Prague Economic Papers, 2013 (vol. 22), issue 4

Original contributions, Original article, Research article

Synchronisation of Stock Market Cycles: The Importance of Emerging and Developed Markets to ASEAN-5

Teng Kee Tuan, Yen Siew Hwa, Chua Soo Yean

Prague Economic Papers 2013, 22(4):435-458 | DOI: 10.18267/j.pep.461  

This study analyses the directions and the degree of financial integration of ASEAN-5 with the PRC, India, the U.S. and Japan. A non-parametric approach has been used to study the crosscountry correlations based on Concordance Index (CI) and Rolling Concordance Index (RCI). Monthly stock market indices between January 1991 and June 2010 for all the countries involved were analysed. The CI results indicate higher financial interdependence of ASEAN-5 with the U.S. and Japan compared to the PRC and India. The stock markets RCIs amongst ASEAN-5 with the emerging and developed economies depict a rising financial integration amongst these nations. Financial...

Composite Indicators as a Useful Tool for International Comparison: The Europe 2020 Example

Lenka Hudrliková

Prague Economic Papers 2013, 22(4):459-473 | DOI: 10.18267/j.pep.462  

Composite indicators as a tool for a ranking become more and more popular, because they illustrate a comprehensive view on a phenomenon that cannot be captured by only one single indicator. Indicators for Europe 2020 are set of indicators used for monitoring targets defined by the European Commission in the Strategy of Smart, Sustainable and Inclusive Growth. The main objective of this paper is the comparison of performance of the EU Member States using the composite indicator principles. Within constructing composite indicators several steps have to be made and corresponding methods have to be chosen. There is not only one correct method how to develop...

Innovation Under Spatial Duopoly

Pu-yan Nie

Prague Economic Papers 2013, 22(4):474-486 | DOI: 10.18267/j.pep.463  

Innovation is an important topic in economics. This paper highlights duopoly innovation under the Hotelling model with game theory approaches. This paper argues that market power, as measured by the cost advantage of a dominant firm over its rival, serves to enhance the incentive to innovate in a Hotelling model of spatial competition. This result implies that a firm with cost advantage will have a larger incentive than its rivals to further its cost advantage as new opportunities for innovation arise thereby implying that innovation increases concentration. This result is in contrast to the result obtained by Holmes et al. (2012) who use the Betrand...

The Role of Remittances as More Efficient Tool of Development Aid in Developing Countries

Robert Stojanov, Wadim Strielkowski

Prague Economic Papers 2013, 22(4):487-503 | DOI: 10.18267/j.pep.464  

This paper examines the effectiveness of remittances and official development assistance (ODA) in developing countries. It compares the outcomes of aid poured into the economies of the Third World for decades without any visible effect and remittances transferred by emigrants to their countries of origin which proved to be quite effective. We find that remittances have a stronger net positive effect on the increase of GDP per capita in developing economies than development aid. In addition, remittances tend to be higher than ODA funds, they are absorbed by 80-90 per cent (in comparison with 50 per cent of aid budgets spent on administrative and other...

The Economic Balance of the Czech Republic and Slovakia During the Economic Crisis

Ilya Bolotov, Radek Čajka, Kateřina Gajdušková

Prague Economic Papers 2013, 22(4):504-523 | DOI: 10.18267/j.pep.465  

The paper examines development of economic balance and efficiency of monetary and fiscal policy in the Czech Republic and Slovakia during the crisis with the help of empirical verification of Robert Mundell's model of effective market classification. Our main findings show that although there was no direct 'loser' during the crisis, the Czech Republic seemed to have better coped with its economic imbalances due to the independence of its monetary policy. Slovakia, on the contrary, has preserved several problems on the side of external balance. However, as both countries show certain differences, it is impossible to assess whether the euro adoption...

Efficiency of Hospitals in the Czech Republic

Jana Votápková, Lenka Šťastná

Prague Economic Papers 2013, 22(4):524-541 | DOI: 10.18267/j.pep.466  

The paper estimates cost efficiency of 99 general hospitals in the Czech Republic during 2001-2008 using the Stochastic Frontier Analysis. We control for determinants of the inefficiency and found that bigger, not-for-profit and teaching hospitals tend to be less efficient, as well as hospitals in municipalities with a larger share of the elderly. Small hospitals, hospitals in bigger municipalities and hospitals in regions where hospital competition is tense tend to be more efficient.

Certification and Its Impact on Quality of Charities

Katarína Svítková

Prague Economic Papers 2013, 22(4):542-557 | DOI: 10.18267/j.pep.467  

Nonprofit organizations in transition countries experience low trust and consequently low income from donations. The study introduces one particular solution to the problem, certification, and examines its impact on the quality of the nonprofit organizations in the market. The situation is illustrated in a game theoretical model, with a manager, donor, certifier, and the charity providing a charitable good: for simplicity, charity is either good or bad: A good charity spends all the resources on the charitable good, and a bad one diverts all resources to the private consumption of its manager (for-profit in disguise). We show that for a wide parameter...

Does Herd Behaviour Arise Easier Under Time Pressure? Experimental Approach

Lubomír Cingl

Prague Economic Papers 2013, 22(4):558-582 | DOI: 10.18267/j.pep.468  

In this paper I explain individual propensity to herding behaviour and its relationship to time-pressure by conducting a laboratory experiment. I let subjects perform a simple cognitive task with the possibility to herd under different levels of time pressure. In the main treatments, subjects had a chance to revise their decision after seeing decisions of others, which I take as an indicator of herding behaviour. The main findings are that the propensity to herd was not significantly influenced by different levels of time pressure, although there could be an indirect effect through other variables, such as the time subjects spent revising the decision....

Book reviews

Central Banking Textbook

Luboš Komárek

Prague Economic Papers 2013, 22(4):583-585 | DOI: 10.18267/j.pep.469