Marcela Guachamìn (p)

Gábor Bodnár

This research develops a Financial Stress Index (FSI) for the dollarized economies of Ecuador, El Salvador and Panama using a Dynamic Factor Model (DFM) to reduce the dimension of a set of variables to a smaller group of latent dynamic factors and to capture the common movements. The FSI identified periods of high financial stress over time such as the Global Financial Crisis (GFC) of 2008 and the health crisis due to the COVID-19 pandemic in 2020. We applied a TVAR model to analyze the impact of a shock to the FSI on the real sector. The results showed that a change in the financial conditions impacts the GDP growth, indebtedness and inflation to a greater extent in the high financial stress regime compared to periods of low financial stress. Thus, the FSI is a useful tool for monitoring financial stability and could ultimately help in macroprudential policy decision-making.

Marianna Sávai (p), Gábor Bodnár (p)

Mei-se Chien

In the years following the 1989–1990 regime change, the countries of Central and Eastern Europe (CEE) were confronted with a series of economic and political challenges. In addition to the pervasive influence of privatisation, the 1990s were a period of significant transition. By the turn of the millennium, the CEEs had reached their pre-transition levels of production, while the structure of the labour market and economic sectors had undergone significant transformation. The objective of this paper is to provide an account of the structural changes that have occurred in the economies of the CEE regions (in this study, Hungary, the Czech Republic, Poland, Romania, Slovakia and Slovenia) from the 2000s to the advent of the global pandemic. The present study examines NUTS-3 level regions to provide a more detailed analysis of regional catching-up processes, which have so far been explored in research using more aggregated data. In light of the above, the research question that guides our investigation is as follows: what are the differences and similarities in the processes describing productivity change in NUTS-3 regions? While the majority of existing research compares catching-up processes with the EU average, our analysis compares countries with the group average, thereby offering a novel perspective on the catching-up issue. The results demonstrate that the productivity data for the regions of Central and Eastern Europe exhibit a notable economic growth in the metropolitan centres, including Bratislava, Prague and Warsaw. However, the development of rural and less developed areas in this sense still lags behind that of metropolitan areas. The more developed regions are characterised by the development of higher value-added sectors, while the less developed regions are dominated by the modernisation of the agricultural and industrial sectors. Inequalities between countries continue to widen as the more developed regions have adapted more rapidly to sectoral structural changing. In addition to the impact ratio analysis, a simulated Theil-index calculation is used to check the robustness of the results.

Mei-se Chien (p)

Tomáš Výrost

This study examines how economic policy uncertainty and financial development influence CO2 emissions. Using panel Autoregressive Distributed Lag (ARDL) to assess long-term relationships and generalized impulse response analysis (GIRF) to measure response duration and magnitude to unexpected shocks, the research analyzes data from 109 countries spanning 2000-2020, comprising 30 advanced and 79 developing nations. The empirical results are summarized as follows:： First, across both country groups, ARDL results reveal consistently positive long-term coefficients for all three financial development indicators, demonstrating that financial institution development, financial market development, and overall financial development increase CO2 emissions. Second, the ARDL analysis shows negative long-term coefficients for economic policy uncertainty in both country groups, though statistical significance only emerges in developing countries. Third, the interaction terms between economic policy uncertainty and the three financial development indicators all exhibit positive coefficients in the full sample, implying that greater synergy between economic policy uncertainty and financial development tends to elevate CO2 emissions. However, only the interaction with financial market development is significant. Fourth, GIRF results reveal that financial market development produces positive impacts in advanced countries but negative effects in developing nations, while financial institution development and overall financial development generate positive impacts across both groups. Economic policy uncertainty consistently creates negative impacts on CO2 emissions in all cases.

Tomáš Výrost (p), Eva Výrostová

Marcela Guachamìn

The main objective of the European Union (EU) Cohesion policy (CP) is to strengthen economic, social, and territorial cohesion by reducing regional disparities. Brexit, the new challenges facing the EU, and the socio-economic consequences of the COVID-19 pandemic created pressures, particularly on the effectiveness and efficiency of its resources.

By far, most studies find a conditional impact of CP on growth and convergence, where the effectiveness of CP depends on various factors, such as quality of institutional set-up, decentralized administrative structure, other supportive policies on national and regional levels, sound macroeconomic policies, industrial structure, territorial capital and regional characteristics, human capital, and others.

Newer studies in the field point out that an analysis should also be conducted at the micro level. The microeconomic analysis may be conducted from two different perspectives. On one hand, the national or supranational financing and management bodies may be interested in the effectiveness of the use of provided funds, reaching project goals, and their alignment, transmission channels, and contribution with respect to the overall CP objectives. From the individual company's perspective, a direct (beneficiary) or indirect involvement in CP projects (as a subcontractor or supplier) may present a substantial source of income and revenue that would be unavailable. As the provision of EU funding bypasses the usual market allocation mechanism that, in classical and neoclassical theories, ensures efficient use of scarce resources, it may be viewed as a source of unfair advantage and potential misallocation. To consider such effects, we evaluate the consequences of EU Cohesion policy funds in Slovakia from the perspective of corporate efficiency, performance, and financial standing of companies directly or indirectly involved in EU Cohesion policy-funded projects.

In our paper, we present an analysis of the Cohesion policy and its effects during the 2014-2020 programming period in Slovakia. Our analysis is augmented by using granular microeconomic data on Slovak enterprises engaged in EU Cohesion policy-funded projects by utilizing a unique dataset on financials and ownership structures spanning all Slovak legal entities in the given period.