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In the 1990s, the transition countries in Central and Eastern Europe witnessed an upward trend in returns to education, unlike in Western European countries. This upward trend led to much higher returns than in what was observed in the communist period or compared to the West. The surveys EU-SILC collected since 2005 show that although returns to tertiary education were converging across Europe, there is still a big difference between East and West, with returns considerably higher in the East. Panel analysis reveals also substantial differences in the factors behind returns to tertiary education in the East and the West. The assumed negative relationship between the share of tertiary-educated workers in the working-age population and the returns to tertiary education were confirmed only in the West. The job vacancy rate has a significant negative impact on returns to tertiary education only in the East. While in the West the labour market seems to react more to labour supply, in the East labour demand plays a more important role.

This paper seeks to investigate the effect of financial development on growth in OECD countries during 1999–2014. The aim of the analysis is to study the dependence of growth on given financial development indicators along quantiles of the conditional growth distribution, taking into account the effect played by each country over time. For the purpose of the empirical analysis, it performed the instrumental variable quantile regression panel data (IV-QRPD) model suggested by Powell (2016). The findings of IV-QRPD model indicated that the effect of finance on growth is changing along quantiles of the conditional growth distribution. That is to say, we provide some evidence that high-growth OECD countries react to the changes in financial development less than low-growth countries.

This paper brings to the foreground an indicator rather less used in specialized studies - the implicit tax rate of consumption - as an effective tax rate of consumption. In an empirical analysis, we try to analyse the impact of the main determinants on the implicit tax rate of consumption. The analysis is based on the panel technique in order to show the impact of tax harmonization on consumer taxation at EU27, EU15 and NMS12 levels, testing three hypotheses: (1) the implicit tax rate of consumption is directly influenced by the economic growth rate; (2) the effects of harmonization are more pronounced in the new EU member states; (3) during an economic crisis, the budget deficit and public debt determine changes in the implicit tax rate.

In this study, using the recent recursive unit root tests proposed by Phillips et al. (2015), we identify and date-stamp periods where food and energy prices deviate explosively relative to other prices in the economy and analyse the implications in terms of anchoring inflation expectations. During the period from January 2003 to July 2018, we have detected the existence of such periods for 17 out of 27 EU countries. Identifying these explosive periods is particularly important since evidence reveals that consumers change, i.e., revise their inflation expectations during periods when headline consumer prices deviate explosively from core prices. Furthermore, it is realized that consumers take macroeconomic variables into account as well as past inflation when forming inflation expectations in both normal and explosive periods. On the other hand, there are particular differences among groups of countries while adjusting their inflation expectations during explosive phases. A common feature for all the countries is that during explosive periods, consumers change and update their inflation expectations on the basis of information coming from the interest rate. More specifically, consumers in all the countries perceive a higher current interest rate as an indication of higher future inflation, leading to higher inflation expectations in explosive periods. A particularly important policy implication of these findings is that periods of explosive deviations in headline prices from core prices should be monitored closely while designing policies to anchor inflation expectations.

This paper investigates the transmission from interest rates to household saving behaviour when introducing two main innovations of analysing this relationship. The first one is based on the use of a set of client interest rates instead of one monetary policy rate. This step enables us to distinguish impacts of the substitution and income effects in more detail. The second major innovation lies in the division of households into income categories, which provides us with more observations and thus makes it possible to conduct this analysis even for a single country. Using the generalized method of moments for the dynamic panel data, we analyse Czech household behaviour for the period 2004-2015. The results highlight that when we ignore details of the transmission channel and use only a monetary policy rate, we lose crucial information about contradictory impacts of the substitution and income effects that are primarily reflected in the client interest rates. This fact may clarify most of the interest rate-savings rate puzzle.

Mancur Olson wrote his influential study Big Bills Left on the Sidewalk: Why Some Countries are Rich, and Others Poor in 1996. In his paper, Olson claimed that the differ-ences in economic development between countries are caused by only two factors: institutions and policies on the one hand and culture on the other. We attempt to test his conjecture using econometric modelling, combining and comparing it with a broadly defined orthodox production function in an indirect neoclassical notation (Solow-Minhas-Arrow-Chenery's SMAC framework). The "pseudo-production function" obtained is econometrically sound and of explanatory power similar to models including economic variables, although we find strong evidence of interdependence between capital-labour share and institutions and policies and culture. We consider the test, performed on panel data from 154 countries over five-year averages from 1980-2014, to be robust and consistent with Olson's ideas.

We explore the procyclicality of monetary policy decisions towards the financial cycle in the 1995-2015 period on a sample of seven central banks. Using the real interest rate gap and the credit-to-GDP gap, we provide evidence that monetary policy procyclicality is a material issue occurring in more than 50% of observations in expansionary phase of financial cycle. It indicates that the central bank faces conflicting objectives of price and financial stability (as proxied by cyclical systemic risk). Nevertheless, taking into consideration all financial cycle phases, complementariness between price and financial stability is more frequent than cases with conflicting objectives in the UK, Euro Area and the US. The occurrence of potential procyclical behaviour of monetary policy (especially in the financial cycle expansion phases) underlines the need for proactive macroprudential policy.

In the last few decades, a valuation of intangible assets is an activity of particular importance, not only because of growing number of transactions with intangibles but for accurate financial reporting as well. In this discipline, a special area is dedicated to the research of different factors that affect the value of intangibles. Royalty rate, a price of the licensed intangible, is a typical measure of an intangible asset's value. This research paper aims at testing empirically selected factors that have been identified by theoretical literature as well as by licensing practice as relevant in determining the level of royalty rates. For this purpose, a multi-factor linear regression model is built using the latest possible sample of licensing transactions from consumer durables industry from 2002 to 2006. The authors make tests of dependent variable (royalty rate) on financial factors as well as on factors coming from different provisions of licensing agreements. Based on a sample of 67 transactions, the financial factors revealed themselves to be statistically negligible, while some license provisions, in particular the extent of rights granted and the license term appeared to be highly significant in determining the royalty rate level.

Gender differences present a topic of great interest in contemporary societies. Aim of this paper is to make a comparison between the unemployment in Serbia and the European countries, and to identify those countries which record the most similar performances considering gender and age. The research is conducted through analysis of activity rates, employment rates, unemployment rates, inactivity rates and long-term unemployment rates. The factor analysis enabled us to identify main factors that influence structures of the labour markets in Europe. Final result of this research is the recommendation of policy measures, including the promotion of women entrepreneurship, in order to reduce gender inequalities in contemporary society's economic activity.

There is still a significant gender wage gap on labour markets in the majority of developed countries. The different earnings are determined mainly by the different sectors, professions and positions that men and women choose. The behavioural approach to interpretation of the labour market agents' decisions can help to explain the choice of different working career paths. The approach focuses on subjective individual preferences and their intrinsic rewards and motivations that cannot be explained by objective rational rules. The paper confirms the different relation of men and women to risk and competition and different preferences to intrinsic and extrinsic motivations and rewards. The author's existing research on Czech data is used. Women indeed preferred a lower risk, although the difference was not large (-0.7 points on a scale of 0-10), while gender does not matter for people with university education. The level of accepted risk was increased by education, career preferences, pride and partnership. On the contrary, having children and their number did not affect the level of accepted risk. As far as extrinsic and intrinsic rewards and motivations were concerned, the preference for intrinsic rewards was higher among women (44%) than men (31%). Women preferred intrinsic rewards compared to higher wages more likely than men. Women with university education preferred intrinsic rewards with the same probability as men with the same degree of education. The preference of non-monetary rewards and motivation increased with higher education.

This article deals with an analysis of the relationship between the Brent oil price and the US dollar price. This paper analyses the development of the intensity and direction of dependence between the nominal effective exchange rate of the US dollar and the price of Brent oil and other commodities, such as industrial metals, agricultural commodities, gold (including jewellery and platinum) in the period from January 1994 to April 2018. The next section tests the hypothesis that there is a short-term relationship between the effective US dollar exchange rate and the oil price. The last part of the article deals with the question whether there is a long-term relationship between these variables: Brent oil price, effective exchange rate of the US dollar, industrial production index in OECD countries, three-month treasury bill, US ending stocks of crude oil, US percent utilization of refinery operable capacity and the price of ethanol.

The doctrine of beneficial effects of price level stabilization is an integral part of modern mainstream economics. In the 1920s and 1930s, Friedrich August von Hayek questioned this monetary policy regime, and stressed injection effects of the newly created money aimed at price level stabilization in the economy with expanding natural output. This paper compares the Hayekian theory with mainstream economics. A simple graphical apparatus is used to clarify major differences between the two theories. Standard textbook models are applied to show why the Hayekian approach favours secular deflation over price level stabilization which may lead to the boom-bust cycle. The next section presents New Keynesian arguments in favour of stable prices or even low inflation, and it shows why the Hayek recommendations may result in quasi-recession. The "Wicksellian" equation, which relates inflation gap to the real interest rate gap, is derived to reconcile the Hayek approach with the mainstream perspective. Finally, it is demonstrated that New Keynesian price rigidities might be of much lower importance when the decline in prices is caused by technological progress. A gradually falling price level is then identified as a natural response of the price system in the expanding economy.

This paper empirically assesses the financial performance of Czech credit unions in relation to other European cooperative banks in terms of their profitability and stability. We created a unique dataset of 283 cooperative banks from 15 European countries in the period 2006-2013. Using the system GMM and alternative panel data methods, we reveal worse performance of Czech credit unions in terms of both profitability and stability compared to their European peers. We also argue that big credit unions in the Czech Republic have assumed a non-sustainable business model depending on excessive risk taking while enjoying implicit subsidy via deposit insurance. In conclusion, we argue that under recent capital management policies, big Czech credit unions will likely face serious financial problems in coming years.

This paper investigates the government spending-revenue nexus for Croatia, Czechia, Hungary, Poland, Romania and Slovenia by using quarterly data and a nonlinear autoregressive distributed lag (NARDL) approach to cointegration. Our empirical findings support the fiscal synchronization for Slovenia, spend-tax for Czechia, tax-spend for Croatia and Hungary, and institutional separation or fiscal neutrality for Romania and Poland in the long run. Moreover, we find an asymmetric effect for Croatia, Czechia, Hungary and Poland in the long run and for all the countries in the short run. Therefore, our results clearly highlight the importance of asymmetric effects in government spending-revenue nexus. Our findings have some policy implications for these countries, such as providing a better coordination of government spending and revenue decisions and paying attention to the asymmetries.

We analyse the extent and determinants of somewhat gloomy employment prospects of older unemployed populations in Austria, the Czech Republic, Poland and Slovakia. For this purpose, we explore the European Union Statistics on Income and Living Conditions over the period 2004-2014. Survival estimates suggest that older unemployed workers face lower job-finding probabilities compared to prime-age unemployed workers, while this age-based gap increases with longer unemployment spells. The results of estimating the hazard models reveal that the job-finding probability of older unemployed workers is about 20-25% lower than that of the prime-age group, even after controlling for explanatory covariates and unobserved heterogeneity. Unemployment duration appears to be the major determinant of job-finding probability within both age groups. In contrast, the impact of explanatory covariates (gender, education, household characteristics, etc.) is relatively less robust and/or uniform.

Common exposure to macroeconomic risk factors across financial institutions is a source of a systemic risk that influences quality of banks´ loan portfolios. This paper focuses on the growing literature on credit risk determinants. The aim of the paper is to provide more general information on effects of macroeconomic drivers with the use of quantitative meta-analytic techniques. We consider five of the most common macroeconomic determinants of non-performing loans ratio. The meta-regression results suggest that there are some significant differences among studies, which could be identified. For instance, data specification, estimation method, number of countries and observations included in the model play a significant role. In some cases, e.g. inflation and exchange rate, the size of the effects presented in journals with impact factor are significantly different from other types of studies included in the analysis. The sub-sample analysis mostly confirms meta-regressions results.

Business failure prediction is an important issue in corporate finance. Different prediction models are proposed by financial theory and are often used in practice. Their application is effortless, selecting only few key inputs with the greatest informative power from the large list of possible indicators. Our paper identifies the financial distress predictors for 5 post-communist countries (Bulgaria, Croatia, the Czech Republic, Hungary and Romania) based on information collected from the Amadeus database for the period 2011-2013 using CHAID decision trees and neural networks. We propose a short list of indicators, which can offer a synthetic perspective on corporate distress risk, adapted for these countries. The best prediction models are substantially different from country to country: in the Czech Republic, Hungary and Romania the flow-approach indicators perform better, while in Bulgaria and Croatia - the stock-approach indicators. The results suggest that the extrapolation of such models from one country to another should be made cautiously. One interesting finding is the presence of the ratios per employee as predictors of financial distress.

This paper analyses the unemployment hysteresis in the Czech Republic on data from 1999 to 2016. The hysteresis is modelled by allowing for the impact of cyclical unemployment on the non-accelerating inflation rate of unemployment. Models are estimated using the Bayesian approach and provide robust evidence in favour of the hysteresis. The estimates imply that in response to an increase in the cyclical unemployment of 1 percentage point, the non-accelerating inflation rate of unemployment increases by 0.18 percentage points.

Debt literacy has been considered to be a critical competence of modern societies since the recent global financial crisis. Debt-literate individuals are less prone to financial abuse and perform better in terms of credit management. Currently, debt-related information and knowledge are widely accessible through social networking sites (SNS), such as Facebook. However, not all SNS users have equal access to debt-related resources, and, consequently, they reach different scores in debt literacy tests. This study examines relational factors (resources) behind the debt literacy of Facebook users (N = 1,055) in Poland by applying the Resource Generator tool built into the online questionnaire. This quantitative instrument helps to diagnose resources that are embedded and mobilised (social capital) from personal networks made up of kin, friends and acquaintances. We found that users with more social capital, that is, better access to resources, perform better in debt literacy tests. Moreover, weak ties (acquaintances) appear to be good sources of debt-related information and knowledge that have positive impact on debt literacy scores.

This study surveys the conventional methods and their limitations in assessing motives for private transfers. Based on the concept of "effective altruism" - a genuine altruist offers help instead of demanding, this study proposes a normative and discriminative strategy to help distinguish the transfer motives, focusing on whether income transfer persists over time. Its application to Chinese interfamily transfers reveals that altruistic motives do exist but play an insignificant role at the aggregate level.

In this article we analyse the impact of the interaction between cross-border mergers and acquisitions and the quality of the institutional setting on domestic investment using panel data for 22 European transition countries from 2000 to 2014. We investigate whether the progress and durability of institutional reforms have a crucial influence on the economic performance of cross-border mergers and acquisitions in transition countries. Our empirical findings indicate that contemporaneous cross-border mergers and acquisitions have a crowding-out effect on domestic investment in the year of merger or acquisition, but the influence of their lagged level has a strong crowding-in effect one year later. We find that the overall quality of the institutional setting and the rule of law negatively and significantly affect the relation between this type of foreign direct investment and domestic investment, both in the short and long run. Political stability exhibits a positive and significant impact on domestic investment in the current period and over time.

We model the future tobacco consumption, size of smoking population and governmental tax revenues in the Czech Republic. The main model assumption states that smokers determine their future tobacco consumption behaviour as adolescents. Further assumptions make the model applicable to the data from the Czech National Monitoring Centre for Drugs and Drug Addiction. Future teenage smoking rates and average consumption are the inputs to the model; consumption growth coefficients for each age category are estimated using zero-inflated negative binomial regression. Several scenarios are built to model possible developments, including extreme cases. All our scenarios show that all model outcomes are going to grow until 2028 in a very similar pattern. In particular, the projected number of smokers in 2028 is by 4-8% higher than in 2013, the total daily tobacco consumption and tax revenue by 7-26%. This increase is induced by aging of large birth cohorts.

This paper analyses the monopolist's production and pricing decisions on two vertically diffe-rentiated versions of a product in the presence of network externality. We show that offering only the higher-quality version of the product is the optimal strategy when negative externality exists and the utility from joint purchase is not large. If both versions are provided, the monopolist will charge a monopoly price for each version to induce separate purchases if these two versions are too close substitutes. Moreover, in the equilibrium with joint purchases, with an increase in externality or the utility from a joint purchase, the prices of both versions increase. In addition, with an in-crease in network externality, the equilibrium region for separate purchases first increases and then decreases.

Interest rates in many advanced countries have reached zero lower bound and this has led to the widespread use of unconventional monetary policies after the global crisis. Hence, it has been more and more important to better understand the effects of these policies on major economic variables and the transmission mechanism through which they influence the economy. This study analyses the impact of quantitative easing (QE) policies on local currency government bond yield in emerging market (EM) economies in a heterogeneous panel setting. An Augmented Mean Group (AMG) estimator is used that allows for cross-sectional dependence and heterogeneous slopes. Model results show that government bond interest rates in EM economies are determined by country-specific factors such as central bank policy rate, inflation and budget deficit as well as external global factors such as US ten-year government bond yield and QE policies of advanced countries' central banks.

This paper contributes to the current literature dealing with drivers of bank business model changes. We analyse the relationship between fee and commission income share and banks' performance in terms of profitability, risk and risk-adjusted profitability in the European Union. We applied the System Generalized Method of Moments to a unique data set of 329 EU banks in the period 2005-2014, which resulted in three key findings. First, we did not find any diversification benefits by increasing the fee income share. Therefore, we can conclude that the increase in fee income share observed in recent years in EU banks was driven mainly by external factors, such as increased competition, rather than by internal reasons. Second, higher reliance on equity financing and better quality of provided loans enhance banks' performance. Third, bank business strategies and macroeconomic factors are crucial determinants of banks' performance.

On a comprehensive duration data set covering 189 countries from 1960 to 2015, we employ a Heckman two-step selection model to investigate determinants of deposit insurance coverage. We find that macroeconomic status, bank structure and regulatory, political institution, legal system and deposit insurance design characteristics have a significant effect on deposit insurance coverage. Moreover, empirical results show that the impact factors are different between developing and developed countries, especially the design characteristics. Specifically, for developing countries, the scheme with the Foreign currency will support a higher coverage. And for developed countries, the Interbank deposits will lead to a lower coverage, but the No coinsurance shows the opposite effect. It is noteworthy that both the Payouts and Backstop from government influence the coverage setting conversely in different samples, which implies that there may be higher banks' risk-taking incentives in developing countries after setting up explicit deposit insurance system.

This paper examines the role of structural change in the asymmetric adjustment of retail energy prices following changes in crude oil costs. The paper also examines the pattern of adjustment in retail energy prices when exchange rate is accounted for as part of the marginal cost of importing crude oil in European countries with high oil import dependency ratio. The paper shows that the results of Greenwood-Nimmo and Shin (2013) no longer hold when the structural change in the relationship between retail energy prices and crude oil costs is taken into the consideration. The paper also cautions that studies like Kristoufek and Lunackova (2014) that failed to account for exchange rate as part of the marginal cost of importing oil for countries with high oil import dependency ratio may be misleading. In fact, the results of this paper further indicate that once the exchange rate effect is taken into consideration, the possibility of rent-seeking behaviour in the gasoline markets of Italy and Spain disappears; while the rockets and feathers effect observed in most of the ex-tax gasoline, diesel, domestic heating oil and industrial fuel oil markets vanishes.

The second order stochastic dominance (SSD) has become exceedingly popular in recent years,
due to its ability to determine the dominance of one asset over another for all risk-averse investors
without a strict requirement in asset distribution. In this study, 33 OECD country indexes and their
enriched set of assets, which consists of some combinations of these indexes, are investigated
and compared between 2007 and 2015 by utilizing pairwise SSD comparisons, with different data
frequencies, such as daily, weekly, monthly and quarterly. This paper contributes to the literature
in three points: Firstly, a serious portion of the best performing OECD countries has the lowest GDP
(PPP) per capita level. Secondly, the SSD efficient set depends on data frequency. Thirdly, when
the data frequency is lowered, the difference between two SSD pairwise efficiency tests decreases.

This article analyses the relationship between corporate social performance and financial performance at the level of a panel of 62 Romanian companies listed on the Bucharest Stock Exchange. The first challenge was measuring of the social performance. A new social performance measurement system was developed based on which the CSP Index was obtained. The GRI criteria for reporting, the channel of communication chosen by the companies, as well as the level of detail of the published information were taken into account. The estimation of the regression model was made using the CSP Index as the dependent variable and the financial indicators (return on assets, return on equity, sales growth, average number of employees, total sales, market value added, PER index) as the independent variables. The panel regression analysis done to highlight the fixed or random effects at the company level indicated a relatively weak causal relationship between corporate social performance and financial performance. The social performance may also depend on other variables that are not included in the model, although, the general conclusion was that the social performance of Romanian companies is relatively low, but in an ascending evolution.