Corporate law and corporate governance. The Hungarian experience

In this paper our aim was to establish legal facts for Hungary in detail, to put the country’s situation into international context, and to find new avenues for comparative research. We updated investor protection indicators already existing in the literature, while determined enforcement indicators for the first time. We hypothesize that besides indicators the dynamics of legislation must be an important topic for research. An analysis of the dynamics of legislation in Hungary indicates that two tendencies could be observed. one responding to actual challenges, leading to more reliance on the interpretation of law by judges, the second following the German-tradition resulting in more bright line rules, and more complicated legal regulation. To make the former workable political and financial independence is a necessary, though not sufficient, condition. We emphasize that though investor protection supports the supply of outside funds, there is a demand side to external finance, and more prudential regulation can lead to less demand for external finance.

Estimates of and Problems with Core Inflation in Hungary

The traditional CPI measure has many drawbacks, when used for very different purposes, and it is not at all surprising that a great deal of work has been devoted to its improvement. Besides seasonal adjustment, various other techniques have been developed to find the “core” inflation index. Although a generally accepted definition of core inflation does not exist, the literature converges towards identifying certain desirable properties that a “good” core index must possess. After reviewing the literature we describe how the publication of a core index fits into the monetary policy strategy of the National Bank of Hungary. Monetary policy both in the form of setting the instruments and by communicating to the public is geared to arrive at a mutual understanding with the markets. By publishing a core inflation index, the NBH aims at providing the public with a price measure that can function as a co-ordination device between policy makers and market participants. As the “index number” problem is clearly connected with relative price changes, we analyze in some depth this issue, too. We argue that there have been clearly visible tendencies in relative price developments that jeopardize some of the traditional uses of inflation measures. Our results suggest that a substantial amount of noise and apparent seasonality have come about as a result of government decisions. Finally we muster some possible procedures to define core indices in Hungary, by comparing their smoothness and forecasting ability from several points of view. Our conclusion is that there is no overwhelming reason to abandon the current “exclusion” approach toward the core.Core Inflation, Price Index, Exclusion Approach

Economic Transformation and the Return to Human Capital - The Case of Hungary, 1986-1996

Millions of East-Europeans started businesses during the transformational recession but, according to a wide-spread interpretation, many of them did so only temporarily and 'unwillingly' under the threat of unemployment. The paper looks at the relevance of the 'disguised unemployment approach to entrepreneurship' using regional data.It first examines how net flows into self-employment were affected by corporate labour demand in Hungarian and Romanian regions. Second, it looks at the responses of self-employment and unemployment to increases in labour demand at later stages of the transition. Finally,.it makes attempts to measure the 'wage push' of selfemployment. The evidence suggests that self-employment and unemployment were guided by rather different forces In Hungary. By contrast, the Romanian agriculture absorbed a non-trivial proportion of the potential unemployed following the unique land reform and the introduction of a restrictive UI system. The data suggest larger flows into self-employment in regions hit hard by the transition shock but they do not indicate net flows from self-employment back to paid employment in the few Romanian regions where labour demand was rising between 1993 and 1996. The pool of private farmers failed to behave as a 'reserve army' in this period and did not have strong influence on wage claims at the enterprise sector.

Price Rigidity and Strategic Uncertainty An Agent-based Approach

The phenomenon of infrequent price changes has troubled economists for decades. Intuitively one feels that for most price-setters there exists a range of inaction, i.e. a substantial measure of the states of the world, within which they do not wish to modify prevailing prices. However, basic economics tells us that when marginal costs change it is rational to change prices, too. Economists wishing to maintain rationality of price-setters resorted to fixed price adjustment costs as an explanation for price rigidity. In this paper we propose an alternative explanation, without recourse to any sort of physical adjustment cost, by putting strategic interaction into the center-stage of our analysis. Price-making is treated as a repeated oligopoly game. The traditional analysis of these games cannot pinpoint any equilibrium as a reasonable "solution" of the strategic situation. Thus there is genuine strategic uncertainty, a situation where decision-makers are uncertain of the strategies of other decision-makers. Hesitation may lead to inaction. To model this situation we follow the style of agent-based models, by modelling firms that change their pricing strategies following an evolutionary algorithm. Our results are promising. In addition to reproducing the known negative relationship between price rigidity and the level of general inflation, our model exhibits several features observed in real data. Moreover, most prices fall into the theoretical "range" without explicitly building this property into strategies.Agent-based modeling, Evolutionary algorithm, Price rigidity, Social learning, Strategic Uncertainty

The Biophysical Modeling of the Biopsychological System

Healthy and ill people both try to achieve the required performance and satisfaction of this, but they experience differently their activities accompanied by secondary feelings, their critical attitude and their compliance with social desires. Exceeding these correspondences requires the operation of countermeasures in all people, which at times are barely noticeable because they are embedded in the personality struc­ture or alternately use the entire arsenal of mechanisms. If a biopsychological system responds specifically to an external stimulus, it means that the value of some of its parameters changes and then returns to its original state of ho­meostasis when the response is complete. Parameters charac­terized by static equilibrium and is involved in the response return their values over time to their original value such that its envelope is an exponential (ascending or descending) curve. The parameter that is characterized by a state of dynamic equilibrium and is involved in the response returns to its original value with attenuated harmonic oscillation after its completion. The duration of the return is different for each parameter, and the normal state of homeostasis is determined by the parameter with the slowest finish

The Specific Characteristics of the Biophysical System Theory

Biophysical model can help to see certain phases more clearly and sharply giving way for experimentation. But by all means, the biophysical model is always suitable to correct faults and direct further investigations in the proper way. Another aspect which equally stresses the usefulness of the model on trial: once we keep a solution in hand we get a great number of testing chance through it as well. We can foretell on the basis of the model in what direction a given biological process shall deviate by changing single parameters. There is no sharp limit between compartments and the number of compartments can be increased or diminished by amplification and reduction, respectively. The enlargement and reduction of the compartments depend on the researcher and the compartmentization is confined by Heisenberg’s principle. With the living systems, too, even in the case of very much parameters there exists a critical point, for example the upper limit of the body temperature which goes around 43 oC in the human being. Similarly, there is a critical value for the blood pressure, for the oxygen concentration, etc. These problems belong to the most difficult tasks of the up-to-date science and evenly appear in the most various chapters of the natural sciences. The biogenesis in the univers shows scale behavi­our, too: of the cell it is characteristic to be living (it can be cultivated under laboratory conditions), organs built up of cells are living (organ transplantation is possible), organisms built up of organs are also living, according to the most universal law of the biogenesis, life appears on a certain evolutional stage of the universe, in different parts of the space. From the biological point of view the types of interactions are no more so clearly confinable. First of all we can consider the metabolism as a fundamental interaction which realizes the unity of the living organism with its environment. The life under study is disappearing as we proceed from the living whole towards the lifeless constituents. This means that the life does not equal to the sum of its constituents. The more we dissect these living units the farther we get from the biology and finally we reach the superb, eternal and universal physical laws of the lifeless matter