Prague Economic Papers, 2003 (vol. 12), issue 3

Original contributions, Original article, Research article

Economic and monetary union accession and capital flows

Jiří Jonáš

Prague Economic Papers 2003, 12(3):195-216 | DOI: 10.18267/j.pep.214  

The paper discusses the prospects for capital inflows to the Czech Republic before Economic and Monetary Union accession. It reviews the potential costs and benefits of capital flows and the history of capital flows to the Czech Republic, before turning to future capital inflows. It notes that different theoretical models provide different predictions about future capital inflows. To get further insight, the paper discusses the future capital inflows from the perspective of nonresidents' supply of external savings and residents' demand for external borrowing and from the perspective of external vulnerability related to large foreign direct investment...

Bank of slovenia adjustment policy to surges in capital flows

Žan Oplotnik

Prague Economic Papers 2003, 12(3):217-232 | DOI: 10.18267/j.pep.215  

The article presents an empirically tested assessment of the Bank of Slovenia (BS), national central bank, adjustment policy to surges in capital flows during the last decade. Exchange rate appreciation, undeveloped banking sector, immoderate money market oscillation, unstable economic trends (all phenomena that can also be found in other transition countries) are just some of the detrimental effects that can be provoked by surges in capital flows if the national economy is faced with some fundamental sectoral deficiencies. Empirical results indicated that BS quite successfully mitigated listed effects of excessive foreign currency inflows during the...

Informative value of firm capital structure

Patrik Bauer, Vít Bubák

Prague Economic Papers 2003, 12(3):233-248 | DOI: 10.18267/j.pep.216  

In this paper, the informative value of firm capital structure is analyzed. In the first part, a theoretical background regarding capital structure theories is presented. In the second (empirical) part, the Ohlson (1995) valuation framework is used in order to analyze the informative value of firm capital structure on a sample of data for the Czech (non-financial) companies. A contextual approach is adopted and the value relevance of debt is analyzed considering the signalling and the optimal capital structure theories. According to the results and in accordance with the optimal capital structure theory, debt is more penalized in case of the companies...

Leakages in dual exchange markets

Fuhmei Wang

Prague Economic Papers 2003, 12(3):249-264 | DOI: 10.18267/j.pep.217  

The issue of determining inter-market foreign exchange flows under dual exchange markets has been hotly debated. Typically the literature has concentrated on the behavior of the financial premium, leaving aside equally important aspects such the reasons for and characteristics of incomplete separation. Our analytical results suggest that cross transactions arise as long as the government changes the commercial rate. Time inconsistency of policy brings opportunity for leakages between two markets. We also find that the more patient the government, the less likely the occurrence of commercial depreciation and leakages will be. Then reputation could be...

Can pro-natalist policy be effective?

Marek Loužek

Prague Economic Papers 2003, 12(3):265-281 | DOI: 10.18267/j.pep.218  

The article is concerned with pro-natalist policies, examining empirically their effectiveness. There are proposed four hypotheses: continuous decline of the birth rate; adaptive model; natural-rate hypothesis; crowding-out hypothesis. Nine countries are tested: Germany, Italy, Sweden and France before the World War II and Romania, Bulgaria, Czechoslovakia, Hungary and East Germany during the communism. Best empirical results arise from the crowding-out hypothesis. Good results follow from the adaptive model and the continuous decline of birth rates. The natural-rate hypothesis has small explanatory power. Pro-natalist policies, according to this study,...