Prague Economic Papers, 2008 (vol. 17), issue 4

Original contributions, Original article, Research article

Some thoughts on nominal convergence, its drivers and determinants for the new eu member states preparing the euro adoption

Václav Žďárek

Prague Economic Papers 2008, 17(4):291-318 | DOI: 10.18267/j.pep.334  

The article analyses the process of nominal convergence of the new EU member states (NMS) with particular attention paid to some applied and theoretical aspects, which may have impact on the process of the euro adoption. Chapter two addresses selected theoretical and methodological issues connected with the International Comparison Project (ICP). It discusses determinants and influences affecting price level convergence and some issues that have set off new trends, such as the globalization or process of the on-going European integration. This chapter also presents a brief summary of the main trends of price convergence observed by focusing on changes...

The endogeneity problem and fdi in transition: evidence from the privatized glass sector in the Czech Republic

Elisa Galeotti, Eva Ryšavá

Prague Economic Papers 2008, 17(4):319-339 | DOI: 10.18267/j.pep.335  

This paper analyses the crucial factors determining the foreign direct investment (FDI) going to the privatized glass sector in the Czech Republic. In our research we felt that there was a scant evidence in Central and Eastern Europe of the determinants of foreign direct investments (FDI) at the micro level and we were aware of the endogeneity issue of FDI. The aim of this paper is to fill these gaps. The choice of the glass sector allows for an analysis of a firm's micro characteristics that attract foreign direct investors in an industrial sector, while reducing the impact of macroeconomic factors in their choice. Our econometrical analysis, using...

Stress testing of probability of default of individuals

Petr Kadeřábek, Aleš Slabý, Josef Vodička

Prague Economic Papers 2008, 17(4):340-355 | DOI: 10.18267/j.pep.336  

This paper introduces a model for stress testing of probability of default of individuals. The model rests on assumption that the individual defaults if his savings fall below zero. The probability of default is then described as a function of several macroeconomic indicators, such as wages, unemployment and interest rates. Stress testing is carried out by applying exogenous stress scenarios for development of these indicators. The model implies that sensitivity of probability of default to the stress is mainly driven by installment to income ratio and for mortgages also by loan maturity. Hence installment to income ratio is suggested as the appropriate...

Determinants of foreign direct investment flows to developing countries: a cross-sectional analysis

Erdal Demirhan, Mahmut Masca

Prague Economic Papers 2008, 17(4):356-369 | DOI: 10.18267/j.pep.337  

The aim of this paper is to explore, by estimating a cross-sectional econometric model, the determining factors of foreign direct investment (FDI) inflows in developing countries over the period of 2000-2004. The study is based on a sample of cross-sectional data on 38 developing countries. We have used average value of all data for the 2000-2004 period. In the models, dependent variable is FDI. Independent variables are growth rate of per capita GDP, inflation rate, telephone main lines per 1,000 people measured in logs, labour cost per worker in manufacturing industry measured in logs, degree of openness, risk and corporate top tax rate. According...