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Abstract

This research developed an analytical framework for industry-oriented leading cyclical indicators (CII), focusing on monitoring and forecasting economic cycles within the European Union (EU). Various methodologies for constructing these indicators were examined through an exhaustive sector analysis. A salient conclusion drawn is the non-feasibility of a one-size-fits-all composite leading indicator for all EU members. It underscores the imperative to tailor these indicators in congruence with the unique industrial characteristics of each country. The study provides empirical evidence that countries like Denmark, Germany, Austria, Estonia, Lithuania, Latvia, Finland and Sweden can benefit from high-caliber composite leading indicators tailored to their economies. Our analysis suggests that GDP is a more robust metric than the Industrial Production Index for predicting economic cycles for the EU countries.

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Abstract

This study examines the complexity in the Eastern European economies, with a focus on the role of foreign direct investment (FDI). Despite transitioning to market economies, these countries remain economically fragile and dependent. Their lower technological complexity and reliance on foreign capacity make them vulnerable. However, some countries like Austria and Poland demonstrate successful integration of production and innovation. The analysis shows FDI has a limited impact on developing complex knowledge but contributes positively to economic complexity. Results also indicate that in the long-term, economic and technological complexity does not lead to accelerated total factor productivity growth, contrary to complexity literature. Combining labour with innovation, safeguarding local industries, and prioritizing education and research are more effective approaches. The study clearly shows how Hungary is stuck in an “assembler trap.” It also finds that the gap between economic and technological complexity negatively affects liberal democracies.

Open access
Acta Oeconomica
Authors:
José Antonio Clemente-Almendros
,
Florin Teodor Boldeanu
,
Cristina Drumea
, and
Samer Ajour El Zein

Abstract

This paper investigates the use of redundancy procedures (RPs) by small and medium-sized enterprises (SMEs) in Spain during the COVID-19 pandemic. The novelty of this study is that it goes beyond the direct influence of the determinants of RPs on RP use, and analyses how the interactions among them moderate the direct effect. In contexts of rising uncertainty, businesses need to adapt their operations and fixed costs, including staffing. While teleworking is an alternative to RPs, our results show that it was not enough to deal with the negative impact of a worsening crisis. Moreover, when the survival of the business is at stake, the use of RPs increases further when the company is simultaneously affected by changes in demand and liquidity issues. We argue that our results reveal the need for flexible tools along with the policies that take into account the fact that businesses' reactions are contingent on their exposure to risk.

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Abstract

The dividend puzzle for private corporations has a long-lasting history. Six theories provide explanations to this puzzle. However, the dividend puzzle has not yet been discussed as an economic problem for state-owned enterprises (SOEs). The article addresses this issue based mainly on the experience of the Bulgarian SOEs.

In the paper all well-known six theoretical concepts of the dividend puzzle are presented and their strengths and weaknesses are analysed. Furthermore, the specific features of SOEs are brought out and the dividend puzzle for them is formulated. Presenting the experience of the dividend policy of SOEs, a confrontation with the theories is made. It is proved that only the theory of dividend payment preference is relevant to SOEs.

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Abstract

This research investigates the causal relationship between innovation, financial development and economic growth in Brazil, Chile, Colombia, Mexico and Peru between 2000 and 2019. Based on quantitative analysis, including vector autoregressive (VAR) models, it can be concluded that bidirectional Granger-causalities are present in the trivariate nexus in the five Latin American countries over the investigated times. Consequently, the three variables support forecasting and policy implications focusing on one of the three sectors that impacts the other two in the future. The paper concludes that imitation and innovation policies focusing on intellectual property rights protection, education, knowledge, institutional change and technological catch-up are necessary to foster economic growth and financial development.

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Abstract

This study aims to analyse the time series properties of the unemployment rates in 10 Central and Eastern European countries after joining the European Union. Three types of unit root tests were conducted: (1) linear unit root tests, namely ADF, PP, LM, and RALS-LM tests; (2) LM and RALS-LM unit root tests with two structural breaks; and (3) LM and RALS-LM unit root tests with Fourier function. The results reveal that the hysteresis hypothesis is valid for Bulgaria, Czechia, Hungary, Latvia, Lithuania, Romania and Slovenia, whereas the structuralist hypothesis is valid for Estonia and Poland. However, the natural rate hypothesis holds only for Slovakia.

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Abstract

This paper provides a comprehensive assessment of the total (market and non-market) gender-based production and consumption activities of Turkish men and women at different stages of their life-cycle. Turkey, one of the few emerging economies within the OECD, offers an interesting case-study as its female labour force participation rate is one of the lowest among OECD countries. Our results show that time spent by Turkish women on household activities is, on average, 30 h a week, basically three times as much as men. In fact, the women-to-men time use ratio for unpaid work is roughly twice as much as the OECD average. We estimate that the monetary value of women unpaid household production exceeds 29% of GDP, while the corresponding estimate for men is around 8%. Using the concept of life-cycle deficit, we also show that Turkish men are dependent on housework undertaken by women over their entire lifetime, which is an almost unique feature in comparison to the European and OECD countries. Finally, unlike other OECD countries that have introduced disincentives to early retirement, Turkish men continue to retire early but retain their acquired habits of not sharing the burden of household work.

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Society and Economy
Authors:
Krisztofer Szabó
and
Márta Aranyossy

Abstract

With an overall aim of providing insights into fostering an entrepreneurial mindset and promoting economic development, researchers have devoted notable attention to intentional and motivational factors for starting businesses, as well as those influencing processes from idea generation to the realisation of a new business. This research project aims to investigate the influence of family business background on entrepreneurial intention. One of the novel features of the approach is the rigorous statistical exploration of direct and moderating effects of family business background while accounting for other factors influencing entrepreneurial intention. The analysis is based on a survey of 590 active university students studying business and economics in the seven largest universities in Hungary. Hierarchical regression analysis was applied to examine how the existence of family business background can influence and moderate relationships between individual factors and entrepreneurial intention. Results confirm that family business background has a significant positive impact on entrepreneurial intention and is most likely to exert its impact through increased human capital levels, entrepreneurial knowledge, skills and experience. The findings not only contribute to accumulated knowledge of the interdisciplinary family entrepreneurship field, but also have policy and educational implications.

Open access
Society and Economy
Authors:
Srdana Táborosi
,
Jelena Rajković Avdija
,
Jasmina Poštin
,
Edit Terek Stojanović
,
Nemanja Berber
, and
Milan Nikolić

Abstract

The paper presents the results of research on the impact of national culture, Big Five personality traits, and emotional intelligence on job satisfaction in teleworkers. The impacts were also examined in conventionally employed, which enabled a comparison. The research was conducted in the countries of the Western Balkans and included 313 respondents. The job satisfaction of teleworkers is most positively influenced by humane orientation, performance orientation, agreeableness, conscientiousness, openness, self-regulation, and social skills. Self-awareness can act both positively and negatively, and neuroticism has a negative impact on job satisfaction. National culture has a greater impact on job satisfaction among conventionally employed rather than within teleworkers. Big Five personality traits work differently: extroversion has a greater impact on job satisfaction among conventionally employed, while agreeableness and conscientiousness have a greater impact on job satisfaction among teleworkers. Emotional intelligence has a greater impact on job satisfaction among conventionally employed rather than teleworkers. Teleworking employees are less influenced by the environment, and thus less influenced by national culture. Emotional intelligence helps conventionally employed work more, while teleworkers place higher value on the results of their work.

Open access

Abstract

In a recent pilot study, we examined the potential benefits and opportunities that ChatGPT can bring to higher education, particularly from the perspective of business students and educators. The study included 41 participants and aimed to explore their opinions on using ChatGPT in business language classes. Twelve students did not use ChatGPT during the course (control group), while 29 students used it actively (experimental group). Examining their experiences and comparing the two groups, it is evident that students see the benefits and disadvantages of ChatGPT and use it for tasks they find helpful. However, the practice and hands-on experience helped the experimental group members gain much more diverse and nuanced opinions about ChatGPT. These results underline that universities and their boards must embrace the technology and find reasonable areas to use ChatGPT. These may not only be connected to assignment forms and plagiarism, but can embrace more general topics, like equal eligibility to these new technologies or strengthening the students' social and emotional intelligence and skills to help their future lives.

Open access

Abstract

The impact of the Russian-Ukrainian war on energy prices contributed significantly to European price increases in 2022. The study aims to find a linkage between the performance of 24 EU countries during the energy inflation crisis and their preparedness, vulnerability or exposure. The verified hypotheses reflect on the role of initial conditions of countries and the one-year impact of energy inflation on their economic performance. The two-step analysis first creates six clusters of countries based on their energy, trade, financial and political vulnerability, and preparedness indicators. The second step is to explore the shifts of clusters in expectations on macroeconomic indicators. Specific patterns of country groups are explored in the value and evolution of wartime indicators of inflation, GDP growth, consumer and business confidence, as well as FX volatility. The exploration concludes that the entry variables of clustering are relevant, and the EU countries can be segmented by dependency, energy, financial, and political aspects. Thus, it is possible to verify the distance in risk and exposure among EU economies. The impact variables demonstrated that the extent of the inflationary effect depended on the initial conditions. In addition, the research identified protective short-term factors against energy inflation originating in a trade and war context.

Open access

Abstract

The sharing economy concept has been firmly incorporated into various scientific fields and applied broadly in practice. This paper aims to gain a detailed insight into the contemporary intellectual structure of the sharing economy in the fields of economics, business and management. Using a two-stage approach: a critical literature review and social network analysis (SNA), the dominant research niches and under-investigated issues within sharing economy were identified, along with the most influential authors and papers. Author collaboration and citation connection of papers have also been examined. It was concluded that sharing economy knowledge is gradually approaching the stage of maturity bearing in mind the growing number of articles, the presence of emerging research niches, as well as scarcity of approaches directed to purely quantitative analysis. Additionally, it was discovered that despite the study focus on the predefined research field, sharing economy concept exhibit a remarkable level of postdisciplinarity.

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Abstract

Economies have gone through several crises in the recent past. The most serious ones were the Covid-19 pandemic and the current Russian–Ukrainian war. Our paper aimed to identify and analyse the impacts and consequences of the pandemic and the war on the manufacturing sector of the Czech Republic. A literature review, based on the analysis and synthesis of the scientific sources, served as a platform for determining research questions and hypotheses. The article summarizes the research results of the research team in October – November 2022. The gap between the outbreak of the war and the implementation of the research was 7 months. The chi-square test, Cramer's coefficient, and exact binomial test were used to verify the statistical dependencies of the research questions and hypotheses. Attention is also focused on risk prevention, as research results show that there has been a sharp increase in the supplier and personnel risks.

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Abstract

One of the objectives of fiscal policy is to ensure a fair income distribution. In the literature there is no consensus on the income inequality – fiscal policy nexus. Unlike previous studies, this paper contributes to the literature by quantifying the moderating effect of income inequality in total tax revenues and gross national expenditures which are defined as fiscal policy tools. With the help of two moderator variables (income inequality*total tax revenues, and income inequality*gross national expenditures), the impact of income inequality and fiscal policy tools on economic growth are tested for 20 Central and Eastern European (CEE) countries from 1990 to 2019. Diagnostic tests are also carried out on the series before long-term relationships are determined. Our analysis finds that the inequality-growth relationship is negative, the moderator variable defined as income inequality * total tax revenues decreases the strength of the relationship, and the moderator variable defined as income inequality * gross national expenditures increases the strength of the relationship.

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Abstract

Since the time of classical economists, investment decisions hold centre stage in economic theory. In this article, we integrate classical economists' perspectives on the determinants of investment with the Keynesian theory of effective demand. For this purpose, we employ variables to capture the effects of profitability, the state of demand, and the financial and risk conditions using time series data from 17 major OECD economies spanning the 1960–2017 period. Two are the salient features of our article: The first is the use as profitability variables, the marginal efficiency of capital or the incremental rate of return, and the second is the use of regime changes and respective threshold values for these two key variables. The econometric results show that the profitability variables are decisive in shaping investment decisions and designating phase changes.

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The revival of comparative economic systems research

Reflections inspired by the recent publication of the collected works of Domenico Mario Nuti

Acta Oeconomica
Author:
László Csaba

Abstract

This essay offers an overview of the state and perspectives of comparative economics in Europe. The starting point is the publication of the collected works of Mario Nuti, but the overview covers several Handbooks and collections as well as individual contributions. The big picture of the post-transition period highlights the relevance of “old” comparative economics, especially when interpreting illiberal practices in the post-communist Europe and the debate on the nature and limitations of the Chinese market socialism.

Open access

Abstract

The potency of economic sanctions imposed on nations depends on demand and supply adjustment possibilities. Adverse GDP impacts will be maximal when import, export, production, distribution and finance are inflexible (universal non-substitution). This paper elaborates these conditions, and quantifies the maximum GDP loss that Western sanctions could have inflicted on Russia in 2022–2023. It reports the World Bank's predictions, contrasts them with results and draws inferences about the efficiency of Russia's workably competitive markets. The paper shows that Russia's economic system exhibits moderate universal substitutability and is less vulnerable to punitive discipline than Western policymakers suppose. The likelihood that the Kremlin will restore Ukraine's territorial integrity, ceteris paribus, is correspondingly low. The authors also observe that unintended adverse side effects from sanctions and counter-sanctions were excessive because policymakers chose to maximize GDP-damage to Russia instead of optimizing Western and third-party net benefits. Given moderate substitutability, Western policymakers can switch to smart net benefit maximizing sanctions that enhance Western and third-party welfare without significantly bolstering Russia's military industrial productivity and war-waging capabilities by retaining embargoes on weapons, technology and critical components, while selectively softening other restrictions. Smart sanctions might facilitate a negotiated settlement of the Russo–Ukrainian war.

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Abstract

This article focuses on mortgage interest deduction (MID) as an indirect tax support for acquiring one's housing. This form of support is the most widely used in the Czech Republic compared to other tax reliefs and causes the highest losses for the government budget. This paper provides quantitative evidence on how the MID was distributed among taxpayers in the Czech Republic in the period 2008–2019 in relation to taxable income and revenue losses for the government budget. Furthermore, it assesses the effectiveness of these tax measures in reducing socioeconomic inequalities among taxpayers. Research based on the application of the MID in tax returns has shown the effective distribution of the MID until 2017. Tax support for housing was used mainly by taxpayers with low taxable income, which is also the largest group. The essence of vertical equity has been fulfilled, which contributed to reducing the level of social inequality. This positive distributional effect has diminished over time. As of 2019, the highest share of public expenditure was redistributed to taxpayers with higher taxable income, indicating the existence of inequalities in the tax system. The different developments over time have shown that the use of the mortgage interest deduction cannot be assessed statically, as it evolves dynamically over time.

Open access

Abstract

The topic of the research is whether better human capital, as determined by secondary school learning outcomes measured by PISA scores, promotes economic growth. The literature often uses the PISA results as a proxy for growth, while its use and impact on growth are not empirically proven. These questions are analyzed through two hypotheses. The first hypothesis (H1) states that in a worldwide sample of countries, GDP per capita growth between 2006 and 2019 was positively impacted by rising PISA results. The second hypothesis (H2) states that between 2006 and 2019, the rise in PISA scores in East Asia had a stronger influence on economic growth than in the rest of the world. The study examines 59 nations that have administered two PISA tests during the period of 2006–2019. The findings imply that there is generally no causal connection between PISA results and growth and the PISA results play no additional role in the development of East Asian nations. The results can be explained in two ways. The first is that human capital includes more than just skills. The second is that the data only covers a short period of time, which may limit the analysis of long-term patterns.

Open access

Abstract

This study investigates the impact of review quality (a situational stimulus) on consumers' risk perception and purchase intention in cross-border e-commerce based on the Stimulus-Organism-Response (SOR) model. In doing so, quantitative research involving 400 Hungarian respondents was performed. The data were analysed using composite-based structural equation modelling (SEM). The study concludes that an experience created through highly qualified online reviews of previous consumers has a significant effect on mitigating consumers' risk perception while increasing their purchase intentions. The study also differentiates two aspects of risk, including perceived risk and affective risk, and reveals the two-fold mechanism of the decision-making journey. These results enrich the existing literature by supporting the use of the SOR model and introducing review quality as a situational stimulus to explain consumers' risk perception and purchase behaviours in cross-border e-commerce. Additionally, the study also provides valuable guidance in website design that can stimulate purchasing while lowering online perceived risk.

Open access

Abstract

This study aims to investigate the relationship between China's outward foreign direct investment (OFDI) in Central and Eastern European countries (CEECs) by assessing their impact on the economies of both the CEECs and China. By analyzing this connection, the paper seeks to gain insights into the economic dynamics and potential benefits derived from investment and trade activities between China and the countries in this region. The paper employs a regression model to examine the influence of foreign direct investment on trade with data from 2008 to 2022. The findings indicate that a one percentage point increase in China's OFDI corresponds to a 0.054 percent boost in bilateral trade between China and the 16 CEECs. In conclusion, the findings highlight a significant link between OFDI in CEECs and bilateral trade. OFDI opens up new trade opportunities and fosters economic growth in CEECs, thereby promoting the development of bilateral trade. Additionally, Chinese investment drives industrial upgrading and structural adjustments in CEECs, enhancing the competitiveness of bilateral trade.

Open access

Abstract

Subjective entrepreneurial success has emerged as an area of academic interest. However, no research study has yet been conducted on startup founders as a specific group of entrepreneurs. Although ‘success’ has been prominently covered in existing startup literature, studies predominantly focus on the possible reasons behind startup success, measuring it solely in economic terms. Drawing upon the qualitative analysis of 22 in-depth interviews with Hungarian startup founders, this paper aims to explore the complex structure of subjective startup success from the founder's perspective along with its gendered patterns. The five dimensions of subjective startup success emerging from the data are similar to those of subjective entrepreneurial success: firm performance, team, personal fulfilment, community impact and personal financial reward. Nevertheless, results reveal that there exists considerable difference between the substance of firm performance dimension in the subjective entrepreneurial success model and in our subjective startup success model. Further, it is found that the interplay among indicators of success could range from synergies to tensions. Finally, personal fulfilment is found to be the only dimension that reflects a marked gender difference in the sample.

Open access

Abstract

In this article we analyze the Hungarian shadow banking system. We point out that the Hungarian shadow banking system is not only much less developed than that of the EU's developed countries, but also structurally different. A further specific feature of the Hungarian financial system is what we call the secondary shadow banking system, through which foreign shadow banking funds do not finance the domestic banking system directly, but through foreign interbank funds and related cross currency basis swaps. The aim of our analysis is to explore the reasons for these specificities, to analyze the risks of the Hungarian shadow banking, and secondary shadow banking systems, and to show that the interconnectedness between banking and shadow banking may not only occur through direct exposure, but also indirectly through the presence of secondary shadow banking.

Open access

Abstract

In 1994, we examined the Fed's abandonment of monetary targets in favor of “omens of impending inflation” (Papadimitriou – Wray 1994). Here we are, three decades later, and the Fed is still fumbling around with unobservable indicators of inflation in its quest to target stable prices. In what follows, we examine the evolution of the Fed's thought and practice over the past three decades, a period in which the Fed has increasingly turned to unobservable indicators that are supposed to predict inflation and unobservable tools that are supposed to fight inflation. We will show that our criticisms have also been raised by the Fed's own members and research staff. Moreover, we suggest that the Fed has far less control over inflation than is presumed, and, at worst, might have the whole inflation-fighting strategy backwards. We conclude with an assessment of the latest round of rate hikes.

Open access

Abstract

Market rules, changes in regulations for users and producers, technological innovation and economic development are important factors shaping energy transitions. Therefore, explaining energy transitions requires a multidisciplinary insight to investigate these factors. The study of energy transitions faces an analytical and methodological challenge, particularly in communicating trends shaping the energy systems in developing economies. The existing literature is not consistent in identifying these disciplines nor proposing how they can be combined. In this sense, this paper proposes a new and simple methodological path to assess variables and theories. It conceptualizes energy transitions as a co-evolution of two types of systems: system innovation with its roots in evolutionary, institutional economics, science and technology studies (STS); and energy systems with its roots in neoclassical and evolutionary economics. From how to conduct a systematic literature review, to how best integrate theories and the analytical framework in which key questions can be answered, the paper elevates the role of political science, as policies play a prominent role in shaping energy transitions. This paper responds to those who have pointed out that the political economy of energy transitions is a vastly understudied area.

Open access

Abstract

In recent years, policymakers and academics have shown interest in understanding how universities could drive regional innovation. Universities are not solely focusing on research and education as their primary missions but are also asked to participate in the development of their regions. This has compelled universities to forge what is called a third mission, encompassing all social and economic activities of universities. Several attempts have been made to evaluate this concept, aiming to highlight the evolving role of universities and their relevance to policy and society. In this vein, this paper showcases existing attempts that aim to measure the impact of the third mission in European universities. This study consists of a systematic literature review studying journal articles published between 2001 and 2021. The purpose of this paper is to enumerate the existing measurements of the third mission and identify the different tensions related to it. This study shows that the literature encompasses three approaches for assessing the third mission. First, some studies incorporated the third mission into the overall evaluation of university performance. Second, other investigations aimed to capture this concept as a whole. Finally, several studies evaluated individual dimensions of the third mission independently.

Open access

Abstract

There exists a vast empirical literature on Financial Sector Development (FSD) and the income inequality nexus; however, it lacks consensus. To study this, 24 studies with 87 regression estimates on financial institution depth and income inequality were collected. This paper used the most common method of economic meta-analysis, the Partial Correlation Coefficient (PCC), to answer the question: What is the magnitude and impact, if any, of financial institution depth on income inequality? In addition, a multivariate meta-regression model was used to find moderator variables that produced mixed results in the literature. The results show that the global average comovement of financial institution depth (domestic credit) on income inequality is very small but positive; suggesting that growth in domestic credit may widen income inequality. The positive correlation between domestic credit and income inequality highlights how financial institutions use household income and collateral as a signal when deciding on credit applications. Finally, the multivariate regression results suggest that the present heterogeneity within the literature stems from different methodologies and control variables included in the econometric models, and panel studies that mix countries with heterogeneous characteristics. These suggest that different components of FSD may impact income inequality differently.

Open access

Abstract

The article analyses the current issues contributing to the volatility of Bitcoin as the reliability of this new technology diminishes, leading to increased unpredictability of its value. Legal efforts and literature regarding Bitcoin have primarily focused on protecting society from the illegal use of this digital technology, with little emphasis on integrating it as an asset. However, this article proposes that countries adopt Bitcoin-related legislation, incorporating recognition and regulation clauses to transform Bitcoin into a stable, less volatile and functional digital asset. In the context of legal history, primary legal domains, such as contracts, family, trade and others, have been integrated through recognition and regulation processes. Therefore, we argue that adopting Bitcoin-specific legislation that recognizes this new technology while comprehensively regulating the associated risks would enhance the coin's stability and reduce volatility, ultimately increasing trust among digital investors and users.

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Abstract

The objective of this research is to identify factors that determine the moral hazard in banks by using discrete choice models (probit and logit regression). A specially constructed indicator was used to quantitatively assess moral hazard as the average difference between the better rating of a client in a bank and the most conservative rating of the same client in the banking sector. This is an example where moral hazard manifests itself as the tendency of management in banks to underestimate credit risk. The results showed that state-owned banks and foreign privately-owned banks with evident problems at the level of their headquarters had higher values of this quantitative indicator of moral hazard. Also, banks whose financial result and capital are highly sensitive to a small increase in non-performing loans, as well as banks that at any time in the observed period had a problem with meeting regulatory capital requirements, showed a greater propensity to moral hazard, as measured by this indicator. In the above cases, in the absence of quality corporate governance, management in banks tends to show performance better than it actually is. The obtained results for Serbia in comparison with the previous research give the possibility to quantitatively confirm additional specific factors important for explaining moral hazard (composite variable of the type of ownership and capital restrictions, variables that perform only the transmission of certain forms of management behaviour, size, capital and profit sensitivity, credit risk level, etc.), in addition to the common factors of moral hazard, such as the type of ownership in the bank, capital restrictions, etc.

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Abstract

Economic freedom is crucial in determining policies for economic performance of nations and monitoring changes in the international economic order. Evaluating economic freedom requires the use of multiple indicators related to each other. Traditional statistical analyses used as an evaluation tool are often constrained by the probability distribution of indicators or sample size. To overcome these shortcomings, this paper uses grey factor analysis (GFA) to evaluate the economic freedom of countries. GFA can be used with multiple interrelated indicators without requirements about the probability distributions or sample size. The absolute degree of grey incidence matrix is used instead of the correlation matrix in factor analysis and GFA integrates the advantages of grey system theory into factor analysis. The analysis covers data for 2010 and 2020 about 20 economic freedom indicators in 36 selected countries. Two factors explain a significant part of the variance for both years. The scores for countries were obtained using the explained variance ratio as a weight. Our results show that GFA provides more accurate results than traditional statistical analyses.

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Abstract

This paper aims to evaluate the influence of investment and R&D expenditures on the performance of large companies that are headquartered in the Europe using regression analysis of the generalized method of moments. The independent control variables are GDP per capita and the interest rate represented by the yield of 10-year state bonds. The sample period is 2010–2018. Our result shows that the growth of R&D expenditures and investments negatively affected the profitability ratios of the firms in the year of implementation. While concentrating on the macroeconomic control variables, the results support an assumption about the positive effects of GDP on the majority of the net income, ROA and ROE estimates. On the other hand, negative effects of interest rates were found.

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Abstract

Tax evasion is reducing the revenues of public budgets of many European Union (EU) Member States (MS). To improve the effectiveness of tax collection, during the last decade authorities in several MS have taken measures to reduce the value added tax (VAT) gap (i.e., revenue received as a percentage of theoretical liability). In the Central and Eastern European region, VAT gap reduction measures have been implemented effectively in Hungary and Poland, whereas in Romania the effectiveness of these measures is very low: Romania has been the worst-performing EU MS in collecting VAT for more than 10 years. Our study analyses the factors influencing this VAT gap. Our analysis relied mainly on a fixed effects panel regression model, using for a balanced panel an individual and time fixed-effects with cluster-robust standard errors model, and for the unbalanced panel the fixed-effects regression with individual-specific slopes. Our results show that the size of the VAT gap is primarily influenced by five variables: the transparency index, the tax collection ratio, the law enforcement index, the VAT revenues ratio and the digitisation index.

Open access

Abstract

Real estate crowdfunding is a relatively new alternative financing and investing method. This research aims to identify factors which might increase investors' willingness to participate in real estate crowdfunding campaigns. We analyse 195 lending-based real estate crowdfunding campaigns from four Spanish platforms. Project success is measured by duration, i.e. the time required to reach the funding target. We assess the impact of the funding target, the annual return, the loan duration, several risk-related metrics and the minimum investment amount. We find that the higher the funding target and the minimum investment amount, the longer it takes to reach the target. We document that investors prefer projects where the maturity of the loan is shorter. We also find that construction-type projects reach the funding target faster than other type of fundraising goals. At the same time, we do not find any association between the annual return or risk-related metrics and project success. To assure successful fundraising, real estate crowdfunding platforms should prioritize those real estate projects which are highly popular among investors (i.e. construction-type projects with short maturity). Real estate developers, in turn, should crowdfund projects which are demanded by the crowdinvestors and use their traditional financing methods for the remaining projects.

Open access

Abstract

Significant parts of the work of the great economist and economic visionary János Kornai function as a magnifying glass in economic theory, philosophy and history. Kornai examined economic systems and system-mixes with substantial details, for then being able to focus his audiences' attention on the most relevant and critical aspects of them. One of Kornai's masterpieces, The Socialist System – a book which recently passed its 30-year publishing anniversary – is such a political economy lens on communism. I am attempting a concise conversion of this magnifying glass, to apply a Galileian metaphor, into an economic telescope. In other words, I am adding another economic lens – that of moral economics – to the Kornaian viewpoints. In a short analysis going through various dimensions of The Socialist System, I am coupling Kornai's thoughts with moral economic ideas, both from the classical and the contemporary moral economy streams. The goal with this exercise of respectfully refreshing a toolkit and style of economic analysis is to then gaze into, and partially describe a potential multitude, or spectra of economic systems, which may manifest in econodiversity.

Open access

Abstract

Kornai challenged not only the dominant economic views of the socialist system, but also those of market economies. The former brought him fame, and the latter remained, so to speak, his scientific testament. He studied the systemic properties of different economic systems through the analytical grid of the sign of aggregate excess supply, which defined three categories: shortage economies, equilibrium economies and surplus economies. In this paper, we show that business plans postulated with the aim of realizing strictly positive net retained profits in nominal terms exclude equilibrium economies; these business plans imply a surplus economy. This definition of the business plan makes it possible to combine seemingly disparate results from different parts of the economic literature. An economy in which business plans are the rule and no economic agent can run a permanent negative budget is a surplus economy, which manifests itself in the phenomena of both growth imperative and realization problem. In short, all these phenomena are the manifestations of the same essence: the working of the business plans.

Open access

Abstract

Contemporary economic thought does not deal suitably with the tasks it faces. Neither does it provide a satisfactory explanation of the socio-economic reality, nor does it propose effective methods of solving the mounting problems, especially at the macroeconomic level, in the national economy, and in the mega-economic level, in the world economy. The beyond-GDP reality requires a beyond-GDP economic theory on which a triple balanced – economically, socially and ecologically – beyond-GDP development strategy must be based. It is necessary to formulate anew the goal of economic activity, which cannot be a simple maximization of profit and a quantitative increase in production. The short-term interests of private capital should be subordinated to the long-term public interests, which is to be fostered by appropriate reinstitutionalization of the market economy. The economics has to be more oriented towards addressing the future challenges, and not mainly be inspired by conclusions drawn from observations of past events, which is often of little use in economic policy and development strategy. The new pragmatism is needed.

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Abstract

A key observation of the endogenous money theory is that banks create deposits (money) by lending. This means that banks apparently face soft budget constraint in responding to demand for credit. However, there are several limiting factors, which can make the banks' money creation somewhat constrained, and can thus harden their budget constraint. Such factors include the need to preserve banks' profitability and the bank regulations (the capital and liquidity requirements). Previous literature on soft budget constraint (SBC) in banking mentioned government bailouts, central banks lender-of-last-resort policies, or the poorly informed depositors who over-finance banks, as reasons for the SBC for banks. Taking the endogenous money theory as a starting point, we use a different approach. We analyze whether the tools that aimed to keep the bank's budget constrain hard are appropriate for this purpose. Our analysis, as well as lessons from several recent bank crisis episodes suggest, that under current banking regulation SBC is an inherent feature of banking.

Open access

Abstract

This paper discusses the contributions of János Kornai to the “language reform” of socialism and post-socialism, meaning the creation of new conceptual frameworks to replace the mainstream interpretation of the system with a more realistic, critical description. We show that, in the three waves of language reform under the Kádár regime – economics, sociology, and law – Kornai was a trailblazer by introducing concepts like “soft budget constraint,” “plan bargaining,” and “shortage,” which became key concepts for reform economists and dissident intellectuals in Eastern Europe. We discuss Kornai's work on post-socialism as well, particularly his paper “The System Paradigm Revisited,” and point out its merits and shortcomings in the description of the regimes of the region. Presenting our offer for a new language reform, based on Kornai, we underline the importance of proper words for understanding “actually existing post-socialism,” and the task of political economists to revise the current mainstream and analyse the phenomena of post-communist “relational economies.”

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Abstract

The objective of this study is to identify how globalisation influences China and how China affects globalisation in the context of János Kornai's Frankenstein metaphor. Kornai (2019) felt moral responsibility for unwillingly contributing with his advice in the 1980s to the birth of a modern version of Frankenstein, the Monster which his creators could not control. A crucial guiding principle of this paper is how the US and the advanced democratic economies can respond to Kornai's dilemma and reconcile the diverging requirements of economic interests with national security priorities. There is a research gap in the systematic mapping of the external economic environment on China's development. The primary conclusion of this paper is that China is less dependent on the rest of the world than the world on China. As the de-risking concept suggests, trade restrictions and domestic industrial policy measures focused on a narrow range of strategic sectors should be combined with unlimited trade and cooperation in the remaining non-strategic sectors. This study's conceptual and methodological framework can be used to analyse the relationship between advanced democratic economies and autocratic regimes in Kornai's Frankenstein dilemma.

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Abstract

János Kornai has achieved a wide-scope multifaceted theoretical analysis moving from Marx to Walras-Lange, then to post-Keynesian disequilibrium economics, and eventually, to Hayek and economic institutionalism. Such a travel is not without meeting dilemmas that Kornai has had to struggle with and opt to resolve them in some way. Such process is illustrated first with a planner's dilemma. On the one hand, Kornai has elaborated on – together with Tamás Lipták – a mathematically ‘super’ solution to finding the optimal plan through a two-level planning procedure. But once implemented the latter has appeared to be too slow, and Kornai has rejected Lange's ideas for Hayek's criticism against central planning. A second dilemma is about how to analyse a centrally-planned shortage (excess demand) economy in which those industries privileged in the planners' pecking order priorities were producing an excess supply of (useless) goods. Kornai did not find a solution in the current disequilibrium economics but, instead, in a ‘lax’ communist bureaucracy generating a soft budget constraint. The third dilemma is that Kornai's views about disequilibria have not converged with the Post-Keynesian disequilibrium models. The latter were unable to conceive a simultaneous excess demand and excess supply in a same market, due to their so-called shorter-side rule. Instead, Kornai has found a solution that fits with theorising the observed micro (or even infra-micro) disequilibria in a Debreu's book, some years after having published a hard criticism of neo-classical microeconomics. A final question is raised: is Kornai's theory a decisive contribution to the analysis of comparative economic systems – that no one denies – or has he added some value to a more general theory of economic disequilibrium?

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Based on the structure of János Kornai's ‘main line of causality’, two unique country cases are compared within the former European socialist bloc: Albania and the Socialist Federal Republic of Yugoslavia. The research provides a comparative analysis with an overview of the two countries' development between World War II and the fall of the socialist regimes. Special attention is paid to the period following the 1970s as the underlying reforms had been implemented in Yugoslavia by then, leading to fundamentally different socialist prototypes. Regarding the differences, the analysis also gives an insight into the structure of the two respective banking systems. Kornai's ‘main line of causality’ provides the framework for the current research, supplemented by the respective literature. The analysis concludes that despite the fact that all blocks of the causality line differed in the two systems, similar challenges had to be addressed during the transition period. Furthermore, Albania and the successor states of Yugoslavia reflected a range of common characteristics, which implies the relevance of path dependence.

Open access
Acta Oeconomica
Authors:
Edina Berlinger
,
Zsolt Bihary
,
Katalin Dobránszky-Bartus
, and
György Molnár

Abstract

We model the consequences of the soft budget constraint in the context of retail borrowers. While János Kornai formulated the term of “soft budget constraint” mainly for organizations (firms, banks, municipalities, NGOs, etc.), we show that it can be applied to individual borrowers as well. We derive the feasibility conditions for private and public debt relief programs in a utilitarian framework and find that lenders have no interest in offering payment reductions if non-performing borrowers are few, have small debts, and are difficult to reach – precisely the characteristics of the poor. In this situation, poor debtors serve better as deterrents, similarly if we put them into a pillory. We calibrate the model parameters to survey data on poor households struggling with overdue debts in small villages in a disadvantaged rural region in Hungary. We find that in normal economic circumstances, private debt relief programs are not feasible. State intervention can be justified by positive externalities and moral considerations.

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Abstract

The most significant concept of János Kornai's oeuvre is the shortage economy theory as it was presented in Anti-equilibrium more than fifty years ago. According to this, modern economies are never in equilibrium. On the markets of goods and services, the aggregate demand is either significantly higher or significantly lower than the aggregate supply. This dichotomous model is discussed in the first part of the paper.

After the collapse of the communist system in 1989/90, shortages disappeared everywhere unexpectedly quickly. But it was also an unexpected development that the institutions of liberal democracy have not developed in several countries and/or collapsed after a short period. Regarding Hungary, Kornai issued an alarm signal at the turn of 2010/2011. He was the first who said that the Orbán regime had turned the country into an autocracy in barely a year. The second part of the paper examines whether Kornai's assertion, shared by many transition-economy specialist, that there are only two political systems (democracies and autocracies) is adequate for the entire range of post-socialist countries. The author's answer to this question is negative.

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Abstract

János Kornai published an interesting and important paper in 2000 about the “system paradigm”, and another in 2016 about the “system paradigm revisited”. In the last one he made a theoretical approach for differences between democracies, autocracies and dictatorships; made a typology for the most important elements for characterization of different political systems. In the second half of the 2010’s a debate has started among political analysts, public intellectuals and journalists, how we can characterize the new political system of Hungary led by Viktor Orbán. We can read detailed analyses about “hybrid regime”, “limited democracy”, “illiberal democracy”, “plebiscite leader democracy” etc. In this paper I would like to deal with the question of different political systems in general, and – on the experiences of the debates about the current Hungarian system – I would like to think further – the Kornai's model. Kornai pointed out 10 elements for characterization of it (the questions of removable governments, opposition parties in parliaments, elections, civil society, freedom of press, etc.) – I would like to differentiate 10 new potential elements, especially from the side of the political ideas, historical backgrounds and other viewpoints.

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Abstract

Kornai profoundly contributed to place the system to the centre of economic analysis. His multidisciplinary system paradigm is fundamental for understanding and analysing the variety of economic solutions and its consequences. The strong scientific foundation of Kornai's approach provides a fruitful opportunity to further develop and apply it to the most fundamental economic issues, such as explaining the different performance and strength of different economies and societies. The inclusion of a multidisciplinary perspective has the significant advantage of keeping under control non-economic factors that influence economic activities and performance and allows to account for the real behaviour and evolution of economies and societies. It can also contribute to explain the resilience of economic and social systems and economies. The paper takes stock of the importance of Kornai's analysis and method and applies them to better understanding the nature and working of the European Union and its difficulties. Based on Kornai's approach, the paper considers how the European Union should evolve to make itself workable and resilient in front of a threatening international environment.

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Abstract

János Kornai was an early and influential critic of rational choice theory, who opposed its application to interdisciplinary questions. In this paper, we attempt to show that certain contemporary uses of rational choice theory are perfectly compatible with Kornai's critique of general equilibrium theory, as well as his broader vision of economics as a mode of understanding. To do so, we leverage the insights of several “ordinary language” philosophers to demonstrate that the utility of rational choice theory derives from its grammatical properties rather than the truth values of its axioms.

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Society and Economy
Authors:
Volodymyr Kulikov
,
Mykhaylo Simanovskyy
,
Abigail Eichenberg
, and
Ksenija Angelina Braese

Abstract

This article explores the communication strategies of multinational corporations in response to the Russo-Ukrainian War and the public pressure to divest from the Russian domestic market. By content analyzing official statements from the top 50 revenue-generating multinational corporations in Russia, the article identifies patterns in corporate narratives about the war, their actions and concerns, and potential solutions. The findings reveal that most companies declare scaling down their presence in Russia while maintaining certain basic obligations, prioritizing employee safety, and expressing concerns about the global economy. While few explicitly condemn Russia's aggression, many adopt neutral language to avoid naming Russia as the aggressor. Corporations emphasize the importance of diplomacy, adherence to international law, and the pursuit of peace, but often avoid proposing concrete solutions. Despite variations across industries, countries of origin, and decisions to stay or leave Russia, the differences in statements were not significant. The uniformity of corporate statements and evidence that companies frequently do not follow their declared promises suggest potential “bluewashing” – making vague or false claims of social responsibility or anti-war stances to improve their public image. These findings emphasize the need for multinational corporations to develop sincere and original wartime communication strategies.

Open access

Abstract

This paper presents the first comprehensive systematic literature review of articles from the last five years published on enterprise-scaled agility and offers practical insights for organisations looking to become more agile. The management literature on agile structures is still relatively scarce and fragmented, but emerging. Our results highlight the characteristics, advantages and tensions created by agility at the organisational level, and give insight for executives to support their decisions on organisational design. By examining the structural, cultural, and leadership antecedents that are necessary for success, this paper contributes to the ongoing debate about agile organisations. The concept of ‘Agility Forest’ proposed here will contribute to the better understanding of the connections between structure, culture, and leadership.

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