Prague Economic Papers, 2017 (vol. 26), issue 6
Inflation and Income Inequality
Arkadiusz Sieron
Prague Economic Papers 2017, 26(6):633-645 | DOI: 10.18267/j.pep.630 
The aim of this paper is to examine the relationship between inflation and income inequality. The article is mainly theoretical, but considerations presented are illustrated by relevant empirical data. Based on our analysis, we claim that inflation, which accelerated after the collapse of the Bretton Woods system in 1971, could have contributed to the rise in income inequality in the USA since the 1970s. Our article transcends the simple notion of an inflation tax and focuses on other redistributive mechanisms of inflation (Cantillon effect) as one of the main causes of income inequality.
Financial Distress and Managerial Turnover: The Case of the Republic of Serbia
Dragana Radjen, Nemanja Stanisic
Prague Economic Papers 2017, 26(6):646-660 | DOI: 10.18267/j.pep.628
This study examines the influence of financial distress on top management turnover in the Republic of Serbia over the period January 2009-June 2015. Using a sample of 86 large and medium-sized privately owned companies that adopted a reorganisation plan in bankruptcy, we found out that top management was changed in 33 companies. A logistic regression provides evidence that probability of top management turnover is significantly correlated with the company's size (positive correlation) and the ownership concentration (negative correlation). The influence of the company's financial performance, applied bankruptcy proceedings and debt monitoring of top...
The Recent Effects of Exchange Rate on International Trade
Myoung Shik Choi
Prague Economic Papers 2017, 26(6):661-689 | DOI: 10.18267/j.pep.632
This paper investigates effects of the real exchange rate and its volatility on trade balance and real GDP using a set of eighteen countries, mainly the OECD developed countries. The paper reports econometric procedures and empirical estimates for major currency-owned large economies and non-major currency- owned countries. One task, for which the elasticities of international trade and real GDP are needed, is developing exchange rate assessments. The study finds that real currency depreciation leads to improvement of trade balance in most of the examined developed countries. But the trade balances after real depreciation of currency do not follow...
Foreign Exchange Market Contagion in Central Europe from the Viewpoint of Extreme Value Theory
Narcisa Kadlčáková, Luboš Komárek
Prague Economic Papers 2017, 26(6):690-721 | DOI: 10.18267/j.pep.634
This paper examines contagion in the foreign exchange markets of three Central European countries and the euro area. Contagion is viewed as the occurrence of extreme events taking place in different countries simultaneously and is assessed with a measure of asymptotic tail dependence among the studied distributions. Currency crisis contagion is one strand of this research. However, the main aim of the paper is to examine the potential of bubble contagion. To this end the representative exchange rates are linked to their fundamentals using a cointegration approach. Given the long-time range required by cointegration testing, the variables are first...
Some Forms of Risk Regulation in Solvency II
Tomáš Cipra, Radek Hendrych
Prague Economic Papers 2017, 26(6):722-743 | DOI: 10.18267/j.pep.638
The contribution deals with the risk regulation in the framework of Solvency II, which is the new regulatory system in insurance valid in majority of the EU countries since 2016. It concentrates on the underwriting risk (in particular, on the reserve risk) and on the counterparty default risk (i.e. mainly on the reinsurers' default risk), since such risks are crucial for insurance activities. Various actuarial approaches to the underwriting risk applied by subjects respected by insurance regulators and supervisors are surveyed. Moreover, one of them suggests by means of a real data example a simplified approach to the reserve risk, which may...
The Effectiveness of Investment Incentives in the Turkish Manufacturing Industry
Halit Yanikkaya, Hasan Karaboga
Prague Economic Papers 2017, 26(6):744-760 | DOI: 10.18267/j.pep.641
This study investigates the impact of investment incentives on sectoral labour productivity, capital intensity, employment and total factor productivity using data on sixteen manufacturing industry sectors in Turkey during the post-liberalization period. To deal with potential endogeneity of the investment incentives, we apply the system GMM estimation technique to the panel dataset for six five-year periods between 1981 and 2009. Our overall GMM estimations indicate that we fail to find any evidence that investment incentives positively affect anyone of our macroeconomic variables. While investment incentives do not increase the employment growth...