Prague Economic Papers, 2016 (vol. 25), issue 3

Exchange Rate Volatility and Uncovered Interest Rate Parity in the European Emerging Economies

Dejan Živkov, Jovan Njegić, Mirela Momčilović, Ivan Milenković

Prague Economic Papers 2016, 25(3):253-270 | DOI: 10.18267/j.pep.562  

This paper investigates whether UIRP principle holds and what is predominant driving force, which influences exchange rate movement - economic fundamentals or short-term speculative behaviour. Analysis covers seven East European transition countries and empirical data comprise weekly time series ranging from first week in January 2003 to last week in December 2013. The research method is Component-GARCH in Mean Model, which decomposes temporary and permanent element of volatility. The mean and variance equations have been adjusted for the structural breaks' presence in order to improve estimated parameters. The results suggested that UIRP principle...

Current Account Deficit, Budget Deficit and Savings Gap: Is the Twin or Triplet Deficit Hypothesis Valid in G7 Countries?

Yusuf Ekrem Akbaş, Fuat Lebe

Prague Economic Papers 2016, 25(3):271-286 | DOI: 10.18267/j.pep.565  

The purpose of this study is to determine the validity of the triplet deficit hypothesis, which means the savings gap and budget deficit effect on the current account deficit. The empirical model is estimated for the G7 countries during the period between 1994 and 2011. The findings show that budget deficit and savings gap have important role in current account deficit in terms of estimator results. Moreover, bi-directional causality between the current account deficit and the savings gap and between the budget deficit and the savings gap are determined. So, especially the savings gap has an important effect on the current account deficit and the budget...

Development of the Corporate Social Responsibility Concept in Small and Medium-Sized Enterprises

Renata Skýpalová, Renata Kučerová, Veronika Blašková

Prague Economic Papers 2016, 25(3):287-303 | DOI: 10.18267/j.pep.558  

The paper presents results of the research conducted in the area of CSR in the Czech Republic in 2013/2014. We focussed on small and medium-sized enterprises (SMEs). Correlation between the size of the enterprise, awareness, commitment and the number of used CSR activities is evaluated. The paper follows the involvement of SMEs in specific activities within the social, economic and environmental pillars and suggests possibilities for further development of the National Action Plan (NAP) for SMEs. The results of the statistical analysis show that engagement of organizations in the CSR activities growths with the size of the organization. Only 30% of...

Political Business Cycle in the Czech Republic: Case of Municipalities

Michal Plaček, Milan Půček, František Ochrana, Milan Křápek, Lenka Matějová

Prague Economic Papers 2016, 25(3):304-320 | DOI: 10.18267/j.pep.566  

The study analyses expenditures of all municipalities of the Czech Republic over the period 2003-2013. It aims to examine whether changes in municipal spending get affected by the electoral cycle. The analysis has proven that expenditures of municipalities of the Czech Republic are influenced by the political cycle. However, the political business cycle has at the level of municipalities (compared to the macroeconomic level) its peculiarities. These arise mainly from limited options of municipal politicians to use economic instruments to win electoral votes in elections. To receive electoral votes, municipal politicians use mainly public investments...

Money Market Equilibrium in the Czech Republic

Jana Juriová

Prague Economic Papers 2016, 25(3):321-334 | DOI: 10.18267/j.pep.564  

This paper examines the theoretical concept of equilibrium in the money market that is empirically verified for the economy of the Czech Republic. The subject of the analysis is the relationship defining equilibrium in the domestic money market, i.e. when money demand corresponds to the money supply in the economy. The main objective is to determine whether such a long-term equilibrium relationship exists by verifying this assumption on real data for the Czech economy. The Johansen cointegration approach is applied for modelling the money demand function including four domestic macroeconomic indicators: money supply, price level, gross domestic product,...

Measuring Yields: Arithmetic, Geometric and Horizon-Consistent Average

Michal Dvořák

Prague Economic Papers 2016, 25(3):335-353 | DOI: 10.18267/j.pep.563  

The choice of averaging method has considerable impact on the average yield of a financial variable. Usually, geometric average is preferred, though dissenting opinions exist. Here it is shown that the problem has a consistent solution, which is called the horizon-consistent average. It is shown why geometric and arithmetic average calculations are almost always biased. When using company valuation's most common SP500 dataset by Ibbotson Associates for 1928-2012 and the recommended 10-year forecasting horizon, consistent with the 10-year government securities in a CAPM model, the arithmetic average is severely flawed. On the other hand, the geometric...

The Added Value of Women in Management: The Czech Case

Zuzana Křečková, Dana Zadražilová, Hana Řezanková

Prague Economic Papers 2016, 25(3):354-373 | DOI: 10.18267/j.pep.588  

The paper attempts to assess the added value of women in management in the context of the Czech Republic. The wider purpose is to contribute to the debate for the need of gender-balanced top managerial teams. It additionally contributes new inputs to the discussion as to whether quotas or other special measures are relevant to promote or engage more women in higher management positions within both the Czech public and private sectors. According to the results, Czech respondents view women as added value to management given the different characteristics of their approach over that of their male counterparts. However, the research reveals that women...

A Modern Labour Economics Textbook

Dagmar Brožová

Prague Economic Papers 2016, 25(3):374-377 | DOI: 10.18267/j.pep.589