?

For many observers, the answer is “no”. To survive the next bad shock, they argue, Europe’s monetary union needs major reform and deeper political integration. As such deeper integration is extremely difficult in today’s political climate, pessimism is the order of the day.

We do not share this pessimism. The Eurozone’s construction has surely followed a convoluted process, but the fundamental architecture is now in place. Yes, some measures are needed to strengthen this architecture. And yes, more ambitious steps would improve resilience further, but these will have to wait for a political breakthrough.

The purpose of this essay is to identify what needs to be done soon, and what would be good to do but can probably wait. To avoid the mind-numbing details that often cloud discussions of Eurozone reform, we paint our arguments with a broad brush. (We will follow up with further documents with much greater detail on specific reform proposals.)

On banks and the financial system

Think of a good financial architecture for the Eurozone as achieving two main objectives in coping with another bad shock: 1) reducing the risk of bank defaults; and 2) containing the broader economic effects when defaults do occur.

This architecture is largely built. Both supervision and regulation are now largely centralised. Supervision is improving and stress tests are becoming more credible with each iteration. The Single Resolution Mechanism is in place and private-sector bail-in rules have been defined. The Single Resolution Fund can provide some recapitalisation funds if and when needed. If they turn out not to be enough, the European Stability Mechanism (ESM) can, within the context of a macroeconomic adjustment programme, add more. In the longer term, a euro-wide deposit insurance scheme could improve resiliency, but this will take time.

So what more needs to be done soon? Mostly to make sure that the rules in place can be enforced. Italy provides two cases in point. First, non-performing loans have steadily increased and are carried on the books at prices substantially above market prices. Second, the Italian government has proven very reluctant to apply the bail-in rules. The credibility of the rules is at stake. Either they have to be applied, or credibly modified.

What are the measures that would be good to take, but can probably wait?

Diversifying the portfolios of banks so that there are more resilient to domestic shocks would clearly be desirable. The focus has been on decreasing the proportion of domestic sovereign bonds in banks’ portfolios. This would be good, but domestic sovereign bonds represent a relatively small proportion of banks’ portfolios. Decreasing banks’ overexposure to domestic loans would also be an important step towards boosting resiliency. A different approach would be to transfer the responsibility for banks’ rescue from national governments to the ESM. But this is the kind of political step that seems unlikely to be feasible in the near term.

On public finances

Public debt is high, even if, for the time being, low interest rates imply a manageable debt service. Just as for the financial system, a resilient public finance architecture needs to:  1) reduce the risk of default; and 2) contain the adverse effects of default, if it were to occur nevertheless.

On both counts, much remains to be done.

Reducing the risk of default is best achieved through a combination of good rules and market discipline. Neither is really in place. The accumulation of rules has made them unwieldy, unenforceable, and open to too many exceptions. They can and should be simplified. In most countries, the level of expenditure – rather than the deficit – is the main problem. High expenditure makes it difficult to raise taxes and balance the budget, leading to dangerous debt dynamics. Thus, a focus on expenditure rules, linking expenditure reduction to debt levels, appears to be one of the most promising routes. Market discipline, on the other hand, will not work if the holders of the debt do not know what will happen if and when default takes place. This takes us to the second objective.

Resiliency Authors (25.VI 2016)“Making the Eurozone more resilient: What is needed now and what can wait?“:

http://voxeu.org/article/making-eurozone-more-resilient-what-needed-now-and-what-can-wait#  :

„ … The Eurozone has put in place the right institution to deal with default, namely the ESM. Like the IMF, the ESM can, under a programme, help a country adjust. In its current form however, the ESM falls short of what is needed. First, the ESM’s ‘firepower’ is too small compared to the sort of shock-absorbing operations it may be called on to undertake in the case of a large Eurozone nation getting into debt trouble. Second, given its current decision-making procedures, markets cannot be sure that action will be taken promptly. Higher funding or higher leverage, and changes in governance such as replacing the requirement of unanimity by a more flexible one, are needed to make the ESM able to respond quickly and fully to a country in trouble. Third, the current structure is silent on who should negotiate a public debt restructuring in the extreme case where one was needed. Putting an explicit process in place should be a priority; the ESM is the natural place for it. … “

What other measures which would be good to have, but can probably wait?

Initiatives to address the legacy of high public debt would bolster Eurozone resiliency and thus would be very useful. However, as low interest rates are likely for some time to come, debt service is manageable, and debt forecasts show that debt-to-GDP ratios will slowly decline (absent a bad shock). Since proposals for dealing with legacy national debts would require the sort of political willpower that seems in short supply for now, such plans cannot be realistically put on the ‘do now’ menu, even if they are may be necessary in the future.

Another set of measures would implement stronger risk sharing, and transfer schemes to further reduce the impact of domestic shocks on their own economy. Proposals run from euro bonds to fiscal transfer schemes for countries subject to bad shocks. These measures would make the Eurozone more resilient and thus may be desirable. But, equally clearly, they would require more fiscal and political integration than is realistic to assume at this point. We believe that the Eurozone can probably function without tighter fiscal integration at least for some time.

We end with two sets of remarks.

Solvency and liquidity

Whether it is with respect to banks or states, the two issues facing policymakers are how to deal with solvency and liquidity problems. We have argued that, when solvency is an issue, the ESM is the right structure to address it (assuming a public debt restructuring procedure is in place). With respect to liquidity, we believe that, in addition to the liquidity facilities of the ECB, which can address sudden stops on banks, the Outright Monetary Transactions (OMT) is the right structure to address sudden stops facing states. One step that could be taken soon is a clearer articulation of how to combine the two. This would clarify the role of the ECB, and eliminate a source of criticism about the allocation of roles between the ECB and other Eurozone structures such as the ESM. The resulting clarity would make it easier for markets and investors to be assured that Europe’s monetary union could deal effectively with any future shocks.

Structural reforms

In any country, at any point, some pro-growth structural and institutional reforms are desirable. Is there a particularly strong argument for them in the case of the Eurozone? To some extent, yes. The institutional problems of the euro are made worse by low growth, and demographic change. If the structural and institutional reforms delivered higher growth, this would be good by itself – ignoring distribution effects – and it would allow for faster improvement in bank and state balance sheets.

Those specific structural reforms which allow for faster adjustment of competitiveness, be it through faster cost adjustment or faster reallocation, would also improve the functioning of the monetary union. Implementing such reform is a slow and difficult process, but necessary nonetheless. The Eurozone will never be a well-functioning monetary union until it is much more of an economic union as well.

We have stressed that actions need to be taken soon, while others are more long term, but the long-term questions do need to be discussed without delay.

………………………………………………………….

 

ANNEX Z

 

The Idea  Joseph E. Mullat

1

BOOK IDEA

The Idea  Joseph E. Mullat

2

Date: __July 6, 2016___________

Provisional title of the book:

Experimentations Implementing Monotone Systems Theory in Bargaining Games, Data

Analysis, and for Cosmological Speculations

  1. Type of book:

Collection of Academic Papers.

The collection is the author’s original work, no other contributors

  1. Author Details, http://www.datalaundering.com/author.htm

Danish citizen, Estonian ID card Identification, 20 years experience working as System Analyst,

Computer System installation expert, and Internet Communication Services adviser, Former

docent at the Faculty of Economics (1979‐1980), Tallinn Technical University, Estonia

Full name, affiliation and position:

Joseph Emmanuel Mullat, System supporter and

Network Manager at Danpol Copenhagen 2001 ApS

Full contact address (including telephone and e‐mail):

Danpol Copenhagen 2001 ApS, Nygårdsvej 10, 2. sal., Nr.13, 2100 Denmark,

Privat adresses: Byvej 269, 2650, Hvidovre, Copenhagen, Denmark,

Jahu tn. 1‐117, 10415, Tallinn, Estonia,

mjoosep@gmail.com; Tel.: +45 42714547, +372 6450027

Book Pages 17X22 (including illustrations/figures): 496.

The complete manuscript has been published at

https://www.saxo.com/dk/experimentations‐implementing‐monotone‐systems‐theory‐inbargaining‐

games‐data‐analysis‐and‐for‐cosmological‐speculations_joseph‐emullat_

hardback_9788740920864

Title 1 page

The “Monotone System” name explanation 1 page

To whom it may concern 2 pages

Introduction Synopsis, illustration in color 1 page

Contents Page 3

Preface Pages 5‐31

Chapter I, Bargaining Games, illustration in color Page 32

The Dilemma facing Sparrows enjoying a Tree: Instead of Introduction Pages 33‐36

The Sugar Pie Game: The case of None‐Conforming Expectations Pages 37‐46

Calculus of Bargaining Solution based on Boolean Tables Pages 47‐83

How to arrange a Singles’ Party, illustration in color Page 84

Coalition Formation in Matching Game Pages 85‐120

The Idea  Joseph E. Mullat

3

The Left‐ and Right‐Wing Political Power Design:

The Dilemma of Welfare Policy with Low‐Income Relief Pages 121‐200

Original publication, 1 page, Автоматика и Телемеханика Page 202

Stable Coalitions in Monotonic Games Pages 203‐231

Original publication, 1 page, Автоматика и Телемеханика Page 230

Equilibrium in a Retail Chain with Transaction Costs Pages 231‐249

Chapter II, Data Analysis, illustration in color Page 252

Indicators Credentials—a Significance Dilemma: Instead of Introduction Pages 253‐255

Original Preprint Cover, TTÜ Toimetised Page 256

Maximum Principle for some Set Functions Pages 257‐269

Original text in Russian Pages 270‐277

Original Preprint Cover, Teaduste Akadeemia Toimetised Page 278

On an absorbing markov Chains Pages 279‐284

Original text in Russian Pages 285‐287

Original Preprint Cover, Biological Program VI, Tartu Page 288

New Method based on Cluster Analysis Pages 289‐296

Original Preprint Cover, Mathematical Social Sciences Page 298

Fast algorithm for finding matching responses

in a Survey Data Table Pages 299‐316

Original Preprint Cover, “Symposium in Advent Statistik” Page 318

Survey Data Analysis Pages 319‐333

Original cover, 1 page, Автоматика и Телемеханика Page 334

Subsystems of Monotonic Systems I Pages 335‐360

Original cover, 1 page, Автоматика и Телемеханика Page 362

Subsystems of Monotonic Systems II Pages 363‐384

Original cover, 1 page, Автоматика и Телемеханика Page 386

Subsystems of Monotonic Systems III Pages 387‐413

Original Preprint Cover, TTÜ Toimetised Page 414

An Explorative Method for Studying

Markov Chain Structure Pages 415‐434

Contra Monotonic Systems in the Analysis

of the Structure of multivariate Distributions Pages 435‐452

Chapter III, Cosmology, illustration in color Page 454

What was first: The Dark or the Visible Matter:

Cosmological Speculation Pages 455‐490

Postscript Pages 491‐494

Name references Pages 495-496

The Idea  Joseph E. Mullat

4

Back-Cover

The subject of the proposed publication and indication of its academic level.

In the present collection of articles focusing on the Monotone (or Monotonic, MS)

System phenomenon, we introduce a Totality of lists, any of which is characterized by

numerical credentials possessing monotone (monotonic) property. Credentials are

increasing or decreasing along with the partial order of lists by inclusion that reflects

credentials’ dynamic nature obeying the property.

Credentials are assigned to each element in a sub‐list chosen from the Totality (the

main representative) List, henceforth referred to as the Grand List. The Monotone

Systems phenomenon formalizes and generalizes the intuitive notion of ordering,

sequencing, or arrangement of items in lists of various types. The theory was first

developed by the author in 1971, and was subsequently further enhanced, resulting in its

publication in Russian periodical of MAIK in 1976. The English version was originally

distributed by Plenum Publishing Corporation.

The implementation of the Monotone (Monotonic) System concept is discussed in

three contexts. It is first introduced with the objective to reflect the bargaining power

adjustments of Left‐ and Right‐wing Political Parties, i.e., to elucidate the political

mechanism design. It is also applied to Data Analysis, and finally for mathematical

speculations about the dynamics of Dark and Visible matter in Cosmology.

Although the idea of Monotonic System implementation in these highly diverse

research fields may seem unexpected, the use of stable/steady lists of credentials provides

a unifying perspective for virtual experiments. This is particularly beneficial when

employing monotonic mappings of lists producing so called fixed points, which preserve

stability or equilibrium of lists of credentials despite the credentials’ dynamic nature.

Details of the principal audiences for the publication.

This book is intended for a very exclusive audience of hyper‐knowledgeable

specialists in Game Theory and Data Analysis whose main interest lies in Informatics

and Communications, Welfare and Network Economics or Social Sciences. However, the

work presented here may also be of value to those in need of mathematical speculations

in the context of Cosmology or Astrophysics, especially researchers in the area related to

geometrical models. However, if you are a high performing undergraduate or master

student and have a strong desire to undertake research at a PhD level, the material

presented here may be a useful source of novel ideas.

List relevant subject areas and job functions.

Academicals at universities with divisions related to mathematics, economics,

communication and informatics, data mining, and astrophysics.

 

Annex W

 

FT Magazine (20. VII 16)

Metropolitan myths that led to Brexit by: Tim Harford

Excerpts:

 The Eurosceptic myths that fuelled hostility to the EU are obvious enough. We were told that the NHS was being destroyed by immigration, when more than a third of UK-based doctors qualified overseas. We were told that the EU is a fat bureaucracy, when it employs about as many people as Derbyshire County Council. And we were told that the UK was being buried in red tape, when the OECD reckons it is one of the least regulated economies in the developed world.

It is easy (and useless) to sneer. Yet the metropolitan elite that voted so enthusiastically to remain cherishes its own myths, and those myths did plenty to undermine the cause of remaining in the EU.

Here are four tenets of the trendy centre-left of British politics: first, soaring inequality means that ordinary people haven’t shared in the benefits of economic growth; second, rich people and big companies don’t pay taxes; third, gross domestic product (GDP) is a statistic that misses what really counts; and finally, economists are reliably wrong. Flip through The Guardian, browse the popular economics books in your local bookshop, and tell me that these ideas aren’t taken for granted among the chattering classes.

Before the referendum, Anand Menon, director of the “UK in a Changing Europe” project, was speaking at a town hall event in Newcastle. He explained that most economists thought Brexit would depress the UK’s GDP. “That’s your bloody GDP,” yelled a heckler, “not ours”.

Look again at the four articles of centre-left faith. If they are true, then surely the heckler was right. But while there is a little truth in each of these four beliefs, there is less than you might think.

It is true that income inequality in the UK rose very sharply during the 1980s. But by most measures it has been pretty flat since 1990. The top 1 per cent continued to pull away in the 1990s — although not this century — but, counterbalancing that, the gap between people at the 10th percentile and the 90th percentile actually fell between 1990 and 2013-14. Broadly, income inequality is a problem that emerged in the 1980s and has not worsened since. (The Institute for Fiscal Studies report Living Standards, Poverty and Inequality in the UK: 2015 is a good source here.)

The pressing issue for the UK has not been rising inequality but weak growth that has affected most people not only during the recession of 2008, but in the five years before and after it. The problem is not that income growth benefits only the rich. The problem is that there’s been little income growth to benefit anyone at all.

The second article of faith is that rich people don’t pay taxes. If true, it would hardly matter to ordinary voters if Brexit hurt the rich or drove them away.

But the richest 1 per cent of taxpayers pay nearly 28 per cent of income tax. And, with about 9 per cent of post-tax income, they presumably also pay about 9 per cent of VAT, which is close to being a flat tax. Of course, some other taxes are grossly regressive — most notoriously the council tax, which the European Commission did urge the UK government to reform — but the rich certainly pay enough tax that the public purse would say if they disappeared. London, too, generated more than 25 per cent of UK taxes, and that proportion has been rising, according to Centre for Cities, a think-tank. After Brexit, who knows?

What about the idea that GDP itself is flawed? Well, yes. It is flawed. It measures things that do not matter and misses things that do. But a sharp hit to GDP will also be a sharp hit to our everyday wellbeing: people will lose their jobs; schools, hospitals and public services will be squeezed as tax revenue dries up.

Consider an alternative measure: the Social Progress Index, an attempt to measure what matters in global human development with more than 50 different indicators — including access to nutrition, healthcare and schools. The SPI explicitly excludes financial indicators. Yet there is a very high correlation between the SPI and GDP. (For my fellow nerds: Michael Green, director of the SPI, tells me that the correlation is 0.88 when GDP is measured on a log scale. That’s high.) As a measure of human welfare, GDP completely fails in theory. In practice, however, it is not such a bad yardstick.

Finally, there is the low reputation of economists, the result of a global financial crisis that only a few in the profession warned us against. But the institutes that analysed the risks and rewards of Brexit can hardly be blamed for that. The Institute for Fiscal Studies is full of experts on tax and household income; the Centre for Economic Performance studies globalisation, technology and education. Blaming these people for not foreseeing the collapse of Lehman Brothers is like blaming a brain surgeon for the spread of obesity.

Many of the people who rightly scorned the myths put around by Euro sceptics should examine their own fond beliefs. The lesson of the referendum campaign was that emotion trumps rational analysis — and that is not just true of the Leavers.

Tim Harford is the author of ‘The Undercover Economist Strikes Back’. Twitter @TimHarford

Illustration by Harry Haysom

Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web.


  

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European Commission – Press release

State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion

Brussels, 30 August 2016

The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”

Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a “head office”. The Commission’s assessment showed that these “head offices” existed only on paper and could not have generated such profits. These profits allocated to the “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.

This selective tax treatment of Apple in Ireland is illegal under EU state aid rules, because it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules. The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission’s first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.

In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold. This structure is however outside the remit of EU state aid control. If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland.

 

Apple’s tax structure in Europe

Apple Sales International and Apple Operations Europe are two Irish incorporated companies that are fully-owned by the Apple group, ultimately controlled by the US parent, Apple Inc. They hold the rights to use Apple’s intellectual property to sell and manufacture Apple products outside North and South America under a so-called ‘cost-sharing agreement’ with Apple Inc. Under this agreement, Apple Sales International and Apple Operations Europe make yearly payments to Apple in the US to fund research and development efforts conducted on behalf of the Irish companies in the US. These payments amounted to about US$ 2 billion in 2011 and significantly increased in 2014. These expenses, mainly borne by Apple Sales International, contributed to fund more than half of all research efforts by the Apple group in the US to develop its intellectual property worldwide. These expenses are deducted from the profits recorded by Apple Sales International and Apple Operations Europe in Ireland each year, in line with applicable rules.

The taxable profits of Apple Sales International and Apple Operations Europe in Ireland are determined by a tax ruling granted by Ireland in 1991, which in 2007 was replaced by a similar second tax ruling. This tax ruling was terminated when Apple Sales International and Apple Operations Europe changed their structures in 2015.

Apple Sales International

Apple Sales International is responsible for buying Apple products from equipment manufacturers around the world and selling these products in Europe (as well as in the Middle East, Africa and India). Apple set up their sales operations in Europe in such a way that customers were contractually buying products from Apple Sales International in Ireland rather than from the shops that physically sold the products to customers. In this way Apple recorded all sales, and the profits stemming from these sales, directly in Ireland.

The two tax rulings issued by Ireland concerned the internal allocation of these profits within Apple Sales International (rather than the wider set-up of Apple’s sales operations in Europe). Specifically, they endorsed a split of the profits for tax purposes in Ireland: Under the agreed method, most profits were internally allocated away from Ireland to a “head office” within Apple Sales International. This “head office” was not based in any country and did not have any employees or own premises. Its activities consisted solely of occasional board meetings. Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the “head office”, where they remained untaxed.

Therefore, only a small percentage of Apple Sales International’s profits were taxed in Ireland, and the rest was taxed nowhere. In 2011, for example (according to figures released at US Senate public hearings), Apple Sales International recorded profits of US$ 22 billion (c.a. €16 billion[1]) but under the terms of the tax ruling only around €50 million were considered taxable in Ireland, leaving €15.95 billion of profits untaxed. As a result, Apple Sales International paid less than €10 million of corporate tax in Ireland in 2011 – an effective tax rate of about 0.05% on its overall annual profits. In subsequent years, Apple Sales International’s recorded profits continued to increase but the profits considered taxable in Ireland under the terms of the tax ruling did not. Thus this effective tax rate decreased further to only 0.005% in 2014.

 

Apple Operations Europe

On the basis of the same two tax rulings from 1991 and 2007, Apple Operations Europe benefitted from a similar tax arrangement over the same period of time. The company was responsible for manufacturing certain lines of computers for the Apple group. The majority of the profits of this company were also allocated internally to its “head office” and not taxed anywhere.

Commission assessment

Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions.

The role of EU state aid control is to ensure Member States do not give selected companies a better tax treatment than others, via tax rulings or otherwise. More specifically, profits must be allocated between companies in a corporate group, and between different parts of the same company, in a way that reflects economic reality. This means that the allocation should be in line with arrangements that take place under commercial conditions between independent businesses (so-called “arm’s length principle“).

In particular, the Commission’s state aid investigation concerned two consecutive tax rulings issued by Ireland, which endorsed a method to internally allocate profits within Apple Sales International and Apple Operations Europe,two Irish incorporated companies. It assessed whether this endorsed method to calculate the taxable profits of each company in Ireland gave Apple an undue advantage that is illegal under EU state aid rules.

The Commission’s investigation has shown that the tax rulings issued by Ireland endorsed an artificial internal allocation of profits within Apple Sales International and Apple Operations Europe,which has no factual or economic justification. As a result of the tax rulings, most sales profits of Apple Sales International were allocated to its “head office” when this “head office” had no operating capacity to handle and manage the distribution business, or any other substantive business for that matter. Only the Irish branch of Apple Sales International had the capacity to generate any income from trading, i.e. from the distribution of Apple products. Therefore, the sales profits of Apple Sales International should have been recorded with the Irish branch and taxed there.

The “head office” did not have any employees or own premises. The only activities that can be associated with the “head offices” are limited decisions taken by its directors (many of which were at the same time working full-time as executives for Apple Inc.) on the distribution of dividends, administrative arrangements and cash management. These activities generated profits in terms of interest that, based on the Commission’s assessment, are the only profits which can be attributed to the “head offices”.

Similarly, only the Irish branch of Apple Operations Europe had the capacity to generate any income from trading, i.e. from the production of certain lines of computers for the Apple group. Therefore, sales profits of Apple Operation Europe should have been recorded with the Irish branch and taxed there.

On this basis, the Commission concluded that the tax rulings issued by Ireland endorsed an artificial allocation of Apple Sales International and Apple Operations Europe’s sales profits to their “head offices”, where they were not taxed. As a result, the tax rulings enabled Apple to pay substantially less tax than other companies, which is illegal under EU state aid rules.

This decision does not call into question Ireland’s general tax system or its corporate tax rate.

Furthermore, Apple’s tax structure in Europe as such, and whether profits could have been recorded in the countries where the sales effectively took place, are not issues covered by EU state aid rules. If profits were recorded in other countries this could, however, affect the amount of recovery by Ireland (see more details below).

 

picture EN

The infographic is available in high resolution here.

 

Recovery

As a matter of principle, EU state aid rules require that incompatible state aid is recovered in order to remove the distortion of competition created by the aid. There are no fines under EU State aid rules and recovery does not penalise the company in question. It simply restores equal treatment with other companies.

The Commission has set out in its decision the methodology to calculate the value of the undue competitive advantage enjoyed by Apple. In particular, Ireland must allocate to each branch all profits from sales previously indirectly allocated to the “head office” of Apple Sales International and Apple Operations Europe, respectively, and apply the normal corporation tax in Ireland on these re-allocated profits. The decision does not ask for the reallocation of any interest income of the two companies that can be associated with the activities of the “head office”.

The Commission can only order recovery of illegal state aid for a ten-year period preceding the Commission’s first request for information in this matter, which dates back to 2013. Ireland must therefore recover from Apple the unpaid tax for the period since 2003, which amounts to up to €13 billion, plus interest. Around €50 million in unpaid taxes relate to the undue allocation of profits to the “head office” of Apple Operations Europe. The remainder results from the undue allocation of profits to the “head office” of Apple Sales International. The recovery period stops in 2014, as Apple changed its structure in Ireland as of 2015 and the ruling of 2007 no longer applies.

The amount of unpaid taxes to be recovered by the Irish authorities would be reduced if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period. This could be the case if they consider, in view of the information revealed through the Commission’s investigation, that Apple’s commercial risks, sales and other activities should have been recorded in their jurisdictions. This is because the taxable profits of Apple Sales International in Ireland would be reduced if profits were recorded and taxed in other countries instead of being recorded in Ireland.

The amount of unpaid taxes to be recovered by the Irish authorities would also be reduced if the US authorities were to require Apple to pay larger amounts of money to their US parent company for this period to finance research and development efforts. These are conducted by Apple in the US on behalf of Apple Sales International and Apple Operations Europe, for which the two companies already make annual payments.

Finally, all Commission decisions are subject to scrutiny by EU courts. If a Member State decides to appeal a Commission decision, it must still recover the illegal state aid but could, for example, place the recovered amount in an escrow account pending the outcome of the EU court procedures.

 

Background

Since June 2013, the Commission has been investigating the tax ruling practices of Member States. It extended this information inquiry to all Member States in December 2014. In October 2015, the Commission concluded that Luxembourg and the Netherlands had granted selective tax advantages to Fiat and Starbucks, respectively. In January 2016, the Commission concluded that selective tax advantages granted by Belgium to least 35 multinationals, mainly from the EU, under its “excess profit” tax scheme are illegal under EU state aid rules. The Commission also has two ongoing in-depth investigations into concerns that tax rulings may give rise to state aid issues in Luxembourg, as regards Amazon and McDonald’s.

This Commission has pursued a far-reaching strategy towards fair taxation and greater transparency and we have recently seen major progress. Following our proposals on tax transparency of March 2015, Member States reached a political agreementalready in October 2015 on automatic exchange of information on tax rulings. This legislation will help to bring about a much greater degree of transparency and deter from using tax rulings as an instrument for tax abuse. In June 2015, we unveiled our Action Plan for fair and effective taxation: a series of initiatives which aims to make the corporate tax environment in the EU fairer and more efficient. Key actions included a framework to ensure effective taxation where profits are generated and a strategy to re-launch the Common Consolidated Corporate Tax Base for which a fresh proposal is expected later this year. The Commission launched a further package of initiatives to combat corporate tax avoidance within the EU and throughout the world on 27 January of this year. As a direct result, Member States have already agreed to tackle the most prevalent loopholes in national laws that allow tax avoidance to take place and to extend their automatic exchange of information to country-by-country reporting of tax-related financial information of multinationals. A proposal is also on the table to make some of this information public. All of our work rests on the simple principle that all companies, big and small, must pay tax where they make their profits.

The non-confidential version of the decisions will be made available under the case number SA.38373in the State aid register on the DG Competition website once any confidentiality issues have been resolved. The State Aid Weekly e-News lists new publications of State aid decisions on the internet and in the EU Official Journal.

 

[1]         Based on historical exchange rates

 

 

 

 

 

August 16, 2016 - Posted by | Uncategorized

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