How reliable are forecasts of GDP growth and inflation for countries with limited coverage?

This paper analyses the performance of GDP growth and inflation forecasts for 25 transition countries between 1994 and 2007, as provided by 13 international institutions, including multilateral, private and academic forecasters. The empirical results show that there is a positive correlation between the number of forecasters covering a given country and the forecast accuracy. Simple combined forecasts are shown to be unbiased and more accurate than most of the individual forecasters, although also inefficient. However, only a few institutions provide efficient and unbiased forecasts, with just one out of 13 forecasters providing both unbiased and efficient forecasts of both GDP growth and inflation in the observed period. The directional analysis shows a correct forecast of the change in the forecast indicator in over two thirds of cases. However, the eventual outcome is within the range of available forecasts in less than half of the cases, with more than 40% of outcomes for GDP growth above the highest forecast. Encouragingly, forecasts are shown to be improving over time and becoming more accurate with the increase in the number of forecasting institutions – forecast accuracy measured by mean absolute error improves by 0.3 percentage points for growth and by 0.2 percentage points for inflation for each additional institution providing forecasts.     

Modelling driver propensity for traffic accidents: a comparison of multiple regression analysis and fuzzy approach

Abstract

This research proposes an assessment and decision support model to use when a driver should be examined about their propensity for traffic accidents, based on an estimation of the driver’s psychological traits. The proposed model was tested on a sample of 305 drivers. Each participant completed four psychological tests: the Barratt Impulsiveness Scale (BIS-11), the Aggressive Driving Behaviour Questionnaire (ADBQ), the Manchester Driver Attitude Questionnaire (DAQ) and the Questionnaire for Self-assessment of Driving Ability. In addition, participants completed an extensive demographic and driving survey. Various fuzzy inference systems were tested and each was defined using the well-known Wang-Mendel method for rule-base definition based on empirical data. For this purpose, a programming code was designed and utilized. Based on the obtained results, it was determined which combination of the considered psychological tests provides the best prediction of a driver’s propensity for traffic accidents. The best of the considered fuzzy inference systems might be used as a decision support tool in various situations, such as in recruitment procedures for professional drivers. The validity of the proposed fuzzy approach was confirmed as its implementation provided better results than from statistics, in this case multiple regression analysis.     

A study on the competitive strategy of the universal postal service provider

We analysed how the universal postal service providers could employ their specificities to achieve an advantage over the growing competition. The basic input for the model is expert opinions. We interviewed 18 experts in five stages. As a multiple criteria decision support method, we used an analytic hierarchy process. Further, we proposed a geometric method for determining the business area where a company should focus its biggest attention to achieve the best result. By implementing the proposed model, a company should obtain two types of business directions, the first related to the proposed activities and the second to the business areas. To demonstrate the applicability of the proposed methodology, we tested and verified it in the case of the Serbian universal postal service provider which is a state-owned company called the Post of Serbia.     

Assessing Macroeconomic Vulnerability in Central Europe

The Central European transition-accession countries Have experienced several periods of macroeconomic vulnerability since the end of output declines in the early 1990s. Some notable periods, which resulted in a necessity to implement extensive stabilisation measures, are March 1995 in Hungary, May 1997 in the Czech Republic and September 1998 in the Slovak Republic. This article shows that the standard early warning indicators provided useful information on macroeconomic vulnerability prior to the crises in Central Europe, although this information had been mainly indicative; that is, early warning indicators would not have allowed one to predict the crises and their timing. However, the growing gap between current account deficit and foreign direct investment (FDI) in all the countries analysed did provide clear early warning of subsequent economic turbulence.     

Competitiveness of Czechoslovak exports under socialism and its impact on industries’ output growth after 1989

This paper addresses the performance of international trade during the centrally planned period in socialist Czechoslovakia and its consequences in the transition period. The goal of the paper is to determine whether the relative export competitiveness before 1989 positively influenced the performance of the enterprises in the transition period. To determine the reason for the low competitiveness of socialist enterprises, we use the oral history method, based on interviews with the then managers. We show that the level of competitiveness was influenced by multiple factors. Some of them were of a systemic nature, such as incentive structure, which did not encourage managers to pursue higher productivity, and others were related to day‐to‐day operations of the enterprises and a lack of Western technologies. Consequently, an econometric analysis is applied to determine whether there was any relationship between competitiveness in late socialism (ability to export to world markets) and production growth in the transition period. We expected that sectors that were able to export to Western markets during the centrally planned period were more successful after the fall of the regime. However, our findings do not support this hypothesis.     

Portfolio sensitivity to changes in the maximum and the maximum drawdown

In this article, we define new ‘Greeks’ for financial derivatives: sensitivities to the running maximum and the running maximum drawdown of an underlying asset. Some types of portfolios, such as the net asset value of a hedge fund or performance fees, are sensitive to these parameters. In order to illustrate the concept of the new ‘Greeks’, we derive probabilistic representations of sensitivities for two classes of financial contracts: forwards on the maximum drawdown and lookback options. These results allow us to interpret the delta-hedge of the contracts in a novel way.