CE Special Issue - COVID-19
Challenges of Contemporary Economics


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Volume 14 (2020) Volume 13 (2019) Volume 12 (2018) Volume 11 (2017) Volume 10 (2016) Volume 9 (2015) Volume 8 (2014) Volume 7 (2013) Volume 6 (2012) Volume 5 (2011) Volume 4 (2010) Volume 3 (2009) Volume 2 (2008) Volume 1 (2007)

Volume 9 Issue 1 (2015)

An Introduction to Alternative Experimental Models in Monitoring Economic Failures original article

pp. 5-16 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.156

Mario Arturo Ruiz Estrada, Muhammad Tahir


This research paper presents four alternative experimental models for monitoring economic failures. These models include the national production function (NP-Function), the multi-level trade creation and trade diversion analytical framework, the mega-economic structures vulnerability analysis (MSV-Analysis), and the mega-economic surface interactive system. The main objective behind the proposed experimental models in economics is to analyze different macroeconomic scenarios in monitoring and warning of possible unexpected economic failure(s) under the use of a new mathematical framework and the application of multidimensional graphs. The proposed alternative experimental models are based on the application of Econographicology. Hence, our models are expected to offer policy-makers and researchers new analytical tools to study the impact and trend of economic failures in the economy of any country from a new perspective. Finally, we suggest the application of three new concepts in the study of economic failures such as Omnia Mobilis (everything is moving), the global structural imbalance principle, and the dynamic imbalance state. Therefore, our findings would certainly help both policy makers and researchers to implement and execute appropriate policies to develop their economies and to protect them from unwanted situations.

Keywords: Econographicology, Economic Modeling, Macroeconomic Policy, Economic Teaching, Multi-Dimensional graphs and Multi-Dimensional Physical Spaces

Gross Value Added and Total Factor Productivity In Czech Sectors original article

pp. 17-28 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.157

Tomáš Volek, Martina Novotná


The main purpose of this paper is to consider the development of total factor productivity in the development of gross value added in individual sectors of the economy of the Czech Republic in the period from 1996 - 2011. The National Account was the source of the data. The paper addresses the importance of extensive and intensive sources of economic growth in individual sectors. It was found that the development of total factor productivity does not match the growth of gross value added. The growth of gross value added was significantly influenced by extensive and intensive sources of growth in all of the economy and its sectors. The hypothesis stating that if the total factor productivity rises faster than the gross value added, then the extensive factor is negative was accepted for all sectors of the economy. The influence of intensive factors was primarily found in the manufacturing and commercial service sectors. The results of this study indicate differences in the sources of growth in individual sectors.

Keywords: gross value added; total factor productivity; sectors;

Oil Price Forecasting Using Crack Spread Futures and Oil Exchange Traded Funds original article

pp. 29-44 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.158

Hankyeung Choi, David J. Leatham, Kunlapath Sukcharoen


Given the emerging consensus from previous studies that crude oil and refined product (as well as crack spread) prices are cointegrated, this study examines the link between the crude oil spot and crack spread derivatives markets. Specifically, the usefulness of the two crack spread derivatives products (namely, crack spread futures and the ETF crack spread) for modeling and forecasting daily OPEC crude oil spot prices is evaluated. Based on the results of a structural break test, the sample is divided into pre-crisis, crisis, and post-crisis periods. We find a unidirectional relationship from the two crack spread derivatives markets to the crude oil spot market during the post-crisis period. In terms of forecasting performance, the forecasting models based on crack spread futures and the ETF crack spread outperform the Random Walk Model (RWM), both in-sample and out-of-sample. In addition, on average, the results suggest that information from the ETF crack spread market contributes more to the forecasting models than information from the crack spread futures market.

Keywords: oil price forecasting, crack spread futures, oil-related exchange traded funds, multivariate GARCH model

Corruption, Political Instability and Economic Development in the Economic Community of West African States (ECOWAS): Is There a Causal Relationship? original article

pp. 45-60 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.159

Nurudeen Abu, Mohd Zaini Abd Karim, Mukhriz Izraf Azman Aziz


Despite the abundant research on economic development, corruption and political instability, little research has attempted to examine whether there is a causal relationship among them. This paper examines the causal relationship among corruption, political instability and economic development in the ECOWAS using the Granger causality test within a multivariate cointegration and error-correction framework for the 1996-2012 period. The findings indicate that political instability Granger-causes economic development in the short term, while political instability and economic development Granger-cause corruption in the long term. In addition, we employed the forecast error variance decomposition and impulse response function analyses to investigate the dynamic interaction between the variables. The results demonstrate positive unidirectional Granger causality from political instability to economic development in the short term and positive unidirectional Granger causality from political instability and economic development to corruption in the long term in ECOWAS countries. Thus, ECOWAS governments should employ policies to promote political stability in the region.

Keywords: Corruption, Political instability, Economic development, ECOWAS

Negative Impacts of the Neo-liberal Policies on the Banking Sector in Bulgaria original article

pp. 61-76 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.160

Rossitsa Rangelova Pavlova, Grigor Sariiski


From the beginning of the 1970s until the last global financial and economic crisis in 2008-2009, neo-liberal ideas guided economic policy development. It is worth noting that the Central and Eastern European countries transformed their economies from centrally planned to а market type at the peak of the liberal policies. Bulgaria offers a particularly interesting example because the country encountered a very difficult transition from one extreme of an economic system organization to another. The paper considers the reforms in the Bulgarian banking sector during the transition period from a centrally planned to a market type economy (from 1989 onward) through the implementation of neo-liberal policies. The development of the banking sector and its transformation is analyzed throughout the two main periods: before and after the transition. The latter is divided into two sub-periods (phases) beginning with the early 1990s, followed by the financial and bank crisis in the country, the introduction of a currency board regime in 1997, and stabilization, and ending with the global crisis in 2008-2009. This article summarizes that during the transition period, a modern banking system was established to accumulate profit rather than to promote economic growth. Following a chronological order, the negative effects of the liberalization of the Bulgarian banking sector are specified: the exportation of ownership (and control) upon banking system assets, unfair asset redistribution, the emergence of the local oligarchy, the weak protection of the taxpayers and others.

Keywords: neo-liberal policies, transition from centrally planned to a market type economy, financial sector, Bulgarian banking system

Fiscal Austerity Versus Growth in Croatia original article

pp. 77-92 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.162

Marinko Škare, Romina Prziklas Druzeta


The role of fiscal austerity has been questioned for centuries, but a rapidly increasing deficit along with the financial crisis in 2007/2008 influenced a renewed debate on the economics of austerity. This paper analyzes the role of austerity versus the role of economic growth. It also attempts to highlight the role of the theoretical context of austerity policy and the economic history lesson learned during the transition from the Bretton Woods model to Washington’s consensus. Despite numerous studies and polarized debate, no consensus on the implementation of fiscal austerity has been achieved because this complex subject has not been the subject of a sufficient methodological exploration. Emphasis should be placed on defining the methodology of austerity and gathering statistical data to influence the implementation of social transfer policies. In addition, it is necessary not only to take a hybrid approach to fiscal and monetary policy but also to adopt economic laws and quantitative economic relationships. The benchmarking country used in this paper is Croatia. The outcome of this research can serve as the basis for future decision-making and research.

Keywords: fiscal austerity; economic growth; business cycles; macroeconomic adjustments

The Impact of Banks and Stock Market Development on Economic Growth in South Africa: an ARDL-bounds Testing Approach original article

pp. 93-108 | First published in 31 March 2015 | DOI:10.5709/ce.1897-9254.161

Sheilla Nyasha, Nicholas M. Odhiambo


This paper examines the impact of both bank- and market-based financial development on economic growth in South Africa during the period from 1980 to 2012. Unlike some previous studies, the current study employs means-removed average to construct both bank- and market-based financial development indices. The study uses the newly developed autoregressive distributed lag (ARDL) bounds testing approach to examine this linkage. The empirical results of this study show that there is a positive relationship between bank-based financial development and economic growth in South Africa. The results, however, fail to find any relationship between market-based financial development and economic growth in South Africa. The results apply irrespective of whether the regression analysis is conducted in the short run or in the long run. These results imply that it is bank-based financial development rather than market-based financial development that plays a pivotal role in propelling South Africa’s real sector.

Keywords: South Africa, Bank-based Financial Development, Market-based Financial Development, Economic Growth