Prague Economic Papers, 2022 (roč. 31), číslo 5

FISCAL COUNCILS IN EU MEMBER STATES: IMPACT ON FISCAL DISCIPLINE

Martin Gorčák, Stanislav Šaroch

Prague Economic Papers 2022, 31(5):327-346 | DOI: 10.18267/j.pep.810  

This paper presents the impact of fiscal councils in the European Union on public fi- nance. Using a fiscal reaction function, the impact of fiscal councils on the discretionary component of fiscal policy is examined. The impact of fiscal councils is a topical issue due to the fact that most EU countries have established fiscal councils in response to the EU legislation adopted after the last financial crisis. The empirical results imply that fiscal councils are complementary to numerical fiscal rules and instrumental for limiting deficit bias in the EU countries, most importantly through monitoring of compliance with fiscal rules and...

Fiscal Decentralization, Political Heterogeneity and Welfare

Erkmen Giray Aslim, Bilin Neyapti

Prague Economic Papers 2022, 31(5):347-376 | DOI: 10.18267/j.pep.813  

This paper contributes to the literature on fiscal decentralization by presenting a formal model of the interaction between the central and local governments (CG and LGs, respectively) where LGs may differ in their degree of political alignment with CG. The non-cooperative optimal behaviour of the agents reveals that optimal tax increases with the extent of fiscal decentralization (FD), political unison and spillovers across localities, while LGs' optimal tax collection effort is negatively associated with all of these parameters. The first novel finding of our study is that both welfare peaks and income distribution are more equitable...

Bitcoin Transaction Fees, Miners' Revenue, Concentration and Electricity Consumption: A Failing Ecosystem

Frederik Rech, Chen Yan, Amon Bagonza, Lubomir Pinter, Hussam Musa

Prague Economic Papers 2022, 31(5):377-397 | DOI: 10.18267/j.pep.817  

The research and investment community seems to ignore the long-term sustainability of Bitcoin, which is reflected in four flaws: transaction fees, miners' revenue, concentration and electricity consumption. While most of the authors have aimed to examine one topic at a time, with a particular interest in electricity consumption and carbon footprint, the aim of this paper is to examine all these issues simultaneously to provide a more comprehensive view on long-term sustainability of Bitcoin. This paper looks at these flaws and reveals why Bitcoin is not sustainable in the long run, how decentralization is being lost, how the design is putting artificial...

Do R&D Subsidies Improve Operational Performance? New evidence from China

Qingjie Zhou, Mingyue Du, Zhenling Chen, Tianshun Miao, Guoge Yang

Prague Economic Papers 2022, 31(5):398-416  

The sustainable development of the digital economy has attracted wide attention. To ex-plore how to improve the operational performance of China's digital firms, this paper conducts an influence mechanism model to test the nonlinear effect, heterogeneity effects, and mediation effects using a panel data of China's digital firms from 2008 to 2017. The empirical results indicate that R&D subsidies have an inverted U-shaped effect on operational performance, and these results are still valid after a series of robustness tests. In addition, we find that R&D subsidies have a heterogeneous effect on operational performance in terms of...

An Assessment of The Effectiveness of Sterilization of Central Bank Interventions: Empirical Evidence from India

Abdul Rishad, Sanjeev Gupta, Akhil Sharma

Prague Economic Papers 2022, 31(5):417-440 | DOI: 10.18267/j.pep.808  

The active participation of the central bank in exchange rate management has accelerated the growth of foreign exchange reserve in India. The massive reserve stockpiling has substantially contributed to apprehensions about excess liquidity in the domestic economy. The extent to which these concerns are justified depends on the degree to which the central bank is able to mitigate its effects on monetary aggregates. This study is an attempt to assess the magnitude of the sterilization coefficient by using quarterly data from 1996 to 2019. In order to estimate sterilization and offset coefficients, the study employed the two-stage least squares (2SLS)...