Reports

The paper investigates the financial vulnerability of non-financial firms during the Coronavirus (COVID-19) epidemic crisis. In particular, it evaluates the extent to which firms may run into a liquidity crisis following the COVID-19 outbreak and the impact of stylised policy measures to reduce the risks and depth of such crisis. The analysis relies on three ingredients: a simple accounting model, a large dataset reporting firms’ balance sheets for 14 countries and granular data on the magnitude of the shock measuring the impact of confinement measures on economic activity (notably depending on the capacity of each sector to operate by teleworking). Results suggest that, without any policy intervention, up to 38% of firms would face liquidity shortfalls after 10 months since the implementation of confinement measures. Comparing the impact of different policies (tax deferral, debt moratorium and support to wage payments), the analysis shows that government support to relieve wage bills is the most effective tool to reduce liquidity shortages, followed by debt moratorium policies. Finally, the paper zooms into labour market policies and compares the costefficiency of short-term work and wage subsidies schemes, highlighting how their relative efficiency depends on their design.

This paper provides the first comprehensive analysis of benefits and side-effects of foreign-currency differentiated reserve requirements for a sample of 58 countries from 1999 to 2015. Departing from the existing literature on effectiveness which used binary variables to measure policy changes, the intensity of reserve requirement adjustments is captured by using the gap between foreign and local currency rates to isolate the impact of differentiation net of volume effects. The findings show that increasing the gap between FX and local currency-denominated reserve requirements is generally effective in reducing currency mismatch and dollarisation in banks’ balance sheets, notably through a reduction in the share of banks’ FX liabilities to total liabilities and in banks’ net FX positions. The findings also show that a higher gap is associated with a broader reduction in capital inflows, in particular portfolio debt inflows and flows to non-banks. Little evidence of domestic or international circumvention, with risks shifting to other sectors or countries is visible.

Online personalised pricing is a form of price discrimination that involves charging different prices to different consumers, often based on a consumer’s personal data. Policymakers are currently discussing ways to protect consumers from potential adverse effects of personalised pricing. One option involves displaying disclosures on the websites of retailers that use personalised pricing, in order for consumers to make informed purchase decisions. This paper summarizes findings from a laboratory experiment on the effects that online disclosures about personalised pricing have on consumers. Results from the experiment suggest that online disclosures have only limited effects on consumers’ ability to identify and comprehend online personalised pricing, and cannot confirm a significant effect on participants’ purchasing behaviour. Results from a questionnaire distributed to participants reveal that on average personalised pricing is considered an unfair practice that should be prohibited.

This report assesses the impact of digitalisation on competition by examining the evolution of mark-ups and multifactor productivity (MFP) across firms of different sizes. It finds that size is positively related to mark-ups and that this relationship has strengthened over time. This trend has been accompanied by an increase in the relative productivity advantage of larger firms and both changes are more pronounced in digital-intensive sectors, suggesting that digitalisation may be an underlying driver. Policy makers may need to consider appropriate responses if digital technologies affect larger and smaller firms in a heterogeneous manner.

In immediate responses to the COVID-19 crisis, science and innovation are playing essential roles in providing a better scientific understanding of the virus, as well as in the development of vaccines, treatments and diagnostics. Both the public and private sectors have poured billions of dollars into these efforts, accompanied by unprecedented levels of global cooperation. However, the economic crisis that is currently unfolding is expected to severely curtail research and innovation expenditures in firms, while debt-laden governments will face multiple, competing demands for financial support. These developments threaten to cause long-term damage to innovation systems at a time when science and innovation are most needed to deal with the climate emergency, meet the Sustainable Development Goals, and accelerate the digital transformation. Governments will need to take measures to protect their innovation systems as part of their stimulus and recovery packages, but should also use these as opportunities for reforms. In particular, science, technology and innovation (STI) policy should shift towards supporting a more ambitious agenda of system transformation that promotes a managed transition to more sustainable, equitable and resilient futures.

This paper reviews opportunities and challenges for mitigating greenhouse gas emissions from Azerbaijan’s transport sector. It provides an overview of Azerbaijan’s transport system and reviews the country’s existing policies and future plans for reducing CO2 emissions from transport. The paper also provides an overview of the data on transport activity and emissions available for Azerbaijan, and the tools used by government agencies for assessing them. Finally, it proposes options for further action in the context of ITF’s 'Decarbonising Transport in Emerging Economies' (DTEE) project.