Template-Type: ReDIF-Article 1.0 Author-Name: Milan Bedná? Author-Name-First: Milan Author-Name-Last: Bedná? Author-Email: milan.bednar@vse.cz Author-Workplace-Name: Faculty of Economics, University of Economics in Prague Title: Southern Countries of the European Union in a Debt Trap: What Options Are on the Table? Abstract: This paper analyses the current debt situation of five Southern countries of the eurozone ? Spain, France, Greece, Italy, and Portugal. By using values of key debt variables between 1996 and 2016, we show that all the countries, except Italy, are caught in a debt trap. Moreover, Greece and Portugal cannot solely rely on fiscal austerity because they would need to achieve unreasonably high budgetary surpluses in a period longer than 30 years to reduce the excessive debts. Moderate results were shown in the case of France and Spain. Nevertheless, the latter country is suffering from high real interest rates on the government debt which are currently higher than 10%. Moreover, we identified and analysed four main possibilities of dealing with the debts: debt monetization, fiscal consolidation, structural reforms, and sovereign default. The debt monetization as practised by the ECB is not an appropriate solution, its secondary effects are making the situation worse, while its primary effects are based on a short-term perspective. Appropriate fiscal consolidation seems to be based on cutting expenditures. However, the target is not achievable without structural reforms. Some authors claim, that the reforms should be mainly demand-driven, however, we show that this is not the case. Based on historical evidence, the GDP growth does not serve as the main factor of reducing indebtedness. In fact, it was significant in less than 40% of the time in the examined period. Finally, we claim that due to the political motivations, there is a lack of emphasis on real competitive advantages. A return to market principles in many cases is needed, which is in contrast with the usual growth-driven reforms. When there is an insufficient political will to carry out reforms, a proper and fully-executed sovereign default would accelerate functioning of correction mechanisms in the EMU/EU. Unfortunately, such action was not executed in the case of Greece, even though the country has de-facto bankrupted. Classification-JEL: E60, F30, H60 Keywords: European Union, eurozone, indebtedness, debt trap, economic policy Journal: International Journal of Economic Sciences Pages: 1-34 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-1850 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-1850?download=1 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:1-34 Template-Type: ReDIF-Article 1.0 Author-Name: Nikolaos Dritsakis Author-Name-First: Nikolaos Author-Name-Last: Dritsakis Author-Email: drits@uom.gr Author-Workplace-Name: University of Macedonia, Economics and Social Sciences Author-Name: Pavlos Stamatiou Author-Name-First: Pavlos Author-Name-Last: Stamatiou Author-Email: stamatiou@uom.edu.gr Author-Workplace-Name: University of Macedonia, Economics and Social Sciences Title: Causal Nexus between FDI, Exports, Unemployment and Economic Growth for the Old European Union Members. Evidence from Panel Data Abstract: This study examines the causality relationships between foreign direct investments (FDI), exports, unemployment and economic growth in the fifteen old EU members using panel data covering the period 1970-2015. The Hausman test is applied for choosing between Fixed Effect and Random Effect approach in order to estimate the panel VAR equations for Granger causality tests. The results revealed three bidirectional causalities between economic growth and exports, exports and FDI, and exports and unemployment and three unidirectional causalities running from FDI to economic growth, FDI to unemployment and from economic growth to unemployment. Policy implications are then explored in the conclusions. Classification-JEL: C22, E31, E50 Keywords: Economic growth; Foreign direct investments; Exports; Unemployment; Panel analysis; Causality Journal: International Journal of Economic Sciences Pages: 35-56 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-1877 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-1877?download=2 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:35-56 Template-Type: ReDIF-Article 1.0 Author-Name: Robert McGee Author-Name-First: Robert Author-Name-Last: McGee Author-Email: bob414@hotmail.com Author-Workplace-Name: Fayetteville State University Author-Name: Jovan Shopovski Author-Name-First: Jovan Author-Name-Last: Shopovski Author-Email: jovanpraven@yahoo.com Author-Workplace-Name: European Scientific Institute, ESI Title: The Ethics of Tax Evasion: A Survey of Law and Economics Students in the Republic of Macedonia Abstract: This paper examines the ethical perception of tax evasion in the Republic of Macedonia. A survey consisting of 18 statements was distributed to 120 students; 107 responses were received. The results show that, in general, Macedonian students are intolerant towards tax evasion, perceiving it as an unethical behavior. However, only 45.3 % of the students did not justify tax evasion in any of the 18 cases. Furthermore, male students were more tolerant towards tax evasion than their female colleagues. Law students were more supportive of tax evasion than their colleagues from the faculty of economics. Classification-JEL: H24, H26, H27 Keywords: Tax evasion, Taxes, Ethics, Perception, Tax morale Journal: International Journal of Economic Sciences Pages: 57-69 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-7083 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-7083?download=3 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:57-69 Template-Type: ReDIF-Article 1.0 Author-Name: TEODORAS MEDAISKIS Author-Name-First: TEODORAS Author-Name-Last: MEDAISKIS Author-Email: teodoras.medaiskis@evaf.vu.lt Author-Workplace-Name: Vilnius University Author-Name: TADAS GUDAITIS Author-Name-First: TADAS Author-Name-Last: GUDAITIS Author-Email: tadas.gudaitis@evaf.vu.lt Author-Workplace-Name: Vilnius University Author-Name: JAROSLAV ME?KOVSKI Author-Name-First: JAROSLAV Author-Name-Last: ME?KOVSKI Author-Email: jaroslav.meckovski@gmail.com Author-Workplace-Name: Vilnius University Title: OPTIMAL LIFE-CYCLE INVESTMENT STRATEGY IN LITHUANIAN SECOND PENSION PILLAR Abstract: The proposition to introduce life-cycle investment strategy as a default option in second pension pillar in Lithuania is currently being intensely discussed as a measure to solve the problems of the irrational behaviour of pension fund participants. The latest analysis has shown that the majority of participants have selected an inappropriate pension fund (investment strategy and investment risk) while evaluating the accumulation period that they have left till the retirement. Moreover, most of them are not active and do not change the pension fund during accumulation period. The life-cycle investment strategy allows participants to switch automatically and gradually from one asset allocation to another as they get closer to retirement. Therefore, such dynamic asset allocation must have a strong analytical foundation. The goal of the study is to evaluate the optimal life-cycle investment strategy in the Lithuanian second pension pillar. In order to achieve this goal, the authors prepared a quantitatively calibrated model that closely follows such works as Cocco et al. (2005), Bagliano et al. (2009) and Blake et al. (2008). The model takes into account the specifics of the Lithuanian market such as contribution rates, the investment performance of pension funds, and participant?s labour income process. In this paper, the authors use the optimization problem, where participant?s utility is maximized only by the selected investment strategy (without consumption). The results show that from the beginning of accumulation period (the age of 20) till the age of approximately 42 years it is most rational to invest a high proportion of participant?s pension assets into equities. Then optimal asset allocation is gradually switching from equities to less risky assets (e.g. government bonds) as the retirement age (65) approaches, where only 19 per cent of assets are invested into equities. The paper consists of three main parts: literature review, the explanation of the model and calibrated parameters that were used to evaluate the optimal life-cycle investment strategy, and main simulation results, including benchmark and sensitivity analysis. Classification-JEL: J32, D14, G11 Keywords: Pension funds, life-cycle investment, investment strategy. Journal: International Journal of Economic Sciences Pages: 70-86 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-6990 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-6990?download=4 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:70-86 Template-Type: ReDIF-Article 1.0 Author-Name: Maja Mihelja ?aja Author-Name-First: Maja Author-Name-Last: Mihelja ?aja Author-Email: mmiheljaz@net.efzg.hr Author-Workplace-Name: Faculty of Economics and Business Zagreb Author-Name: Drago Jakov?evi? Author-Name-First: Drago Author-Name-Last: Jakov?evi? Author-Email: djakovcevic@efzg.hr Author-Workplace-Name: Faculty of Economics and Business Zagreb Author-Name: Lucija Vi?i? Author-Name-First: Lucija Author-Name-Last: Vi?i? Author-Email: visiclucija@gmail.com Author-Workplace-Name: Faculty of Economics and Business Zagreb Title: Determinants of the Government Bond Yield: Evidence from a Highly Euroised Small Open Economy Abstract: This paper analyses the relationship between bond market, macroeconomic fundamentals and a set of additional covariates in the Republic of Croatia, a small open economy with a very high and persistent level of euroization. The sample ranges from the year 2001 to 2017. Ordinary least squares regression is applied on the quarterly dataset to examine the major drivers of nominal yields of government bonds, whereas Multiple Breakpoint Tests are used to determine structural breaks in the variables. The results corroborate theoretical knowledge and suggest a significant effect of fiscal and financial determinants on bond yields. Variables presenting macroeconomic fundamentals explain a substantial part of Croatian trends. Therefore, policymakers seeking to improve macroeconomic conditions should learn from multi-causal studies involving these variables before setting their policies. Classification-JEL: C32, E44, G12 Keywords: government bonds, macroeconomic fundamentals, structural changes, linear regression, The Republic of Croatia Journal: International Journal of Economic Sciences Pages: 87-106 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-6952 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-6952?download=5 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:87-106 Template-Type: ReDIF-Article 1.0 Author-Name: Aynur Pala Author-Name-First: Aynur Author-Name-Last: Pala Author-Email: aynur.pala@okan.edu.tr Author-Workplace-Name: Istanbul Okan University Title: Investigating the Relation between Technology and Economic Growth with AK Model: An Application SWAMY?s Random Coefficient Model (RCM) Abstract: This study aims to investigate effect of technology on economic growth and 2008 crises on this relation in thirty-OECD countries using static panel data model and random coefficient model (RCM) with AK model. We applied cross-sectional dependence test, panel unit-root test and cointegration test. As a result of static panel regression model with different OECD sub-sample for both pre and post-2008 period, there is negative significant effect of Business Enterprise Expenditure on R&D (BERD) on economic growth in OECD countries which has high R&D expenditure to GDP EU countries for the post-2008. As a result of RCM, in Denmark, France, and Germany, it was observed decreasing technology effect on economic growth after 2008 crisis. Classification-JEL: C33, O32, O47 Keywords: Technology, R&D expenditure, economic growth, panel regression model, random coefficient model. Journal: International Journal of Economic Sciences Pages: 107-118 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-7012 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-7012?download=6 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:107-118 Template-Type: ReDIF-Article 1.0 Author-Name: Maryna Tverdostup Author-Name-First: Maryna Author-Name-Last: Tverdostup Author-Email: maryna.tverdostup@ut.ee Author-Workplace-Name: University of Tartu; University of Innsbruck Author-Name: Tiiu Paas Author-Name-First: Tiiu Author-Name-Last: Paas Author-Email: tiiu.paas@ut.ee Author-Workplace-Name: University of Tartu Title: Skills heterogeneity and immigrant-native wage gap in the European countries Abstract: The paper analyses individual human capital, measured by the education, literacy and numeracy skills, and explores to what extent immigrants employ their cognitive skills at work. Based on the Program of International Assessment of Adult Competencies (PIAAC) data for 15 European countries, we document that, on average, foreign-born respondents achieve substantially worse scores in literacy and numeracy test domains in majority of analysed countries. Only immigrants in the Nordic countries reveal skill improvement over immigration tenure. Once we account for both skill levels and use of skills at work in wage regressions, no statistically significant gap in earnings across immigrants and natives remains. Although, once immigrants attain comparable to natives? skill use frequency, their pay disadvantage turns statistically insignificant in all countries, except Estonia and Ireland. The results are leading us to the conclusion that potential for development and utilization of immigrants? skills in the European labour markets is still underused. Immigrants are not yet sufficiently well integrated in labour markets in most of the European countries. Classification-JEL: J21, J24, O15 Keywords: migration, wage, human capital, cognitive skills, PIAAC Journal: International Journal of Economic Sciences Pages: 119-142 Volume: 7 Issue: 2 Year: 2018 Month: November File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-6942 File-URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-6942?download=7 Handle: RePEc:sek:jijoes:v:7:y:2018:i:2:p:119-142