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Authors: Viktória Szirmai, Zsuzsanna Váradi, Szilvia Kovács, Júlia Schuchmann and Nóra Baranyai

The article presents the urban sprawl phenomena in Central European capitals and in the Budapest metropolitan region, based on statistical data and empirical survey analysis. The study concentrates on territorial consumption issues, which are determined by the suburbanisation processes, the changes of city and outskirt populations, and the transformation of land use patterns. It describes the negative environmental and social impacts (air pollution, spatial and social stratification phenomena and conflicts) as well. Moreover the paper summarizes the residential requirements to offer a hypothesis concerning the possible urban sprawl in the future. Finally it discusses the excessive criticism of the urban sprawl phenomena.

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This paper investigates the use of different priors to improve the inflation forecasting performance of BVAR models with Litterman’s prior. A Quasi-Bayesian method, with several different priors, is applied to a VAR model of simulated data as well as to the Australian economy from 1978:Q2 to 2006:Q4. A novel feature with this paper is the use of g-prior in the BVAR models to alleviate poor estimation of drift parameters of Traditional BVAR models. Some results are as follows: (1) In the Quasi-Bayesian framework, BVAR models with Normal-Wishart prior provide the most accurate forecasts of Australian inflation; (2) Generally in the parsimonious models, the BVAR with g-prior performs better than BVAR with Litterman’s prior; (3) In simulated data, the BVAR model with g-prior produces more accurate forecasts of driftless variable in the long-run horizons (first and second year forecast horizons).

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This study investigates the bank selection criteria of undergraduate students who are future potential customers of banks from different regions of the world in a small island economy by comparing the selection factors of international students for the first time. Survey results of 258 respondents show that there are not huge differences in the bank selection factors between Turkish and non-Turkish international students in the case of a state university in North Cyprus. “Availability and convenient location of ATM services” and “speed and quality of service” are the most important factors for considering banks and their services for both Turkish and non-Turkish undergraduate students.

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Authors: Mihály Szívós, Dániel Izsák and Tuğba Yumakli
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Authors: Bernadett Kovćs and Gyöngyi Csuka
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With flexible (variable) retirement every individual determines his optimal retirement age, depending on a common benefit-retirement age schedule and his life expectancy. The government maximises the average expected lifetime utility minus a scalar multiple of the variance of the lifetime pension balances to achieve harmony between the maximisation of welfare and the minimisation of redistribution. Since the government cannot identify types by life expectancy, it must take the individual incentive compatibility constraints into account. Second-best schedules strongly reduce the variances of benefits and of retirement ages of the so-called actuarially fair system, thus achieving higher social welfare and lower redistribution.

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This investigation is one of the first to adopt quantile regression (QR) technique to examine covariance risk dynamics in international stock markets. Feasibility of the proposed model is demonstrated in G7 stock markets. Additionally, two conventional random-coefficient frameworks, including time-varying betas derived from GARCH models and state-varying betas implied by Markov-switching models, are employed and subjected to comparative analysis. The empirical findings of this work are consistent with the following notions. First, the beta smile (beta skew) curve for the Italian, U.S. and U.K. (Canadian, French and German) markets. That is, covariance risk among global stock markets in extremely bull and/or bear market states is significantly higher than in stable periods. Additionally, the Japanese market provides a special case, and its beta estimate at extremely bust state is significantly lower, not higher than that at the middle region. Second, the quantile-varying betas are identified as possessing two key advantages. Specifically, the comparison of the system with quantile-varying betas against that with time-varying betas implied by GARCH models provides meaningful implications for correlation-volatility relationship among international stock markets. Furthermore, the quantile-varying beta design in this study relaxes a simple dual beta setting implied by Markov-switching models of Ramchand — Susmel (1998) and can identify dynamics of asymmetry in betas.

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Authors: Gyöngyi Csuka, Bernadett Kovács, Digdem Soyaltin and Sanja Hajdinjak
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A model of human resource (HR) practices in the subsidiary units of multinational corporations (MNC’s) in Hungary was developed from a review of the literature. This model describes the evolution of different HR variables in the light of external (macro) and internal (firm specific) factors. Based on components of this model, an interview-based survey of top level HR executives at 42 subsidiaries of large multinational companies in Hungary was completed. Results suggest that local subsidiary HR executives still maintain significant authority over their functional processes vis-à-vis the corporate office and expatriates are used less now than in earlier stages of development. Critical issues facing these executives varied by stage of competitive development between 1988 and 2005, HR staff continue to have significant in-country head counts, consulting is largely limited to training and development activities and most privately owned subsidiaries perceive unions as a marginal institution in Hungary today. The paper concludes with a series of limitations based on the interview processes and small sample size and a discussion of areas for further regional and national research development relevant to the model.

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This paper attempts to contribute to the understanding of how democracy and individual rights associated with it affect economic development. The market process approach to innovation (and entrepreneurship) is combined with the stationary bandit approach to property rights to derive a proposition concerning how the lack of exogenous constraints on the government can retard innovation. According to this, a credible commitment to secure property rights through respecting individual or human rights becomes an important factor for the process of catching up for those countries that are relatively close to the most developed ones in terms of technology and thus income. The proposition is tested on cross-country panel data using a measure of civil rights as a proxy for the commitment to secure individual rights. This argument provides one possible explanation for the fact that there is a strong correlation between democracy and income while the correlation between democracy and growth is weak.

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Literature on firms’ entry and exit decisions provides empirical evidence that industries with many exits also have many entries. We present a paper that merges some different approaches to the entry and exit of firms and which proposes a new method for looking at the entrepreneurial decision. Our model theoretically supports what empirical evidence has shown and holds; that databases are not yet developed enough to understand the whole exit process. We demonstrate that the possibility of recovering some share of investment costs makes entry more than just a production decision. Within a defined time horizon, a firm can enter the market despite making a loss from production output since the firm’s return consists of both sales and investment cost recovery. Entry may be the optimal strategy even when the unit cost is higher than the market price.

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The progress of post-socialist systemic transformation should be evaluated through the prism of its influence on a country’s development abilities. During twenty years of comprehensive systemic shift, gross domestic product has increased only to a limited degree, on a par with the growth of the world economy. While judging the transformation progress, not only the improvement of competitiveness and growth in terms of quantity must be taken into account, but also social and cultural aspects. Had there been a better policy co-ordination of systemic change and socio-economic development, GDP could have increased by a considerable amount more. This opportunity has been missed due to the implementation of sub-optimal if not just wrong economic policies based on wrong economic theories and the lack of ability of the ruling elites to overrun the conflicts of interests.

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Authors: István Benczes and Blagoy Kitanov
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The global economic and financial crisis has raised further concerns about the euro-entry criteria, in addition to other factors, such as the effective tightening of the criteria due to the enlargement of the EU from 12 to 27 members, the highly unfavourable property of business cycle dependence, the internal inconsistency of the criteria due to the structural price level convergence of Central and Eastern European countries, and the continuous violation of the criteria by euro-area members. The interest rate criterion became a highly volatile measure. Many US metropolitan areas would fail to qualify to be members of the US monetary union by applying the currently used inflation criterion to the US. It is time to reform the criteria and to strengthen their economic rationale within the legal framework of the EU treaty. A good solution would be to relate all numerical criteria to the average of the euro area and simultaneously to extend the compliance period from the currently considered one year to a longer period.

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The crisis that started in 2008 began with the malfunctioning of the financial mechanisms, i.e. as a financial crisis; it quickly became an economic crisis and is now threatening to become an energetic crisis and, lately, a crisis of agricultural products, announcing at the same time the crisis of a development model and an ontological crisis. It engages the questioning of certain conceptualizations and orientations. If one wonders about the new concepts employed by the foreseen “ontological crisis”, then one may answer, with powerful arguments, that there are concepts such as: “cultural turn”, “transdifference”, “complexity”, “risk” and “vulnerability”. These concepts are assumed in order to understand the world we are living in. If we ask ourselves about the changes in orientation brought by the crisis, then the answer is that this crisis forces us to review the diagnoses given to the current society and to accept that we have entered the “uncertain society”. The paper is based on the speech delivered by the author at the receipt of the Doctor Honoris Causa title of Corvinus University Budapest on the 28th of January 2010.

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This paper discusses why change inevitably leads to conflicts which, unless treated right, become destructive. It presents a tested framework on how to convert destructive conflicts into becoming constructive, which applies to individuals, families, any organizations, and society. The paper is based on the speech delivered by the author at the receipt of the Doctor Honoris Causa title of Corvinus University Budapest on the 22nd of January 2010.

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The paper argues that in some specific cases the central Government, which is usually required to choose in between whether to maintain (improve) the competitiveness of the economy or to reduce governmental responsibilities, is able to manage the state budget without limiting its choice to one of the two alternatives. At present, in Hungary the possibility is given to increase tax revenues and concurrently increase competitiveness. The main discussion of the article is centered around four practical proposals intended to support the above statement:

  1. the necessity to create new jobs to (re)activate the inactive population the tax morale of the taxpayer to fulfill his obligations depends primarily on the propensity of other taxpayers to pay taxes, and therefore the abolition of the secrecy of tax declarations would improve tax morale and thus propensity to pay taxes corruption can be curtailed with strict restriction of cash payments the owners of incomes realized on domestic economic operations should not (only) pay taxes in tax havens and offshore areas, but in Hungary

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The article refers to a definition of globalisation in three perspectives, namely the development of territorial boarders and in particular the redefinition of regions, the development of the division of labour and distribution of power, and the changed role of culture. The latter is thereby not least understood as a new culture of capitalism. With this orientation it is aimed at developing a historical perspective on globalisation that refers not simply on an increasing loss of borders. Instead, the argument is directed to the understanding more the actual background of changes in world-capitalism by investigating a broad outline of the changing process of production. In this light, globalisation is not seen as a linear process but a matter of permanent ‘negotiations’ and reorganisation.

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Work culture is an integrative component of the transformation process. At first sight, Hungarian work culture appears globalized, but many of the globalized or “westernized” characteristics remain superficial. The lack of a deeply-rooted democratic culture can easily be traced at the workplace. The entrance of multinational companies in Hungary has provided opportunities and challenges to the Hungarian workforce, including the model of the “globally integrated enterprise”. While multinational enterprises become more integrated and efficient on the global level, their local social and economic contexts disintegrate. If new forms of cooperation and partnership will emerge, a new work culture in Hungary could increase in momentum and flourish. Identifying critical junctures in work culture has underscored the need for new partnerships among employees and employers who together can positively change the economic landscape and prospects for the future. This study is based on empirical research by using the methodology of value sociology and value surveys. Its major conclusion is that reinventing Hungarian work culture might be a difficult and complex process but nevertheless it is possible and also inevitable.

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Processes that are taking place at the beginning of the 21st century make the creation of a new social contract absolutely essential, from the viewpoint of higher education. The Magna Charta Universitatum issued in 1988 by the rectors of the European universities and the World Declaration on Higher Education for the Twenty-first Century (UNESCO 1998) already recognized this fact. Tendencies well known and foreseeable at the end of the 20th century continued in a surprisingly accelerated form. The present European higher education reform is one of the possible ways to the creation of such a new social contract. In 2008 it became clear that the economic and financial crisis leads to a whole new situation. The future of universities could finally be interpreted and handled according to global interconnections. Practicing academic moral solidarity can help the world of universities survive the crisis without major damage. At the same time the social responsibility of universities includes assisting the world to get past the global economic crisis.

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The notion of a supranational union of peace is an alternative idea developed by European thinkers, with the goal of reforming the European system of states, and as a response to the challenges of modernization and globalization. It represents a union of states based on the principle of subsidiarity and multilevel governance. The EU as a supranational union raises the question: How does the EU-method influence international relations? While looking for an answer to this question, this article investigates the following topics: the historical bases of the idea of a supranational union of peace; the meaning of supranationalism in the EU; the EU-model and the world; and the human rights aspects of supranationalism.

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Authors: Beata Grzebieluch, István Magas, Attila Török and Anita Veres
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Authors: Dávid Mihályi and Pál Czeglédi
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As competition is increasing both locally and globally, more and more organisations face the need to preserve their customers while minimising preservation and marketing costs. Through an empirical analysis of customers of a logistics service provider in Israel, it is argued that service providers can intelligibly influence customers’ impression and the emotional experience they get through the service provision interaction. Moreover, if this impression is positive, customers perceive an incremental value in the service interaction and tend to develop a long-lasting commitment to the organisation which can develop into loyalty. In general, this rationale is validated by the research.In addition, it was discovered that price is not the main element of customer loyalty; even its role is found to be less dominant than the role of emotion. Implication and projections for further studies are also discussed in the paper.

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Measuring the financial efficiencies of mutual funds in emerging markets has played an important role in finance literature. Charnes et al. (1978) advocated Data Envelopment Analysis (DEA), a valuable mathematical programming technique, which is used to measure the technical, pure and scale efficiencies of decision making units. The general form of DEA is the CCR model that depends on the assumption of constant returns to scale. Subsequently, Banker et al. (1984) developed an alternative DEA model which includes a variable returns to scale approach. The aim of this study is to measure and compare the financial efficiencies of Turkish securities and pension funds in the 2006–2007 period. In this respect, 36 securities mutual funds (SMFs) and 41 pension mutual funds (PMFs) have been evaluated comparatively according to classical portfolio performance measures and DEA models. Results from performance indices and DEA models reveal that PMFs have higher portfolio performances and financial efficiencies than SMFs in the 2006–2007 period. However, SMFs and PMFs have shown considerable increases in efficiency in the 2006–2007 period according to CCR and BCC models. Of the 77 funds studied, 23 funds in 2007 and 20 funds in 2006 demonstrated scale efficiency. Furthermore, the input ratios should be considerably improved for 2006 and 2007. But, mostly the output values of the funds were found to have remained unchanged in the case of PMFs and SMFs in 2007. The output ratios for 2006 should be considerably improved, especially in the case of SMFs. Finally, the DEA method is evaluated as a substantial quantitative tool for investors in analysing the financial efficiencies of funds in the capital markets.

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Rationality requires self-control

An empirical study on the phenomenon of consumer self-control

Author: L. Lippai

The observation on the phenomenon of consumer self-control is a frontier of economics and psychology which is gaining more and more significance. The objective of the study is to empirically observe the phenomenon above.In this study self-control is defined as the resultant of the intra-psychic and situational variables that influence the power necessary to rationally implement inter-temporal decisions. Based on this concept the present empirical study is to map the respondents’ preference order related to their everyday activities, then examine what happens if the participants are confronted with a decision situation in which following such a preference order is not unconditionally rational from an economic point of view.The results show that only 31.6 percent of the 279 respondents giving estimable answers decided in harmony with the preference order expressed at an earlier phase of the study when they faced the tempting decision situation mentioned above.

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The paper presents how the Committee on Futures Research, within Section IX. of the Hungarian Academy of Sciences (HAS), sees the possible futures for Hungary for the year 2025, based on the expertise of Hungarian futurists and social scientists, including the opinions of younger generations. It offers insight to Hungarian society in 18 years from 2007, when the research began. In cooperation with experts coming from diverse scientific backgrounds and with those who feel responsibility for the future and are willing to act upon it, we need to continue discovering our horizon albeit in a different way and to embark on new roads. In summary, we need to change the HOW and the WHAT.

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Amends of an old feud

Goodwin’s flair for the law of conservation

Authors: A. Bródy and I. Ábel

Mathematical duality in economic dynamics offers a fresh insight for applied research. The dichotomy of causes and objectives is fading away in economics just like it disappeared from physics over the past century. The struggle between apparently conflicting theories gives way to practical approaches of empirical assessment of economic motion. We present an approach based on the Goodwin model which offers a clear exposition and deeper insight by using the mathematical concept of the ‘first integral’. Goodwin’s classic model of the economic cycle stands on the dividing line between the teleological and the causal school of thought and is theoretically acceptable to both. Inputs and outputs, aims and means, causes and objectives are organically interconnected in his approach that also provides a computationally simple alternative to facilitate the numerical and graphical description of economic cycles.

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Authors: Viktor Friedmann, Beata Grzebieluch and Anita Veres
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Authors: András Tétényi, Digdem Soyaltin and Attila Jámbor
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Finnish health care has been the target of continuous management reforms for decades. Most reforms have been aimed at effectiveness, enhancing quality, raising the level of management skills of health care professionals, and allowing patients greater freedom of choice. Thus, the reforms implemented in health care have been wide, many-sided and complex, and they have also overlapped each other. The main objective of this article is to analyze the current status of public health care management reforms in Finland by discussing the theoretical and practical trends used in the development of Finnish health care systems and services. The reason for choosing both the theoretical and the practical trends as the framework for this study is the hypothesis that only by combining these two issues is it possible to create a more in-depth analytical picture of the management reforms implemented in Finnish health care. This study aims to explore how health care management deals with system-wide problems, and what kinds of solutions, or even new styles of governing, have been introduced in Finland to solve these problems.

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Authors: Péter Harasztosi and Viktória Vásáry
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The paper is a contribution to the empirics of cross-country and cross-region literature on growth economics. Its aim is to assess the role of the global component in the development of European regions during the period 2000–2005. For this purpose a simple leader-follower model is set up in which all countries imitate the technology of the leader. The model is applied to cross-country data of the period 1870–2003 as corroboration and to the cross-region data. This approach makes it possible to rank the regions based on the rate of return of broadly understood capital and the impact of global forces as compared to local ones. Finally, a conclusion is drawn on the extent of the role of imitations in the growth of European regions.

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Most countries now share the prospect of an extended period of public fiscal austerity. Yet at the same time the demands for improved public services continues. This paper reviews the relationship between expenditure restraint and reform. It describes three broad strategies for achieving savings, noting that each has a different mixture of advantages and disadvantages. It then identifies four significant considerations that public service leaders will need to bear in mind as they decide their programs: timing, ethics, communications and legitimacy. The paper concludes with the observation that simultaneously tackling the needs for austerity and reform will call for extraordinary levels of public service leadership.

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Is Europe becoming the world’s leading knowledge-based economic area of the world, as European leaders planned at their Lisbon meeting in 2000? In this article, we analyze the Lisbon performance of the countries of the European Union from a long-term, structural perspective. We examine performance in the Lisbon indicators by factor analytical means. To measure progress, we observe contradictions between some of the indicators, chosen by the member governments and the European Commission. Finally, we conclude that only a Schumpeterian vision of capitalism as a process of “creative destruction,” or rather “destructive creation,” can explain these contradictions, which we empirically reveal in this analysis, and which beset the “Lisbon strategy” from the very beginning. European decision-makers often seem to be unaware of these underlying contradictions, which is why the goal of our paper is to clarify the processes involved. In Schumpeter’s elitist-conservative visions of society, the decay of values in the capitalist society was an all-important element in his pessimistic theory developed in “Capitalism, Socialism, and Democracy”. For Schumpeter the disappearance of the enterprising, male-dominated capitalist family was a critical element in his theory. But it is not the disappearance of the enterprising capitalist family that threatens the future of capitalism in Europe, but the often still existing incompatibility of work and family life, which explains more than 60% of the Lisbon process failure.

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A healthy Hungarian society in 2025: Vision or possible reality?

Inexpensive preventive action plans, instead of a costly reorganization of public health services, for shaping health-conscious, future-oriented thinking

Author: Zoltán Vass

If one extrapolates present social circumstances, one comes to the conclusion that much more emphasis should be placed on health and physical activity, possibly through the life-span development of younger generations, in order to avoid the negative influences of civilization. Otherwise, humans will not be able to compensate for the absence of health even with an enormous aggregation of financial and cultural goods. In other words, accumulated knowledge and capital are worth little without health. To deal with the new challenges of sport, health, and physical activity on their merits, the old-fashioned mode of thinking should be refashioned or should be replaced. This process is possible only with a number of substantial changes that will be able to influence common knowledge in order to educate an active, creative, healthy, and self-confident society. Today, in an economically and culturally unstable environment, the smallest effects can cause a number of unpredictable (favorable or unfavorable) changes in our everyday life due to negative feedback. For this very reason, in our knowledge-based society, optimal physical and mental health and their practical applicability in everyday life should be an achievable goal for the individual. This paper is addressed to explore the thinking of secondary school students about social regeneration in Hungary by asking them what kind of tools they can imagine which could help them achieve an optimal physical and mental health and how they can apply the knowledge in their future adult life. The young people involved in this research claim that physical education (PE) in secondary schools can provide an acceptable tool for the required regeneration and it can prove to be adequate in the formation of a health-confident society as well. The present paper claims, however, that physical education is able to fulfill this role only if it goes through massive structural changes taking the demands and claims of the younger generation into consideration.

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Building upon the research by Meyer et al. (2007), this study employs risk biographies to evaluate how three ex-Yugoslav pension systems cope with the social exclusion of the elderly. The article simulates pension entitlements in Slovenia, Croatia and Serbia and comes to two broad conclusions. First, the three pension systems that originated from a common legislative base, albeit in countries with marked differences in economic development, now diverge in almost every aspect. Hence, further research should analyse the entire retirement microcosm of the former Yugoslavia and delve deeper into the mechanisms of pension system evolution. Second, the study expounds the pros and cons of the three schemes and argues that none can avoid further reforms. Slovenian public pensions are excessively generous and consequently require fiscal cuts, the Croatian funded tier is too small to complement lower public benefits, and the Serbian arrangements should be a temporary sacrifice to cope with fiscal austerity. The paper complements a traditional overview of the three systems by analysing the problems of each risk biography. It concludes by giving a number of prescriptive recommendations for the future well-being of the elderly in the region.

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There are at least three reasons why many transition economies succeeded by pursuing policies that are very different from radical economic liberalization (shock therapy), which is normally credited for the economic success of Central European countries. First, optimal policies are context dependent, specific for each stage of development, so what worked in Slovenia cannot be expected to work in Mongolia. Second, even for countries at the same level of development, reforms needed to stimulate growth are different; they depend on the previous history and on the path chosen. The reduction of government expenditure as a share of GDP did not undermine significantly the institutional capacity of the state in China, but in Russia and other CIS states it turned out to be ruinous. It is the growth diagnostics that should reveal the missing ingredient of economic growth. Introducing this “missing ingredient” should not, however, result in the destruction of other pre-conditions for growth. The art of the policymaker is to create markets without causing government failure, like it happened in many CIS countries. Third and most importantly, there are long-term trajectories of development that are path dependent: once the country gets on a particular trajectory, it is sometimes better to stay on track because the costs of a transition to a seemingly superior trajectory may be prohibitively high.

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Discussing the future of research in public administration (PA) is more than just listing topics for reserach which are inspired by possible future challenges for the public sector. Even if national contexts determine a strong path dependency for research agendas, there are four major trends which affect the future of PA research: Europeanisation, reform agendas, globalisation issues, and marketisation of research. A crucial element in the debate is to know what the specific European voice is and should be in PA research. For this purpose it is necessary to explicitly organise research in PA.

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The paper examines the requirements of an effective and legitimized democratic political system in the process of transition. The analysis and the conclusions are based on the Hungarian experience, which can carefully be applied to all Central and Eastern European (CEE) countries. Special focus is given to the relationship of legal certainty and the efficiency of the democratic system, to the tension between legalism and managerialism and to the characteristics of civil society organizations. In the conclusion special features of the transitional countries are pointed out.

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Awareness about the growing role of networks in economic activity keeps rapidly increasing as reflected by the number of publications in international academic literature. This literature is, however, concerned with the advantages of network-based cooperation, while analyses of network failure and inferior-to-expectations outcomes remain scarce. This paper adds to the accumulating evidence that network formation and network integration are no panacea: similarly to the much-researched and analysed phenomena of market failure or government (state) failure, there is such thing as network failure .Combining theoretical arguments with Hungarian fieldwork experience originating from the author’s past investigations, cases of network failure and network misalignment both within the innovation system and within producer networks are examined. Another focus of this paper is institutional and policy (mis)alignment, i.e. the question, how the institutional set-up facilitates or works against achieving developmental goals in Hungary. We claim that though networks have an impact on development outcomes, the effectiveness of networks, i.e. their developmental role and the value of network ties are continuously shaped by network actors’ capabilities and behaviour.

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“We are in the situation of relative free will”

An interview with Immanuel Wallerstein

Author: Ferenc Miszlivetz
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The research concentrates on connections between different dimensions of entrepreneurial capacity and openness towards innovations on one side, and an individual’s decision to become an entrepreneur on the other. The results show that an individual’s decision to become an entrepreneur in Slovenia is significantly correlated with entrepreneurial awareness, risk aversion and willingness to try new products/services. The correlation is positive in the case of entrepreneurial awareness and in the case of willingness to try new products/services, and negative in the case of risk aversion. An important result of our research is that the belief in the benefits of newness is not significantly correlated with the decision to become an entrepreneur. The results show that willingness to try new products/services is more important than the belief that innovative products/services produced by others will improve one’s life.

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The paper presents a research that was focusing on the ideal entrepreneurial attitude, on the one hand, and personality traits that make an individual successful, on the other. The sample was chosen randomly, consisting of 670 respondents who were entrepreneurs not only from an administrative-legal point of view but also in a psychological sense. Asset index (AI) and turnover index (TI) were used as economic indicators of success, while CPI was applied for the examination of personality traits. Two types of successful entrepreneurs were distinguished by the researchers. Type A entrepreneurs (high AI factor value) were found to attach importance to increasing the value of fixed assets in their business activity. Their personality is characterized by increased dominance, endeavor to take a leading role, increased motivation for achievement and success, ability to achieve high social status, self-confidence, ability to exert social influence effectively, and strong aspiration to present themselves in a favorable light. The business activity of Type B entrepreneurs (high TI factor value), is characterized by a high level of self-knowledge, satisfaction with their social status and role, increased need to meet community expectations, good adaptation and accommodation skills and a strong ability to shape social relations, endeavor to increase net profit (earnings).

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In this paper I use a New Keynesian model with unemployment and estimate it for the Romanian economy using Bayesian techniques. I use the estimated model to derive an estimation of the Okun coefficient. I alternatively estimate the Okun coefficient using the Bayesian linear regression. The results show that the Okun coefficient is high in the Romanian economy implying that the current crisis will have a severe impact on the labour market as well as important social effects.

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Authors: László Csaba, Lucia Kurekova and Marion Smith
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Authors: Anita Pelle, Gyöngyi Csuka, Bernadett Kovács and Mihály Szívós
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Drawing on data from 11 successive waves of yearly wage surveys carried out by the Public Employment Service in Hungary from 1992 to 2003, the paper examines, with the use of elementary statistical tools, whether or not earnings fluctuations differ in size across groups of employees with different degrees of schooling and labour market experience, and if they do, whether the observed differentials might be related to differences in the experience-earnings profiles of those groups.Although preliminary, our findings suggest that earnings fluctuations do differ in magnitude across those groups, and that, moreover, their magnitudes vary in positive association with group-specific global and local slopes of the relevant experience-earnings profiles.Assuming that (1) differences in the observed magnitudes of earnings fluctuations are at least partly due to differences in the flexibility/rigidity of the market rates of earnings, and that (2) the flexibility/rigidity of those rates is a determinant of unemployment, it seems reasonable to expect that long-discovered systemic differences in unemployment across groups of employees with different degrees of schooling and experience (and, perhaps, across countries as well) might also be related in part to differences in experience-earnings profiles

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The global crisis of 2007–2009 can be viewed as three interdependent and mutually reinforcing crises: a financial crisis, a liquidity crisis, and a crisis in the real economy. The ten East European countries that are now EU members were hit first by the global liquidity crisis, then by dramatic declines in capital inflows and plunging demand for their exports. Different impacts among the ten are explained by such factors as their exchange rate regimes, the extent to which households found it advantageous to rely on foreign-currency loans and the appropriateness of fiscal and monetary policies prior to the crisis. Since Western Europe’s recovery and growth are likely to be slow, in the future East European countries will have to rely relatively more on internally-generated sources of productivity growth and enhanced global competitiveness.

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The paper discusses the reasons and possible resolutions of the contradictions in the Hungarian local government system, and proposes methods to resolve them. The nature of the Hungarian system cannot be described by classical normative theories of fiscal federalism. The operation of Hungarian local governments is determined rather by the decentralisation of conflicts stemming from the reduction of state responsibilities, and the resulting municipal behaviour. The second generation theory of fiscal federalism pays particular attention to the institutional guarantees of fiscal discipline shown by the lower levels of government sector. Actors in the Hungarian system, a system that functions as a ‘conflict container’, try to offset the financial pressures, weighing heavily on them by borrowing and by contingent liabilities. While central government has transferred new duties to local governments from year to year, it has reduced the amount of fiscal subsidies. Until a long-term comprehensive reform is implemented, consequent risks must be treated in the short run, as well.

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Authors: István Magas, Attila Török and Dóra Győrffy
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Authors: Balázs Borsi and György Kovács
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The relationship between education and country-risk is an almost neglected question in economic literature, despite the several reasons for which these two issues could be related. In a recent article by Sequeira — Ferraz (2009) a linear relationship is documented. The present article provides evidence that the strength of the relationship between country-risk and education decreases for higher levels of GDP. It also proves that this decrease consistently applies for secondary and tertiary education levels and for the three types of risk considered: economic, financial and political. The relationship obtained here is quite robust across the different subcomponents of country-risk.

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