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.     

The long-run effect of economic disasters

This article investigates the long-run consequences of economic disasters. The results suggest the negative long-run effect of economic disasters on output growth and the limited empirical importance of the investment channel.     

Public debts,deficits and interest rates in CEECs: are there spatial spillovers?

In this paper we extend the literature on the relationship between public debts, deficits and government bond yields in the following directions: we examine a set of 11 Central and Eastern European countries during the period 2006–2015; we apply a novel econometric technique that allows for spatial effects; and we test forward-looking instead of current values of explanatory variables thus addressing endogeneity problem. We find that there is overall a highly significant positive effect of both public debt and deficit on long-term interest rates. This effect is found to be larger in CEECs than in developed countries. Moreover, deficits are found to exert a large and significant indirect effect, and these spillovers amount to more than 50% of the overall effect.     

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     

Garden tourism: reasons for opening private gardens in the UK National Garden Scheme

As both private and public spaces, gardens are a major source of leisure activities in the UK and a way of life for many British citizens. As garden tourism is increasing in the country, there is an urgent need for more knowledge, particularly regarding the motivation of garden owners. Using a qualitative approach, this paper presents the owners’ perceptions of the garden and examines the role of the garden in garden opening during the open days. Although the significance of charity openings (in many cases with personal and local interests) is undoubtedly a manifestation of the success of the National Garden Scheme, this study reveals that participation in garden opening differs according to the person’s motivation, varying from charity support and community engagement to social reasons, community creation, age resistance or nostalgic reasons.     

ON AGENT’S AGREEMENT AND PARTIAL‐EQUILIBRIUM PRICING IN INCOMPLETE MARKETS

We consider two risk‐averse financial agents who negotiate the price of an illiquid indivisible contingent claim in an incomplete semimartingale market environment. Under the assumption that the agents are exponential utility maximizers with nontraded random endowments, we provide necessary and sufficient conditions for negotiation to be successful, i.e., for the trade to occur. We also study the asymptotic case where the size of the claim is small compared to the random endowments and we give a full characterization in this case. Finally, we study a partial‐equilibrium problem for a bundle of divisible claims and establish existence and uniqueness. A number of technical results on conditional indifference prices is provided.     

Misspecified Recovery

Asset prices contain information about the probability distribution of future states and the stochastic discounting of those states as used by investors. To better understand the challenge in distinguishing investors' beliefs from risk‐adjusted discounting, we use Perron–Frobenius Theory to isolate a positive martingale component of the stochastic discount factor process. This component recovers a probability measure that absorbs long‐term risk adjustments. When the martingale is not degenerate, surmising that this recovered probability captures investors' beliefs distorts inference about risk‐return tradeoffs. Stochastic discount factors in many structural models of asset prices have empirically relevant martingale components.     

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.     

Identifying and ranking novel indicators of MSMEs innovation potential

ABSTRACT

The aim of this paper is to present the research on the identification and ranking of innovation potential indicators of micro, small and medium enterprises (MSMEs). The main innovation management challenge is to recognise and measure factors that enable innovations. In that sense, the key 6 criteria and 41 indicators that describe innovation potential of MSMEs have been identified, based on expert judgment and the selected literature review in the field of innovation and entrepreneurship. Next, the rank of every indicator based on an expert’s assessment was determined by using Fuzzy AHP approach. A case study was conducted for Serbian MSMEs. The holistic approach, applied in this research for the identification of the innovation potential criteria and indicators, represents novelty and contribution to the literature. The presented procedure of the innovation potential indicators selection and ranking could be used as a bench-marking tool, to help managers to improve innovation capacity of the company.