Saturday, June 27, 2015

Recent developments related to electric power in Armenia

It never ceases to amaze me how governments over and over fail to adequately communicate with their citizenry. A case in point is the recent decision by regulators in Armenia to allow ENA, the private electricity distribution network formed over a decade ago, to raise the peak tariff rate it charges consumers from about AMD 42 in 2014 to 48 per KWH in 2015, or from about USD 0.09 to 0.10 per KWH (with similar change to the off-peak rate).

Privately owned firms are free to set any price they want for their products. For privately owned public utilities, however, government regulators typically set rates so as to allow firms to realize a certain rate of return to recover their costs; public utilities, as natural monopolists, may otherwise charge much higher prices. For the electric grid in Armenia, the tariff rate has been fixed at 25 Drams for several years (pre and post privatization) until April of 2009 when it was raised by 20 percent to 30 Drams, which also happens to be the rate at which the Dram depreciated relative to the Dollar in the previous month. As the Dram continued to depreciate following the global Great Recession, regulators seem to have allowed the utility to charge higher tariff rates, albeit with a lag as the figure below shows.

Foreign investment in public utilities in Armenia, effectively electric and gas, took off in 2006, peaking in 2008 at USD 477 million in FDI; they dramatically declined to USD 7 million by 2013 (see here). When stated in USD, the tariff rates have changed little over this period. Raising tariff rates would be welcome by power providers as it will help them recover their costs. Of course consumers can get hurt by this, and it is no surprise that some strongly oppose raising rates. Unfortunately, and given the aging infrastructure, and in particular the nuclear power plant, tariff rates are likely to increase much more dramatically over the next decade to cover the cost of new investments. I am not sure that this is being communicated well to the public.


Electricity peak tariff rates in Armenia 

Reading resources:

Republic of Armenia : Power Sector Tariff Study (2013)
http://hdl.handle.net/10986/16703

From Crisis to Stability in the Armenian Power Sector Lessons Learned from Armenia’s Energy Reform Experience (2006)
http://siteresources.worldbank.org/INTARMENIA/Resources/Armenia-Energy-Crisis-to-Stability.pdf

Also the following is useful:
Armenia Power Sector Policy Note (2014)
http://documents.worldbank.org/curated/en/2015/04/24421395/armenia-power-sector-policy-note

Thursday, June 18, 2015

Armenian Economic Association 2015 Annual Meetings

The Armenian Economic Association 2015 annual meetings will be jointly hosted by Yerevan State University (YSU), the Central Bank of Armenia (CBA-Dilijan), and the American University of Armenia (AUA) on June 19-21, followed by a workshop on “Forecasting techniques and forecast evaluation” on Monday, June 22, at CBA-Yerevan. Preliminary program is  available at http://aea.am/conferences.html.

Registration for the meetings and the workshop is free at the conference homepage at http://aea.am/conferences.html.

The Conference brings together academics and researchers from Armenia, Canada, France, Georgia, Germany, Hungary, Italy, Norway, Netherland, Spain, United Kingdom, and the United States. Presentations over the three days include over 50 papers which address topics in agriculture, finance, international trade, economic development, macro and microeconomics, migration, political economy, and among others.

The keynote speaker on Friday, June 19th, is Professor Armen Hovakimian, Chairman of the Finance and Economics Department at Baruch College, City University of New York, and the luncheon speaker on Sunday, June 21th, is Dr. David Dole, Country Director, Asian Development Bank.

The meetings conclude Sunday evening, June 21, at AUA, with the best paper award ceremony. Three categories of awards are available: Armen Alchian Awards for papers of general interest; Grigor Artzruni Awards for young scholars; and International Monetary Fund Awards for papers in Macroeconomics and International Economics.

On Monday, June 22nd, 10AM-3PM, Professor Tatevik Sekhposyan of Texas A&M University, formerly of central Bank of Canada will conduct a workshop on Forecasting models at CBA-Yerevan.

Forecasting Workshop: Armenian Economic Association 2015 Meetings

The Armenian Economic Association 2015 Annual Meetings conclude with a workshop on "Forecasting techniques and forecast evaluation," hosted by the Central Bank of Armenia at 10AM-3PM, on June 22nd, 2015.
This workshop examines time series models used for forecasting macroeconomic series and discusses forecast evaluation techniques. The main emphasis is on forecast evaluation techniques covering tests of relative and absolute evaluation and briefly considering the assessment of predictive density calibration. The workshop will involve both theoretical and empirical aspects of forecast evaluation.
Duration: 10AM-3PM; 2-hour lecture segment, with an hour break in between
Prerequisites: This is a graduate level workshop. Audience should be comfortable with simple algebra and familiar with basic concepts of econometrics.
About the instructor: Tatevik Sekhposyan is an Assistant Professor of Macroeconomics at the Texas A&M University at College Station. She has worked previously at the central Bank of Canada and holds a Ph.D. from the University of North Carolina at Chapel Hill. See more at http://www.tateviksekhposyan.org/
Registration is free but is required at the conference page http://aea.am/conferences.html

Saturday, April 04, 2015

A Blessed Easter

Christ is risen from the dead. Blessed is the resurrection of Christ.

Քրիստոս յարեաւ ի մեռելոց՜ Օրհնեալ է Յարութիւնն Քրիստոսի՜
Kristos haryav ee merelots. Orhnial e Harutiunn Kristosi.

Thursday, January 29, 2015

2015 Armenian Economic Association Annual Meetings

The Armenian Economic Association 2015 annual meetings will be jointly hosted by Yerevan State University (YSU), the Central Bank of Armenia (CBA), and the American University of Armenia (AUA) on June 19-21.

Scholars, researchers, and graduate students, are invited to present their research in all areas of economics and finance. Papers may address growth and development issues in Armenia and the South-Caucasus, the emerging financial crisis in the region, regional trade patterns, trends in labor markets and migration, or any other topic representing current advances in economics and finance. Both theoretical and empirical works are welcome. The language of the conference is Armenian and English, and sessions will be organized by language and JEL fields below:

* Microeconomics; Industry Studies
* Macroeconomics and Monetary Economics
* International Economics
* Financial Economics
* Public Economics
* Labor and Demographic Economics, Health, Education, and Welfare
* Growth, Economic Development, and Transition Economics
* Agricultural, Natural Resources, and Environmental Economics
* Urban, Rural, and Regional Economics

If interested, please submit an abstract at http://aea.am/conferences.html by April 15th; decision by April 30th. Submitted abstracts should be less than 500 words and include: title of paper, name(s) of author(s), affiliation, current position, an email address, at least one keyword.  In the abstract, please identify the research, methods, and outcomes (obtained or expected). The submission of complete sessions with 3-4 papers is also welcome, and highly encouraged.

There is no submission fee nor any cost to present and participate. Contributions and sponsors are welcome.

Conference homepage: http://aea.am/conferences.html
Facebook: https://www.facebook.com/ArmenianEconomicAssociation

Wednesday, December 24, 2014

Season's Greetings


Happy New Year and Merry Christmas

Շնորհավոր Նոր Տարի եւ Սուրբ Ծնունդ

This being the season for giving, please consider sponsoring an Armenian student.

Monday, December 08, 2014

2013 Armenian household survey released

The 2013 Household Integrated Living Conditions Survey was recently released by Armstat. As with previously released surveys (2004-2012), observations are aggregated at the household level and information is released for a subset of the variables; there are 5184 households in the survey. You may download the survey for free from the databases page of Armstat (http://www.armstat.am/am/?nid=271). The survey, with select variables aggregated at the household member level, as well as by expenditure type are also available. The complete raw data is not publicly available.
The surveys are available both as xls and sav (spss) files.

Wednesday, August 27, 2014

Migration survey released

Armstat released the migration survey covering the years 2007-2013. The data is available in SPSS format (.sav), and can be easily converted and read in Stata (a bit more complicated if using a 64 bit computer and do not have the software to directly convert). The sample consists of 31118 individuals.
As the funding organization states, this is "a comprehensive national representative household survey on migration of Armenia’s population in 2007-2013, which measures immigration, emigration, internal migration, return, and addresses the migrants’ savings, remittances and migration’s development effect on population and households."
This is a very valuable and timely source of information on the mobility of the population.

Wednesday, June 11, 2014

Workshop on "Modeling Market Risk" June 23, 2014

The Armenian Economic Association 2014 conference will conclude with the workshop "Modeling Market Risk in Mathematica". The workshop is scheduled for 10AM-12PM, Monday, June 23rd, and description follows below. Registration is free, but is required to help decide on venue in case of sizeable interest.

Modeling Market Risk in Mathematica

With the creation of global financial networks, banking systems of most countries have become increasingly inter-linked. At the same time, changes in equity prices, interest rates, commodity prices and currencies, i.e. market risk, began to play an increasingly important role in overall risk exposure of financial institutions. Recent global financial crisis forcefully demonstrated great importance of properly measuring and managing risk and, in particular, market risk.

The purpose of the workshop is to discuss fundamental concepts and provide an overview of the key models most frequently used in measuring market risk. This is done in an environment particularly suited for building such models, namely using the software Mathematica (by Wolfram Research). All concepts are illustrated using real data. After the workshop, participants shall be given the fully functional interactive lecture notes written in Mathematica that they can later use to further explore these topics and continue learning about this important subject.

The workshop plans to cover most of the following topics:

• Stylized facts about asset returns
• Key measures of market risk: Value-at-Risk (VaR) and Conditional Value-at-Risk (CvaR)
• Historical Simulation VaR
• RiskMetrics approach to measuring VaR and CVaR
• Modelling conditional volatility dynamics: GARCH models
• Comparing VaR models
• Modeling non-normality of standardized asset returns
• Backtesting and stress testing market risk models

Workshop will be conducted by Branko Urosevic (PhD in Finance, UC Berkely, USA), Professor of Finance, University of Belgrade, and advisor to USAID/FED.
 
Workshop resgistration:https://docs.google.com/spreadsheet/viewform?usp=drive_web&formkey=dFRMZ0JiNU5mTVlRR3JNYlF5dkN0T0E6MA#gid=0

If you have not registered for the conference (http://www.aea.am/conferences.html), and are interested in attending, you may do so by following this link:https://docs.google.com/spreadsheet/viewform?usp=drive_web&formkey=dGpMME55aXJqbFZVWXg5bGdyMEwtckE6MA#gid=0

Sunday, April 20, 2014

Happy Easter


Christ is risen from the dead. Blessed is the resurrection of Christ.

Քրիստոս յարեաւ ի մեռելոց՜ Օրհնեալ է Յարութիւնն Քրիստոսի՜
Kristos haryav ee merelots. Orhnial e Harutiunn Kristosi.

Monday, February 03, 2014

2014 Armenian Economic Association annual meetings

The Armenian Economic Association 2014 annual meetings will be jointly hosted by Yerevan State University (YSU), the Russian Armenian University (RAU), and the American University of Armenia (AUA) on June 20-22, followed by a workshop June 23, 2014.

Scholars, graduate students, and researchers are invited to present their research in all areas of economics. Papers may address growth and development issues in Armenia and the South-Caucasus, regional trade patterns, trends in labor markets and migration, the aftermath of the global financial crisis, or any other topic representing current advances in economics and finance. Both theoretical and empirical works are welcome. The language of the conference is Armenian and English, and sessions will be organized by language and JEL fields below:

• Microeconomics; Industry Studies
• Macroeconomics and Monetary Economics
• International Economics
• Financial Economics
• Public Economics
• Labor and Demographic Economics, Health, Education, and Welfare
• Growth, Economic Development, and Transition Economics
• Agricultural, Natural Resources, and Environmental Economics
• Urban, Rural, and Regional Economics

If interested, please submit an abstract at http://aea.am/conferences.html, alternatively email it to aea2014[at] aea.am by April 15th. Submitted abstracts should be less than 500 words and include: title of paper, name(s) of author(s), affiliation, current position, an email address, and at least one keyword. In the abstract, please identify the research question, methods, and outcomes (obtained or expected). The aim of the conference is to bring together scholars, researchers, and students to promote the exchange of ideas and advance economics scholarship.

There is no submission fee nor any cost to present and participate. Contributions are welcomed by AEA.
If interested, apply for AEA membership here.

Sunday, January 26, 2014

2012 Household survey released

The 2012 Household Integrated Living Conditions Survey was recently released by Armstat. As with previously released surveys (2004-2011), observations are aggregated at the household level and information is released for a subset of the variables. You may download the survey for free from the databases page of http://armstat.am/. The survey, with select variables at the household member level, as well as by expenditure type (2011-12) are also available. The complete raw data is not publicly available.
The surveys are available both as xls and sav (spss) files. See my previous post to read or convert sav files to dta (stata).

Thursday, January 16, 2014

Pension reform in Armenia

Armenia's new pension system took effect this month, on schedule as part of legislation enacted in 2010. It consists of three pillars, with Pillar II calling for a mandatory private pension contribution scheme for those age 40 and under. By doing so Armenia joins a number of developed economies that have mandatory private pension plans in effect. Below is a snapshot from an OECD report on the prevalence of mandatory private pensions in 2010; countries with such plans include Australia, Chile, Denmark, Estonia, Finland, Hungary, Iceland, Israel, Mexico, Netherlands, Norway, Poland (recently switched to public), Slovakia, Sweden, and Switzerland. Even in countries that have "voluntary" private coverage, the plans are not strictly voluntary. Voluntary plans available by virtue of one's occupation (e.g. unionized shops) are not truly voluntary except for the choice of employment. Some of the countries listed in the table below may also have public plans. In the US, the social security system, a public plan, mandates a contribution rate of about 12 percent.
A short background and description of the challenges is provided by Delloitte. And everything you ever wanted to know about the new pension plan are provided by PALM. Despite the very wide publicity, seminars, and conferences, over a span of several years, only recently some opposition to the plan was expressed by some groups. Of course, there is widespread support for the provision of pension benefits to the elderly. All along I had expected some opposition, on ideological or philosophical grounds, to the proposed plan by those who support a public over a private plan. In other words, whether the government should tax workers and use the proceeds to fund retirees (PAYGO or otherwise). But the current debates have little to do with this, and I really do not see the merit of the arguments presented. The questions at hand are: do you want to provide the elderly with pension benefits, and if so, how do you fund it? These are very simple questions but yet not simple to address.

Note: This survey refers only to the experience of 34 OECD countries. A number of other countries have Pillar 2 type pensions in place. [Added January 18th]


Source: OECD WORKING PAPERS ON FINANCE, INSURANCE AND PRIVATE PENSIONS, NO. 20, 2012; "COVERAGE OF PRIVATE PENSION SYSTEMS: EVIDENCE AND POLICY OPTIONS" 

Wednesday, December 25, 2013

Season's Greetings

Happy New Year and Merry Christmas

Շնորհավոր Նոր Տարի եւ Սուրբ Ծնունդ

Friday, October 18, 2013

Armenian Economic Association 2013 Conference October 19-20

The Armenian Economic Association 2013 conference will be jointly hosted by Yerevan State University (YSU) and the American University of Armenia (AUA) on October 19-20, followed by a workshop on the state of art in public finance at the Central Bank of Armenia (CBA) on October 21, 2013. The language of the conference is English and Armenian, and sessions are organized by language and field.

The Conference brings together academics and researchers from Armenia, Czech Republic, Georgia, Germany, Italy, Spain, United Kingdom, and the United States. Presentations over the two days include over 40 papers which address topics in international trade, economic development, macro and microeconomics, migration, finance, political economy and public finance, energy, and labor markets among others. The conference is preceded by a reception at the Akian gallery, at AUA, on October 18th.

The keynote speakers are (1) Daron Acemoglu (via video conference), Elizabeth and James Killian Professor of Economics at Massachusetts Institute of Technology, and (2) Mark Davis, Head of EBRD office in Armenia.

The conference is in part sponsored by Yerevan State University, the American University of Armenia, the Central Bank, and the USAID/EDMC program. Registration is free. For more details, please visit the conference homepage at http://aea.am/conferences.html, and follow AEA on https://www.facebook.com/ArmenianEconomicAssociation.

Sunday, September 22, 2013

Construction sector yet to recover

The construction sector has yet to recover from the collapse in the aftermath of the global crisis. For this year through August, construction activity declined by close to 11 percent when compared to the same period in the previous year. It stood at USD 471 million, compared to a peek of near 3 billion in 2008.
The economy has been recovering at a rate that surpasses those experienced by a number of European and developed economies; 3.8 percent growth rate year through August. Yet this rate is well below the experience prior to the crisis. Can the economy recover and grow at its past trajectory without the recovery of the construction sector?

Saturday, July 06, 2013

Armenian Economic Association 2013 Conference

The Armenian Economic Association 2013 meetings will be jointly hosted by Yerevan State University and the American University of Armenia on October 19-20, followed by a workshop at the Central Bank of Armenia on October 21st.

Scholars, graduate students, and researchers are invited to present their research in all areas of economics. Papers may address the European sovereign debt crisis, the aftermath of the global financial crisis, growth and development issues in Armenia and the South-Caucasus, regional trade patterns, or any other topic representing current advances in economics. Both theoretical and empirical works are welcome. The language of the conference is Armenian and English, and sessions will be organized by language and JEL fields below:

• Microeconomics; Industry Studies
• Macroeconomics and Monetary Economics
• International Economics
• Financial Economics
• Public Economics
• Labor and Demographic Economics, Health, Education, and Welfare
• Growth, Economic Development, and Transition Economics
• Agricultural, Natural Resources, and Environmental Economics
• Urban, Rural, and Regional Economics

If interested, please submit an abstract at http://aea.am/conferences.html, or alternatively email it to aea2013[at] aea.am by July 30th. Submitted abstracts should be less than 500 words and include: title of paper, name(s) of author(s), affiliation, current position, an email address, and at least one keyword. In the abstract, please identify the research question, methods, and outcomes (obtained or expected). Authors will be informed of the acceptance of their proposals by August 15th, 2013.

There is no submission fee nor any cost to present and participate.

Thursday, May 30, 2013

Canadian Economic Association 2013 Conference


I am attending the Canadian Economic Association 2013 conference which is being held at the University of Montreal on May 30-June 2. The conference homepage is http://economics.ca/2013/en/index.php  and the preliminary program is directly available at  http://economics.ca/2013/en/program.php.
Would love to meet old friends and make new ones perhaps at the reception on Friday evening (or before/after). Drop me a note if interested.

Monday, May 20, 2013

AIPRG conference on economy of Armenia

AIPRG will hold its conference on the economy of Armenia on June 1-2, 2013, simultaneously in Washington, DC, and Yerevan.
Advanced registration is recommended.

Friday, May 03, 2013

Dollarization of bank loans in Armenia

Armenia's economy witnessed significant dedollarization for much of the past decade, that is until it was hit hard by the unravelling global financial crisis. The foreign exchange (FX) share of commercial bank loans to private non-financial businesses declined from the mid 70s down to 50 percent by early 2007. More impressively, the FX share of loans to households declined from about 90 percent down to 20 percent in summer of 2008.


By the first quarter of 2009, the FX share of loans to both businesses and households reversed its trend. The business share is now in the mid 80s, whereas that of households has risen to the mid 30s only, as illustrated in the figure below.

I am sure that it will take some time to reverse this pattern. But in the mean time, this is likely to add to the risk (foreign exchange) of doing business in Armenia, in particular for those with Dram denominated earnings and loans in a foreign currency.

FX share of commercial bank loans to households and private non-financial businesses: Jan 2000-Feb 2013
 Data can be downloaded from here (xls).