(Gender-differentiated) Effects of Changes in Personal Income Taxation

Intereconomics - One of the most important areas of taxation is the personal income tax, which may have a gender-differentiated effect on work incentives and infl uence the distribution of paid and...     

Is it Possible to Identify High-Risk Suppliers from Financial Statements?

International Advances in Economic Research -     

Foreign Trade Patterns Between Estonia and the EU

In this paper, we focus on the development of the foreign trade flows between Estonia and the EU. We observe rapid reorientation of the trade flows from the former Soviet Union towards Western markets because of economic reforms and foreign trade liberalization. Moreover, we determine the commodity groups with a comparative advantage in the EU market and analyze its dynamics. Further analysis of the intra-industry trade (ITT) shows that vertical IIT plays a dominant role in Estonian-EU IIT flows. Shares of total, vertical, and horizontal IIT have grown rapidly since 2004, the year of accession to the EU.     

The Effect of Mandatory Agro‐Environmental Policy on Farm Fertiliser and Pesticide Expenditure

EU farmers are subject to mandatory cross‐compliance measures, requiring them to meet environmental conditions to be eligible for public support. These obligations reinforce incentives for farmers to change their behaviour towards the environment. We apply quasi‐experimental methods to measure the causal relationship between cross‐compliance and some specific farm environmental performance. We find that cross‐compliance reduced farm fertiliser and pesticide expenditure. This result also holds for farmers who participated in other voluntary agro‐environmental schemes. However, the results do not support our expectations that farmers who relied on larger shares of public payments had a stronger motivation to improve their environmental performance.     

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.     

To bet or not to bet: a reality check for tennis betting market efficiency

We present evidence that the tennis betting market appears to be much more efficient than suggested by previous studies. More specifically, we study the market efficiency by studying the forecasting performance of a diversified set of 40 betting rules in two ways: by searching for the existence of a return differential between betting rules and by analysing the profitability of betting rules. Even though individual tests provide evidence that, within our universe of betting rules, positive returns can be achieved, when data-snooping bias is taken into account, the evidence diminishes. Subsequently, we also find very little evidence of return differentials between betting rules. These results cast doubts on previous research as they suggest that when the potential detrimental effects of data-dreading are taken into account, betting markets in general might not, ultimately, be so inefficient.     

The convergence in domestic value-added of exports in the EU

Difficulties in measuring domestic value-added in exports (DVA) have led to the development of alternative measures of trade in value-added terms. These new measures have enabled more accurate estimates that reveal that the EU countries from Central and Eastern Europe (CEE10) exhibit an approximately five percentage points lower DVA share of exports compared with other EU countries (EU15). The lag is on average the highest in knowledge-intensive manufacturing sectors (eight percentage points) and the lowest in knowledge-intensive services (0.3 percentage points). However, this article argues that the CEE10 economies have acquired new knowledge by participating in GVCs and thus have gradually started increasing their level of DVA. Based on EU trade data, this article presents evidence of convergence of DVA in manufacturing and especially in the services sector. It is also shown that a negative relationship exists between participation in GVCs and DVA in the CEE10 economies that is declining over time in both manufacturing and services exports.     

A Procedure for Negotiating Pollution Reduction under Information Asymmetry. Surface Water Quality Case

This paper considers an alternative approachto surface water quality management whensociety is faced with the need to reduce waterpollution in a region with a complicatedregulatory environment. The paper is focusedon a specific kind of negotiation betweenpolluters and an authority, leading toresolution of the problem when there is theinformation asymmetry between the authorityand the polluters, i.e., the true pollutionabatement costs are known to the pollutersonly. This paper reports a laboratory experimentalcase prepared at the Department ofEnvironmental Economics, the University ofEconomics in Prague. The comparison withtheoretical computed first-best results underconditions of full information is included.Political and economic aspects of thesuggested approach are also discussed.     

Optimal Loan Interest Rate Contract Design

This paper analyzes optimal loan interest rate contracts under conditions of risky, symmetric information for one-period (static) and multi-period (dynamic) models. The optimal loan interest rate depends upon the volatility of, and co-variation among the market interest rate, borrower collateral, and borrower income, as well as the time horizon and the risk preferences of lenders and borrowers. For a risk-averse borrower with stochastic collateral, variable interest rate contracts are, in general, Pareto optimal. For plausible assumptions, the optimal loan interest rate for the multi-period model often exhibits muted responses to changes in market interest rates, making fixed rate loans a reasonable approximation for the optimal loan. Hence, in the absence of optimal contracts, long-term (short-term) borrowers tend to prefer fixed rate (variable) contracts.