How are Inflation Targets Set?

This paper contributes to a better understanding of how inflation targets are set. First, we gather evidence on how inflation targets are set from official central bank and government publications and from a questionnaire of our own design. Second, we estimate the determinants of the level of the inflation target in 19 inflation-targeting countries using unbalanced panel interval regressions to deal with the issue that targets are typically set as a range rather than as a point. We find that both a higher level and higher variability of inflation are associated with a higher target. The setting of the inflation target is also found to have an important international dimension, because higher world inflation is positively correlated with inflation targets. Rapidly growing countries exhibit higher inflation targets. Our results also show that authorities establish a wider target range for the inflation rate when the macroeconomic environment is less stable. We find that central bank credibility is negatively associated with the level of the inflation target, suggesting that less credible central banks are likely to recognize the risks related to anchoring inflation expectations at low levels. On the other hand, government party orientation does not matter, even in less independent central banks.Central bank, credibility, independence, inflation, inflation targeting.

Do Financial Variables Help Predict Macroeconomic Environment? The Case of the Czech Republic

In this paper, we 1) examine the interactions of financial variables and the macroeconomy within the block-restriction vector autoregression model and 2) evaluate to what extent the financial variables improve the forecasts of GDP growth and inflation. For this reason, various financial variables are examined, including those unexplored in previous literature, such as the share of liquid assets in the banking industry and the loan loss provision rate. Our results suggest that financial variables have a systematic and statistically significant effect on macroeconomic fluctuations. In terms of forecast evaluation, financial variables in general seem to improve the forecast of macroeconomic variables, but the predictive performance of individual financial variables varies over time, in particular during the 2008–2009 crisis.Forecasting, macroeconomic and financial linkages, vector autoregressions.

Interpersonal Trust and Mutually Beneficial Exchanges: Measuring Social Capital for Comparative Analysis

There are at least two significantly different approaches to the conceptualisation of social capital. Advocates of the most influential stream define social capital primarily as an attribute of societies, as an innate characteristic of the social environment based on the high degree of interpersonal & institutional trust facilitating people's co-operation. Adherents of the other stream define social capital in terms of mutually beneficial exchanges based on social connections & informal networks allowing individuals to achieve their own particular goals. The former approach prevails in 'western' countries, while the latter one prevails in the study of social change in post-communist societies where social capital drawing from interpersonal trust seems to be rather low. The aim of this article is to contribute to the conceptualisation & measurement of social capital, with a special emphasis on its role in post-communist societies. The authors attempt to develop a measurement model for the two distinct dimensions of social capital mentioned above. The measurement model for the two dimensions of social capital is developed & tested by confirmatory factor analysis. The authors proceed by testing the hypothesis that social capital defined as trust is only weakly linked to social stratification, while social capital defined as a person's involvement in mutually beneficial exchanges shows significant variation between groups defined by relevant stratification variables. The analysis was performed on the data from the Social Networks survey carried out in the Czech Republic in 2001 under the International Social Survey Programme

Czech Higher Education Still at the Crossroads

The paper addresses the development of higher education in the Czech Republic after 1989, with special emphasis on the relevant legislation, institutional settings, financing, & enrollment. Czech higher education has changed profoundly since 1989. Universities were granted almost full autonomy as early as in 1990. They have reformed their curricula, expanded programs in the humanities & social sciences, & eliminated political criteria from admissions policies, both for faculty & students. However, the structural changes were not as quick & profound as obtaining & mastering the freedom was. The most significant structural changes in the Czech tertiary educational system addressed in the paper are decentralization & diversification. With regard to financing, the authors argue that universities have remained dependent on the state to a high degree. Several attempts to expand multi-source financing by introducing cost-sharing features (tuition fees, loans, student allowances) failed. The reliance on the public budget led to a severe financial crisis in public universities. As far as enrollment is concerned, the authors demonstrate that, although the number of students rose by almost 60% between 1989 & 2001, the offer of educational opportunities was too low to meet the steeply rising demand for tertiary education. The chance of being admitted hovered around 50%. Owing to the combined effect of a drop in the size of the relevant age cohort & the growing proportion of students admitted to bachelor programs, the chance of enrollment started to increase in 2001. In spite of this recent change, the transition from secondary to tertiary education still remains the most critical moment in an educational career

Who Has Gotten Ahead after the Fall of Communism? The Case of the Czech Republic

Pierre Bourdieu's concept of various forms of capital are employed in a study of patterns of individual mobility in the postcommunist Czech Republic, drawing on secondary empirical data from a longitudinal study conducted by P. Mateju, M. Tucek, & L. Rezler (1991) in which 2,891 eighth-grade student questionnaires & 2,709 parent interviews were completed in 1989 & again in 1992. It is found that the former nomenklatura class has retained its social position due to its conversion of human & social capital into economic capital. However, a change from pre- to postcommunist society is detected in the increase of education as a facilitator of upward mobility. Finally, while cultural capital does not appear to significantly influence stratification, a strong relationship is found between social capital & upward mobility

Early Warning Indicators of Economic Crises: Evidence from a Panel of 40 Developed Countries

Using a panel of 40 EU and OECD countries for the period 1970-2010 we construct an early warning system. The system consists of a discrete and a continuous model. In the discrete model, we collect an extensive database of various types of economic crises called CDEC 40-40 and examine potential leading indicators. In the continuous model, we construct an index of real crisis incidence as the response variable. We determine the optimal lead employing panel vector autoregression for each potential indicator, and then select useful indicators employing Bayesian model averaging. We re-estimate the resulting specification by system GMM and, to allow for country heterogeneity, additionally evaluate the random coefficients estimator and divide countries into clusters. Our results suggest that global variables are among the most useful early warning indicators. In addition, housing prices emerge consistently as an important source of risk. Finally, we simulate the past effectiveness of several policy instruments and conclude that some central bank tools (for example, reserves) could be useful in mitigating crisis incidence.Bayesian model averaging, dynamic panel, early warning indicators, macroprudential policies, panel VAR.

The Roots of the Sociopsychological Model of Social Stratification

This article, published in connection with the recent death of Otis Dudley Duncan (16 November 2004), sets out to provide a critical summary of the development - from its beginnings in the 1960s up to its final revision & modification in 1983 - of the socio-psychological model of the status attainment process. The article not only looks at the classic model of the social stratification process of Blau & Duncan, but also examines the influence of one of the founders of the socio-psychological branch of the study of social stratification, W. H. Sewell. Special attention is devoted to the development of the so-called Wisconsin model, primarily the work of William H. Sewell & his student, Robert M. Hauser, who, while as a student of Duncan also, considerably contributed to the use of structural modelling in sociology. The article concludes with a brief discussion of the main critical reactions to the socio-psychological model emphasising the 'allocational' paradigm of interpretation of the reproduction of social inequalities. The article should primarily help students of sociology gain an orientation in the massive amount of often poorly accessible literature on one of the most cited of sociology's 'products'

Transition to University under Communism and after Its Demise. The Role of Socio-Economic Background in the Transition between Secondary and Tertiary Education in the Czech Republic 1948-1998

The aim of this study is to assess the most recent trend in inequality in access to tertiary education in the Czech Republic. The authors put forward the hypothesis claiming that the period of stable inequalities in the years 1948-1989 was followed by a period of growing inequalities during the postcommunist transformation (1989-1999). The study focuses primarily on the cultural & socioeconomic (class) dimensions of social origin & gender & their net effect on success in the transition between secondary & tertiary education. Theoretically, the paper draws primarily on the work of Raftery & Hout (1996) & Hanley & McKeever (1997), who claim that the chances of attaining higher education among individuals from families with a low social status can only increase on the condition that the demand for the given level of education has first of all been satiated among all the strata disposing of social & cultural capital. Another important theory they build on is the theory of rational action proposed by John Goldthorpe & Richard Breen (Goldthorpe 1996; Breen & Goldthorpe 1997). The principal hypothesis (inequality has grown) is tested using log-linear analysis applied on the data from various surveys carried out during 1998-2000, merged into one data set. The authors construct several models of the influence of social origin on the chances of making a successful transition between secondary & tertiary education in the years 1948-1999. The initial hypothesis of the growing effect of class origin on this transition in the period after 1989 has been confirmed. One of the strongest explanations for this trend is the insufficient expansion of the tertiary sector of education, which is incapable of satisfying the continually growing aspiration & corresponding demand for higher education in circumstances where socioeconomic inequalities are on the rise

Granulostasis: Protein Quality Control of RNP Granules

Ribonucleoprotein (RNP) granules transport, store, or degrade messenger RNAs, thereby indirectly regulating protein synthesis. Normally, RNP granules are highly dynamic compartments. However, because of aging or severe environmental stress, RNP granules, in particular stress granules (SGs), convert into solid, aggregate-like inclusions. There is increasing evidence that such RNA-protein inclusions are associated with several age-related neurodegenerative diseases, such as amyotrophic lateral sclerosis (ALS), fronto-temporal dementia (FTD) and Alzheimer's disease (AD). Thus, understanding what triggers the conversion of RNP granules into aggregates and identifying the cellular players that control RNP granules will be critical to develop treatments for these diseases. In this review article, we discuss recent insight into RNP and SG formation. More specifically, we examine the evidence for liquid-liquid phase separation (LLPS) as an organizing principle of RNP granules and the role of aggregation-prone RNA-binding proteins (RBPs) in this process. We further discuss recent findings that liquid-like SGs can sequester misfolded proteins, which promote an aberrant conversion of liquid SGs into solid aggregates. Importantly, very recent studies show that a specific protein quality control (PQC) process prevents the accumulation of misfolding-prone proteins in SGs and, by doing so, maintains the dynamic state of SGs. This quality control process has been referred to as granulostasis and it relies on the specific action of the HSPB8-BAG3-HSP70 complex. Additional players such as p97/valosin containing protein (VCP) and other molecular chaperones (e.g., HSPB1) participate, directly or indirectly, in granulostasis, and ensure the timely elimination of defective ribosomal products and other misfolded proteins from SGs. Finally, we discuss recent findings that, in the stress recovery phase, SGs are preferentially disassembled with the assistance of chaperones, and we discuss evidence for a back-up system that targets aberrant SGs to the aggresome for autophagy-mediated clearance. Altogether the findings discussed here provide evidence for an intricate network of interactions between RNP granules and various components of the PQC machinery. Molecular chaperones in particular are emerging as key players that control the composition and dynamics of RNP granules, which may be important to protect against age-related diseases

Determination of College Expectations in OECD Countries: The Role of Individual and Structural Factors

Renowned international experts in higher education financing have argued that, owing to large government deficits, tertiary education will not be able to open up and meet growing demand unless cost-sharing principles and efficient student financial aid programmes are introduced. Opponents of cost-sharing in higher education object that introducing tuition fees will raise inequality in access to higher education. Drawing on OECD data, and focusing on college expectations, the authors argue that the effects of ability, gender, and socio-economic background on college expectations are primarily shaped by the characteristics of secondary education systems, such as the degree of stratification and vocational specificity of secondary schools, while the principal characteristics of the tertiary education system, such as enrolment rates and the model of financing, play a much less important role. The results clearly show that, after controlling for the effects of secondary school system characteristics, cost-sharing, as such or by degree, does not affect the formation of college expectations by ability, gender, and socio-economic background as much as the selectivity of the secondary school system does