Prague Economic Papers, 2006 (vol. 15), issue 1

Original contributions, Original article, Research article

Budget Deficit and Interest Rates

Zdeněk Dvorný

Prague Economic Papers 2006, 15(1):3-13 | DOI: 10.18267/j.pep.272

The article examines the impact of the budget deficit upon the term structure of Czech interest rates. An important feature of the model is that it enables us to directly test the predictions of the three alternative paradigms, the Keynesian, neoclassical and the Ricardian, concerning the long-term and short-term impact of deficit on interest rates. The result of the study, obtained by the IV method suggests that the budget deficit is negatively related to the interest rate level in the short-run. Therefore, the long-run Ricardian proposition cannot be rejected in favour of any alternative hypothesis.

Ready to Go? EU Enlargement and Migration Potential: Lessons for the Czech Republic in the Context of Irish Migration Experience

Wadim Strielkowski, Cathal O'Donoghue

Prague Economic Papers 2006, 15(1):14-28 | DOI: 10.18267/j.pep.273  

EU enlargement is hardly to be seen as the major push factor for migration. There are mainly economic factors that influence the migration decisions. Besides it seems that there is a migration potential, unique for every country, that pre-determines the migration or labour mobility. In our paper we (i) analyze the impact of internal economic factors, such as GDP growth, unemployment and wages on the emigration rate and (ii) compare the migration potential for the country distinguished by the high ratio of outward migrations (represented by Ireland) with those of the post-communist economy as well as the ""new"" EU member (represented by the Czech Republic)....

Sales-Advertising Relationship: An Application of Panel Data from the German Automobile Industry

Petr Mariel, Cristina López, Karmele Fernández

Prague Economic Papers 2006, 15(1):29-43 | DOI: 10.18267/j.pep.274  

This paper uses panel data from the German car industry for the estimation of parameters of a demand equation applying different statistical methodologies and paying special attention to advertising variables. Two important conclusions can be drawn. First, advertising plays an important role in this market but its effectiveness depends on its form and type of message; and second, the marketing policy of a firm has to take into account the size of its cars.

International Intertemporal Solvency in OECD Countries: Evidence from Panel Unit Root

Hüseyin Kalyoncu

Prague Economic Papers 2006, 15(1):44-49 | DOI: 10.18267/j.pep.275  

The purpose of this study is to investigate the sustainability of current account of 22 OECD countries by employing Liu and Tanner (1996) testing procedure. The procedure used here is to examine stationarity of current account. By using ADF unit root test on single time series, it has been found that current account of most OECD countries have unit root. This outcome, however, might be due to the generally low power of this test. The aim of this paper is to reconsider this issue by exploiting the extra information provided by the combination of the time-series and cross-sectional data and the subsequent power advantages of panel data unit root tests....

Subregionalism Within the EU with Special Regard to the Groupings of which the Czech Republic is a Member

Eva Cihelková, Pavel Hnát

Prague Economic Papers 2006, 15(1):50-62 | DOI: 10.18267/j.pep.276  

As a consequence of the third wave of regionalism, the so called new regionalism, a marked increase in the number of regional groupings can be observed worldwide which makes the preferential relations between states even more complicated and complex. Within these relations those in which a regional grouping is one partner are the most complex. One of such complex relationships, which did not come to being during the third wave of regionalism but was strongly supported by it, is subregionalism - simply said, overlapping of regional integrations. This development can be especially observed in the regions, where a region-wide integration scheme is being...

Challenges for the Czech Republic's Competitive Performance in the Enlarged EU

Anna Kadeřábková

Prague Economic Papers 2006, 15(1):63-77 | DOI: 10.18267/j.pep.277  

The new EU-entrants face double challenge on the Lisbon road to knowledge-based competitiveness. On the one hand, higher expenditure is required to improve the quality of research and education input and infrastructure, on the other hand, the innovation system changes are necessary to increase efficiency of expenditures. The example of the Czech Republic within EU-25, as to the export performance, productivity and R&D intensity of the so-called hi-tech activities, presents a more detailed analysis of competitive advantage sources and challenges in the less developed EU members. The analysis emphasizes the criterion of (in)completeness of the multinational...

Development of Formal and Informal Institutions in the Czech Republic and Other New EU Member States Before Their EU Entry: Did the EU Pressure Have Impact?

Adam Geršl

Prague Economic Papers 2006, 15(1):78-90 | DOI: 10.18267/j.pep.278  

The paper compares the quality of the institutional framework of the Czech Republic with other new EU Member States and the EU 15 average using the World Bank data on Governance Indicators and argues that the pressure from the EU institutions during the accession negotiation period to reform the legal framework was not sufficient to improve significantly the business environment. Among factors that prevented the improvement of institutions the influence of strong interest groups, ineffective enforcement of legal rules and corruption are discussed and empirically illustrated using data on "state capture".