Contents of No. 178-179
1. SCIENTIFIC PAPERS
1.1 Author: Dejan Trifunović
JEL Classification: D82, G14
Pages: 7-43
The Dual Role of Equilibrium Price in Competitive Economies with Asymmetric Information
DOI: 10.2298/EKA0879007T
1.2 Author: Serkan Erkam, Tarkan Cavusoglu
JEL Classification: C32, E31
Pages: 44-71
Modelling Inflation Uncertainty in Transition Economies: The Case of Russia and the Former Soviet Republics
DOI: 10.2298/EKA0879044E
1.3 Author: Sabine Bernabè, Gorana Krstić
JEL Classification: J21, I30, O15, O17, J43
Pages: 72-121
Labour Markets as a Transmission Channel from Growth to Poverty Reduction: Evidence from Vietnam and Burkina Faso, 1993-20031
DOI: 10.2298/EKA0879072B
1.4 Author: Ivana Prica
JEL Classification: C40, E44, F02, F15, G28
Pages: 122-144
Financial Services Liberalisation and International Integration in South Eastern Europe
DOI: 10.2298/EKA0879122P
2. COMMUNICATIONS
2.1 Author: Debi Konukcu-Önal, Ayse Nil Tosun
JEL Classification: E62, H61
Pages: 145-156
Government Revenue-Expenditure Nexus: Evidence from Several Transitional Economies
DOI: 10.2298/EKA0879145K
2.2 Author: Sanja Filipović, Gordan Tanić
JEL Classification: K23, L51, L94
Pages: 157-182
The Policy of Consumer Protection in the Electricity Market
DOI: 10.2298/EKA0879157F
2.3 Author: Saša Ranđelović
JEL Classification: E62, H21, H24, K34
Pages: 183-197
Dual Income Tax – an Option for the Reform of Personal Income Tax in Serbia?
DOI: 10.2298/EKA0879183R
2.4 Author: Novo Plakalović
JEL Classification: G20, G28, E61
Pages: 198-230
The Safety Network System and Prospects for the Appearance of a Financial Crisis in Bosnia and Herzegovina
DOI: 10.2298/EKA0879198P
ABSTRACTS
SCIENTIFIC PAPERS
1.1 Dejan Trifunovic
The Dual Role of Equilibrium Price in Competitive Economies with Asymmetric Information
DOI: 10.2298/EKA0879007T
ABSTRACT: This paper analyses equilibrium in competitive markets with asymmetrically informed agents. In contrast to Walrasian equilibrium, where equilibrium price is only an indicator of relative scarcity, in the models studied in this paper equilibrium price has two additional roles. It conveys and aggregates the private information of agents in the economy. Each agent infers the private information of other agents by studying the equilibrium price. This implies that agents in this setting have higher cognitive capabilities than Walrasian agents. The equilibrium concept used to describe these additional roles of equilibrium price is called Rational Expectations Equilibrium (REE).
KEY WORDS: Fully revealing rational expectations equilibrium; Noisy rational expectations equilibrium; Information aggregation; Stock market crashes.
1.2 Serkan Erkam, Tarkan Cavusoglu
Modelling Inflation Uncertainty in Transition Economies: The Case of Russia and the Former Soviet Republics
DOI: 10.2298/EKA0879044E
ABSTRACT: This study investigates the linkage between inflation and inflation-uncertainty in seven transitional economies ( Armenia , Azerbaijan , Georgia , Kazakhstan , the Kyrgyz Republic , the Russian Federation and the Ukraine ) which experienced hyper-inflation until the mid-1990s. This linkage is investigated in the ARCH modelling framework by using both conventional Granger non-causality testing and the Holmes-Hutton approach, which has significant small- and large-sample power advantages over the former. The results support the Friedman-Ball hypothesis in Azerbaijan , the Russian Federation and the Ukraine . The Cukierman-Meltzer hypothesis is favoured in the Kyrgyz Republic and in the Russian Federation using a different model. In Azerbaijan , greater inflation uncertainty preceded lower rates of inflation, indicative of the strong monetary stabilization policies pursued in this economy.
KEY WORDS: Inflation, inflation-uncertainty, Granger-causality, conditional variance
1.3 Sabine Bernabè ,Gorana Krstic
Labour Markets as a Transmission Channel from Growth to Poverty Reduction: Evidence from Vietnam and Burkina Faso, 1993-20031
DOI: 10.2298/EKA0879072B
ABSTRACT: Employment is widely perceived as being amongst the most important channels for translating growth into poverty reduction. This paper focuses on two countries, Burkina Faso and Vietnam , with very distinct patterns of growth and poverty reduction between 1993-2003. We use household survey data to examine how employment transmitted growth to the poor in these two countries and find that there are two important factors that maximize the effectiveness of this transmission channel: (1) an increase in labour productivity that is (a) broad based and (b) concentrated in sectors where the poor are disproportionately employed or to which they have access, and (2) strong (domestic and foreign) demand for the goods and services produced by the poor, and access to these markets.
KEY WORDS: labour markets, pro-poor growth, poverty reduction, informal economy
1.4 Ivana Prica
Financial Services Liberalisation and International Integration in South Eastern Europe
DOI: 10.2298/EKA0879122P
ABSTRACT: The first part of this paper analyses the regulatory framework for international trade in financial services within the auspices of the World Trade Organisation (WTO), with special attention paid to the open issues including the scope of prudential measures and capital mobility limitations. The process of the international integration of the South Eastern Europe (SEE) countries is mainly dictated by their goal of EU integration. With regard to the services’ sectors, a major liberalisation step on the way is WTO accession. Of the countries in the region only Serbia , Bosnia and Herzegovina and Montenegro are still not WTO members and in order to become members significant liberalisation commitments will be demanded of them. For this reason the second part of the paper deals with concrete financial liberalisation commitments undertaken by the original WTO members in SEE and the newly WTO-acceded SEE member countries. The last part of the paper provides a quantitative analysis of these commitments by means of the measurement of liberalisation indices in the banking sectors in SEE countries. This is to provide a general idea of the scope of liberalisation that may be required from a SEE country in order to achieve WTO membership on the road to EU integration.
KEY WORDS: financial services, liberalisation, international integration, WTO, trade in services, regulation of financial sector
COMMUNICATIONS
2.1 Debi Konukcu-Önal , Ayse Nil Tosun
Government Revenue-Expenditure Nexus: Evidence from Several Transitional Economies
DOI: 10.2298/EKA0879145K
ABSTRACT: Budget deficits and the debate on the sources of deficit finance have been on the agenda of public economics ever since the 1980s. However recently in the post-communist countries fiscal imbalances appear to be an important problem due to prolonged periods of growing poverty resulting from the transition process. Poverty alleviation policies considerably affect the revenue and expenditure decisions of governments, which are subject to hard budget constraints in an open transitional economy and do not have room for departing from sound fiscal policies. The public finance literature provides a vast number of studies analyzing the relationship between public revenues and expenditures. These studies are mostly characterized by efforts to reveal the attitude of the fiscal authority towards maintaining the budget balance. In this respect, budgetary dynamics in which past government revenues have predictive power on the current level of government expenditures are accepted as evidence of the so-called tax-and-spend hypothesis. On the other hand, the revenue-expenditure nexus running from expenditures to revenues is known in the literature as the spend-and-tax hypothesis. The objective of this study is to analyze empirically the relationship between government revenues and expenditures in four of the transitional economies, i.e. Belarus , Kazakhstan , the Kyrgyz Republic and the Russian Federation . The empirical findings of this study, which are based on Granger causality tests, indicate evidence supporting the tax-and-spend hypothesis in Belarus and the Russian Federation and fiscal synchronization in Kazakhstan and the Kyrgyz Republic . The empirical support for the tax-and-spend hypothesis in these economies implies that increasing government revenues may not end up with lower budget deficits due to their stimulating effect on the demand for public goods and services.
KEY WORDS : Tax and Spend, Government Expenditures and Revenues, Granger Causality, Transitional Economies
2.2 Sanja Filipovic and Gordan Tanic
The Policy of Consumer Protection in the Electricity Market
DOI: 10.2298/EKA0879157F
ABSTRACT: The provision of a safe and reliable electricity supply has a central place in modern social life. The rise of electricity prices and the process of liberalisation of the electricity market are the two main factors which have made it necessary to modify the current traditional ways of protecting vulnerable customer categories. The Internal Energy Market Directives provisions ensure that citizens have access to energy of a specified quality level at reasonable, cost-reflective prices and to the conditions of real competition and free choice. This objective implies intervention due to the fact that some consumer classes are less attractive for the companies (remote consumers, low consumption consumers or low-income consumers). The aim of this paper is to analyze the current forms of vulnerable customer protection from the critical point of view and to point out possibilities for their application in the case of Serbia .
KEY WORDS: liberalisation, competition, vulnerable customers, consumer protection.
2.3 Saša Randelovic
Dual Income Tax – an Option for the Reform of Personal Income Tax in Serbia?
DOI: 10.2298/EKA0879183R
ABSTRACT: Contemporary tax theory and practice provides two fundamental concepts for taxation of personal income: scheduler and global. Several systems have been derived from these basic models, including combined, flat, dual and negative income tax. Dual income tax, the subject of this paper, requires progressive taxation of income from employment and proportional taxation of income from capital. However, strict application of this system significantly violates the principle of equitability of taxation, both horizontally and vertically.
KEY WORDS : Dual income tax; Labour income; Income from capital; Equitability in taxation; Personal income tax in Nordic countries.
2.4 Novo Plakalovic
The Safety Network System and Prospects for the Appearance of a Financial Crisis in Bosnia and Herzegovina
DOI: 10.2298/EKA0879198P
ABSTRACT: The article is on the system of the safety network of the financial sector in Bosnia and Herzegovina (BH) and potential causes of possible financial instability. The network of protection of financial institutions in BH is to a certain extent incomplete but a high level of regulatory and supervisory activities has been present so far, which effects the expressed stability of financial institutions. Potential risks and the vulnerability of the financial system arise from a range of features which are characteristic of the local financial institutions, their activities, the condition of the BH economy, and macroeconomic stability and flows of goods and capital between the country and foreign countries. The sector of financial institutions has been privatized and it is in foreign ownership. Foreign exposure of domestic economy and financial markets is limited to only a small number of countries ( Austria , Germany ). There are pressures in respect of the increased rates of return on bank capital and there is a very high dynamic of credit growth. Possible unfavourable scenarios could bring about problems in the banking sector, which is shown by stress tests. The deterioration of the macroeconomic imbalance could also be a significant cause of serious problems in the local financial sector. There are no certain indicators that this could happen in the near future and influence the appearance of a financial crisis; however, such a situation cannot be ruled out.
KEY WORDS : BH financial sector, financial crises, safety network system, regulation and supervision of banks