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21. Potential impact of financial innovation on financial services and monetary policy

Author:
Marek Dabrowski
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The recent wave of financial innovation, particularly innovation related to the application of information and communication technologies, poses a serious challenge to the financial industry’s business model in both its banking and non-banking components. It has already revolutionised financial services and, most likely, will continue to do so in the future. If not responded to adequately and timely by regulators, it may create new risks to financial stability, as occurred before the global financial crisis of 2007-2009. However, financial innovation will not seriously affect the process of monetary policymaking and is unlikely to undermine the ability of central banks to perform their price stability mission.
Topic:
Energy Policy, Environment, Monetary Policy, Financial Crisis, Economic growth, Innovation, and Trade
Political Geography:
Europe, Global Focus, and European Union

22. Stabilization Policies and Structural Developments: Poland and the Crises of 1929 and 2008

Author:
Zbigniew Polański
Publication Date:
12-2017
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
This paper contrasts the impact of the 1929 and 2008 world crises on the Polish economy. Her much better performance during the recent crisis can be explained by two groups of factors: first, by very different stabilization policies and second, by distinct structural developments (resulting both from authorities' structural policies and spontaneous processes). It is emphasized that several factors responsible for Poland's superior performance during the 2008 crisis also contributed to her economic success vis-à-vis other European Union countries.
Topic:
Financial Crisis, Economic structure, Economic growth, Global Financial Crisis, and Trade
Political Geography:
Europe, Poland, and European Union

23. The Future Development of EU Exports in a Global Context

Author:
Robert Stehrer, Roman Stöllinger, and Sandra Leitner
Publication Date:
11-2017
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Global trade patterns are changing rapidly. Emerging economies are increasing their share of exports overall and intensifying competition in nearly all sectors. Using a gravity-based approach, this report examines the future profile of European Union (EU) world market shares at the aggregate and sectoral level. It further points towards the changing patterns of trade within the EU. Based on the results, some conclusions on EU industrial policy are drawn.
Topic:
Industrial Policy, International Trade and Finance, Global Markets, Economic growth, and Trade
Political Geography:
Europe, Global Focus, and European Union

24. The Relevance of Financial and Economic Factors for Determining Banking Risk across Europe

Author:
Renata Karkowska
Publication Date:
11-2017
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The goal of this study is to identify empirically how country-level development, taking into account the financial and macroeconomic environment, affect the risk profiles of the banking sector in Europe. Through a dataset that covers 3,399 European banks spanning the period 1996-2011, and the methodology of panel regression, the empirical findings document the heterogeneity of banking risk determinants. I examine the implications of bank leverage that manifest itself as spreading and growing instability. The study contributes to and combines the different strands of literature and understanding of the importance of the links between the variables. It also contributes to the literature by focusing on a group of countries from Central and Eastern Europe and the Commonwealth of Independent States that have not been studied before. The extended model provides a causal link between risk in the banking sector and the growth of the financial market and macroeconomy. I apply four measures of country-level development that are available in previous studies: share of foreign ownership in the banking sector; the financial freedom index; the real growth rate; and stock market capitalization. Using these measures, I obtain different results which highlight the fact that the effect of macroeconomic and financial development on banking sector risk-taking is ambiguous.
Topic:
Financial Markets, Economic growth, Banks, Trade Liberalization, Macroeconomics, and Trade
Political Geography:
Europe, Eastern Europe, Central Europe, and European Union

25. Domestic Cycles, Financial Cycles, and Policies. What Has Gone Wrong?

Author:
Daniel Daianu
Publication Date:
11-2017
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The financial crisis and its ensuing effects have brought back into the limelight the issue of cycles and of policies which fuel or mitigate crises. Cognitive and operational models in economics and business are questioned. There is a specter of much lower economic growth in the industrialized world. Central banks are over-burdened. This makes central bankers’ lives much more complicated and obfuscates the boundaries between monetary policy and fiscal policy, especially when financial stability gets to center stage. New systemic risks show up in capital markets. The eurozone has escaped collapse owing to the European Central Bank’s extraordinary operations and large macro-imbalance corrections in its periphery, but major threats persist. This paper focuses on economic cycles and policies in an international (European) context. Attention is paid to linkages between domestic cycles and the European financial cycle, drivers of financial cycles, finance deregulation and systemic risks, ultra-low interest rates, the international policy regime, and global stability. The experience of European emerging economies is taken into account.
Topic:
Debt, Monetary Policy, Financial Crisis, Economies, Economic growth, Interest Rates, and Fiscal Policy
Political Geography:
Europe and European Union

26. How Not to Get Stuck in the Middle Lessons for the Commonwealth of Independent States from Central and Eastern Europe

Author:
Jakub Zowczak and Kamil Pruchnik
Publication Date:
09-2017
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The aim of this paper is to analyze how different models of transformation in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) increased or decreased the risk of being stuck in the middle-income trap (MIT). The key finding is that the CEE and CIS countries are, from a definition point of view, not materially at risk of the MIT as out of nine selected MIT definitions, none of the CEE or CIS countries were “stuck” more than three times. At the same time, the CEE countries are more at risk of falling into the MIT than the CIS countries; however this is because the CIS is a poorer region and is not near the lower MIT thresholds. The CEE countries had a better start at the beginning of the transformation and on average implemented a better set of transformation models; however, some CEE countries are now struggling to permanently join the advanced countries and CIS countries are, on average, far behind that. The literature review on transformation models and the analysis of the “jumps” in the World Bank ranking classification suggest that while the MIT is not a concern for CEE or CIS countries, in order to speed up convergence, CIS countries might consider more shocks and consistently following free market related approaches. The study fills a gap in the literature on the MIT which has thoroughly analyzed the Asian and Latin American countries but has provided little analysis of the CEE and CIS countries.
Topic:
Finance, Economic growth, Economic Policy, and Trade
Political Geography:
Europe, Eastern Europe, and Central Europe

27. Russia’s Crony Capitalism: Stagnant But Stable

Author:
Anders Åslund
Publication Date:
09-2017
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The Russian economy is caught in stagnation, but thanks to a skillful macroeconomic policy, the economy has stabilized. The current economic model is dualistic. On the one hand, the so-called systemic liberals are in charge of macroeconomic policy, which they pursue eminently. On the other, President Vladimir Putin allows state corporations, cronies, and law enforcement agencies to dominate the corporate economy, enriching themselves with little consideration of legality. Anders Aslund's paper discusses the state of the Russian economy and the prospects for reform and growth.
Topic:
Corruption, Economics, Reform, Capitalism, Economic growth, Putin, Cronyism, and Macroeconomics
Political Geography:
Russia and Eastern Europe

28. The Catalan economy: Crisis, recovery and policy challenges

Author:
Xavier Cuadras-Morató
Publication Date:
05-2017
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Catalonia is one of the richest regions in Spain. Until the outbreak of the international financial and economic crisis in 2008, it enjoyed a phenomenal economic boom – which then turned into a very severe depression, from which the region began to exit only in 2014. Consolidating the recovery and making the economy more competitive and resilient, and less volatile, are some of the key challenges of economic policy in Catalonia. Also, to improve the region’s social cohesion, policymakers should make sure that economic prosperity is more widely shared, and transform it into an effective tool for social progress.
Topic:
Demographics, Labor Issues, Economic growth, Social Policy, Global Financial Crisis, Economic Policy, Trade, and Recovery
Political Geography:
Europe, Spain, Catalonia, and European Union

29. Economic policy, the international environment and the state of Poland’s public finances: Scenarios

Author:
Aleksander Łaszek
Publication Date:
03-2017
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Poland’s structural deficit is one of the largest in the EU. While other Member States are taking action to reduce their deficits, the Polish government has not only introduced costly projects, but has also announced additional projects that will further aggravate the state of Polish public finances. The aim of maintaining the nominal deficit under 3% of GDP, as declared by the government, is insufficient because it does not leave a margin of safety in case of an economic slowdown. In the meantime, the turbulent global economy and the structural challenges the Polish economy is facing make the scenario of an economic slowdown increasingly plausible. Dr. Aleksander Łaszek evaluates the government’s current policy through the lens of the challenges that stand a head of Polish economy, and its resilience to shocks, in the new mBank-CASE Seminar Proceedings "Economic policy, the international environment and the state of Poland’s public finances: Scenarios".
Topic:
Debt, Government, Finance, Economic growth, Trade, and Deficit
Political Geography:
Europe, Poland, and European Union

30. Study and Reports on the VAT Gap in the EU-28 Member States: 2016 Final Report

Author:
Grzegorz Poniatowski, Mikhail Bonch-Osmolovsky, and Misha V. Belkindas
Publication Date:
09-2016
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The analysis serves as the Final Report for the DG TAXUD Project 2015/CC/131, “Study and Reports on the VAT Gap in the EU-28 Member States”, which is a follow up to the reports published in 2013, 2014, and 2015. In this report, estimates of the VAT Gap and the Policy Gap for the year 2014 are presented, as well as revised estimates for the years 2010–2013 “due to the transmission” of Eurostat national accounts from the ESA95 to the ESA10. This update covers Croatia, which was not included in the previous updates. While it was hoped that the update would also cover Cyprus, it has not been possible due to incomplete national accounts data. The VAT Gap is a measure of VAT compliance and enforcement that provides an estimate of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies, as well as miscalculations. It is defined as the difference between the amount of VAT collected and the VAT Total Tax Liability (VTTL), which is expressed in the report in bothabsolute and relative terms. The VTTL is the theoretical tax liability according to tax law, and is estimated using a “top-down” approach.
Topic:
Economic growth, Tax Systems, Macroeconomics, Fiscal Policy, Innovation, VAT, and Trade
Political Geography:
Europe, Poland, Croatia, and European Union