The 2010–2012 euro crisis prompted a wave of institutional reforms in the European Economic and Monetary Union (EMU), and one of the most remarkable changes was the creation of a permanent bailout facility for troubled sovereigns. The birth of the European Stability Mechanism (ESM) in 2012 was preceded by harsh debates, reflecting a conflict between a German view of country-level responsibility and French-Italian calls for more risk sharing. These tensions have remained ever since, which was also highlighted by conflicts regarding the ESMs overhaul at the end of 2019. Concerns of Italy then drew attention to the fact that a wide range of issues prevented the community from finalizing the post-crisis structure of the eurozone. This paper focuses on the evolution of the EMU financial assistance framework up until the latest efforts for its reform. We analyse the impact of related policy announcements on changes in sovereign bond yields of Italy, Spain, Portugal and Ireland (i.e. the most vulnerable countries during the euro crisis). Our findings show that news on bailout arrangements significantly contributed to a contemporaneous moderation of periphery bond yields, especially in the case of shorter maturities. This result hints at the role of common facilities in supporting financial stability. To enhance this feature, a ‘package approach’ (i.e. multiple reforms together, as stressed by Italy) may well need to be considered. Such a broad perspective can help strengthen the euro area once the acute threat of the coronavirus pandemic is averted.
Multinational enterprises (MNEs) use different methods and structures for base erosion and profit shifting (BEPS) to optimize the tax liability of the group. It is of great interest to the relevant countries to be able to identify such practices and react with appropriate measures. The objective of this paper is to verify whether selected MNEs engaged in the digital economy tend to shift profits from the Czech Republic to jurisdictions with lower taxation using the tax evasion rate (TER) indicator and the transactional net margin method (TNNM). Since the TER method has not been tested yet, this paper also aims to demonstrate its application on real world data and to evaluate its usability. On a sample of five MNEs, the analysis showed a potential tendency to shift profits within Europe for four MNEs (Amazon, Apple, Google and Uber) and a potential tendency to shift profits specifically from the Czech Republic for one MNE (Amazon). The analysis shows that TER is suitable as a preliminary indication of possible risks, rather than their exact quantification.
Providers of insurance used to have no other choice than to absorb the behavioral externalities of their policy-holders. New technology coupled with the incentives of low-risk consumers has made it possible for firms to price-discriminate on the basis of behavioral risk and thus internalize behavioral externalities. While cost-internalization is generally a positive development, the introduction of behavioral tracking technologies also introduces new economic and social costs. This paper explores the economic and moral trade-offs of adopting behavioral tracking technologies in various insurance settings.
This paper examines the drivers and the size of the shadow economies of the Czech Republic, Hungary and Poland. It also investigates the tax losses associated with these shadow economic activities in all three countries. The Multiple Indicators and Multiple Causes (MIMIC) model is applied and uses time series data covering the period 1990–2019. The key findings show that the sizes of the shadow economies of the Czech Republic, Hungary and Poland are 10.44, 11.18 and 20.47% respectively. The results also show that the average size of the shadow economies between 1990–2019 was 14.92% in the Czech Republic, 18.72% in Hungary and 22.85% in Poland. The Czech Republic loses 3.13% of tax revenue from goods and services and 2.83% from incomes and profits as a result of the shadow economy, while Hungary loses 5.05% of tax revenue from goods and services and 1.68% from incomes and profits. Poland loses 5.25% of tax revenue from goods and services and 4.34% from incomes and profits.
For the further development and more efficient operation of the sharing economy, a fast and inexpensive peer-to-peer payment system is an essential element. The aim of this study is to outline a prototype that ensures the automation and decentralization of processes through smart contracts without blockchain technology. The model has been built based on the narrative that a community currency created through smart contracts can promote genuine practices of sharing as opposed to the profit-oriented approach that most of the currently operating sharing economy platforms have. Features of the model, such as ease of use, high-speed transactions without transaction cost are benefits that can provide a more efficient alternative to the traditional or to the cryptocurrency-based centralized sharing economy platforms.
Authors:Zdeněk Pikhart, Šárka Pikhartová, and Pavel Procházka
The main aim of the article is to identify unintended consequences of economic policies to combat climate change, in the short and long run, using the example of the Czech economy. The short term impacts are assessed by world input-output analysis in order to capture direct and indirect channels affecting the Czech automotive industry. Optimistic, realistic and pessimistic scenarios of decrease in demand for cars due to the imposition of environmental taxes in the European Union and the rest of the world are presented. The results show adverse impacts on Czech gross domestic product from 1.6 to 4.9 percentage points. The economy is expected to change its structure and reallocate factors of production to an alternative use, but there is a risk of suboptimal allocation, which might reveal losses from less efficient allocation of labor and capital. Therefore, the analysis of the relationship between economic welfare and the quality of the environment is conducted. Data on the Czech economy confirm the hypothesis of an environmental Kuznets curve and point to unintended consequences of overly ambitious policies to mitigate global climate change. If economic welfare excessively declines, there would be a significant risk of undermining people's will to invest into environmental protection.
Authors:Mirjana Gligorić Matić, Biljana Jovanović Gavrilović, and Nenad Stanišić
After Second World War (WWII) a true evolution in understanding of economic development happened, which affected the ways of measuring prosperity, i.e. perceiving changes in people’s welfare. Numerous indicators have been created, which go ‘beyond GDP’ and cover different aspects of development and well-being. The aim of this paper is to analyse prosperity convergence in 32 European countries with a composite indicator – Legatum Prosperity Index (LPI). LPI is more complete than other indicators used in convergence analysis and reflects multidimensional nature of modern development and prosperity. Our research of absolute beta convergence is based on cross-sectional and panel data. Results indicate the existence of convergence in the overall index and its constitutive parts – dimensions and pillars, with different convergence speed regarding LPI and its segments for the total sample of countries, as well as for the countries of Eastern and Western Europe.
Kornai (2014) described the problems of municipal indebtedness in Hungary and analysed the process of bailout carried out between 2011 and 2014. In the same period, the central government also reformed the local government system, which included serious limitations of their financial independence. This study re-examines the state of the soft budget constraint (SBC) of Hungarian local governments. To start, the general theoretical framework of SBC is introduced. Then, the budget constraint on the Hungarian local governments before the bailout is described briefly, followed by an assessment of the corresponding measures which were expected to offset the negative messages of the completed bailout and to harden the budget constraint. The study concludes that the central government decided to harden the budget constraint through the introduction of new hierarchical mechanisms, while the development of fiscal discipline stopped. On the one hand, this resulted in the consolidation of municipal budgets, but on the other, it was accompanied by a serious limitation of local autonomy, projects and borrowing in general, while the central government employs specific administrative tools to show favour to some settlements according to its (political) interests.
This paper examines the links between religion and job satisfaction. Its concern is to compare Eastern and Western Europe. We use the 2015 International Social Survey Programme (ISSP) data covering both non-religious individuals and individuals affiliated to a religious denomination. While the Western European countries generally report significantly higher levels of job satisfaction compared to their Eastern counterparts, we test the hypothesis that religion also shows differentiated effects on job satisfaction and work attitudes. Our results indicate that religion has no significant effect on job satisfaction in either of the regions. In the West, religious affiliation has an influence on a larger variety of work attitude measurements compared to those in the East. In both regions, workers who regularly attend religious services would enjoy work significantly more even if they did not need money, consider high income as less important, and consider helping other people, contact with other people, and having a job useful to society as more important.