An extended matrix of economic growth and corresponding dynamic system

This paper considers an extended matrix of growth and corresponding dynamic system. The aim of this consideration is to define and analyse different cases of interdependences based on the extended matrix of growth. The system on the basis of the extended matrix of growth is built on the general structure of sectors growth. This generalized structure is expressed by the direct and indirect growth rates among sectors and exogenous factors. The main characteristic of this system is that it can be formulated and examined under various conditions. This is because of the fact that growth is characteristic of all economic processes, and the extended matrix of growth has the capability of including and expressing the structural and dynamic aspects of the interdependence of processes. In this sense the extended matrix of growth is used to examine various systems of interdependence.     

Noise and aggregation of information in large markets

We study the relation between noise (liquidity traders, endowment shocks) and the aggregation of information in financial markets with large number of agents. We show that as long as noise increases with the number of agents, the limiting equilibrium is well-defined and leads to non-trivial information acquisition, even when per-capita noise tends to zero. In such equilibrium risk sharing and price revelation play different roles than in the standard limiting economy in which per-capita noise is finite. We apply our model to study information sales by a monopolist, and information acquisition in multi-asset markets, showing that it leads to qualitatively different results with respect to those in the existing literature. Our conditions on noise are shown to be necessary and sufficient to have limiting economies with perfectly competitive behavior consistent with endogenous information acquisition.     

Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods

This study estimates cost inefficiency and economies of scale of Slovenian water distribution utilities over the 1997–2003 period by employing several different stochastic frontier methods. The results indicate that significant cost inefficiencies are present in the utilities. An introduction of incentive-based price regulation scheme might help resolve this problem. However, the inefficiency scores obtained from different cost frontier models are not found to be robust. The levels of inefficiency estimates as well as the rankings depend on the econometric specification of the model. The established lack of robustness can be at least partly explained by different ability of the models to separate unobserved heterogeneity from inefficiency. Newly proposed true fixed effects model (Greene, J Econom 126:269–303, 2005; J Prod Anal 23(1):7–32, 2005) appears to perform better than the conventional panel data models with respect to distinguishing between unobserved heterogeneity and inefficiency. On the other hand, different models produce fairly robust results with respect to estimates of economies of output density, customer density and economies of scale. The optimal size of a company is found to closely corresponds to the sample median. Economies of scale are found in small-sized utilities, while large companies exhibit diseconomies of scale.

Partial equilibria with convex capital requirements: existence,uniqueness and stability

We consider several risk-averse financial agents who negotiate the price of a bundle of contingent claims in an incomplete semimartingale model of a financial market. Assuming that the agents’ risk preferences are modeled by convex capital requirements, we define and analyze their demand functions and propose a notion of a partial equilibrium price. In addition to sufficient conditions for the existence and uniqueness, we also show that the equilibrium prices are stable with respect to misspecifications of agents’ risk preferences.     

On the monetary nature of the interest rate in a Keynes–Schumpeter perspective

Abstract

Keynes, in the General Theory, explains the monetary nature of the interest rate by means of the liquidity preference theory. The objective of this article is twofold. The first objective is to point out the limits of the liquidity preference theory. The fundamental limitation of this theory is that it does not allow to realize the intent declared by Keynes in 1933 to elaborate a monetary theory of production The second objective is to present a more solid theory of the monetary nature of the interest rate. It will be shown that an essential element of this explanation is Schumpeter’s analysis of the role of bank money in a capitalist economy. In fact, this analysis represents a fundamental tool to explain the characteristics that, according to Keynes, distinguish a monetary economy from a real-exchange economy     

When do neoliberal economic reforms cause democratic decline? Evidence from the post-communist Southeast Europe

Do neoliberal reforms (notably, austerity policy) facilitate democratic decline and the gradual deconstruction of democratic institutions? I examine the democratic development of the Western Balkan countries since 2008 by focusing on the two most recent cases of democratic rollback in Macedonia and Serbia. Neoliberal reforms may create a preference to shut down democratic institutions, because such reforms are socially costly and politically risky. However, democratic backsliding is not possible without opportunity. I illustrate this with reference to the examples of Hungary and Croatia. Croatia implemented some neoliberal policies after 2015, but did not see a drop in its democracy score. By contrast, Hungary moved towards centrally planned capitalism, nationalisation and state interventionism (all opposed to the neoliberal concept of reform), and yet saw a significant democratic decline after 2010. The opportunity to dismantle democratic institutions was a consequence of an electoral gap (a difference in vote share between former and new incumbents), which enabled the rise of authoritarian leaders in Macedonia, Hungary and Serbia.     

Impact of an unexplained component of real exchange rate volatility on FDI: Evidence from transition countries

The aim of this paper is to examine the impact of an unexplained component of real exchange rate volatility on FDI in transition economies. We make an attempt to overcome some problems associated with previous studies; the aggregation problem, inadequate measures of volatility, short-run focus and the endogeneity problem. Using a GARCH specification, we focus on long-run volatility, while we control for the endogeneity problem by applying SYS-GMM estimation. The obtained results show that the impact of the unexplained component of real exchange rate volatility on FDI differs among economic activities since 2000. As part of the re-estimation exercise, we use two alternative measures of volatility to avoid arbitrariness. The obtained results are to a large extent in accordance with the first one.     

The Global Extent of the Great Moderation*

In 2008 the US financial crisis spilled over into a number of other economies causing declines in GDP across the world. Yet the decades preceding the current downturn had been a period of unprecedented stability for the US economy. This article examines annual data for 98 countries over the period 1961–2007 and finds that lower GDP growth volatility in the period preceding the current crisis was not confined to the US. It is detected in a number of developed and developing countries, suggesting that a reduction in volatility in this period was a more general phenomenon.     

Grocery Store Attributes in Recovering Economies: An Empirical Investigation of Their Importance,Using Three-Component Contour Plotting

The authors share results of a study conducted to measure the attributes of grocery stores that are the most important for consumers in a market recovering from war and transitioning to a market economy. Applying a trilinear coordinate plot, the authors develop a model that consists of those attributes. The findings led to conclusions that services and location, rather than the historically favored attribute of price, increasingly are key factors affecting store choice. Managerial implications are discussed and future research directions are suggested.