The Effect of Fiscal Policy Asymmetries on Business Cycle Correlation in the EU

This paper reviews the role of bilateral fiscal differences, fiscal indiscipline and their joint effects in particular in determining business cycle synchronicity in the European Union (EU). Panel data comprising 28 EU members from 1999–2019 are used in the analysis. The two-step Instrumental Variable–Generalized Method of Moments (IV–GMM) is employed to estimate the effects of examined fiscal measures on business cycle correlations. The study finds that fiscal indiscipline doubles the negative effect of increasing fiscal differences on business cycle correlation compared to fiscally disciplined country-pairs. The findings suggest reopening the debate on fiscal policy coordination across Europe

Integration of Central and Eastern European Countries: Increasing EU Heterogeneity?

The paper assesses the heterogeneity of an enlarged European Union and discusses the role and contribution of CEECs on the development of this heterogeneity over time. The two central research questions are: What are the factors that distinguish between successful and less successful CEE countries in terms of the EU enlargement? How was heterogeneity in the EU developed in the last decade? Using cluster analysis methods allow the focusing on heterogeneity in the five selected dimensions of interest: Institutions and Governance; Single Market and Openness; Macroeconomic Policies; Symmetry and Convergence; and Competitiveness. We can find that the specific macroeconomic policies followed by CEE countries during the transformation period were less decisive for a successful transition than the level of (non-elite) political stability, the quality of institutional framework, the maturity and compatibility of informal institutions and the initial level of economic development. We also can find substantial convergence in terms of economic indicators in the EU in the period considered but none or a very slow convergence in terms of institutional indicators. The negative consequences of such heterogeneity were strengthened by the crisis. As a consequence the tensions caused by these different speeds of convergence in different fields challenge the long-term sustainability of EMU, and the consequences of this situation should be more intensively discussed in the EU. We also argue that the experience of transition of CEE countries holds valuable lessons for the currently discussed reforms of the southern periphery of Europe. Similarly to the CEECs before their entrance to the EU, the periphery countries need to find a direction to head for in the next 10-15 years. Budgetary savings are inevitable; nevertheless positive long-term visions should be formulated as well

Examining the spatial spillover of gambling regulation in the Czech Republic

The responsibility of spatial regulation of gambling in the Czech Republic is placed on municipalities, the smallest self-governing units in the country. This creates a possibility that the effectiveness of regulation may be reduced by spatial spillover to the neighboring municipality. The aim of this paper is to evaluate to what extent the local reduction of gambling is effective in the overall reduction of gambling in the area under the conditions of fragmented regulation and mobility of gamblers. OLS regression was used to identify the spatial spillover effect. The decline in tax revenue on gambling machines in a district capital by one percentage point is associated with the rise of the same revenue in surrounding municipalities that are reachable in 10 min by 0.45 of a percentage point. Spatial spillover in more distant municipalities is close to zero. The results remain stable when control variables are employed. The results suggest that fragmented regulation is easy to overcome and better cooperation among municipalities or regulation on higher administrative level may be more effective.OA-hybri

Advertising as a possible determinant of private consumption

Private consumption represents an important component of aggregate demand, i.e. private consumption becomes a significant aspect of GDP determination. The objective of this paper is to examine private consumption in terms of a potential short-run influence of advertising on private consumption as one of the factors that determine consumption. GDP (disposable personal income), interest rates, but also advertising may be considered as important factors that can accelerate the development or change the direction of development of private consumption. A debate on effects of these factors is carried on in the paper. Determinants of advertising expenses as well as potential influence of advertising on private consumption will be studied. This general theme will be specified under conditions of American economy and examined during a period of almost 80 years (1929–2008). The GLS method of estimation with application of Cochrane-Orcutt regression is used. Despite of lower statistical significance the model indicates that advertising expenses variable is not an important variable of private consumption at aggregate level on the contrary to disposable personal income and private savings

Regulatory Quality and Sustainable Economic Development

Recently, an importance of often contradictory relationship between the environmental quality and economic performance has been discussed both at economic and political level. Whereas the quality of environment is an essential condition to simply survive and can be considered as one of consumers’ goals, economic performance seems to be a primary goal of the majority of firms and consequently of the whole economies. The cohesion of both aspects then seems to be inevitable. However, necessary protection of environment can be reinforced only in presence of correct, enforceable institutions and sufficient wealth that shift preferences towards clean environment. The study is dedicated to the assessment of the relationship among institutional context, environmental quality and degree of economic development using panel vector autoregressive techniques for the sample of 166 countries. It is aimed to show, how the environment can be conserved taking satisfactory living conditions into account. The study demonstrates that more efficient institutional setting leads to a situation, in which environmental quality improves together with economic development

Reklama ve vývoji ekonomické teorie spotřeby

The aim of the thesis is to capture an evolution of views on advertising in economics in order to integrate the mentioned phenomenon into economic theory of consumption. Analyses of advertising emerge with the assumption of imperfect competition. Being potential fragments of advertising theory contributions in the field of interest are systematized in an individual chapter continued with a discussion on space and conditions that would enable an integration of advertising into economic theory of consumption. Based on Eichner criteria of scientific theory a comparison of neoclassical, institutional, post-Keynesian and behavioural attitudes to advertising is carried on. The attitudes differ according to ontology and epistemology that determine standard headings and consequently also potential integration of advertising. The integration seems to be acceptable only for mainstream (neoclassical) economics, hence it fulfils both fundamental and sufficient criteria of scientific theory, while for alternative economics preference evolution represents a difficulty that cannot fulfil coherency test, i. e. fundamental criteria of scientific theory

Political instability and economic growth: an empirical evidence from the Baltic states

For more than last 20 decades, new political economics has been dealing with theories of economic growth (for example influential contributions by Mancur Olson, Dani Rodrik). However, less attention has been paid to their empirical verification. The new political economics growth theory defines some factors that are necessary for economic growth among which political stability. Our aim is to test the theory focused on political stability empirically in order to enrich the studies with recent European results. The paper uses a single-equation model to reject a hypothesis that political stability is a necessary condition for economic growth finding a relationship between economic growth and political instability. A demonstration that political stability is not a crucial factor for economic development in general then represents the main goal of the contribution. There are distinguished two types of political instability – elite and non-elite – in topical literature. While non-elite political instability concerns about violent coups, riots or civil wars, elite political instability is represented with “soft changes” such as government breakdowns, fragile majority or minority governments. A number of government changes is used as a proxy of elite political instability. The disproof of the hypothesis is demonstrated on data from the Baltic states where number of government changes takes place and still fast economic growth could be seen within last two decades. Since it is shown that political instability has almost no impact on economic growth, we consider the hypothesis regarding a necessity of political stability for economic development to be only a specific non-generalizable case

Entrepreneurship and Economic Development: What is the Difference Between Austrian and New Institutional Approaches?

What is the role of entrepreneurship in economic development from the perspective of neo-Austrian and new institutional economics and what is the difference between these approaches? Neo-Austrian economists claim that economic development is caused by entrepreneurial discovery. New institutional economists argue that structure of incentives determined by the institutional environment provides a guideline for entrepreneurial decision-making. Hence, an institutional environment that rewards rent-seeking does not provide opportunities for economic development. In this paper we offer a comparison of these approaches to show that both entrepreneurial discovery and institutional environment are closely related. Moreover, with the comparison we demonstrate that entrepreneurial decision-making plays more important role in economic development when an institutional change is taken into account.new institutional economics, neo-Austrian economics, entrepreneurship, economic development

Corruption in the Czech and Slovak Republic: Did the EU pressure improve legal framework and its enforcement?

Did the EU pressure improve legal framework and its enforcement in the Czech and Slovak Republic? The paper analyzes the current state of the Czech and Slovak quality of legal framework and its enforcement in the context of the European Union accession. We looked at a variety of corruption indicator data, such as statistics of revealed and clarified malfeasance connected with corruption per 100 capita and the composite indexes. These indicators suggest that the quality of the legal framework and its enforcement in the Czech and Slovak Republic has not improved after joining the European Union. More precisely, it can be argued that in spite of implementation of anti-corruption public policies proposed by EU institutions, perceived corruption of public officers has remained the same. This means that trustworthiness of legal framework and enforcement authorities responsible for deterrence and reduction of corruption remained the same as well. Therefore, in order to improve the quality of the legal framework and its enforcement, reduction of barriers to entry and more profound legislation reforms is suggested