Dynamic signaling and market breakdown

We consider the effects a public revelation of information (e.g. rating, grade) has on trading in a dynamic signaling model. Competing buyers offer prices to a privately informed seller who can reject them and delay trade. Delay is costly and the seller has no commitment to its duration. The external public information allows for signaling in equilibrium. More interestingly, we characterize the dynamics of trade and prices. If signals are noisy, no trade takes place just before the revelation of external information. If signals are fully revealing, then trade occurs even close to revelation, however, transaction prices are discontinuous.     

Multinational Enterprises,Absorptive Capacity and Export Spillovers: Evidence from Polish Firm‐level Data

An important benefit attributed to the activity of multinational enterprises (MNEs) in developing and transition countries is its effect on international market access. Through a variety of channels the presence of MNEs is expected to reduce the costs faced by indigenous firms in breaking into international markets and in turn boost their export prospects. In this paper we use an extensive Polish firm‐level dataset for the period 2000–2008 to verify whether MNEs have positively contributed to the export performance of indigenous firms. We track not only sectoral and geographical spillovers stemming from the activity of MNEs but also control for firm‐specific characteristics that affect indigenous firms' decisions to export including their absorptive capacity. Our empirical results support the existence of positive spillovers (related to MNE export activity) at the sectoral level but not at the regional level. Finally, we find that individual absorptive capacity determines the size of export spillovers.     

Agriculture and climate change in global scenarios: why don't the models agree

Agriculture is unique among economic sectors in the nature of impacts from climate change. The production activity that transforms inputs into agricultural outputs involves direct use of weather inputs (temperature, solar radiation available to the plant, and precipitation). Previous studies of the impacts of climate change on agriculture have reported substantial differences in outcomes such as prices, production, and trade arising from differences in model inputs and model specification. This article presents climate change results and underlying determinants from a model comparison exercise with 10 of the leading global economic models that include significant representation of agriculture. By harmonizing key drivers that include climate change effects, differences in model outcomes were reduced. The particular choice of climate change drivers for this comparison activity results in large and negative productivity effects. All models respond with higher prices. Producer behavior differs by model with some emphasizing area response and others yield response. Demand response is least important. The differences reflect both differences in model specification and perspectives on the future. The results from this study highlight the need to more fully compare the deep model parameters, to generate a call for a combination of econometric and validation studies to narrow the degree of uncertainty and variability in these parameters and to move to Monte Carlo type simulations to better map the contours of economic uncertainty.     

On methods of optimal portfolio construction

The transition from a centrally planned economy to a market economy in Poland has caused dynamic changes in the number and structure of potential investors of the stock exchange market. This phenomenon, unknown in the past, needs a new approach to statistical methods of stock market analysis. The paper presents two methods of optimal portfolio construction. The first one leads to the square programming problem. Applying the Lagrange multipliers, we obtain a system of algebraic equations which can be solved by the special algorithm proposed in the paper. The second method reduces the mentioned above square program to the linear programming problem which can be solved using the simplex method.     

Poland's development dilemmas on the verge of the 21st century

This article briefly summarizes a prognostic Report, ‘Towards modern Poland—development dilemmas on the verge of the 21st century’ of the Poland 2000 Committee of the Polish Academy of Sciences. It further comments on the changes of perspective that have occurred since the Report was written. The study consisted of the development and analysis of three scenarios of socioeconomic development based on societal aspirations. Key drivers influencing these scenarios and their likelihood are discussed here.     

Barking Up the Wrong Tree: A Reply to Haynes & Husan

The Albanian economy in the 1990s experienced a rapid recovery from its near-collapse in 1992. The rapid economic growth between 1993 and 1996 was exceptional by East European standards, and represented the highest rate of sustained economic growth of all transition economies. This investigation indicates that the standard explanations for recovery and growth in transition economies, such as the pace of economic reform or the levels of domestic and foreign investment, do not adequately explain the rapid growth of the Albanian economy. Factors specific to Albania also need to be considered. The main conclusion drawn here is that the success of the Albanian economy in the mid-1990s rested largely upon the inflow of remittances from Albanians working abroad. These remittances are shown to have been much greater in value than was previously assumed by the IMF: in the region of $700 million per annum rather than $400 million. Remittances are also found to have played a much greater role in Albania's economic recovery than was previously recognised. It is demonstrated that the rise of pyramid investment schemes in 1996 was closely linked to the inflow of remittances. Such schemes are also found to have played a part in fuelling the rapid economic growth in the Albanian economy, before their collapse in 1997.     

Analysis of a network structure of the foreign currency exchange market

We analyse structure of the world foreign currency exchange (FX) market viewed as a network of interacting currencies. We analyse daily time series of FX data for a set of 63 currencies, including gold, silver and platinum. We group together all the exchange rates with a common base currency and study each group separately. By applying the methods of filtered correlation matrix we identify clusters of closely related currencies. The clusters are formed typically according to the economical and geographical factors. We also study topology of weighted minimal spanning trees for different network representations (i.e., for different base currencies) and find that in a majority of representations the network has a hierarchical scale-free structure. In addition, we analyse the temporal evolution of the network and detect that its structure is not stable over time. A medium-term trend can be identified which affects the USD node by decreasing its centrality. Our analysis shows also an increasing role of euro in the world’s currency market.     

Initial conditions and privatisation as causes of post-communist corruption

This article investigates the economic determinants of corruption in post-communist countries. We conduct an empirical verification of two research hypotheses using EBRD and World Bank data on 27 post-communist economies over the 1996–2014 period. The first hypothesis suggests that corruption is rooted in the communist past, when these countries embraced communist institutions, social norms, as well as low-development structural factors broadly defined as initial conditions. The second hypothesis is that the flawed transition process led corruption to increase because politics and business were never separated. The elites pushed measures that preserved their status while obstructing reform policies that might endanger their interests. Our empirical results demonstrate that both hypotheses are valid to a limited extent, while revealing a more complex view of the reforms and initial conditions. Corruption seems to be related to the natural resource curse, to the lack of small-scale privatisation and to a long history of underdevelopment that could have preceded communism.