Heavy money

Why is broad money growing like weeds in Kazakhstan?

Since 2011, a broad measure of money supply, M3, has been rising more rapidly than narrower – that is, more liquid – measures in Kazakhstan.  In the past two years, M3 has been more than triple the size of M1, the narrow measure comprised mainly of cash and checking accounts.  The figure for August 2014 was 3.54.  The last time that August M3 was so large was in 2008 (3.26), just before the real estate bubble burst.  Isn’t that a coincidence?

Of course, a high ratio of M3 to M1 does not mean that catastrophe is inevitable – only that it’s possible.  The ratio indicates that illiquid forms of money – that is, forms that are hard to spend quickly – are becoming prevalent.  This may occur because of major projects, which require large and long-term loans.  If these projects introduce Kazakhstan to new and more efficient modes of production, then they may spur economic growth.

But there is another possibility:  Creditors have loaned generously to construction projects, such as those for residential centers and shopping malls, that are risky because they would pay off only in the long run, if ever.  If these projects fail to pay interest in the interim, then lenders of dollars to the banks – dollars that industries require for buying foreign inputs – may pull out their money in the short run, leaving banks and borrowers up the creek.  Falling oil prices may precipitate this dollar flight.

In response, the government blames economic instability on volatile oil prices.  The ostensible solution is to shift investment away from oil and gas and toward industries that prosper when the former don’t.  This will reduce instability at the price of a modest reduction in economic growth, one hopes.

The argument presumes that the subsidized new industries will make money; there is no point in substituting unprofitable industries for a profitable one.   But if they are haymakers, then why didn’t private investors back them in the first place?  Were they ill-informed?  Then the government should inform them, not displace them.  The sneaking suspicion is that the industries are rewarded more for their political connections than for their efficiency.  Exhibit A is tourism in this remote and landlocked country.   --Leon Taylor tayloralmaty@gmail.com

Notes

Data on M1 and M3 are from the National Bank of Kazakhstan (nationalbank.kz).  To control for seasonal factors, I used the August figures for every year beginning with 2000.

 

Sanction and inflation

Do they go together like a horse and carriage?

Prices bumped up a bit in Kazakhstan last month, reports the government’s statistical agency.  Compared to September 2013, prices rose 7.4%.  This was significantly higher than the 6.4% average for January through September of this year relative to the same period of last year.  Although a one-month change in the inflation rate is too short to tell us much about the economy, it's intriguing to see that since last September, the prices of nonfood goods have risen 8.4%, which is outside the National Bank’s target corridor for inflation of 6% to 8%.

Why the bump?  Ever since the West levied sanctions against Russia because of Ukraine’s civil war, Russian food exports to Kazakhstan have increased, according to Panorama.  Thus Russia may export inflation to Kazakhstan as well.  But the inflation rate in Russia is close to that of Kazakhstan, so the sanctions may not affect Kazakhstani inflation considerably, reports the business weekly.  It is not clear whether this is Panorama’s own analysis or that of the National Bank of Kazakhstan.  In any case, it’s a leaky bucket.       

If anything, the sanctions should lower the price of Russian exports to here.  Since Russia can no longer sell as much as before to Western Europe and the United States, it will try to sell more to Kazakhstan.  That will require price cuts.  And food prices, for once, do not comprise the fastest-rising category of Kazakhstan’s inflation. 

A more logical cause of this price blip is that Western countries want to buy more than before from Kazakhstan, since they no longer can buy from Russia.  This will raise Kazakhstan’s export prices -- and consequently its domestic prices, since producers will shift output from the home market to the foreign one.  Kazakhstani consumers will compete for now-scarce goods by bidding up prices.  That, at least, is the theory.  In reality, Kazakhstan’s leading export, crude oil, is restrained by the recent fall in global prices to below $100 per barrel.  Consequently, this back-channel seems unlikely to fuel much inflation here.       

Money is no object?

Let’s round up the usual suspects.  The February devaluation must lead eventually to higher prices expressed in tenge, because the currency has lost a fifth of its purchasing power over foreign products.  A delay of several months in the inflationary consequences of a devaluation is not unusual, since the trade contracts must be rewritten to take into account the weakened tenge. 

And there’s the variable that Panorama, the statistical agency, and (above all) the National Bank rarely want to discuss – money supply.  Here the picture is mixed.  Over the last two years, the narrowest types of money – pure currency (M0), and currency plus transferable tenge accounts in banks (M1) – have been stable.  The total rates of change since August 2012 are -1.6% and 1.1% respectively. 

Broad money is something else.  M2, which encompasses M1 as well as transferable foreign-currency accounts, has risen 13.8%.  M3, an even broader measure of money, is up 29.3%.  In contrast, gross domestic product over the past two years has risen only about 9% in terms of output.  To the extent that people and firms spend broad money on goods and services, the potential stimulus to inflation is clear. 

But recognizing this possibility would require the National Bank, which is supposed to manage the money supply, to admit that it may be the villain in the inflationary story.  --Leon Taylor tayloralmaty@gmail.com

References

Panorama.  Uroven’ centyabriskoy ynflatsii mozhet stat’ kluchevim dlya peresmotra prognozov (September inflation may be key to forecasts).  October 3, 2014.

National Bank of Kazakhstan.  www.nationalbank.kz. The source of monetary data used here.

 

Statistical Agency of Kazakhstan.  www.stat.gov.kz.  The source of GDP data used here.                     

Is the population boom a bust?

Checking in with Malthus

Now exceeding 7 billion, the world population has been rising by nearly a billion souls per decade.  True, the growth rate has nearly halved since 1960, to 1.2% per year.  But the poorest populations have been growing at almost double the world rate.  They account for almost a fourth of the addition to world population although they comprise only an eighth of the total population.  Five African countries are growing by 3% or more per year, including Zimbabwe (3.1%).  The Palestinian West Bank and Gaza Strip also grow by 3%.  No wonder demographers suspect that population growth creates poverty, although the most rapidly-growing nation, the small Gulf state Oman (9.2%), is rich, according to World Bank data.

In Soviet days, Soviet scholars fearfully anticipated rampant growth throughout the Central Asian satellites.  That hasn’t transpired.  Three countries grow at the world rate or slightly lower: Kazakhstan, Kyrgyzstan and Turkmenistan.  The largest populace in the area, Uzbekistan, is growing faster (1.5%).  But the pacesetter for the region is its poorest nation, Tajikistan (2.2%), in line with demographers’ expectations.

A simple model, assuming a constant rate of growth, predicts more than 90% of the fluctuation in population for most nations over a period of 10 or 15 years; after that, the growth rate tends to change.  This suggests that a simple theory may explain the size of population – and Thomas Malthus provided one, in 1798.  One of the first professional economists, Malthus argued that population growth doomed humanity since the populace would expand more rapidly than food supply.  The amount of food per person would fall until we starved.  Famine, pestilence and war would thin the population, raising the amount of food available to each survivor until people had recovered enough to beget children again.  Then food supply per capita would fall back to the subsistence level. 

Charitable cruelty

We cannot escape this cycle of catastrophe because – according to Parson Malthus -- we cannot control our passions.  Consequently, the rate of population growth will be determined largely by the fertility rate (the number of children born to an average woman), which changes slowly.  (From 1965 to 2008, the fertility rate in Kazakhstan fell just 27%, from 3.49 to 2.56 – but fell as low as 1.8, in 1998 and 2000.)  So it’s no surprise to find that most populations grew at a constant rate over the medium run.  Food supply, on the other hand, depends on a finite amount of land, so it grows linearly – that is, at a diminishing rate.  The populace grows faster than the harvest.

Malthus’ dark vision extended to altruism.  He opposed welfare for the poor since it would merely encourage them to have more hungry children.  “Such charity was only cruelty in disguise,” explained Robert Heilbroner, the late historian of economic thought.

China adopted a Malthusian policy in 1979, when it forecast a spike in fertility in the 1990s.  Parents with just one child received priority in health, housing and education.  Those with more than two children were taxed 5% of their income per child; the rate increased with each additional child.  The policy may seem a success:  Since 2000, China’s population has grown by less than .6 of a percent per year, half of the world average, and the fertility rate fell by two thirds in less than 30 years.  But China’s sizzling economic growth may have played a role, too.  Richer households have fewer children, perhaps partly because they would have to give up high wages in order to devote time to the bambinos.  In any event, the policy incurred social costs.  In 1986, one child was aborted for every two births. 

Calling Dr. Pangloss

Though compelling, Malthus’ theory does not fit the facts.  Since 1798, both the world population and world income per capita have grown sharply.  Latter-day Malthusians, such as the Club of Rome, warn that catastrophe is just around the corner; witness global warming.  Nevertheless, the past two centuries have given us a pretty good dataset.

Anti-Malthusian economists explain that an increase in population density stimulates innovation, since more people can exchange more ideas.  Whatever the reason, some nations would welcome a population boom.  Russia lost five million souls from 2000 through 2009, when its population dipped below 142 million, though it has grown slowly since then, to 143 million in 2012.  An indicator of the future labor force, the share of the population younger than 15, fell from 1990 through 2004 in China, Japan, Kazakhstan -- and sharply in Russia, from about 22% to 15%.  Maybe two heads are better than one, especially if one head is young. --Leon Taylor tayloralmaty@gmail.com

Notes

1.  The growth rates of national populations reported here are annual averages for the period from 2000 through 2012, using World Bank data.  I estimated them with this OLS model:  Ln Pop(t) = a + r*Year, where ln denotes a natural log and r is the exponential rate of growth.  R-squared for most estimations exceeded .92 and usually exceeded .99.
2.  Concerning the fertility rate in Kazakhstan: A measure of volatility, the ratio of the standard deviation to the mean, was .21 – lower than one might have expected, given the dramatic changes due to migration over the 1990s, and given that there were only 25 observations for the 44-year period.  

Good reading

Karen Hardee, Zhenming Xie, and Baochang Gu.  Family planning and women’s lives in rural China.  International Family Planning Perspectives 30(2): 68-86.  2004.  A source of the material used here about China.

Karen Hardee-Cleaveland and Judith Banister.  Fertility policy and implementation in China, 1986-88.  Population and Development Review 14(2): 245-286.  June 1988.  Another source of the Chinese material.

Robert Heilbroner. The worldly philosophers.  Touchstone.  Seventh revised edition.  1999.  Depicts Malthus vividly.

Thomas Malthus.  An essay on population.  1798.  Online.  Brilliant and provocative.

Joseph Schumpeter, Capitalism, socialism and democracy.  Harper.  Third edition.  1950.  Argues that returns to producing ideas do not diminish as ideas increase, because they don’t require finite resources – just imagination.

References

United States Bureau of the Census.  International data base.  2013.  The source of estimates of world population used here.

World Bank.  World Development Indicators.  2014.  Online.  The source of estimates used here for population levels, fertility rates, and the share of youths in national populations.

How to create income like magic

Why are government statistics in Kazakhstan truly incredible?

Great news!  Despite anti-Russian sanctions and anemic global prices for oil, average income in Kazakhstan is rising 14% per year.  That would make it one of the world’s fastest-growing economies…if you could believe the government.

Unfortunately, you probably can’t.  I’ll explain.

Nominal income per person, measured in tenge, is not the best measure of prosperity, since it can rise because of growth in either output or prices.  Real income subtracts price increases, reflecting only growth in output. It measures purchasing power and thus prosperity.

As a simple example, consider an economy that produces only bottled water.  The price is 100 tenge per liter.  If average nominal income is 200 tenge, then a typical person can buy two liters of water, which is real income.  If nominal income doubles to 400 tenge, and if the price also doubles, to 200 tenge per liter, then the person can still buy only two liters.  Although nominal income has risen by 100%, real income has not changed.

Now suppose that nominal income doubles to 400 tenge but that the price remains at 100 tenge per liter.  Then your new income can buy four liters rather than just two.  Real income has increased by 100%.

In short, the growth rate in real income roughly equals the growth rate in nominal income minus the growth rate in prices.  If nominal income rises by 8%, and prices rise by 6%, then real income rises by about 2%.

Now we can discuss the news.  A few days ago, quoting the government’s statistical committee, the business newspaper Panorama said nominal income per person was rising 8.4% per year.  Inflation – the average rate of increase in prices for all products – was something like 5% or 6% per year.  One should conclude that real income per person is rising in the neighborhood of 2% or 3% per year, depending on the precise rate of inflation, which was not reported.

However, according to the weekly newspaper, real income per capita is rising 14%.  Evidently, someone calculated growth in real income by adding the inflation rate to the growth rate of nominal income.   

In principle, either Panorama or Kazakhstan’s statistical committee could have pulled this boner.   But given that Panorama, like most newspapers in Kazakhstan, intones government press releases as if they were the Word of God, the error probably came from Astana.

So don’t plan your Mediterranean vacation just yet.  You may not be as rich as the government thinks.  –Leon Taylor tayloralmaty@gmail.com

       

References

Panorama.  Tovarooborot Kazakhstana so stranamy TS v 2014 godu pashul na snyzheni.  (Kazakhstani trade with the other countries of the customs union in 2014 tends towards decline.)  September 19, 2014.

Money on the move

How quickly do we spend?

The West today worries that prices will fall unexpectedly, discouraging production.  But deflation is no problem for Kazakhstan, which benefits by the bane of the West, expensive oil.  In Kazakhstan, prices on average have been rising about 6% to 8% per year since its recovery from the financial crash of 2008-9.  At times, monthly “headline” inflation has exceeded 20%, often due to food prices in the short run.  The resulting uncertainty is not good for business.

The central bank, the National Bank of Kazakhstan, periodically avers that it will contain inflation.  Indeed inflation here has been lower than in Russia, for whatever that’s worth.  But an inflation rate of 8% is about four times higher than the one often recommended by economists.  Can the National Bank reduce inflation?

Conservative economists note that the higher the money supply, the higher the prices.  Suppose that Kazakhstan’s economy produces only one product, a pint of kefir each year.  Then increasing the money supply from 200 to 400 tenge will double the beverage’s price. 

The inflation in this example is temporary, since the price will stabilize at 400 tenge.  But monetarists point out that continual increases in the tenge supply may sustain inflation if they exceed the rate of increase in production.  To avoid long-run inflation, the money doctors prescribe a diet for the National Bank:  Cut back on those high-fat tenge. 

In Kazakhstan, the annual rate of growth in “broad” money – cash, checking and savings accounts, called “M2” – has thankfully fallen since the bubble days of 2006, when it was 78%. But it remained at 13% and 15% in 2010 and 2011, according to the International Monetary Fund.  These rates were roughly double the output growth rates in those two years. 

This “tough love” argument is alluring, but it assumes a simple link between the tenge supply and the price level (which is the price of a typical bundle of products).  If money supply rises by 16% and output by 6%, then the price level will rise by 10%.  So cut back the increase in tenge to something like 6%.  But this assumes that we can forecast output.  If production actually rises by 16%, then no inflation will occur.

Safe at any speed?

More unsettling is an assumption that central banks rarely discuss with the public.  It concerns the rate, or “velocity,” at which people spend a tenge.  Suppose that the money supply is 1 trillion tenge.  If velocity is 3, then each tenge is spent 3 times per year.  Annual spending is 3 trillion tenge.  If velocity suddenly rises to 6, then spending will double and may well push up prices.  To calculate the money supply that will avoid inflation, the central bank must forecast velocity as well as output.

At one time, it was fashionable to assume a constant velocity.  People will always spend a typical tenge three times per year, so we need not worry that an unexpected change in velocity will gum up the forecast.  This supposition was common shortly after the American economist Irving Fisher had popularized velocity in 1911.  Alfred Marshall, an English economist (and teacher of Keynes), explained in 1923 that velocity was stable because spending habits are slow to change.

Some macroeconomists still assume a constant velocity, at times for reason.  A rate of turnover in bank deposits was fairly constant in Britain from 1920 to 1940, reported J. S. Cramer.  But most economists now recognize that velocity may depend on the interest rate.  When bonds pay off at higher rates, people will buy them more quickly, increasing the rate at which money turns over.  Thus, in reality, velocity is volatile. 

In Kazakhstan, the velocity of cash and checking accounts (“M1” money) has halved since 2002, from 4 to 2, according to one study.  This may relate to a fall in interest rates, or it may express a new reluctance to spend that would not bode well for the country in the event of another global recession.  In any event, fluctuations in velocity over the course of a year have nearly tripled since 2008. 

Forecasting the “right” money supply may be harder for the National Bank than classical monetarists might claim.  Perhaps the Bank should provide a range of forecasts (for example, from 1 to 2 trillion tenge) rather than just one value.  –Leon Taylor, tayloralmaty@gmail.com

Notes

1.  The IMF defines M2 money as “the sum of currency outside banks, demand deposits other than those of the central government, and the time, savings, and foreign currency deposits of resident sectors other than the central government.”  I use end-of-year estimates.

2.  The velocity rate reported by Cramer was measured as the ratio of debts to account balances, excluding money markets.  It ranged from 15 to 20.

         

Good reading

Alfred Marshall.  Money, credit and commerce.  Prometheus Books.  2003. 

Ana Lucia Coronel, Dmitriy Rozhkov, Ali Al-Eyd, and Narayanan Raman.  Republic of Kazakhstan: Selected issues.  IMF.  2011.  Discusses inflation and food prices.   

J. S. Cramer.  Velocity in circulation.  In John Eatwell, Murray Milgate, and Peter Newman, eds., The New Palgrave: Money.  Norton.  1989.

Irving Fisher, assisted by Harry G. Brown.  The purchasing power of money: Its determination and relation to credit interest and crises. Macmillan.  1911.

References

Murat Alikhanov and Leon Taylor.  An algorithm for estimating the volatility of the velocity of money.  Working paper, Munich RePeC archives.  2013.  The source of the estimates of velocity in Kazakhstan used above.

International Monetary Fund.  International financial statistics.  Online.

Call for papers

The Central Asia Business Journal, published by KIMEP University twice each year, promotes understanding of business issues (broadly defined) in the region.  As we see it, the region includes the post-Soviet “stans” (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan) as well as the post-Soviet states of the trans-Caucasus area (including Armenia, Azerbaijan and Georgia).

Central Asia is a fertile area for research.  It prospers from rich natural resources and high commodity prices as well as from its location at the crossroads of East and West.  But its open economy is vulnerable to such external shocks as the global financial crisis of 2008, and its Soviet legacy complicates its transition to markets.

Authors may submit research papers, case studies, and book reviews as either completed works or as abstracts and proposals.  We also invite students’ papers.  All submissions must be in English.  Refereeing is double-blind.

 The journal is open to all methodologies, but it especially welcomes papers that are conceptually and analytically strong and that relate to the real world.  We prefer papers with new findings but also publish surveys.  All papers should discuss applications to Central Asia.

The journal’s interests include:
International accounting standards and taxation
Corporate governance
Financial and capital markets and industries
Market structure and efficiency
Human resources management
Leadership
International business and globalization
Business law
Marketing strategies and effectiveness
Tourism and the hospitality business
Logistics and supply chain management
Management information systems
Business cycles and economic development
Market integration and segmentation
Emerging markets
Institutional economics
Microfinance and development    
Multinational enterprises and business strategy
Natural resources and their internationalization
Nongovernmental organizations and entrepreneurs
Mathematical economics
Statistical economics
Risk and uncertainty
Political economy
Behavioral economics

We also welcome contributions to three sections of the journal:

Perspectives.  This features nontechnical surveys of issues in Central Asian business that would interest scholars.  An example is a survey of theoretical and empirical papers about customs unions.  A typical length is 4,000 to 6,000 words.  You should propose your topic to the managing editor before beginning work.

Book reviews.  Reviews should summarize and evaluate books about Central Asian business or about business issues of interest to the region.  Most reviews will concern recent books, but the journal may also publish a retrospective essay about well-known titles in a particular field.  A typical length for a review is 1,500 to 2,500 words.  Please write the managing editor about the book that you propose to review.

Symposium.  This consists of several commentaries on a recent issue of interest – for example, the February 2014 devaluation of the tenge.  A typical commentary may run 1,500 to 2,500 words.  The commentaries are not refereed.  Usually, the journal commissions commentaries, but you may propose a symposium to the managing editor.



Deadline for completed work for the March 2015 issue: October 15, 2014.  After that date, we will consider submissions for later issues.  We try to give the author a decision in six weeks.

The Journal’s website is www.kimep.kz/CABJ.

For further information and submissions, please write to the Journal at cabj@kimep.kz or to the managing editor, Leon Taylor, at ltaylor@kimep.kz.

Step on it

Can price hikes worsen Kazakhstan’s gasoline shortage?

In the last few months, drivers and observers have suspected gasoline shortages in cities of Kazakhstan, including Almaty.  Shortages may also occur in Kyrgyzstan because of a holdup of petrol supplies from Kazakhstan. 

In June, the oil and gas minister of Kazakhstan, Uzakbai Karabalin, denied that a gas shortage would occur and vowed to avoid a price hike.  (In Kazakhstan, the government regulates retail fuel prices.)  But in late August, the economy minister authorized gasoline prices to rise 10% to 15%, reported TengriNews.  At present, the liter price of high-grade gasoline is roughly 157 tenge, or 86 cents, estimated globalpetrolprices.com. 

The government may have had to raise prices in order to eliminate excess demand.  Question: How should they rise?

Suppose that the prices of all grades of gas rise by the same amount – say, 20 tenge per liter.  Remarkably, this may increase demand for the highest grade of gas, compared to the demand for a lower grade; and it may not alleviate the shortage of high-grade gas as much as that of low-grade gas.

To see how, check out your apples.

Suppose that the city of apples, Almaty, exports its fruit to Moscow.  Every apple sent out will incur the same transport cost -- say, 5 tenge.  To avoid losing money, exporters must raise their price by 5 tenge per apple.  The demand for apples, or for anything else, depends on the price of apples relative to the price of a substitute, since the buyer must decide which product to buy with his 20 tenge.  This especially applies to good and bad apples.  A good apple sells at a higher price than a bad one – say, 20 tenge rather than 10.  In Almaty, the relative price of a good apple is thus 2 bad apples, or simply 2. 

Now suppose that we export both good and bad apples.  The price of both will rise by 5 tenge, or to 25 tenge and 15 tenge.  The relative price of the good apple exported is 25 / 15, or 1.67.  Yes, the relative price of the good apple falls when it is exported to Moscow rather than sold on Dostyk Boulevard.  Consequently, demand for good apples, relative to demand for bad ones, will be higher in Moscow than in Almaty.  Ceteris paribus, the seller may respond by selling good apples in Moscow and bad ones in our fair city.  Have you checked your yabloky for worm holes lately?

Your slimmed-down wallet

Back to gasoline.  If all octane grades increase in price by the same amount, then the price of high-grade gas, relative to the low-grade price, will fall.  Motorists will respond by substituting some high-grade gas for low-grade gas. 

How much will they substitute?  We don’t yet know.  In the United States, studies indicate that a fall of 1% in the relative price of high-octane gas will increase demand for it, relative to low-octane gas, by less than 1%, even after two or three months.  Drivers may be reluctant to substitute one grade of gas for another because their vehicles are designed for a particular grade.  In any event, if these figures hold roughly for Almaty, then a uniform price increase may not aggravate the shortage of high-grade gas by much.

In addition, increases in gasoline prices reduce the purchasing power of your income, since you can no longer buy as much gasoline as before.  As a result, you may buy fewer liters overall – say, 10 liters per month rather than your usual 20.  The share of high-octane gas in your purchases may rise – say, from 10% to 15%.  But because your overall purchases have fallen, the overall amount of high-octane gas that you buy is likely to fall.    

Still, keep your fingers crossed.  You’ll need some gas in order to drive to Moscow and buy good Alma-ata apples. –Leon Taylor, tayloralmaty@gmail.com

Notes

The drop in the price of a good product, relative to the price of a bad one, occurs because a given increase in any number will raise the total by a smaller percentage for a large initial number than for a small one.  This illustrates what economists call the “third law of demand.”  Alchian and Allen introduced the idea. 

In our example, the initial price of good apples was 20 tenge.  The additional 5 tenge due to transport costs raised the price by 25%.  The initial price of bad apples was 10 tenge, which the additional 5 tenge raised by 50%.

References

R. Morris Coats, Gary M. Pecquet, and Leon Taylor.  The pricing of gasoline grades and

the Third Law of Demand.  KIMEP Social Research Working Paper Series.  2014.

globalpetrolprices.com.  Kazakhstan gasoline prices, liter.  Accessed September 2, 2014.

Gyuzel Kamalova.  Additional gas to be imported from Russia: KazMunaiGas Onimderi.  en.tengrinews.ke  September 1, 2014.

Oksana Kononenko.  V KMGO schytaiot defytsyt benzyna delom ryk camyx AZC.  Panorama.  August 22, 2014.

Assel Satubaldina.  Kyrgyzstan blames Kazakhstan for fuel shortages.  TengriNews.   en.tengrinews.kz.  July 11, 2014.

Sergey Smirnov.  Struggle with gasoline shortage in Azerbaijan and Kazakhstan.  Oilnews.kz.  November 27, 2013.

TengriNews.  No petrol shortages expected in Kazakhstan: Oil Minister.  en.tengrinews.kz .  June 19, 2014.

Gul’zhanat Yxyeva and Ol’ga Kym.  Benzyn na korotkom povodki.  Kursiv’.  August 21, 2014.

Good reading

A. A. Alchian and W. R. Allen. University Economics.  Wadsworth. 1967.

    

T. E. Borcherding and E. Silberberg. Shipping the good apples out: The Alchian and Allen Theorem reconsidered.  Journal of Political Economy, Vol. 86. 1978.