Template-Type: ReDIF-Article 1.0 Author-Name: Martin Janicko Author-Name-First: Martin Author-Name-Last: Janicko Author-Email: martin.janicko@vse.cz Author-Workplace-Name: Vysoká ?kola ekonomická v Praze Title: Mainstream Versus Heterodox View on Financial Innovation Abstract: There is much controversy surrounding something what is conventionally called ?financial innovation?. Yet, it should be in any case seen as a relatively substantial element in the functioning of modern economies. However, its general impact should be assessed from quite different perspectives, depending on its particular behavior, and subsequently, the role it plays in an economy. In terms of economic fluctuations, financial innovations are frequently assessed based on the cycle amplitude. The amplitude may typically be determined by efforts to evade a regulatory framework set by a central authority in the country. Most importantly, this contribution follows either Post Keynesian or Regulation School logic, trying to clarify business cycle volatility with respect to the intensity of innovative activities in the financial sector. At the same time, it also strives to specify the most important standpoints of contemporary mainstream economics. Its main conclusion is that higher intensity of financial innovation usually leads to a higher volatility of the business cycles, namely due to excessive pessimistic or optimistic sentiment and influx of supplementary credit. Additionally, at times it may also lead to so called self-fulfilling prophecy, which itself contributes to the major vector direction of the economy. Classification-JEL: G01, G28, E32 Keywords: financial innovation; mainstream economics; Regulation School; Post Keynesian economics Journal: International Journal of Economic Sciences Pages: 1-24 Volume: 4 Issue: 1 Year: 2015 Month: March File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-74 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-74?download=1 Handle: RePEc:sek:jijoes:v:4:y:2015:i:1:p:1-24 Template-Type: ReDIF-Article 1.0 Author-Name: Young-Han Kim Author-Name-First: Young-Han Author-Name-Last: Kim Author-Email: kimyh@skku.edu Author-Workplace-Name: Sungkyunkwan University Author-Name: Eun Mo Yang Author-Name-First: Eun Mo Author-Name-Last: Yang Author-Email: superqn@skku.edu Author-Workplace-Name: Sungkyunkwan University Title: Environmental Protection versus Incentives for FDI Inflows: Abatement Technologies Matter Abstract: This paper examines how environmental regulation affects the FDI strategies of parent firms in developing countries (the South) and developed countries (the North) when there are differences in the emission abatement technology between these countries. More lenient environmental regulations of developing countries are likely to attract more foreign capital inflows with higher risks for being pollution haven. As long as the emission abatement technology of the multinational corporations is superior to that of the South, lenient environment regulation to induce foreign capital inflows turns out to be the optimal policy. Also when social concerns about pollution are higher than the critical value, there is a tougher environmental regulation. Moreover, the welfare of developing country is maximized with the foreign capital inflows as joint-venture, suggesting higher incentive policies for joint-ventures with higher abatement technology. We also demonstrate that stricter environmental regulation is applied if the foreign firm invests as a monopoly firm instead of joint-venture. The larger market size of the developing economy also induces stricter regulation. Classification-JEL: F18, F23, Q56 Keywords: FDI strategy; Emission standard; R&D; Developing country; Environmental regulation Journal: International Journal of Economic Sciences Pages: 25-44 Volume: 4 Issue: 1 Year: 2015 Month: March File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-80 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-80?download=2 Handle: RePEc:sek:jijoes:v:4:y:2015:i:1:p:25-44 Template-Type: ReDIF-Article 1.0 Author-Name: Dana Kloudova Author-Name-First: Dana Author-Name-Last: Kloudova Author-Email: xklod06@vse.cz Author-Workplace-Name: University of Economics, Prague Title: Estimating Output Gap and Potential Output for Russia and Its Usefulness by Forecasting Inflation Abstract: This paper deals with an estimation of output gap and potential output for Russian?s economy. Three methods of estimation have been used for estimating these two unobservable variables: Hodrick-Prescott filter, production function and SVAR model. All methods of estimation showed very similar course, although obtained values were not identical. Then obtained values of output gap were used to analyse the ability of output gap to forecast inflation. Two simple gap models were used for this purpose. Results showed that output gap could be used as useful indicator of inflation, according to all methods of estimation output gap. Abstrac Abstract Abstract Classification-JEL: C53, E31, E32 Keywords: output gap, HP filter, SVAR model, production function, inflation Journal: International Journal of Economic Sciences Pages: 45-59 Volume: 4 Issue: 1 Year: 2015 Month: March File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-75 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-75?download=3 Handle: RePEc:sek:jijoes:v:4:y:2015:i:1:p:45-59 Template-Type: ReDIF-Article 1.0 Author-Name: Valeriu Nalban Author-Name-First: Valeriu Author-Name-Last: Nalban Author-Email: valeriunalban@gmail.com Author-Workplace-Name: Bucharest University of Economics Studies Title: Do Bayesian Vector Autoregressive models improve density forecasting accuracy? The case of the Czech Republic and Romania Abstract: The supremacy of Bayesian VAR models over the classical ones in terms of forecasting accuracy is well documented and generally accepted in the literature on the grounds of overcoming the short sample and overfitting problems. However, the record is rather limited in case of emerging economies, ¬¬¬and more so for density (as opposed to point) forecasting. In this paper we compare the predictive accuracy of Bayesian and classical VAR models in case of density forecasting Czech and Romanian economic variables. The results show predictive densities are generally well calibrated, especially at shorter forecast horizons (less so for Romania). Log predictive density scores confirm the hypothesis of more accurate predictions of Bayesian VAR over classical VAR and naïve univariate models, the dominance of the former being more obvious in case of Romania. As such, the Bayesian approach to VAR yields a better approximation of the uncertainty surrounding the unknown future and minimizes the prediction errors. Classification-JEL: C11, C13, C32 Keywords: Bayesian VAR, density forecasting, forecast evaluation, calibration, sharpness Journal: International Journal of Economic Sciences Pages: 60-74 Volume: 4 Issue: 1 Year: 2015 Month: March File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-78 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-78?download=4 Handle: RePEc:sek:jijoes:v:4:y:2015:i:1:p:60-74 Template-Type: ReDIF-Article 1.0 Author-Name: José Luis Viveros Añorve Author-Name-First: José Luis Author-Name-Last: Viveros Añorve Author-Email: joseluis.viveros@uni-bonn.de Author-Workplace-Name: University of Bonn Title: Towards a more effective poverty reduction in Mexico: a general equilibrium assessment Abstract: Oportunidades, Mexico?s conditional cash transfer program, has proved to be an insufficient tool for poverty alleviation in a phase of low and uneven economic growth, and it has failed to achieve its intended goal to break the intergenerational transmission of poverty. In this context, what strategy would lead to a more effective poverty reduction without jeopardizing Mexico's economic development? This study carries out a general-equilibrium assessment in a bottom-up approach in the regional setting of Chiapas, the poorest state in Mexico. It finds that a policy set composed of a 20 per cent, 10 per cent, and 5 per cent increase in fixed investment in agriculture, construction, and manufacturing, respectively, as well as distributional changes in Oportunidades and other social transfers, pro-poor direct tax rate changes, a higher value-added tax rate and the elimination of labor and payroll taxes, may notably boost real GDP growth by 6 per cent. This economic strategy may also reduce informal employment, may ensure that formal labor income growth increases more than capital income, and may generate pro-poor growth, enhancing a process of structural transformation and rural change. Moreover, poverty would fall. The growth elasticity of poverty shows that for every one-percentage increase in GDP, poverty would decline by 2.95 per cent on average. Classification-JEL: E16, I32, O11 Keywords: Oportunidades, conditional cash transfers, poverty reduction, pro-poor growth, rural change, structural transformation, Chiapas, Mexico Journal: International Journal of Economic Sciences Pages: 75-107 Volume: 4 Issue: 1 Year: 2015 Month: March File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-79 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-79?download=5 Handle: RePEc:sek:jijoes:v:4:y:2015:i:1:p:75-107