Prague Economic Papers, 2018 (vol. 27), issue 6
Original contributions, Original article, Research article
Risks and Transfer Pricing Regulation at the Multinational Enterprises’ Routine Units: A Literature Review
Tomáš Buus
Prague Economic Papers 2018, 27(6):621-636 | DOI: 10.18267/j.pep.678 
Multinational enterprises (MNE) allocate valuable intangible assets and strategic functions to the strategy units (usually parent companies) for that allows them to impropriate the majority of the profits there and protect those assets from subsidiaries' risks. The subsidiaries are frequently routine units. Subsequently, the routine units receive low reward, as they perform only routine functions. The OECD transfer pricing guidelines support that practice to the detriment of go-vernment budgets and public by considering the routine units as the low-risk ones. This paper reviews the relevant literature and shows that the traditional view...
What Do Post-Communist Countries Have in Common When Predicting Financial Distress?
Madalina Ecaterina Popescu, Victor Dragotă
Prague Economic Papers 2018, 27(6):637-653 | DOI: 10.18267/j.pep.664
Business failure prediction is an important issue in corporate finance. Different prediction models are proposed by financial theory and are often used in practice. Their application is effortless, selecting only few key inputs with the greatest informative power from the large list of possible indicators. Our paper identifies the financial distress predictors for 5 post-communist countries (Bulgaria, Croatia, the Czech Republic, Hungary and Romania) based on information collected from the Amadeus database for the period 2011-2013 using CHAID decision trees and neural networks. We propose a short list of indicators, which can offer a synthetic perspective...
Do Free Trade Regimes and Common Currency Drive Export Growth?
Mindaugas Butkus, Henrikas Karpavičius, Kristina Matuzevičiūtė
Prague Economic Papers 2018, 27(6):654-667 | DOI: 10.18267/j.pep.663
It is believed that in many countries export activities could enhance countries' capabilities. It is also believed that trade liberalization or common currency could be an export driver. This paper examines the impact of trade liberalization and common currency on EU countries' export growth. The methodology applied in this research is constructed using specifics of the data that arise from a natural experiment. We examined how exogenous events like joining the EU, WTO, EFTA or becoming a member of Eurozone change the environment, in which countries trade. The results using an unbalanced panel data consisting of 28 EU countries for the period 1995-2015...
A Disaggregated Analysis of the Impact of Output Gap on Inflation and Implications for Monetary Policy
Oguz Atuk, Mustafa Utku Özmen, Cagri Sarikaya
Prague Economic Papers 2018, 27(6):668-683 | DOI: 10.18267/j.pep.677
This study investigates the sensitivity of Consumer Price Index (CPI) sub-items to output gap for an emerging market economy, Turkey. To this aim, we estimate standard Phillips Curve equations for each of the 152 sub-indices of the CPI and determine the goods and services that respond to output gap in a statistically and economically significant manner. Thereby, we propose an alternative view to assess core inflation as a complementary tool to better monitor underlying inflation with respect to its main drivers. Empirical findings show that about one-third of the consumer basket is affected by the output gap. Remaining items that are found to be insensitive...
Work Flexibility in Developed Countries: Economic Context and Policy Implications
Peter Pisár, Ján Huňady, Erika Ľapinová
Prague Economic Papers 2018, 27(6):684-703 | DOI: 10.18267/j.pep.688
The work flexibility is considered as an integral part of the modernization of the labour market and also as an effective solution of the current problems at the labour market. The paper is therefore focussed on this problem in terms of the working time organization, as well as selected forms of employment in developed countries. We pay an attention to theoretical issues and practical application of work flexibility. Appling the methods of spatial comparison and cluster analysis, we identify the key differences and similarities in labour flexibility among selected countries. There are rather significant differences between groups of countries. The...
Is the Rule of Law Significant for Explanation of Differences in the Gender Pay Gap?
Veronika Hedija
Prague Economic Papers 2018, 27(6):704-722 | DOI: 10.18267/j.pep.684
Using data from European Union Statistics on Income and Living Conditions, the study examines the causes of variation in the unexplained gender pay gap among 25 European countries and considers the effect of the legal environment on these. We employ the Oaxaca-Blinder decomposition to estimate the unexplained part of the gender pay gap. To assess the impact of the rule of law on unexplained gender wage differences, we apply a linear regression model, where the estimated unexplained gender pay gap is used as a dependent variable and selected rule of law indicators (specifically the Worldwide Governance Indicators Rule of Law and the Legal System &...
A Financial Performance Comparison of Czech Credit Unions and European Cooperative Banks
Matěj Kuc, Petr Teplý
Prague Economic Papers 2018, 27(6):723-742 | DOI: 10.18267/j.pep.682
This paper empirically assesses the financial performance of Czech credit unions in relation to other European cooperative banks in terms of their profitability and stability. We created a unique dataset of 283 cooperative banks from 15 European countries in the period 2006-2013. Using the system GMM and alternative panel data methods, we reveal worse performance of Czech credit unions in terms of both profitability and stability compared to their European peers. We also argue that big credit unions in the Czech Republic have assumed a non-sustainable business model depending on excessive risk taking while enjoying implicit subsidy via deposit insurance....