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The paper examines development of economic balance and efficiency of monetary and fiscal policy in the Czech Republic and Slovakia during the crisis with the help of empirical verification of Robert Mundell's model of effective market classification. Our main findings show that although there was no direct 'loser' during the crisis, the Czech Republic seemed to have better coped with its economic imbalances due to the independence of its monetary policy. Slovakia, on the contrary, has preserved several problems on the side of external balance. However, as both countries show certain differences, it is impossible to assess whether the euro adoption had the same effect on both of them. In general, the paper contributes to the research on the Czech and Slovak economy and euro area membership.

The paper examines the issue of flexicurity in the EU Member States and studies the association between flexicurity policy components (i.e. employment protection legislation, lifelong learning programs, active and passive labour market policies) and labour and total factor productivity growth in 20 EU Member States over the 1991-2008 period. The empirical analysis pointed on the existence of large differences in the level of implementation of flexicurity policies across EU Member States, by which the least successful are NMS, especially with regard to active labour market and lifelong learning programs. As regards the relation between flexicurity variables and productivity growth, panel regression estimates showed that active labour market policies and participation in lifelong learning programs have a statistically significant positive association with labour and total factor productivity growth. On the other hand, rigid employment protection and high expenditures for passive labour market policies negatively relate to productivity growth.

This paper investigates multiscale interdependence between the stock markets of Germany, Austria, France, and the United Kingdom. Wavelet energy additive decomposition was analyzed to investigate which scales capture the most energy (volatility), whereas a wavelet cross-correlation estimator was used to analyze comovement and lead/lag relationship between stock markets' return dynamics on a scale-by-scale basis. The main findings of the paper are as follows. First, major financial market crises had a significant impact on return volatility of investigated stock markets. Among them, the global financial crisis of 2007-2008 had the greatest and the most durable impact. Second, the lowest scale (associated with stock markets' return dynamics over a 2-4 days horizon) and the second lowest scale (associated with stock markets' return dynamics over 4-8 days horizon) MODWT (maximal overlap discrete wavelet transform) decompositions of stock markets' returns captured the greatest share (together about 70-80%) of indices' returns volatility. Third, comovement between stock market returns is a scale-dependent phenomenon. Fourth, a strong comovement between stock market returns of Germany, France, and the United Kingdom exists at all scales, while the Austrian stock market is less correlated with the three biggest stock markets in Europe. Fifth, the dynamics of stock market returns seems to be well time-synchronized at daily (raw returns) and the lowest scale (scale ) return decomposition as most of the return innovations are transmitted between stock markets intraday. Sixth, at the highest investigated scale (associated with stock markets' return dynamics over a 64-128 days horizon), significant leads and lags between dynamics of stock markets' returns were detected. The time-synchronization of the stock markets' return dynamics for investments of 64 to 128 days horizon is less perfect than for investments of shorter investment horizons.

The paper describes the development cooperation of the Czech Republic within the European Union. It has briefly analyzed the evolution of development cooperation until 2004 when Czech Republic joined the European Union and further the situation from 2004 to present. The paper also evaluated the financial resources for development cooperation, bilateral cooperation and the comparison with other EU Member States, background on the progress of Official Development Assistance in European Union.

This study examines the extent to which fund characteristics contributes to explaining fund returns differentiated by managers' stock picking and market timing abilities. The findings show that funds characterized by high exposures to broad market movements have good timing returns but show poor selectivity performance, suggesting the presence of activity specialization among fund managers. It is shown that large funds enhance managers' timing returns, reflecting the efficiencies of large funds in responding to market-wide movements. However, as the size of the fund gets larger, managers find it more challenging to identify worthwhile investments and hence results in poor selectivity performance.

We investigate the influence which the financial condition of a multinational bank group may have on the lending rates of its affiliates, using data from the ten biggest banks in the Czech Republic under foreign control. The analysis is based on a theory of bank lending in which the implicit opportunity costs of lending by a foreign bank affiliate are influenced by the scarcity of funds within the multinational conglomerate. The theory predicts that parent banks' influence should be stronger in loan segments with more pronounced information asymmetry. Our empirical model, which explains the interest rate charged by the affiliate by means of affiliate-level controls and a parent influence variable, is tested for three categories of commercial non-financial borrowers (domestically owned firms, foreign-owned firms and the self-employed). Evidence of parent influence is found in a limited number of cases of banks and borrower classes for which the constraint on fund flow within the parent bank group is likely to be tight, particularly when the borrower class is of strategic importance for the affiliate's overall performance.

The paper presents the development of monthly gross wages and wage distributions both by gender groups and for the total sample in the Czech Republic over the years 2002-2009. The first part deals with the development of sample characteristics of the level, differentiation and shape of the wage distribution in the research period, including characteristics of wage level forecasts for 2010 and 2011. Special attention is paid to the different behaviour of the wage distribution between men and women in the Czech Republic and the gender dependence of gross monthly wages. A comparison of the income level development in the Czech Republic with that of the other European Union countries in 2005-2009 is made in the final part of the paper. The comparison is drawn in relation to the income level development both in the original fifteen EU countries and the twelve newly-accepted EU member states.

We tested the hypothesis of procyclicality against the economic activity and stock exchange of Croatia - as a country preparing for EU accession - in order to investigate the spillover effect, i.e., the degree and pace of integration into larger financial markets such as the EU. The empirical findings obtained in application of OLS methodology for the 2000-2010 period provided evidence that EU accession is a trigger for a closer financial integration of a candidate country as Croatia; and a trigger for a rise in stock prices and economic revival, was reflected in by an increase in GDP and large FDI.

The paper presents both the theoretical account of the issue of foreign exchange risk premium and the actual estimates of the time-varying risk premium for the cases of the Czech koruna to euro and US dollar. The risk premium is modelled within a state space framework and estimated using the Kalman filtering procedure. Some financial market fundamentals are used to estimate the risk premium, and thus not only do the estimates give insight into the foreign exchange market behaviour but also into some linkages between the various segments of the financial market as a whole.

This paper aims to quantify the basic structure of gender wage gaps in the Czech Republic, Hungary, Poland, and Slovakia, using the EU-SILC 2008 dataset. The structure of the gender wage gap is analyzed based on the Heckman selection model and Oaxaca-Blinder decomposition. The findings are to a great extent similar for the Czech and Slovak Republics. The observed gender wage gap is relatively high in these two countries, compared to Hungary and Poland. A relatively small but positive part of the observed gender wage gap can be explained by gender differences in characteristics in the Czech and Slovak Republics, with a high contribution of job characteristics. An opposite result proved in Hungary and Poland, where working women have on average even better characteristics than working men, mainly in terms of individual characteristics.

This paper highlights the monopoly firms' commitments for goods requiring high maintenance expenditure, such as elevators, televisions and computers. A guarantee time limit model to maintain these special goods is presented in this paper. Based on this model, several types of commitments with different guarantee time limits are compared under monopoly conditions. This paper finds that the guarantee pattern has no effect on the monopoly firm's profits if all information is known to both the consumer and the monopolist. It is also shown that if a monopoly firm exaggerates its product quality claims in its advertisements, then it cannot meet its warranty guarantees. Industrial organizational theory is employed to analyze maintenance guarantees in this work.

The aim of this work is to provide new evidence on the factors that determine the flow of FDI among transition countries. The analysis takes into consideration the period of most intense transition and post-transition (1994-2002) of 26 former socialist countries. The empirical estimates enable us to draw two main conclusions: first classical locational FDI factors maintain their role in the context of transition countries, and, second, that FDI are influenced by specific market and institutional factors. Among market variables, relatively higher labour costs surprisingly do not constitute an obstacle for foreign investment. We find that variables reflecting market stabilising institutions play a more important role than those representing market creating institutions. Although, there is a certain tolerance of foreign investors towards weak institutional environment, we demonstrate that, to attract FDI, countries should reinforce their macroeconomic stability by focusing on market stabilising institutions.

The swap market is key segment of the fixed income market due to its liquidity and tight links to other market segments. In our paper we estimate basic parameters of the swap curve and we test the stability of these parameters during the crises period. Our estimate confirms that the Czech swap curve may be represented by three components that track its level, slope and curvature. These parameters were stable during the crises period that culminated in the autumn 2008. On contrary, the basic swap curve characteristics are showing most abnormal behaviour during periods of relative calm development. The traditional determinants of the Czech swap curve remain monetary policy, euro swap rates and risk premiums. Although risk premiums are low in the swap market, the large increase in risk premium in the Czech money market rates had significant impact on the swap curve slope during the crises period.

The article discusses several factors that should be addressed when analysing linear dependences and testing the Efficient Market Hypothesis on the Czech capital market in order to avoid possible interpretation biases. The conclusions are based on the empirical analysis of the stock return behaviour in 1995-2005 and the generalization of the up-to-date local studies outcomes. It also discusses the market's relative efficiency compared to capital markets that are considered the most effective worldwide and on the European territory - the American NYSE and the German and Netherlands stock exchanges. Significant linear dependences of daily returns are typical on the Czech capital market; its relative efficiency still lags behind the efficiency of the developed markets.

In this paper we discuss the issue of the choice of foreign exchange rate regimes in transitive economies, their effect on the relative changes and the volatility of the foreign exchange rate and the development of the national foreign exchange market. The results of our analysis indicate that the choice of the foreign exchange rate regime is not a passive factor regarding both average relative changes in exchange rates and volatility as measured by the standard deviation. They also show that increased volatility of spot rates and a growing interest rate differential lead to the growth of the share of outright forwards and swaps (e.g. transactions that might be used for hedging) in relation to spot transactions.

This paper examines the long-run relationship between oil prices and stock market prices of G7 countries by using Robinson (1994a) tests for fractional integration and cointegration instead of the classical approaches. Having found that the unit root null hypothesis cannot be rejected for any individual series, it is examined whether oil prices and stock market prices have a fractional cointegration relationship. Test results on the residuals from the cointegrating regressions indicate that there is evidence of fractional cointegration between oil prices and DAX 30, Dow Jones, FTSE 100 and SP-TSX indices while there is no evidence of fractional cointegration for others.

During different GDP growth regimes, the dynamics of global financial markets impacts the Slovenian stock exchange with varying intensity. We propose a smooth transition regression model to explain Slovene stock exchange index returns employing financial and macroeconomic variables. According to our model, the reaction of the stock market to several of the explanatory variables depends on the magnitude of GDP growth. The weaker relationship between Slovene stock exchange index returns and S&P 500 returns in the period of lower or negative GDP growth could be explained by less developed financial market in Slovenia and therefore not closely linked interchange of securities.

In this paper, we assess the effects of the investigations carried by the Turkish Competition Board in 1997, 2002 and 2003 on the degree competition in the Turkish cement market. For this aim, we used proverbial Bresnahan-Lau framework with alternative definitions for the supply relation. Our first finding is that cement producers had a considerable amount of market power at the period prior to the first investigation in 1997. In addition, this study shows that, parallel to our initial expectation, competition in the cement market increased thanks to the investigations. The positive effect of the first investigation is found to be especially significant. Hence, this study witnesses that the enforcement of the competition law by the Turkish Competition Board has produced the desired effects in the most problematic sector with respect to competition law.

In this paper we extend the original heterogeneous agent model by introducing smart traders and changes in agents' sentiment. The idea of smart traders is based on the endeavor of market agents to estimate future price movements. By adding smart traders and changes in sentiment we try to improve the original heterogeneous agents model so that it provides a closer description of real markets. The main result of the simulations is that the probability distribution functions of the price deviations change significantly when smart traders are added to the model, and they also change significantly when changes in sentiment are introduced. We also use the Hurst exponent to measure the persistence of the price deviations and we find that the Hurst exponent is significantly increasing with the number of smart traders in the simulations. This means that the introduction of the smart traders concept into the model results in significantly higher persistence of the simulated price deviations. On the other hand, the introduction of changing sentiment in the proposed form does not change the persistence of the simulated prices significantly.

This paper demonstrates that increasing returns to scale can be sustained when agents care about praiseworthiness of their conduct. Unlike the desire to attain approbation from external sources, the notion of praiseworthiness seems to have been neglected by contemporary economic literature. Yet the relevance of praiseworthiness as an internal motivational force was stressed by a number of classical economists. We construct an endogenous growth model in which agents derive utility not only from their consumption but also from praiseworthiness of their action. In such a setting, the motivation by praiseworthiness is able to generate positive and accelerating growth of output per labourer in steady state. The main implication of our model is that the existence of increasing returns depends critically on presence of sufficient approbation attributed to creativity. Furthermore, the presence or the absence of these rewards may be susceptible to explain the cross-sectional differences in growth rates, growth miracles and growth disasters.

This paper aims to quantify the impact of social benefits on labour market participation in the Czech Republic and provides a comparison with selected European countries. It applies the logistic regression to estimate the probability of labour market participation depending on social benefits related to net wage of the individuals, controlling for individual and household characteristics. Our results indicate that the work disincentives via social benefits do exist in most of the included countries and they proved to be relatively strong in the Czech Republic. When trying to understand the reasons for recently decreasing participation rate in the Czech Republic, the often called ""generous"" Czech social benefit system appears to be relevant.

The paper deals with the hypothesis of housing price bubble in the Czech economy. This topic is very popular among economists worldwide now, especially because of the U.S. housing crisis and subsequent collapses on financial markets. However, surprisingly there are not many analyses dealing with the Czech housing market (besides e.g. very brief Financial Stability Report published by the Czech National Bank in 2008) and with the possible housing bubble burst. The first standard bubble indicators like P/I ratio are used to identify the bubble possibility on the Czech housing market. As the second step a regression analysis (VAR model) is being used for deeper analysis of the situation. The whole analysis is complicated by a lack of relevant data and quite short-time series.

A proper picture of the Czech labour market emerges by focusing on its nuanced details from various perspectives. First we focus on the specific phases of the labour market as it developed in the 1990s. Second, we observe the changing composition of the labour force and labour mobility. Third, we examine the vulnerable categories of people. Policies, active labour market policies in particular, are described in the fourth section. Fifthly, we analyse the flexibility of the labour market in its various forms. In conclusion, several questions regarding the future of the Czech labour market are raised: predominant montage character of the Czech economy and labour force, weak work commitment, growing differentiation of the labour market and a weak legal and institutional environment of business and employment.

The paper analyses the causes of the current situation of women on the labour market in Poland, the Czech Republic and Slovakia as well as women's chances for the future. It discusses the questions: Are women more at risk of unemployment than men in the future, or less? Will the twenty first century favour the development of women's career opportunities? The conclusion is that we are facing the end of industrial era and are moving towards the era of information and knowledge. Women are more prepared for these changes, as they are better educated, they are motivated to take up new challenges, and they posses the skills needed in new economy like the ability to communicate and cooperate, empathy and intuition.

The behaviour of selected European stock indices in the period 2001-2005 was analysed. UKX (GB), DAX (Germany), CAC (France) and MIBTEL (Italy) represented well established West European markets, whereas PX-50 (Czech Republic), SKSM (Slovak Republic), BUX (Hungary) and WIG (Poland) were the examples of Central European emerging ones. The subject of this analysis were logarithmic daily returns computed from closing values of corresponding indices. Cross correlation function reached typical values 0.7 (West Europe) and 0.4 (Central Europe) excepting the Slovak Republic. The patterns of both common and solitary movements were revealed with the use of principal component and cluster analysis. To establish some dynamical relations in return time-series, vector autoregression models and Granger causality tests were employed. As for West Europe, the causal chain UKX_MIBTEL_DAX_CAC was revealed. On the other hand, the form of this chain for Central Europe was PX-50_BUX_WIG. Finally, the behaviour of both BUX and WIG returns was strongly determined by all West European counterparts.

In transition countries, especially in the period of central planning or semi-command regulation, prices of goods and services in the non-tradable sector were regulated, which was one of the main obstacles to normal functioning of the supply-demand market mechanism after the breakdown of the socialist economic system. In the period of economic transition reestablishment of market institutions arises, with price deregulation as one of the fundamental constitutional parts of this process. But in the case of transition economies there exists a recognized doubt in an immediately well functioning market system after deregulation because of inadequate development of the economic system in the past that produced a gap in the development of institutions typical for market economies. The aim of this article is to present the results of the empirical analysis on the market outcomes of price deregulation for chimney sweep services in the Slovenian economy. For this purpose we developed an original model for analysing market outcomes after price deregulation occurs. For the selected case study we recognize large cumulative price growth, that was a consequence of significant supply-side imperfection, since the selection among suppliers is based on the concession system at the municipality level.

Economic transition in the Czech Republic has created a group of long-term unemployed people, many of whom do not actively seek out employment opportunities and instead rely on social assistance. A number of subjective and objective factors contribute to this problem, including the shifting demands of the labour market, regional variation, workers' attitudes and skill level, and the relationship between social assistance benefits and the minimum wage. This article assesses the issue of workers' motivation. Although there are combinations of factors that result in low motivation to search for jobs, the social assistance system is especially at fault and structural changes must be made to better foster workers' engagement and motivation. The problem with the social assistance system is finding the balance between protecting people from poverty and motivating them to work.

In 2004, the Czech economy continued in solid growth. Slight acceleration of economic growth was driven in particular by strong investment demand and improving performance of the foreign trade with goods. On the other hand, due to slowdown in real wages, consumer demand weakened. 2004 was the year of turnover in foreign trade which has reported the best results since 1994. The EU entry was an important factor behind the improvement of trade balance - the foreign trade exchange significantly accelerated after the EU accession. The EU entry opened new chances to the exporters, especially small and medium-sized companies could fully use the advantage of the Single Market. With the trade balance improving, the reason for permanently high current account deficit is the growing deficit of income balance as a consequence of strong FDI inflow. January and May changes in the Value Added Tax brought a temporary speed-up of consumer prices. After the absorption of this increase, since the last quarter of 2004, headline inflation has been declining. Similar to previous years, inflation fell under the CNB target corridor. Record high world prices of oil and metals caused a strong increase of industrial producer prices, however, strong competition between both producers and traders has prevented the spillover to consumer prices.

This paper deals with the Czech economy supply side performance from the macroeconomic point of view. In order to evaluate the supply side behaviour we calculate the potential output dynamic path and contribution of its particular determinants using the production function method. The results show that the potential output growth was rather slow around 2 per cent. This implies that e. g. even 3 per cent growth can cause macroeconomic imbalances. Increase of the non-accelerating-inflation-rate of unemployment (NAIRU), weak growth of the capital stock and weak growth of total factor productivity appear to be the reasons for the constrained ability of the Czech economy to grow steadily and converge to EU level.

Based on a general equilibrium model, this study finds that real output in Estonia is positively associated with real quantity of money and negatively influenced by real depreciation of the kroon, real stock prices, and the expected inflation rate. Government deficit spending is found to be insignificant. Policy implications are that fiscal discipline pursued by the Estonian government is appropriate, that a stronger currency may better serve Estonia, and that the wealth effect of an increase in the stock price on real money balances is greater than the substitution effect.