Browse Our Business and Economics Journals
Economics and business journals focus on publishing papers coming from the fields of applied economics, corporate finance, financial investments, markets, institutions, industrial organization, international trade, marketing and similar.
Business and Economics
Abstract
This paper is aimed at investigating determinants of recent flows of foreign direct investment (FDI) into advanced business services (ABS) in the European Union with the distinction between “old” (till 2004) and “new” member states (after 2004 extension). Special attention is put on the Visegrád countries. The factors affecting location decisions of multinational corporations were analysed at the national and regional level. The latter approach proved to be very effective due to the fact that foreign companies operating in ABS are highly unequally distributed across economies. Indeed, there are only few regions in economies attracting bulk of the operations in ABS.
The research method applied in the paper is negative binomial regression, which measures the probability of occurrence of an ABS foreign firm in an economy or a region taking into consideration its characteristics. This research combines macroeconomic, regional and firm-level data. The explanatory variables are divided into two groups: demand and supply. The main conclusion is the high significance of the supply factors. In other words, foreign companies focus on locations offering large number of skilled workers at reasonable prices. The key recommendation for governments interested in attracting ABS type of investment is to focus on the quality of human capital.
Abstract
The purpose of this paper is to investigate the importance of human capital, as location determinant for the foreign direct investment (FDI) decisions in the Western Balkan Countries between 2008 and 2016. Apart from the human capital indicators, several location determinants were used as control variables. The hypothesis has been tested by employing correlation and regression analysis. The empirical findings revealed the positive impact of primary education and the negative impact of tertiary education on the inflows. The analysis showed that political stability and control of corruption are more important location determinants than human capital. Therefore, the policy measures should be directed towards the improvement of institutional framework and creating a supporting environment for the FDI inflows.
Abstract
This study investigates the transmission mechanism of price and volatility spillovers across the Budapest, Warsaw, Prague, Bucharest, and Zagreb stock markets in the pre- and post-financial crisis periods under the framework of the multivariate Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH) model. By using daily closing prices, the results highlight certain interesting findings. I found evidence of price spillovers of the intraregional linkages among the stock price movements in five countries. This analysis shows the existence of bi-directional volatility spillovers between stock markets of the Czech Republic and Croatia in the pre-crisis period, and between Hungary and Romania in the post-crisis period. Also, there are significant volatility spillovers from Croatia to Poland and from Poland to the Czech Republic during two periods. The volatility is found to respond asymmetrically to innovations in other markets. The findings also indicate that the stock markets are more substantially integrated into crisis, as well as the persistence of volatility spillovers between the stock markets increases, and the financial stock markets become more integrated after the crisis period.
Abstract
We investigate the relationship between economic growth and real exchange rate (RER) misalignments within the European Union (EU) during the period of 1995–2016. In addition to the relative price level of GDP, we quantify an alternative indicator for the RER: the internal relative price of services to goods. We interpret RER misalignments as deviations from the levels consistent with the levels of economic development among the EU countries. Using pooled OLS and dynamic panel techniques, we find that within the EU over- (under-) valuations are associated with lower (higher) growth. This is mainly due to developments in the countries operating under the fixed exchange rate regimes. Our results indicate that the level of development does not influence the strength of the growth-misalignment relationship within the EU. Regarding the price level of GDP, we find that the positive relationship between undervaluation and growth diminishes with the degree of undervaluation. We find that overvaluation has a statistically significant negative effect on export market shares and private investments, indicating that both the competitiveness and the investment channels play a role in the relationship between growth and RER misalignments. As an extension, we show that the effects of “wage misalignments” from levels consistent with productivity are also negatively related to economic growth. The policy implications of the analysis point to the importance of a growth strategy avoiding overvaluation on the one hand, and to the futility of aiming at excessive undervaluation, on the other.
Abstract
In our paper we use an institutional perspective to define the concept of the quality of remuneration policy. Traditional perspective focuses on pay-per-performance relationship between top executives' remuneration and companies' performance. This study is based on the assumption that the acquisition of normatively defined compensation practices and structures is more important for the successful organization than the practices which enhance efficiency defined on the basis of input (compensation) – output (company's performance) relationship. We examine the relationship between the quality of executive remuneration policy and corporate governance standards in banks with a controlling blockholder. Based on the sample of a hand-collected data on corporate governance characteristics, executive remuneration, and financial results of all public banks in Poland from 2005 to 2015, we find that the effective implementation of sound corporate governance practices should be rooted in the form of obligatory normative acts. Consistent with other studies we find a positive and statistically significant relationship between the corporate governance measures and the quality of remuneration policy. In particular, our study shows the significant role of two institutional factors positively determining the efficiency of incentive contracts: remuneration committees and institutional ownership. We also find that the banks controlled by foreign corporations, especially the US–UK–Ireland financial institutions, have a significantly more effective compensation policy than the banks controlled by domestic investors.
Abstract
After the devastation of the Second World War, the federal units of the former Yugoslavia were on their way to catching up with the Western Europe, with different degrees of success. In fact, Yugoslavia was considered a success story among the socialist economies due to its specific self-management system. Nevertheless, among the Federal units that later became independent states, regional differences in development level increased, in spite of the proclaimed policy to narrow them. Enough time has passed since the wars of the breakup and the economic transition to check if this divergence is continuing under a capitalist market system, now that all the countries are on the path to the European Union (EU) accession. The paper tests the convergence hypothesis among the states of the former Yugoslavia in terms of Human Development Index (HDI), as a more complex indicator of country development than GDP per capita. The results of two different approaches to test for the presence of β (beta) and σ (sigma) convergence suggest that the gap between the states of former Yugoslavia is closing, albeit at a slow rate. Given that convergence is slow, the active EU policies aimed at hastening the accession of the currently non-member states of the former Yugoslavia would accelerate the process.
Abstract
Are governments able to continuously boost economic growth by spending for decades? Can the state be a more efficient user of income by improving the structure of public spending? The paper analyses the correlation between various types of public expenditures and GDP growth in different countries of the EU. The database was composed from the Classification of the Functions of Government (COFOG) classification of public spending, which contains data of 25 EU economies in the period 1996–2017. Three econometric models were applied in accordance with the empirical practice found in the literature: first-differences general method of moment (GMM), fixed effects panel and ordinary least squares (OLS) models. The expenditures on social protection proved to have a negative, statistically significant and robust impact on GDP growth. The results are similar for general public spending, and while spending on public order also has a significant and robust coefficient, its sign is ambiguous. The novelty of the article relate to the findings on lagged education and health spending, which have a positive impact on GDP growth.
Abstract
The purpose of this article is to study the impact of fiscal policy on economic growth in Bulgaria for the period 1995–2018. The descriptive analysis is focused on the general trends in fiscal policy and tax structure. The influence of government spending and taxation on economic growth is studied through regressions on time-series data. The empirical estimates prove that taxation is a more reliable instrument of fiscal policy than government spending in terms of a small open emerging-market economy. The dilution of the effect of public spending is probably caused by the high negative values of the current account balance that have been maintained for long periods. Thus, when domestic supply is weak, government expenditure cannot stimulate domestic production, as supply is dominated by import goods. Public investments demonstrate a negative effect on economic growth, which suggests a low productivity of investment spending. A factor of great importance is the level of corruption, which is strongly correlated with government investments, but is harmful to their efficiency. The Bulgarian tax system demonstrates consistency with economic growth. The receipts from value-added tax seems growth-conductive. The decrease of the corporate income tax rate exerts a positive impact on economc performance during the analyzed period, while personal income taxation demonstrates a negative effect. Property taxation has no significant relation with the growth of the Bulgarian economy.
Abstract
The growth impact of tax reforms is probably one of the most controversial issues in economic policy discussions, reflecting deep beliefs in the way economic agents are expected to react to policy changes. The optimal tax theory literature provides a wide array of arguments to identify the mechanisms through which tax reforms might influence growth, depending on the tax category considered and the circumstances under which tax reforms are implemented. The empirical literature has relied on the use of cross-country growth regressions and provided general results leading to normative conclusions on the desirability of specific tax reform options. However, recent research has shown that this approach yields inconclusive results, notably due to identification and endogeneity issues, and the difficulty to account for the true determinants of governments' actions. The dynamic scoring approach combining microsimulation and macro models proves more useful in this respect, especially in order to draw policy recommendations while accounting for the second-round effects of tax reforms. I illustrate these arguments by analysing the growth impact of a hypothetical change from the current flat personal income tax (PIT) rates to progressive taxes in Central and Eastern European (CEE) countries. I find that the estimated impact of such a reform would be rather small but positive when using the dynamic scoring method, while the less-reliable traditional growth regressions would suggest adverse growth effects.
Abstract
This article concentrates on the transformative potential of the Millennial generation within the framework of the political landscapes of the United States, several European countries and Russia. Generational experiences frame the context for the comparative examination of the democratic order and the perspectives for democratic transition. In Western countries, the group is a potentially powerful political force, yet its members do not pursue traditional forms of civic engagement – they are sceptical about institutional forms of participation and have little trust in public authority. Embedded in a youth-marginalization discourse, the public identities of the Millennials are seen rather as a manifestation of the failures of democratic representation, rather than as forms of agency seeking new ways of political expression. The orientations of this distinct group also present a puzzle when the future of authoritarian regimes is discussed: Millennials’ openness to political change is often questioned, despite the prominent role they play in the rise of the opposition forces that gained influence during Vladimir Putin’s third term. Nevertheless, in both contexts, the ongoing generational shift has become an increasingly important area for social-scientific investigation and it is being directly related to broader arguments about the nature of political change.
Abstract
Although Ethiopia is one of the Heavily Indebted Poor Countries (HIPC), there is a lack of empirical studies about the determinants of its external indebtedness. This paper aims to fill this gap by examining the macroeconomic determinants of the external indebtedness of Ethiopia between 1981 and 2016, using the two- and three-gap models as a theoretical framework and an autoregressive distributed lag bound testing approach. The result shows that in the long run, the savings-investment gap, trade deficit, fiscal deficit, and debt service have a positive and significant impact on external indebtedness. However, the growth rate of gross domestic product, trade openness, and inflation negatively and significantly affect the external indebtedness of the country. These results coincide with the predictions of the two- and three-gap models of the theoretical framework. The study argues that appropriate macroeconomic, social, and supply-side policies are essential to reducing the external indebtedness of Ethiopia.
Abstract
The South African Ministry of Health has recognized experiences of care as key to strengthen patient-centred care. This case study aims to measure patient-reported experiences of care at a clinic in South Africa, and its associations with the respondents' sociodemographic characteristics. A survey was conducted in 2019 on a convenience sample of 179 respondents. Questions on experiences of care were based on a standardised set of questions by the Organization for Economic Co-operation and Development (OECD). Logistic regression was used to examine the effects of respondents' characteristics on their experiences. The proportion of respondents who reported that a nurse spent adequate time with them during consultation was significantly higher among literate respondents (92.3 vs. 79.5%). Those who reported past negative experiences were significantly more likely to report a positive experience in regard to perceiving adequate consulting time (odds ratio = 3.865, with a 95% confidence interval between 1.555 and 9.607), receiving easy-to-understand explanations (4.308; 1.665–11.145), being given the opportunity to ask questions (2.156; 1.013–4.589) and shared decision–making (3.822; 1.728–8.457). The results can spur comparisons with other clinics in a similar setting and inform key stakeholders on aspects of the care experience that need greater improvement within the national framework for quality and safety assurance and patient experience measurement.
Abstract
The expected future impact of the fourth industrial revolution is a hotly debated issue in the literature. The majority of papers focus on quantifying the expected impacts on labour demand, or on a specific country, or on huge macro-regions – and the estimates differ widely. Our paper focuses on the impact assessment of Industry 4.0 on the expected structure of employment, wages and inequalities in Hungary. We built a static microsimulation model for our analysis, where the “EU Survey of Income and Living Conditions Hungary 2017” dataset was used as a starting point. Projections by the European Centre for the Development of Vocational Training (CEDEFOP) were used for policy simulations on future employment by sector and by occupational group for each European Union (EU) member state. The analysis also elaborates our own augmented vision about the expected labour demand changes and expected wage trends. Based on this information, the spill-over effects were calculated regarding wage structure and inequalities by sector, region and the highest educational attainment.
Abstract
The main characteristics of intra-EU labour mobility are well documented. There is less focus, however, on the pattern of mobility of the East European (EU-13) EU-mobile citizens. This group constitutes more than half (57%) of all the EU movers and show, to some extent, other features than the rest of the EU mobile citizens (EU-15). The first part of this paper gives a brief overview of some key demographic and labour market characteristics of the East European mobile citizens in the most important destination countries. The perspectives of the sending countries are not analysed frequently enough, and thus the second part of the paper focuses on this issue in the case of Hungary, by asking to what extent the serious labour shortages, ensuing from the outflow of Hungarians, could be compensated by the recent increase of immigration of third country nationals. Using OECD data, the paper quantifies the balance of labour gains and losses for Hungary and compares this with Czechia, Poland, and Slovakia. The analysis concludes that despite the substantial recent inflow of third country nationals into Hungary, it remains to be seen whether this has a real substitution effect for the lost domestic labour force.
Abstract
The aim of this paper is to analyse the relationship between unemployment benefits and durations of unemployment with respect to different approaches in social policy. The hypothesis of the research is that unemployment benefits negatively affect the duration of unemployment. An analysis of the relationship concerning unemployment benefits and duration of unemployment within the European Union Member States (EU-28) between 2006–2018 using panel data regression approach was conducted. The sample was split into sub-samples in order to get more homogeneous groups of EU-28 countries. Estimation results suggest that the more generous a social policy, the more prevalent the negative relationship between unemployment duration and unemployment benefits. Our results also revealed that the better the economic situation, the less pressure is put on unemployment benefits and on the duration of unemployment.
Abstract
Rating the reliability of banks has always been an important practical problem for businesses and the economic policy makers. The best way to do this is the CAMEL analysis. The aim of this paper was to create a bank-rating indicator from the five fields of the CAMEL analysis using two-two indicators for each field for the Turkish Islamic banking system. According to the results of the analysis, we could rank the Turkish Islamic banks. Beside the widespread use of the CAMEL analysis, we applied the Similarity Analysis as a new method. We compared the results from the two methods and came to the conclusion that the CAMEL analysis does not adequately provide a fairly shaded picture about the banks. The Component-based Object Comparison for Objectivity (COCO) method gave us the yearly results in time series form. The comparison of the time series data leads to the problem of deciding about what is more important for us – average, standard deviation or the slope. For handling this problem, we used Analytic Hierarchy Process, which gave weights to these indicators.
Abstract
Deflation is widely feared and opposed. This paper provides arguments to explain the anti-deflationary bias. It is argued that governments favour inflation, that the main deflation theories have influenced negatively the public opinion on deflation, and that rent-seeking behaviour and group formation explains why the opposition to deflationary redistribution is stronger than the opposition to inflationary redistribution. Moreover, psychological concepts, such as anchoring, the endowment effect or the availability heuristic have contributed to the fear of deflation by causing a money illusion and a equalisation of deflation and recession.
The sustainability of an unfunded pension system depends highly on demographic and labour market trends, i.e. how fertility, mortality, and employment rates change. In this paper we provide a brief summary of recent developments in these fields in Hungary and draw up a picture of the current situation. Then, we forecast the path of the economic old-age dependency ratio, i.e. the ratio of the elderly and employed populations. We make different alternative assumptions about fertility, mortality, and employment rates. According to our baseline scenario the dependency ratio is expected to rise from 40.6% to 77% by 2050. Such a sharp increase makes policy intervention inevitable. Based on our sensitivity analysis, the only viable remedy is increasing the retirement age.
Abstract
The paper explores the nature of economic models. It is claimed that accounting for it along the isolationism-constructivism line is untenable. A more integrated approach is needed, based on the pragmatist philosophical tradition, focussing rather on the modelling process than on the narrower notion of the model. This argument is backed by a case study: analysis of the Austrian Business Cycle Theory (ABCT) as presented by Roger Garrison, which, as is argued, does not fully fit either the isolationist or the constructivist account of models. It is primarily shown by revealing the fact that learning about the world by using ABCT is not of deductive nature. Therefore, even in the presence of such a strong realistic methodology as the one in the Austrian economics, models used by its adherents are not necessarily perfect isolations. At the same time, this realistic methodology is not in line with the constructivist approach in model-building. The paper should be understood as an exercise in philosophy of economics, namely as an attempt at better understanding of various aspects of economics (here it is models and specifically ABCT) by taking the perspective offered by philosophy of science.
Abstract
The purpose of this paper is to analyse the economic resilience of Spanish provinces and help to explain why some of them are much more resilient than others. To do so, the paper focuses on the recent, 2007–2009 economic crisis and computes a composite indicator (Resilience) made up of two sub-indicators: one for the recession period (Drop) and the other for the recovery period (Rebound). Then, it suggests some factors affecting resilience and, due to the presence of spatial dependence, applies a spatial econometric approach to assess them. The main conclusions are that the level of Resilience depends negatively on the shares of the construction and manufacturing sectors in GDP, and positively on the share of services and the openness degree. As for the Drop, it is important to stress that human capital emerges as a variable that has contributed to minimise the negative effect of the crisis.
Free movement of persons is one of the fundamental values and achievements of the European Union, however, intentions towards mobility vary across and within the member states. Economic literature has remarkable theories to explain migration flows and individual selection factors of potential migrants, but it ignores major achievements of other social sciences. This paper builds an economic framework to incorporate the Hirschmanian concept of loyalty into the microeconomic (human capital) model of international migration by using interdependent preferences. Hirschman assumes that even after exiting, loyal people care about their previous communities, thus it imposes a certain psychological ‘exit tax’ on them. Based on this concept, it is hypothesized that people with altruistic motives have weaker intentions to migrate, so the presence of loyalty towards others makes international migration less likely, conveying that loyalty towards local or national community may be responsible for moderate labor mobility among EU member states. Results show that attachment to one's country makes one's intention to move abroad in the near future less likely, while loyalty towards one's city has more moderate impact on their intentions.
Abstract
We present an application preference, list-based framework to Hungarian universities, which allows different type of flexible aggregation, and hence, analysis and clustering of application data. A novel mathematical method is developed by which preference lists can be converted into scored rankings. The proposed approach is demonstrated in the case of Hungary covering the period of 2006–2015. Our method reveals that the efforts to leverage the geographical center–periphery differences did not fulfil the expectations of policy makers. Also, it turns out that a student's top preference is very difficult to influence, while recruiters may build their strategy on the information of the first but one choice.
Abstract
The purpose of the study is to examine the relationship between tourism development and economic growth in Greece, using the Autoregressive Distributed Lag (ARDL)-Bounds testing procedure. The present paper attempts to examine the relevance of the tourism led growth hypothesis according to the Kaldorian theory. The analysis was carried out for the period from 1963 to 2016 and involves the short-run as well as the log-run impact. As a proxy for the output of the tourism sector, its receipts are employed, while as an index for economic growth, the GDP is employed. The empirical results show that the economy of Greece can recover and return to the long-run equilibrium with a speed of adjustment 7.17% per year.
Abstract
The aim of this paper is to identify the differences in the determinants of successful transition (understood as the creation of a new development path) between the eastern and the western EU Member States between 1994 and 2014 and elaborate assumptions for a strategy of constructing regional advantage for them at the NUTS2 level. We find that the regional transition requires individual approaches to using comparative advantage at the beginning of the process and then competing with specific advantages that can be consciously constructed throughout the process. Therefore, we hypothesise that a successful transition requires constructing regional advantages based on the knowledge-related factors, leading to specialisation in the knowledge-intensive industries. Furthermore, we state that the way of constructing such advantages differs across the regions. All of our hypotheses were confirmed. Both groups of regions had different comparative advantages at the beginning of the period and constructed competitive advantage based on related knowledge-intensive industries, leading to their specialisation. Interestingly, although the process of building regional advantage was similar, the factors used to create it were different, had a different impact on GDP growth and led to a different specialisation.
The paper provides a brief description of the Active Ageing Index (AAI). This indicator, introduced in 2012, aims to measure the potential of older people for active and healthy ageing. The indicator is constructed from European Union survey data, and these results are weighted with coefficients determined by experts. One of the variables from the surveys measures the proportion of older people using the internet at least once a week. We argue that such regular internet usage does not show too much variation in this era of the ubiquitous internet, so a more sophisticated definition of internet usage must be taken into consideration. Our discussion contains three different AAI variants: the original expert-based, the Djurovic et al. (2017) I-distance indicator, and our factor-based index.
Abstract
Shape analysis has special importance in the detection of manipulated redistricting, which is called gerrymandering. In most of the US states, this process is made by non-independent actors and often causes debates about partisan manipulation. The somewhat ambiguous concept of compactness is a standard criterion for legislative districts. In the literature, circularity is widely used as a measure of compactness, since it is a natural requirement for a district to be as circular as possible. In this paper, we introduce a novel and parameter-free circularity measure that is based on Hu moment invariants. This new measure provides a powerful tool to detect districts with abnormal shapes. We examined some districts of Arkansas, Iowa, Kansas, and Utah over several consecutive periods and redistricting plans, and also compared the results with classical circularity indexes. We found that the fall of the average circularity value of the new measure indicates potential gerrymandering.
A number of megatrends are hitting the world of work at the same time. These include the digital revolution, globalisation and rapid population ageing, which are all having a profound impact on the types of jobs that are being created and how and where they are performed. This paper examines the challenges confronting the Visegrad Group of countries and the broad policy responses that will be required. It looks at the risk of job automation, how the structure of employment is changing by skill level and the rise of the gig economy. These changes will require a combination of policy responses in the areas of employment regulation, measures to facilitate labour mobility and lifelong learning, social protection and social dialogue. In many cases, this will not require a complete paradigm shift in policies but an adaptation and strengthening of existing polices.
Abstract
The aim of this study is to analyse the impact of board size on a firms' operational and market performance at the largest East Central European listed non-financial, non-public utility firms. The literature debates the effects of the size of the board. While the resource dependency theory supports a positive effect, the agency theory supports a negative impact on firm value. This question is rarely investigated in two-tiered corporate governance models. This paper estimates the effects of management board and supervisory board size, between 2007 and 2016. The results indicate that the effect of management board size depends heavily on the size of the observed company. In both fixed effects and GMM-type dynamic panel regression models, using Tobin's Q, market-to-book ratio, total shareholder value and ROA as firm performance measures, increase in management board size has a significant positive impact on firm performance; however, in the case of larger firms, the effect is significantly negative. Moreover, the increase in the ratio of outside directors has a positive impact on the firm's performance in all dynamic panel regression models and this effect is even more significant in Tobin's Q and market-to-book ratio models. This can indicate the effective monitoring role of the supervisory board.
Abstract
I investigated the effects of adolescents' attitudes toward risk on their choice of employment sector in adulthood. I employed a joint model of employment sector choice and three-dimensional background characteristics to demonstrate that employment preference is an inverse function of the degree of relative risk aversion. Empirical data was obtained from longitudinal data, and a logit model was applied to estimate the effects of the three-dimensional background characteristics on the risk-taking attitudes and employment choices. I observed that individuals with a higher tendency to engage in risky experiences exhibit low risk aversion, and thus, tend to choose a riskier employment sector.
Abstract
The Confucian doctrine of the Mean teaches that too much is as bad as too little. The Aristotelian doctrine of the Mean coincidently articulates that there can be too much or too little of nearly every human passion and action. In neoclassical economics, it is assumed that people tend to take any action at the optimal (not too much and not too little) level to maximise the net happiness from the action. This article argues that the Confucian doctrine of the Mean concurs with the optimality principle, and therefore that the optimality principle is a representation of human nature and can be understood as universal human wisdom. It follows that people can adopt both the Confucian doctrine of the Mean and the optimality principle as worldly common wisdom beyond the blunt dichotomy of spiritual orientalism and materialistic individualism. Too much emphasis on the technical differentials between the two has undermined the common wisdom embedded in them.
Abstract
The objective of this paper is to identify the most efficient healthcare systems in a sample of 17 EU Member States. According to the health system financing schemes, the selected countries belong to two main groups, Beveridge and Bismarck. The research includes five input variables describing the financial and human resources, the level of health infrastructure, the medical technology and the healthcare utilization. On the output side we analysed four measures that reflect the overall health status of the population and the effectiveness of prevention and emergency care. Using the Data Envelopment Analysis (DEA) method, the most efficient healthcare systems are found in Sweden, the UK and Romania. The constraints applied for all the indicators and scenarios lead to higher or lower inefficiency scores, the Beveridge group being on average more efficient than the Bismarck one.
Abstract
In 2017, Korea became an ‘aged society,’ with the proportion of people aged 65 or older exceeding 14%, while the ratio of the working-age population declined for the first time. This study uses data from the Korean Longitudinal Study of Ageing (KLOSA) to examine the effects of public pension on the labour supply of older people and discusses ways of preparing for this ageing problem. The study uses the Heckman sample selection model for analysing both the extensive and intensive margins of older people's labour supply. Our results show that the effects of public pensions in Korea are very different from that in other countries. It can be inferred that these differences are a consequence of the less developed social security system and limited experience from its short period of implementation. Hence, encouraging older people to work could be a way of solving the problem of relatively high poverty among the older population in a society that is likely to age even more. This is considered an optimal solution in light of increasing life expectancy, a poor social security system, and a decrease in private income transfers from children to their ageing parents.
Abstract
Evidence from the global financial crisis (2007–2008) and the Asian financial crisis (1997) have taught policymakers valuable lessons. The contagious effects of these crises have proven unavoidable and have led to negative economic development. However, South Korea, unlike other countries, has recovered remarkably from both episodes of financial turmoil and proved their ability to maintain positive growth throughout the two periods. This study investigates the correlation between the evolution of South Korean banking and corporate sector before, during and after these crises. A VAR model was employed to test the effectiveness of the South Korean government's policies, in response to the financial crisis from 1997 to 2017, using macroeconomic variables as proxies for newly introduced policies, and non-performing loans for controlled risks. The empirical results indicate impulse response functions which suggest that changes in macroeconomic variables as a representation for the policies resulted in a reduction of non-performing loans. This implies successful risk reduction and an overall economic recovery.
Abstract
This paper examines the Bismarckian and Beveridgean-style healthcare systems in 25 OECD countries to identify the relationship between the efficiency of the country's healthcare delivery arrangement and its economic wealth. The Data Envelopment Analysis (DEA) is applied as a quantitative tool. I examine three models using infant mortality and potential years of life lost as output indicators. These models differ only in the way of expressing healthcare inputs. The DEA computations show that neither the Bismarckian nor the Beveridgean healthcare system has a clear advantage over the other when inputs are expressed by health expenditure as a percentage of GDP. The model which uses USD per head expenditure data at purchasing power parity shows a slight advantage of the Beveridge-style systems. This confirms the common opinion that the Bismarck-style systems perform worse in controlling the costs. When inputs are expressed using physical units (medical staff and equipment), DEA shows that the Beveridge system is significantly more efficient than the Bismarckian ones. I analyse the relationship between the DEA scores and the country's GDP per capita, as well. This analysis shows that more developed economies are technically less efficient. These findings are consistent with the belief that technical efficiency is only one of the many criteria that determine the quality of the healthcare system and patient satisfaction.
Abstract
This study focuses on the level of interdependence across the Central and Eastern European (CEE) foreign exchange markets (Hungary, Poland, the Czech Republic, Romania and Croatia) from September 2008 to September 2017, using the return spillover measure proposed by Diebold and Yilmaz (2009; 2012). We mainly find a bidirectional volatility spillover among these assets and the cross-market linkages in the CEE region have become stronger over time. Furthermore, the Czech exchange market has a significant influence on the rest of the foreign exchange markets. The total spillover remained very high over the periods 2010–2012 and 2015–2017, despite the noteworthy fluctuations in other periods. These results would also be useful for portfolio managers, policy makers and speculative traders to develop exploitable strategies, by providing knowledge of the transmission mechanisms of the volatility of foreign exchange markets. The results may support the distribution of assets in a financial portfolio, especially after financial integration.
Abstract
The paper investigates how the increased use of temporary contracts in Poland affected employment elasticity with respect to output. The analysis is based on Okun's law, and covers the period of 1996–2016, with particular focus on the years of 2001–2016 when temporary jobs became prevalent. We look at the relationships between output growth and the growths of aggregate, permanent and temporary employment separately. Our study finds that the responsiveness of aggregate employment to output is positive and changes through time. Interestingly, after 2007, when the use of temporary contracts stabilised at a high level, the employment intensity of growth started decreasing. We relate this to the opposite trends in output responsiveness of temporary and permanent jobs. Elasticity of temporary job was growing, while elasticity of permanent job was decreasing. Our study also shows that initially employers adapt to output changes replacing permanent job with temporary job, next temporary contracts become the main adjustment device.
Abstract
The relationship between social expenditure, on the one hand, and poverty or income inequality indicators, on the other, focuses a great interest in the literature on welfare systems. In this paper, we evaluate the efficiency of the social transfer policies of the EU-28 states between 2011 and 2015 using deterministic and stochastic frontier models. Using the fuzzy clustering methods, we identify the patterns in the size of welfare systems, which we measure from the value and efficiency of social expenditure. In this way, we identify four clusters. The first cluster comprises many EU-15 countries (normally the Continental and the Nordic welfare states); the second comprises nations that were integrated into the EU in the last 15 years (mostly the former Communist countries); the third cluster comprises the culturally and geographically heterogeneous countries, such as Hungary, Ireland, Croatia and Luxemburg (whose main characteristic is the high efficiency of their social expenditure); and finally, the fourth group basically comprises the southern European countries, whose social transfer policy effectiveness is rather weak.
Abstract
This paper investigates how social capital contributes to the pro-social behaviour of individuals in a post-conflict environment. I simultaneously investigate the pro-social behaviours in the periods of crisis (floods) and normality and observe whether (structural and relational) social capital has important influences in these two different times. The main novelty of this approach is that I model individuals' pro-social behaviours jointly for both the periods in focus and treat them as systematic outcomes of observed and unobserved (endogenous) influences. I find that more pro-social activities in the normal times are positively associated with such activities in the crisis period. Additionally, the results reveal the importance of (structural) social capital on pro-social behaviour – namely, group membership, size and ethnic structure of individual networks matter. Of particular interest for this post-conflict society and related literature is that greater ethnic diversity of individual networks is supportive for pro-social engagement of citizens. Finally, among the observed economic influences, I find that the respondents working in the informal economy report more pro-social activities while formal employment works more as financial intermediary for these engagements.
Abstract
Though tax amnesties (TAs) are considered as a policy tool to increase revenue for governments, they have generated some puzzles. To solve the puzzles of TA we should not ignore the behavioural aspects of delinquent taxpayers. In this paper, we focus on a relatively neglected but important area of the TA literature. Considering that people who participate in tax amnesty policy (TAP) may not honestly report the whole amounts of evaded tax, thus they commit a secondary tax evasion. We indicate that even considering the risk of abstaining from TA and incurring possible uncertainty of tax evasion penalties, participating in a TA provides a higher level of utility for the delinquent taxpayers. Also, due to a secondary tax evasion usually accompanying with TA, we show that during the initial assessment period of a TAP the tax revenue drastically increases and when the assessment period is approaching the tax revenue stably declines and ultimately converges to a fixed value. Furthermore, we show that if delinquent taxpayers participate in the TAP and the penalties are larger than the expected tax revenue of the government, it increases the tax revenue without reducing the welfare of other taxpayers, so as to achieving Pareto improvement.
Abstract
The high rate of increase of ruling politicians' wealth has been empirically proven many times. However, in the literature it is almost always assumed that politicians grew rich faster due to political rent-seeking or corruption. The aim of this article is to discuss the assumption whether corruption and rent-seeking is indeed the only possible cause, and to present empirical findings undermining the assumption. The results of the analysis of levels and rate of growth of Polish politicians' wealth clearly show that the other explanation is the selection of people exercising authority. Based on statistical analysis of 2024 asset declarations of 689 councillors from Polish voivodeship assemblies from two terms in the period of 2010–2018, the paper demonstrates that the different rates of changes of the value of assets of coalition and opposition councillors are at least partly the effect of the selection bias.
The paper applies a variant of the gravity model to test whether there is a positive link between the size of trade flows and the extent to which they follow the pattern of comparative advantage. Using UNCTAD's 2016 trade data for every country in the world, and 255 merchandise items, we show that countries trading more with each other tend to follow the patterns of comparative advantages more than countries with smaller mutual trade flows. While smaller trade flows can be easily influenced by business decisions of individual companies or one-off trade contracts going against trade pattern predictions, this is not the case with larger flows. We also find signs that holding trade volume constant, more distant countries trade less than geographically proximate countries, in line with predictions from comparative advantage. The results are valid for the whole database of all country pairs in world trade, but the goodness of fit increases with the number of items these country pairs trade in. The paper is the first insight into the topic and can be expanded to a higher level of disaggregation and more variables in future research.
Chinese infrastructural projects like the “Belt & Road Initiative” or the “Chinese 16 + 1 Initiative” are trapped in geopolitical narratives. Geopolitical concepts dressed in scientific robes make the logic of warfare begin to prevail over the logic of cooperation. As a consequence, something that was to be an opportunity for less developed countries, becomes the axis of conflict between the great powers. In this paper, I identify the logic of warfare as an underlining characteristic of geopolitical reasoning and show why it is incompatible with economic approach. I also argue that geopolitical concepts are not scientific theories, but rather self-fulfilling prophecies. This theoretical background allows to detect the biggest obstacles related to many Chinese initiatives, and also indicates some necessary means to neutralize geopolitical narratives.
This paper investigates whether multinational companies possess superior manufacturing knowledge relative to domestic companies operating in emerging market countries. Manufacturing knowledge is operationalized as knowledge in use through the implementation and performance impact of manufacturing practices. Using survey data of 216 manufacturing plants located in five emerging countries, we apply analysis of variance (ANOVA) and structural equation modelling (SEM) to identify the potential knowledge surplus of multinational subsidiaries over local companies. Results of our analysis show that, generally, multinational subsidiaries invest significantly more effort in implementing manufacturing practices. Nevertheless, their knowledge superiority concerning the effective use of these practices is only materialized in terms of practices related to human resource development and advanced manufacturing technologies.
The operations of the cooperative organization are an actively debated issue. The efficiency and viability of this organizational form still pose many unanswered questions. The literature is not unequivocal in evaluating the merits and drawbacks of this organization. This article provides empirical evidence from research about cooperatives covering three countries (Canada, France and Hungary) and tests theoretical hypotheses in the framework of organizational economics and cooperative theory. The findings point towards the positive influence of the social environment and cooperative values on organizational choice. The results prove the continued relevance of this type of organization in the 21st century in agriculture in all three researched countries.
Croatia is faced with a low response to cancer-screening programs, especially the national cervical cancer screening program, which ultimately resulted in its suspension. If judged solely on the basis of revealed preferences, such a poor response would imply that the population assigns a low social value to preventive screening programs. However, the question arises as to whether revealed preferences (the population's response), in the case of the absence of response to a preventive program, provide insight into its value (utility). Therefore, the objective of this paper is to determine the value that respondents assign to different attributes of cervical screening and, in a broader sense, to decide whether the best-worst scaling (BWS) approach is appropriate for determining the marginal willingness to pay (MWTP) for public health programs. The MWTP for certain attributes of cervical cancer screening is derived from the results of a BWS study conducted in Primorje-Gorski Kotar County, Croatia. The cost function was estimated by regressing the conditional logit coefficients (level of utility) of three levels of the cost attribute on its corresponding values, that is, the hypothetical price. Because the sum of the MWTP corresponds with the market price of a gynecological examination in private practice, we conclude that the results obtained by the BWS confirm the revealed preferences (the market value of the service).
The paper presents a qualitative study of rapidly and gradually internationalising Polish firms. It compares these two types of firms with a special attention to their competitive strategies. The results show that there are more similarities than differences between the two groups of firms from emerging markets. These findings, based on case studies and interviews must be interpreted with a lot of caution, because the similar strategic behaviour of gradually internationalising firms to rapidly internationalising firms may stem from the fact that the former want to quickly reduce the distance to their counterparts in highly developed countries and thus take some strategic actions similar to rapidly internationalising firms.
The paper analyses the impact of the simultaneous occurrence of external debt and capital flight on economic policy effectiveness in Heavily Indebted Poor Countries (HIPCs) in sub-Saharan Africa, employing the Panel-Corrected Standard Error regression model for the period 1990 to 2015. The empirical results reveal that both monetary and fiscal policies in the region had been undermined in achieving their intended purposes because of increasing capital flight and external debt. Also, the concurrent occurrence of capital flight and external debt has been a hindrance to progress on the continent, particularly by undermining domestic investment. These results call for more practical measures in addressing the issues of foreign debt and capital flight, given the critical importance of domestic private investment for both short- and long-run growth.
