Adverse consequences of economic policy in combating global climate change in the Czech Republic

The main aim of the article is to identify unintended consequences of economic policies to combat climate change, in the short and long run, using the example of the Czech economy. The short term impacts are assessed by world input-output analysis in order to capture direct and indirect channels affecting the Czech automotive industry. Optimistic, realistic and pessimistic scenarios of decrease in demand for cars due to the imposition of environmental taxes in the European Union and the rest of the world are presented. The results show adverse impacts on Czech gross domestic product from 1.6 to 4.9 percentage points. The economy is expected to change its structure and reallocate factors of production to an alternative use, but there is a risk of suboptimal allocation, which might reveal losses from less efficient allocation of labor and capital. Therefore, the analysis of the relationship between economic welfare and the quality of the environment is conducted. Data on the Czech economy confirm the hypothesis of an environmental Kuznets curve and point to unintended consequences of overly ambitious policies to mitigate global climate change. If economic welfare excessively declines, there would be a significant risk of undermining people's will to invest into environmental protection

Import intensities of final demand components and their implications for economic openness: The case of the Czech Republic

The article deals with the estimation of import intensities of exports, final consumption expenditures and gross fixed capital formation. It uses the input-output methodology of computing direct and indirect imports to the final demand components, which compares with regression estimates. Unlike the widely used turnover approach, the results contribute fundamentally to knowledge about the genuine openness of the Czech economy with regard to how much value-added is exported. In 2015, the highest import intensity for exports amounting to 52%, closely followed by 49% for investments. Household consumption worked with 41% import intensity, while general government consumption expenditures showed the lowest import intensity of 16%. Based on our input-output findings, the true openness of the Czech economy can be revealed. While turnover of exports to GDP reached 80% in 2019, the value-added approach showed only a half, i.e., 40% value-added was exported. It implies a contra-intuitive conclusion that even in a relatively small and highly integrated country into the globalized economy, there is a 60% majority of the non-tradeable goods