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Abstract
Processes in the past decades have resulted in the segmentation of European industries into ‘headquarter’ and ‘factory’ economies, though these categories are not fully distinct. ‘Headquarter’ economies typically host the higher value added activities and service units while ‘factory’ economies are popular locations for lower segments of the value chains. This setup has implications for EU level industrial policy strategies. In the current times of accelerating technological development and the ever growing servitisation of industries, ‘headquarter’ economies genuinely have better capabilities and resources to gain more share of the value added, and can actually steer the course of events in the sector. In the EU peripheries, new investment often covers relocation of previous technologies and retired assets of original equipment manufacturers (OEMs). The ‘factory’ economies are in a disadvantage in several aspects, while the headquarters optimise according to their own set of strategic preferences, which further compromises the opportunities of industrial actors in the peripheries to shape their own future. Industrial policies, however smart and well designed, have limited chances to influence the character and speed of changes. We review reported cases through which we test literature and contrast realities with aspirations regarding smart and sustainable industrial development across the EU.
Abstract
Fluctuating prices can cause unintended redistribution of income and wealth, which may be particularly painful to lower income households. Our study examines the indirect effects of this redistribution in an empirical way: it focuses on the capital market distortions of inflation and the disparities in wealth and income. Consumer Price Index (CPI) measures average inflation. However, households feel different inflation rates because their expenditure patterns are different from the ‘average’ patterns. We used the Kruskal – Wallis H test to determine if there are statistically significant differences between low- and high-income households. We calculated alternative inflation rates based on income deciles' different consumption basket. The study finds that households with low income often feel higher inflation than in the actual price indices published by the statistical offices. As our research shows, individuals in different wealth deciles perceive significantly different inflation. Our results also provide important information for economic policymakers, because if social groups perceive different inflation, it modifies the expected behaviour of the population, thereby weakening the economic policy effectiveness of different decisions.
Abstract
We aimed to enrich the empirical picture and to better understand the nature of post-communist capitalism in the new EU member states in Central and Eastern Europe (CEE11). Our main research goal is to assess the degree of similarity of the institutional architectures in these countries toward each of the four models of capitalism in Western Europe distinguished by Bruno Amable (2003), represented in our research by one Western European country being the most typical empirical approximation of a particular ‘ideal-typical’ model. The study is based on the application of a new method designed for the purpose of our research, the coefficients of similarity. Our empirical exercise shows that the CEE11 countries exhibited on average the greatest relative similarity to the Mediterranean model of capitalism, represented by Spain and Italy. At the same time, they also displayed a considerable institutional proximity to the Continental model of capitalism, represented by Germany, and – to a lesser extent – to two remaining benchmarks. These findings may be generalized as the prevalence of a polycentric pattern of institutional similarity of the CEE11 economies to the established models of Western European capitalism which makes the emerging post-communist capitalism a distinct research category and adds to its patchwork nature.
Abstract
We analyse the effect of the European Central Bank's (ECB) monetary shock spillover and its impact on the European Union's 9 countries outside the euro area (EA) between 2000 and 2020. We use the sign-restricted Bayesian VAR model and subsequent interpretation by plotting the impulse-response functions. Moreover, we investigate both conventional and unconventional monetary policies and its international transmission. The spillover of monetary policy is growing with the openness of economies and the ongoing deepening of integration. The output responds to the EA's monetary shock flexibly and persistently, but there is considerable heterogeneity across countries. We claim that it is essential for central banks outside the EA to monitor and incorporate the ECB's monetary policy spillover into decision-making processes. In particular, the international transmission of the unconventional monetary policy has a fundamental effect on the development of the price level, thus achieving price stability. In the case of implementing a counter-cyclical policy, it is also necessary to monitor conventional policy. However, there is no need to fight the spillover effect since there is no beggar-thy-neighbour problem, i.e., spillover effect works in the same direction in both domestic and foreign country.
Abstract
The article deals with the estimation of import intensities of exports, final consumption expenditures and gross fixed capital formation. It uses the input-output methodology of computing direct and indirect imports to the final demand components, which compares with regression estimates. Unlike the widely used turnover approach, the results contribute fundamentally to knowledge about the genuine openness of the Czech economy with regard to how much value-added is exported. In 2015, the highest import intensity for exports amounting to 52%, closely followed by 49% for investments. Household consumption worked with 41% import intensity, while general government consumption expenditures showed the lowest import intensity of 16%. Based on our input-output findings, the true openness of the Czech economy can be revealed. While turnover of exports to GDP reached 80% in 2019, the value-added approach showed only a half, i.e., 40% value-added was exported. It implies a contra-intuitive conclusion that even in a relatively small and highly integrated country into the globalized economy, there is a 60% majority of the non-tradeable goods.
Abstract
Far the most acknowledged and influential author in the economics of Eastern Europe has been János Kornai, the theorist of economic systems and a prolific writer on a variety of subjects in the seventy years of his academic career. His output appeared in more than a dozen of languages. He was criticized and appreciated, especially on the occasion of his 90th birthday, commemorated by – yet another – Festschrift, special issues of academic journals, later followed up by countless obituaries paying the due tribute to someone who has never made to the Nobel Prize, but whose influence definitely exceeded that of many recipients. In this essay we avoid the usual chronological description and highlight certain major themes and try to establish his place in the history of global economic thought. We are aware of our constraints, since it would perhaps take a monograph rather than an article to serve justice to this exceptional academic output of his.
Abstract
The COVID-19 crisis has put the European Union's (EU) ability to respond to external challenges to test. It is not a new issue that has arisen due to the current crisis. The global economic crisis of 2008, and, in particular, the sovereign debt crisis of 2010, highlighted the need for institutional, policy and political reform to ensure the stability and long-term sustainability of the EU project. The EU's asymmetric degrees of integration, in terms of Economic and Monetary Union (EMU) and non-EMU members, resulted in a diverse response to the crisis and, more importantly, mixed-effects from monetary and fiscal policies. This study aims to research the impact of monetary and fiscal policies between 2007 and 2015 on economic growth and employment. The findings show that loose monetary policies at the EU, EMU and non-EMU levels boosted economic growth and development. On the other hand, restrictive fiscal policy had favourably influenced GDP and employment by reducing inflationary pressures produced by expansive monetary policy. However, fiscal policy had a greater impact in the non-EMU countries, demonstrating that this policy can act as a stabilizing force in the face of an overly expansive and common monetary policy. In order to respond effectively to the current and future crises, the EU government should overhaul the way monetary and fiscal policy is conducted and coordinated.
Abstract
This article provides an agnostic, historical review of taxation and economic growth. It critically evaluates how the relationship between the two has evolved throughout modern history. After an introduction that provides a general overview of the relationship between taxation and growth, the article first discusses the positive role of taxes in promoting economic development in the pre-war and post-war periods of the 1940s. It then critically comments on Solow's neoclassical growth theory and explains the experience of stagflation faced by many advanced countries in the 1970s and its implications for tax theory. New growth theories that attribute an important role in economic growth to government policy in general and tax policy in particular are then discussed. This is followed by a rounded five-point assessment of the impact of taxes on growth. The article ends with a general conclusion.
Abstract
This article tests the popular Lee-Carter model's performance for Hungarian mortality rate forecasting. Hungary passed through a mortality crisis which makes the task particularly difficult. Previous forecasts and model choices are validated, and updated forecasts are produced. We find that the behaviour of mortality rates is normalizing, and so the basic Lee-Carter model is becoming applicable.
Abstract
While informal relations between economic and political actors are prevalent in post-communist economies, proper tools for their quantitative measurement are lacking. This paper is a starting point for thinking about this issue. Relying on previous research (Magyar – Madlovics 2020), we elaborate the concept of ‘relational economy,’ and discuss the problem of measuring its peculiar phenomena by existing direct and indirect data. Towards a set of indices for relational economy, we consider the use of proxies in three ways: (1) a radar chart composed of specific company data; (2) ‘moments of truth’ when property movements reveal an actor's de facto ownership status; and (3) ‘moments of truth’ when adoption to or exclusion from the informal patronal network is accompanied by a significant change in financial situation. Illustrations to each of the three methods are provided from the case of Hungary after 2010.
