Prague Economic Papers, 2024 (roč. 33), číslo 1

Testing the Balanced Growth Hypothesis in the Presence of Structural Breaks: Evidence from Developed and Developing Countries

Arjun, Bibhuti Ranjan Mishra

Prague Economic Papers 2024, 33(1):1-35 | DOI: 10.18267/j.pep.849  

The balanced growth theory and the neoclassical growth model predict that certain macroeconomic variables such as output, consumption, and investment grow at a constant rate. Analytically, it indicates that the consumption-output ratio and the investment-output ratio (termed "great ratios") must be stationary. Moreover, consumption and investment must be cointegrated with output. This paper examines these implications with respect to developed (G7) and emerging (E7) countries using data for the period 1970-2019. The validity of the balanced growth hypothesis (BGH) is tested by using unit root tests (univariate analysis) and cointegration techniques...

Financial Account Determinants Of Exchange Rate Regime Switching In Developing Countries

Viktar Dudzich

Prague Economic Papers 2024, 33(1):36-59 | DOI: 10.18267/j.pep.852  

The paper explores the interconnections between foreign capital flows and the exchange rate regime switching in developing countries. We formulate the exchange rate regime switching as annual time series of binary/ordered variables employing de facto classification of exchange rate arrangements and regress them on the financial account capital flows for a panel of 28 developing countries which experienced change in their exchange rate regime during the period 2000-2016. Employing probit and logit regression, we discover the FDI, portfolio flows and changes in reserve assets to precede and/or coincide with switching. Specifically, accumulation of foreign...

Does Financial Integration Matter During Financial Crises? A Comparative Analysis of Economies of Developing Countries

Besnik Fetai

Prague Economic Papers 2024, 33(1):60-78 | DOI: 10.18267/j.pep.850  

Using developing countries in Europe for context, this study examines the complex relationship between financial crises and financial integration. We use panel data comprising 37 countries in Europe, including Iceland, Belarus, Ukraine, Turkey, and Russia from 2000-2019 and the general method of moments. Our findings show that there is a positive relationship between financial integration and development and economic growth. In addition, the results suggest that a higher degree of financial integration is not necessarily increasing financial fragility during a financial crisis. Therefore, the results show that it is a self-defeating policy for developing...

Psychological traits and wages in the Czech Republic

Pavlína Vydrželová, Jiří Balcar, Lenka Johnson Filipová

Prague Economic Papers 2024, 33(1):79-102 | DOI: 10.18267/j.pep.853  

Psychological traits have received significant attention in labour market research in recent decades. Unfortunately, empirical evidence remains limited for some psychological traits and their interactions. To address this gap, we conduct a representative survey of employees, assessing competitiveness, persistence, and risk tolerance using single-item scales. This comprehensive study sheds light on the connection between these traits and wages. Our results confirm that individuals possessing these traits tend to earn higher wages, even when we account for indirect factors, such as higher educational attainment and better job positions. It also suggests...

Multiple Large Shareholders, Investment Efficiency and Corporate Tax Avoidance: Evidence from China

Xiaohong Yu, Maonan Chen, Yujun Ye

Prague Economic Papers 2024, 33(1):103-136 | DOI: 10.18267/j.pep.851  

This study assesses the relationship between the ownership structure and corporate tax avoidance based on annual financial data of Chinese A-share listed firms during 2010-2020. Firstly, the empirical results demonstrate that when a listed firm has multiple large shareholders (MLS), these shareholders are likely to weaken internal monitoring and collude with each other, which will lower its corporate governance level and increase its corporate tax avoidance (CTA) level. The empirical conclusion remains valid after multiple robustness tests. Secondly, the empirical result of the baseline model is significantly influenced by the nature of ownership,...