Friend or Foe? On the role of institutional reforms in the investment development path of Central and East European economies

Many existing studies on emerging markets and firms have concentrated on the separate effects of institutional reforms and quality of the institutional infrastructure for attracting inward foreign direct investment (FDI) and fostering outward FDI. We argue that both these perspectives should be considered in an interplay, as there are links between inward and outward FDI in a country's economic development, which is captured by the investment development path (IDP) concept. Moreover, while predominant attention has been paid to emerging markets, little has so far been done to evaluate the sustainability of the institutional development, including later post-transition stages. We extend the IDP with insights from the institutional theory and conduct a comparative analysis of the effects of institutional reforms on IDP paths of ten Central and Eastern European (CEE) post-communist European Union (EU)-members. We find that while most of the studied post-transition economies follow a quadratic relationship between the net outward investment (NOI) position and each country's economic development, the role of institutional reforms is not in all cases accelerating the movement through the stages of the IDP. We attempt to explain the ambiguous role of institutions in an ensuing detailed discussion of the investigated countries.     

Transmission of monetary policy and exchange rate shocks under foreign currency lending

This paper analyses the differences in reaction of domestic and foreign currency lending to monetary and exchange rate shocks, using a panel VAR model estimated for the three biggest Central and Eastern European countries (Poland, the Czech Republic and Hungary). Our results point toward a drop in domestic currency loans and an increase of foreign currency credit in reaction to monetary policy tightening in Poland and Hungary, suggesting that the presence of foreign currency debt weakens the transmission of monetary policy. A currency depreciation shock leads to an initial decline in foreign currency lending, but also in loans denominated in domestic currency as central banks react to a weaker exchange rate by increasing the interest rates. However, after several quarters, credit in foreign currency accelerates, indicating that borrowers start using it to substitute for depressed domestic currency lending.     

The financial system in post-communist countries: the Polish lessons

The financial systems inherited by post-communist countries are damaging their economic development and make impossible macroeconomic policies aimed both at growth and economic stabilization. This incompatibility is illustrated by recent Polish experiences under both the last communist and the first non-communist government.     

The largest square of successes covering the origin for Bernoulli trials on the lattice

Consider a collection of Bernoulli random variables on the two dimensional integer lattice and define the length D of the side of the largest square consisting entirely of successes, which covers the origin of the lattice. The paper gives a method to evaluate the probability distribution function of D . An analogous problem for the Poisson process on the plane is also considered.     

On the interpretation of price-quality relations

While low price-quality correlations are commonly cited as evidence of markets which are in some way inefficient, we argue in this paper that price-quality correlations do not necessarily reflect the degree of efficiency of a market. We first define a measure of market efficiency as the aggregate amount which consumers lose due to not choosing the maximum utility brand. Given this measure, and a model of consumer search behavior, we demonstrate analytically that losses in a particular market depend on the distribution of prices and qualities, on the number of alternative brands, and on the level of search costs, as well as on the price-quality correlation. We construct several numerical examples which demonstrate that losses need not be closely related to price-quality correlations.     

The contribution of immigration from Ukraine to economic growth in Poland

Review of World Economics - From 2014 onwards Poland witnessed an unprecedented inflow of immigrant workers from Ukraine. Coupled with strong labour demand, this surge in labour supply provided a...     

Fiscal tensions and risk premium

Empirica - The main goal of the paper is to analyse one-dimensional, isolated impact of particular variables which are used in the literature as explanatory variables for risk premium following...     

The great margin call: The role of leverage in the 1929 Wall Street crash

The reasons for the 1929 Wall Street crash and why it occurred at the particular time that it did are still debated among economic historians. We contribute to this debate by building on a new model, which provides a measure of the financial system's potential for financial crises. The evidence suggests that a tightening of margin requirements in the first nine months of 1929 combined with price declines in September and early October caused enough investors to become constrained that the market was tipped into instability, triggering the sudden crash of October and November.     

Human–machine trans roles conflict in the organization: How sensitive are customers to intelligent robots replacing the human workforce?

In organizations facing digital transformation, intelligent technologies are starting to replace the human workforce. At present, managers delegate tasks to an artificial agent and rarely consider the customer reception of such decisions. This arouses tensions between the main stakeholders of the organization. This paper shows that the rash adaptation of the digital workforce may be perceived as an irresponsible innovation that brings negative consequences for companies. If a task is regarded by customers as dedicated to humans, and managers delegate it to machines, a new type of conflict – human-machine trans roles conflict (HMTRC), appears. This paper intends to show that customers are sensitive to HMTRC. This research uses quantitative methods and consists of three stages. First, people were asked to indicate which tasks in an organization should be performed by (a) humans and (b) machines. According to these results, two leaflets for customers were designed (low vs. high HMTRC). In the second stage, standard procedures were used to construct a scale measuring customer reactions to HMTRC on three dimensions: cognitive, emotional and behavioural. Ultimately, the scale and two leaflets were used to check how customers react to different intensities of HMTRC. The research results show that customers are aware when HMTRC occurs and perceive it negatively (cognitive response). Moreover, it evokes negative emotions (emotional response) and prompts customers to take action against the company in which this conflict takes place (behavioural response). The practical contribution of this research is the three-dimensional scale. It may predict customers' reactions to task delegation with different intensities of HMTRC and help build a technologically sustainable organization.