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Financial Crisis, Economic Policy and Economics
19-34Views:129Concerning the financial crisis in 2007-2009 many politicians and economists, in addition
to representatives of other disciplines have asked: why could it not have been avoided,
why could it not have been forecast? The present paper provides a new answer to these
questions. The main argument is that empirical economic policy reached a deadlock when
economists acknowledged the equilibrium models based on efficient market theory. The
static equilibrium paradigm which appeared in the middle of last century has strongly
prevailed to the present day, leaving aside Kornai’s (1971) or Benassy’s (1982) or Goodwin’s
(1991) warnings. Since the economy is never in equilibrium the simultaneous equations
describing it may not provide any guide for politicians; what they should do and how they
should do it in a time of economic crisis. The present author’s newest book (Móczár, 2008),
besides the dynamic equilibrium, also sketches a new paradigm, i.e., non equilibrium
modelling, instead of the orthodox equilibrium paradigm, which allows us to treat bubbles,
to regulate money markets etc. Its necessity is outlined here.JEL classification: E00, E5, E6, G28
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Equilibrium analysis of a semi-mixed duopoly – the production-in-advance case: Játékelméleti modell – a készletre történő termelés esete
63-74Views:124We investigate a mixed duopoly where, according to the ownership structure, a private firm and a partially public firm are present on the market of a homogeneous good. The private firm is assumed to be a pure profit maximizer, while the other firm maximizes social welfare in proportion to its state-owned shares. We assume that production takes place before sales are realized. After an introduction to some important results in the field of mixed duopolies, we determine the Nash equilibrium prices and quantities for all possible orderings of moves in the framework discussed. We show that a pure Nash equilibrium exists only if certain conditions are satisfied, and illustrate our findings through a numerical example. Furthermore, we determine the equilibrium of the timing game, i.e. we investigate whether a simultaneous or a sequential ordering of decisions would arise on the market, if the ordering of moves was an endogenous variable.
Journal of Economic Literature (JEL) Classifications: D43, L13
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Regional factors affecting the rushed and balanced growth of territorial capital
62-80Views:165Adapting the precepts of Kornai’s rushed economic growth theory, this paper compares the harmonic and rushed growth of territorial capital in the Hungarian sub-regions between 2004 and 2010. In the empirical analysis, the article applies the methodology of the concept of territorial capital. The empirical results indicate that the causes of the rushed growth of territorial capital can be found in underdeveloped infrastructural capital and the simultaneous development of socioeconomic inequalities. The effects of the rushed growth of territorial capital could be controlled and eliminated by adequately integrating tools of regional development, economic development and public policy.
Journal of Economic Literature (JEL) kódok: C62, C68, Q01, R58
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Examination of the effect of financial transfers within the European Union
83-102Views:255It is a common view that financial transfers within the European Union have a significant effect on economic growth. Model simulations, sponsored by the European Commission, seem to confirm this supposition. The econometric analyses evaluating the actual impact of the funds, however, yields a dismal picture on the additional growth and convergence effects of financial transfers. This study's goal is to find the reason why the outcomes differ so much. First, we present the main types and the underlying logic of the evaluation methods of EU regional policy. This is followed by a review of the lessons learnt from the specific evaluation methodologies including case-studies, general equilibrium models, and regression analyses. Our conclusion is that the main objectives of the European regional policy prevailed only to a limited extent, which is mainly due to crowding out effects, rent-seeking, inefficient allocation and moral hazard.
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The “Timeless and Highly Topical at the Same Time”: In Memory of Professor András Bródy
5-17Views:135Professor András (Andrew) Bródy, one of the most outstanding of post-war Hungarian economists, perhaps the most spirited member of his generation, died at the age of 86, on 3rd of December, 2010. For several decades he had been dealing with the mathematical formulation of Marxian theory. He was an internationally respected model-builder, applying input-output analysis, also working with Professor Leontief in this field. He was both in full command of high-level theoretical knowledge, and proficient in the latest methodological approaches. He also conducted pioneering research into the application of
the laws of thermodynamics to economic problems. His international fame was initially based on his book Prices and Proportions, published in Hungarian (1969) and also in English by North-Holland (1970). Several articles, conference papers, and several other books he wrote or edited broadened this recognition,
the most important landmarks being Ciklus és szabályozás (Cycles and Regulation, 1980) in Hungarian, Slowdown (1982) in both English and Hungarian, and finally, Near Equilibrium in English (2004) and Chinese (2009). Fortunately, he participated in the work of our department, the History of Economic Thought at the Corvinus University of Budapest between 1995 and 2005. This article in his honour is a brief summary of his achievements and a reader’s selection of his writings prepared for the students of our department which reflect his views on the state of economic theories; also attached is a bibliography of his most important publications.JEL classification: A11, B23, B24, B32
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Testing the long run equilibrium relationship between the nominal exchange rate and monetary macro-fundamentals
36-58Views:122The pure time series testing of long-run monetary models of exchange rate determination and its fundamental building block, purchasing power parity, in the most cases fails to support the conjectures of the theory. Thus, the empirical literature increasingly uses the panel technique when testing both models because the power of the panel unit root and panel cointegration tests seems higher than their time series obverse. In the article we examine the validity of the monetary exchange rate models and purchasing power parity over the period 1996Q1-2011Q4 for US dollar exchange rates of 15 OECD countries using
panel cointegration tests. The results show moderate empirical support for monetary exchange rate models and also purchasing power parity.Journal of Economic Literature (JEL) codes: F31, F41, C33
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A Conjectured Cournot Duopoly Model for the EU–US Automobile Trade: A Game Theoretic Analysis of the TTIP’s Most Traded Product
48-70Views:220Economic actors, in their interactions with each other, certainly make decisions which are able to improve their original situation. In the case of free trade agreements, tariffs have the effect to manipulate countries’ trade and welfare. In this paper, we try to estimate the impacts of the Transatlantic Trade and Investment Partnership (TTIP) on the profit level of participating countries in the context of the Cournot duopoly model. More specifically, we elaborate the most traded product (MTP) and determine the profit levels in the equilibrium regarding two scenarios (pre and post situations of the TTIP). The findings suggest that the Cournot model seems suitable since it illustrates the possible options and provides a guideline for the decision-making process. Based on the model, it can be shown at which point the highest benefit can be achieved for the participating economies (EU, US) i.e. how long it is worth for the parties to apply additional automotive tariffs.
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Monetary Impacts and Overshooting of Agricultural Prices in Hungary
39-49Views:118This paper employs the theoretical model developed by Shagaian et al. 2002, to analyse the response of various sectors of the Hungarian national economy to changes in the money supply. Johansen co-integration and vector error correction methodology is used to test whether agricultural prices overshoot their long-run equilibrium path if a monetary shock hits the system. Our results emphasise that agricultural prices do adjust faster to changes in macroeconomic conditions, in particular money supply, than industrial prices, thus affecting relative prices in the short-run; however, strict long-run money neutrality does
not hold. The result is that flexible sectors of the national economy, such as agriculture or services, bear the burden of adjustment, with significant consequences for farms’ viability.Journal of Economic Literature (JEL) classifications: C32, E51, P22, Q11.
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The equilibrium problems of the Hungarian economy and the theoretic possibility of a solution
85-102Views:130Followinf article analyses the question, how the twin deficit - the joint deficit of the budget and the current account - changed in Hungary between 2000 and 2006. The first part deals with the basic identities of the national accounts. The second, analytical part, looks through the latest data about the import surplus, the balance of owners' income and the inland consumption surplus, then it deals with the current account deficit and the ways of financing it, the current expenses, the net accumulation and the borrowing of the government budget. The third part performs the economic analysis and draws the main conclusions. According to this, the drastic decrease in proportion of the gross accumulation, the virtually zero net accumulation of the government sector, the deficit of the current account and the debt generating way to finance it are way more serious problems than the cudget deficit, which does not mean, that such deficit is sustainable. Even this situation does not justify the radical demolition of the welfare state, the theoretic solution can only be the increase of export capacity and the employment.