Alitalia – The failure of a national carrier

The paper examines the case of Alitalia, Italy’s former flag carrier, as a case of a state-managed failure. The history of the airline is characterized by a continuous decline in its competitive position since the progressive liberalization of the European aviation market. The root cause of this decline lies in the carrier being mainly used as a political tool rather than operating as a competitive firm. In a liberalized market this doomed Alitalia to failure, which was artificially delayed by numerous state financial and regulatory interventions. The paper starts with a historical overview of the most important events in recent Alitalia history. Thereafter the main causes of the airline’s weak competitive position relative to other European carriers are analyzed. We argue that the underlying causes of the decline were continuous political protection, lack of strategic views in favor of short-term objectives, and poor managerial decisions.     

Inflation dynamics and nominal adjustment in the Baltic States

The paper seeks to explain the inflationary dynamics in the Baltic countries since the mid-1990s. Single-equation estimations generally yield poor results, while panel data estimations provide statistically and economically satisfactory findings. The main result is that the observed gradual disinflation can to a large extent be explained by adjustment to international prices. Stringent fixed exchange rate systems have exerted downward pressure on inflation both directly and via expectations to future inflation. Measures of excess capacity in the labour market have no effect on inflation, while industrial output gaps have some explanatory power. Real oil price shocks have an immediate but short-lived impact on inflation.     

The European debt crisis and fiscal reactions in Europe 2000–2014

After the outbreak of the global financial crisis, some governments in the EU experienced serious fiscal problems, while others were less affected. This paper seeks to shed light on the divergent fiscal performance in the EU countries before and after the outbreak of the crisis. Fiscal reaction functions of the primary balance are estimated for different groups of EU countries using quarterly data for the pre-crisis period 2001–2008 and for the crisis period 2009–2014. The pre-crisis estimations reveal some differences in persistence and cyclical reaction between different groups of countries, but in most cases little feedback from the debt stock to the primary balance. The fiscal reaction functions of the countries that eventually developed fiscal problems do not stand out. The estimations on data from the crisis period show largely unchanged persistence and counter-cyclicality but much more feedback from the debt stock, and this applies both to the crisis countries and those less affected. In spite of large deficits and accumulation of debt, the underlying fiscal reaction has become more prudent after the outbreak of the European debt crisis.     

Eucken's 'Social Market Economy' and Its Test in Post-War West Germany

A bstract . Walter Eucken's paradigm of a "social market economy" and "Ordnung" provides a framework for a functional free-market mechanism, which not only accommodates development and change, but which also assures human dignity and freedom, as cornerstones of the Kantian moral universe. Eucken places special emphasis on the integration of economics with "order" and "Justice ," in a synthesis of negative liberty and positive freedom and of Rawls' and Nozick's theories of justice. Adam Smith's laissez faire economy does not assure a competitive economy, he holds, and will evolve into monopolistic practices, interventionism , and distortions of price relationships; but "structural" and "regulating" principles will facilitate a functionally competitive economy with a compatible social policy, characterized by a flexible price mechanism and stable policies. This "social market economy" would provide goods and services efficiently and also eliminate poverty and the maldistribution of income and resources.     

Total factor productivity growth in Central and Eastern Europe before,during and after the global financial crisis

This article presents growth accounting results for 11 EU countries from Central and Eastern Europe for the years 1996–2016. Its contributions include the estimation of new capital stock series and adjustment for the utilisation of capital stock. Before the crisis, growth in total factor productivity (TFP) was the main contributor to output growth in Slovenia, Hungary and Slovakia, while capital deepening was more important in the Czech Republic, Croatia and Poland. During the global financial crisis the contributions of TFP and capital growth differed markedly across the countries, reflecting the very diverse dynamics of the crisis. After the crisis the contribution of TFP growth has been negligible in all of the sample countries coinciding with generally weak output growth. The results are generally robust to changes in estimation methods and parametrisations, but some assumptions regarding the construction of the capital stock series are critical for the results.     

Economic theorist and ‘entrepreneur of popularisation’: Schumpeter as Finance Minister and journalist

Abstract

Modern theory of popularisation suggests that the production and the popularisation of scientific knowledge are interlinked and interactive processes. This perspective offers new insights into Joseph A. Schumpeter's main work in public finance, The Crisis of the Tax State, and into his later endeavours as Finance Minister and journalist to popularise two central economic ideas of this work, the once-and-for-all capital levy and the reform of the tax system. We demonstrate that Schumpeter's Crisis contains popularising features and was written with a popularising intention. Furthermore, we show that in his journalistic works popularisation went hand in hand with the development of innovative economic ideas.