Economic policy options to address energy shocks in small-sized and open countries
ÁDÁM CZELLENG
Following the coronavirus outbreak and Russia’s aggression against Ukraine, double-digit inflation has resurfaced in Europe, mainly due to the rise in energy prices. Economic policy makers face information constraints because the persistence of the processes is unknown, while central bank intervention has no impact on the origin of the processes, although transmission is usually delayed. This paper examines the economic policy options for a small-sized and open country in the presence of a non-permanent energy price shock using a simplified semi-structural model based on New Keynesian principles. The paper assesses the short- and long-term performance of monetary and fiscal policy, complementing the relevant international literature. It concludes, in a scientifically novel way, that the qualification of a number of applied monetary policy rules suggests that passive monetary policy is preferable in the short run, while active policy is more beneficial in the long run. At the same time, the disadvantage of passive policy can be overcome in the long run by choosing the right interest rate rule. Even in the case of non-permanent shocks, fiscal policy can make a significant contribution to a return to the initial situation. The source of investment financing determines the economic path to a considerable extent. The paper shows that economic policy options are strongly influenced by the shock to foreign agents and the response to it.
Journal of Economic Literature (JEL) codes: E17, E47, E58, H30, H54.
The potential of macroeconomic crisis forecasting with text-mining specified random panel regression models
ÁKOS FELLNER
There are two classical views on economic crisis forecasting: one is that time series models are the most appropriate for projections of crises, and the other is that the strongest crisis signal is the change in the consumer price index and the various investor confidence indices. This paperpresents a Hungarian example of a random effects panel model (REPR) specified by text mining methods, arguing that the values of the error terms of the model allow for a much more accurate correlation using panel regression than using time series models, and that monitoring the foreign trade price index is more important than considering the consumer price index or the investor confidence index for crisis signals.
Journal of Economic Literature (EL) codes: C10, C80, E17.
Period poverty as an invisible deprivation. A summary of international and Hungarian experience
LÁSZLÓ ERDEY – EDINA VÁRNAGY
Contrary to stereotypes, menstruation poverty is not just a recurring monthly problem for homeless or severely disadvantaged women but also occurs in workplaces, schools and universities. The consequences of the Covid-19 pandemic have made this situation more difficult and brought invisible inadequacies surrounded by a multitude of taboos to the surface. Drawing on lessons from international examples, the most common steps are the provision of free feminine hygiene products in public institutions and schools and the reduction or complete abolition of the general sales tax or value-added tax, also known as the tampon tax on basic feminine hygiene products. Data from the European Commission’s Taxes in Europe Database show that Hungary has the highest tax on these products in the European Union, even ahead of Scandinavian countries. This topic is not widely researched in Hungary, but it is an area that needs to be explored even more urgently.
JEL: I31, J16, O10.
The praise of context – or on the state of economics in the context of Beáta Farkas’ book A Brief History of Economic Thought
PÉTER ÁKOS BOD
(Akadémia Publishing House, 2022, 488 pages)
The theory of economic thoughts has gradually lost ground in the economics curriculum, and the economic actors seemed to assume in the period of intensive technological and market changes that the former ideational debates had lost their relevance. Yet, recent financial and non-economic crises, as well as renewed antipathy toward free trade and market competition within large segments of society have brought back long-debated academic issues such as the relationship between the market and the state, or challenges of global trade and financial openness. The monography of Prof. Beáta Farkas provides a comprehensive review of leading thinkers and the main schools of economic science and it also exposes the historical and social environment in which the great contributions to our stock of knowledge have been accomplished. The present economics mainstream has eventually absorbed a lot from previously peripheral tendencies such as the behavioural school, the institutionalists, spatial economics, and welfare economics. Yet it is hard to tell how much the present economics consensus influences what business leaders and policy makers think of the economy and economics and, as importantly, what leverage the modern economic thought may exert on the economy and its shapers.
Journal of Economic Literature (JEL) codes: A10, B00, D02, N10
The protection of foreign investments in Mongolia
NINJIN BATAA
This paper describes the evolution of Mongolia’s regulatory environment for the protection of foreign direct investment from the country’s democratic transition in the early 1990s to the present. The changes analysed in the study point towards a more level playing field for investors, as investment protection initially created significantly more favourable conditions for foreign investors compared to the situation of domestic investors. The continuous changes in the legal framework for investment protection have also affected the requirements for investment licensing, leading to the introduction of restrictions that have affected the activities of foreign state-owned enterprises in Mongolia. They also served to protect national mineral resources. The study will also cover the various instruments of investment protection, including the state’s commitment to the taxation environment. It also discusses international arbitration case law on foreign investment in Mongolia.
Journal of Economic Literature (JEL) code: K33.