Template-Type: ReDIF-Article 1.0
Author-Name: Mindaugas Butkus
Author-Name: Henrikas Karpavičius
Author-Name: Kristina Matuzevičiūtė
Title: Do Free Trade Regimes and Common Currency Drive Export Growth?
Abstract: It is believed that in many countries export activities could enhance countries’ capabilities. It is also believed that trade liberalization or common currency could be an export driver. This paper examines the impact of trade liberalization and common currency on EU countries’ export growth. The methodology applied in this research is constructed using specifics of the data that arise from a natural experiment. We examined how exogenous events like joining the EU, WTO, EFTA or becoming a member of Eurozone change the environment, in which countries trade. The results using an unbalanced panel data consisting of 28 EU countries for the period 1995-2015 revealed that membership in WTO instantly increases export by 12.5-13.5%, but has no extra effect in longer period; membership in the EU and EFTA has effect on export with a time lag and common currency did not affect export growth at all.
Keywords: export growth, trade regimes, common currency
Classification-JEL: F13, F40, F42
Pages: 654-667
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=663.pdf
File-URL: http://www.vse.cz/pep/663
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Template-Type: ReDIF-Article 1.0
Author-Name: Madalina Ecaterina Popescu
Author-Name: Victor Dragotă
Title: What Do Post-Communist Countries Have in Common When Predicting Financial Distress?
Abstract: Business failure prediction is an important issue in corporate finance. Different prediction models are proposed by financial theory and are often used in practice. Their application is effortless, selecting only few key inputs with the greatest informative power from the large list of possible indicators. Our paper identifies the financial distress predictors for 5 post-communist countries (Bulgaria, Croatia, the Czech Republic, Hungary and Romania) based on information collected from the Amadeus database for the period 2011-2013 using CHAID decision trees and neural networks. We propose a short list of indicators, which can offer a synthetic perspective on corporate distress risk, adapted for these countries. The best prediction models are substantially different from country to country: in the Czech Republic, Hungary and Romania the flow-approach indicators perform better, while in Bulgaria and Croatia - the stock-approach indicators. The results suggest that the extrapolation of such models from one country to another should be made cautiously. One interesting finding is the presence of the ratios per employee as predictors of financial distress.
Keywords: financial distress, predictors, prediction models, post-communist countries, CHAID decision trees, neural networks
Classification-JEL: C53, G33, L25
Pages: 637-653
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=664.pdf
File-URL: http://www.vse.cz/pep/664
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Template-Type: ReDIF-Article 1.0
Author-Name: Oguz Atuk
Author-Name: Mustafa Utku Özmen
Author-Name: Cagri Sarikaya
Title: A Disaggregated Analysis of the Impact of Output Gap on Inflation and Implications for Monetary Policy
Abstract: This study investigates the sensitivity of Consumer Price Index (CPI) sub-items to output gap for an emerging market economy, Turkey. To this aim, we estimate standard Phillips Curve equations for each of the 152 sub-indices of the CPI and determine the goods and services that respond to output gap in a statistically and economically significant manner. Thereby, we propose an alternative view to assess core inflation as a complementary tool to better monitor underlying inflation with respect to its main drivers. Empirical findings show that about one-third of the consumer basket is affected by the output gap. Remaining items that are found to be insensitive to business cycle extensively co-move with import prices and exchange rate. The results imply that controlling inflation through counter-cyclical policies may be a more challenging issue, especially when external factors work in the opposite direction. Policy efforts to reduce exchange rate volatility and import content of aggregate production are as important as cyclical policies geared toward steering the economy with respect to its potential.
Keywords: inflation, core inflation, business cycle, Phillips Curve, Turkey
Classification-JEL: E31, E32
Pages: 668-683
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=677.pdf
File-URL: http://www.vse.cz/pep/677
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Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:6:id:677:p:668-683
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Template-Type: ReDIF-Article 1.0
Author-Name: Tomáš Buus
Title: Risks and Transfer Pricing Regulation at the Multinational Enterprises’ Routine Units: A Literature Review
Abstract: Multinational enterprises (MNE) allocate valuable intangible assets and strategic functions to the strategy units (usually parent companies) for that allows them to impropriate the majority of the profits there and protect those assets from subsidiaries’ risks. The subsidiaries are frequently routine units. Subsequently, the routine units receive low reward, as they perform only routine functions. The OECD transfer pricing guidelines support that practice to the detriment of government budgets and public by considering the routine units as the low-risk ones. This paper reviews the relevant literature and shows that the traditional view of risk and profit allocation between strategy and routine units is inconsistent with their relative risks, resp. with relative risks of MNE’s subsidiary and independent company. The long-term perspective of MNEs’ members’ downside risks provides correct information for transfer pricing regulation and fiscal authorities. Results of this paper enable proposal of the transfer pricing risk analysis targets and tools.
Keywords: multinational enterprise, stakeholder, profit shifting, multinational corporation, routine unit, risk
Classification-JEL: H25, H26, H87
Pages: 621-636
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=678.pdf
File-URL: http://www.vse.cz/pep/678
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Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:6:id:678:p:621-636
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Template-Type: ReDIF-Article 1.0
Author-Name: Matěj Kuc
Author-Name: Petr Teplý
Title: A Financial Performance Comparison of Czech Credit Unions and European Cooperative Banks
Abstract: This paper empirically assesses the financial performance of Czech credit unions in relation to other European cooperative banks in terms of their profitability and stability. We created a unique dataset of 283 cooperative banks from 15 European countries in the period 2006-2013. Using the system GMM and alternative panel data methods, we reveal worse performance of Czech credit unions in terms of both profitability and stability compared to their European peers. We also argue that big credit unions in the Czech Republic have assumed a non-sustainable business model depending on excessive risk taking while enjoying implicit subsidy via deposit insurance. In conclusion, we argue that under recent capital management policies, big Czech credit unions will likely face serious financial problems in coming years.
Keywords: moral hazard, credit union, cooperative banking, system GMM, Z-Score
Classification-JEL: C23, G21, L25
Pages: 723-742
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=682.pdf
File-URL: http://www.vse.cz/pep/682
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Template-Type: ReDIF-Article 1.0
Author-Name: Veronika Hedija
Title: Is the Rule of Law Significant for the Explanation of the Differences in the Gender Pay Gap?
Abstract: Using data from European Union Statistics on Income and Living Conditions, the study examines the causes of variation in the unexplained gender pay gap among 25 European countries and considers the effect of the legal environment on these. We employ the Oaxaca-Blinder decomposition to estimate the unexplained part of the gender pay gap. To assess the impact of the rule of law on unexplained gender wage differences, we apply a linear regression model, where the estimated unexplained gender pay gap is used as a dependent variable and selected rule of law indicators (specifically the Worldwide Governance Indicators Rule of Law and the Legal System & Property Rights Index) as explanatory variables. Controlling for other institutions affecting gender wage differences (specifically labour market regulation, work-family reconciliation policy and male wage dispersion), we suggest that differences in the quality of legislation and law enforcement across European countries may partly account for the variation in the unexplained gender pay gap. A very progressive improvement in rule of law indices (from the worst to the best among the 25 European countries examined) leads to a decrease in the unexplained gender pay gap by 4.5-5 percentage points.
Keywords: discrimination, gender pay gap, gender, rule of law, legislative quality, law enforcement
Classification-JEL: J16, J31, J71, K30
Pages: 704-722
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=684.pdf
File-URL: http://www.vse.cz/pep/684
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Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:6:id:684:p:704-722
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Template-Type: ReDIF-Article 1.0
Author-Name: Peter Pisár
Author-Name: Ján Huňady
Author-Name: Erika Ľapinová
Title: Work Flexibility in Developed Countries: Economic Context and Policy Implications
Abstract: The work flexibility is considered as an integral part of the modernization of the labour market and also as an effective solution of the current problems at the labour market. The paper is therefore focussed on this problem in terms of the working time organization, as well as selected forms of employment in developed countries. We pay an attention to theoretical issues and practical application of work flexibility. Appling the methods of spatial comparison and cluster analysis, we identify the key differences and similarities in labour flexibility among selected countries. There are rather significant differences between groups of countries. The results of panel data regression largely indicate that higher flexibility on the labour market could have positive impact on the reduction of unemployment in the future, especially when taking into account the two years lag.
Keywords: panel data, comparative analysis, cluster analysis, temporary work, work flexibility, part-time work, economic policy context
Classification-JEL: J20, J60, J80
Pages: 684-703
Volume: 2018
Issue: 6
Year: 2018
File-URL: http://www.vse.cz/pep/download.php?jnl=pep&pdf=688.pdf
File-URL: http://www.vse.cz/pep/688
File-Format: text/html
Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:6:id:688:p:684-703
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