Prague Economic Papers, 2025 (vol. 34), issue 4

Original contributions, Original article, Research article

Tax Competition in the Era of Financial Globalization: An Empirical Non-Linear Analysis for European Countries

İrem Didinmez, Nazmiye Tekdemir, Pelin Varol İyidoğan

Prague Economic Papers 2025, 34(4):442-469 | DOI: 10.18267/j.pep.901  

The aim of this study is to empirically investigate how financial globalization affects tax competition, focusing on implicit and effective tax rates across 29 European countries over the period 2010-2021. Our linear dynamic panel findings suggest that while financial globalization increases implicit tax rates on labor and consumption, it exerts downward pressure on corporate tax rates. The non-linear analysis further reveals threshold effects, where the influence of financial globalization varies depending on its intensity. These results highlight the critical role of tax policy adjustments in response to globalization, emphasizing the need for international...

ESG Resilience Amid Financial Distress: the Role of Board Gender Diversity in EU Firms

Süreyya Yilmaz Ozekenci, Cansu Unver Erbas, Suzan Dsouza

Prague Economic Papers 2025, 34(4):470-494 | DOI: 10.18267/j.pep.902  

Investors often view financial distress, defined as a company’s inability to pay its debts on time, as a sign of declining creditworthiness. However, they also consider non-financial data, such as the environmental, social, and governance (ESG) activities of firms, when making decisions. This study investigates the impact of financial distress on ESG scores among European Union (EU) firms, using firm fixed effects (FE) and random effects (RE) models, along with Pooled Ordinary Least Squares (OLS), Common Correlated Effects Mean Group (CCEMG), and Augmented Mean Group (AMG) estimators. The panel data covers the years from 2013 to 2023. To examine...

Do Machine Learning Techniques Outperform Autoregressive Distributed Lag Models in Inflation Forecasting?

Bogdan Oancea, Mihaela Simionescu, Richard Pospisil

Prague Economic Papers 2025, 34(4):495-558 | DOI: 10.18267/j.pep.898  

Following the COVID-19 pandemic, Romania and other Central and Eastern European (CEE) countries faced some of the highest inflation rates in the European Union, creating a pressing need for accurate short-term forecasts to guide monetary policy. This study compares modern machine learning (ML) methods - Long Short-Term Memory (LSTM) neural networks, Random Forests (RF) and Support Vector Regression (SVR) - with traditional Autoregressive Distributed Lag (ARDL) models in forecasting Harmonised Index of Consumer Prices. Using quarterly data for Romania (2006Q1-2023Q4) and monthly data for nine CEE economies (2006M1-2025M3), we incorporate unemployment...

Unemployment and Remittances Nexus in Central, Eastern and Southeastern Europe

Daniela Bojadjieva, Biljana Tashevska, Gunter Merdzan

Prague Economic Papers 2025, 34(4):559-591 | DOI: 10.18267/j.pep.900  

In existing empirical literature, the effect of remittances has most often been examined in relation to economic growth, poverty reduction, and employment in recipient countries. Unlike previous empirical studies, this paper focuses its analysis on the impact of remittances on unemployment in selected Central, Eastern, and Southeastern European (CESEE) countries from 1998 to 2021, using the New economics of labor migration framework. These countries, which underwent deep economic and political transitions during the 1990s, faced significant challenges associated with high unemployment, particularly among the working-age population who lost their jobs,...

Event study methodology in politics - a systematic literature review

Dorina Kiss

Prague Economic Papers 2025, 34(4):592-623 | DOI: 10.18267/j.pep.899  

This paper presents the first systematic literature review of event study methodology applied to political events. Following PRISMA guidelines, 133 studies (1997-2024) were analysed to uncover methodological patterns. The findings show that nearly three-quarters of the papers rely on a single expected return model. The market model accounts for close to one-half of all identified model specifications, indicating its simplicity and practical applicability. Symmetric event windows, mainly shorter configurations like (-1, +1) are preferred; most of the studies test multiple lengths. Estimation periods vary (5-300 trading days), though many papers offer...