Contents of issue 9/2010
Marek Lubiński - Fiscal Policy at a Time of Financial Crisis: An Overview, abstract
Andrzej Wojtyna - Emerging Market Economies in the Face of a Financial Crisis: Resilience or Vulnerability?, abstract
Władysław Welfe, Waldemar Florczak - Slowdown of the Polish Economy: Model-Based Simulations, abstract
Adam Wyszkowski - Tax Expenditures in the Tax System, abstract
Lesław Niemczyk - Luca Pacioli’s Research Program, abstract
Book Review: Wacław Jarmołowicz, Marek Ratajczak (eds.), Liberalizm we współczesnej gospodarce
(Liberalism in the Contemporary Economy), Wydawnictwo Akademii Ekonomicznej w Poznaniu, Poznań 2008, 360 pp. - reviewed by Maciej Miszewski
Book Review: Sławomir Antkiewicz, Michał Pronobis (eds.), Gospodarka w warunkach kryzysu
(An Economy in Crisis), CeDeWu, PI Wydawnictwo Fachowe, Warsaw 2009, 310 pp. - reviewed by Marek Lubiński
Book Review: Bartosz Michalski, Międzynarodowa koordynacja polityki konkurencji. Budowa ładu korporacyjnego w gospodarce światowej
(International Coordination of Competition Policy: Building Corporate Governance in the Global Economy), Difin, Warsaw 2009, 255 pp. - reviewed by Ewa KaliszukCONFERENCES
Economics - Politics - Ethics - Tadeusz Smuga
Marek Lubiński - Fiscal Policy at a Time of Financial Crisis: An Overview
The article aims to evaluate, in theoretical terms, the fiscal policyresponse to the international financial crisis that began in 2007. The evaluation is based on a debate on the stabilization policy conducted after World War II, and on views formulated in research reports during the latest crisis. The main conclusion is that the reaction of the authorities to the crisis contradicts previously formulated theoretical recommendations. The most visible sign was the extensive use of fiscal policy measures. Theoretical recommendations were disproved in practice, largely due to political considerations.
The key drawback of fiscal intervention was the lack of an assessment of the long-term implications of the move, with uncertain short-term effects. According to Lubiński, the crisis became an excuse for an inconsiderate public policy that served politicians and private interest groups. In a dubious arrangement, financial institutions were supported at the expense of taxpayers, despite the lack of public approval. The role of the government should be to ensure the proper functioning of the financial system, instead of rescuing it in the event of difficulties, Lubiński says. Another problem is posed by unclear regulations for discretionary action.Keywords
: business cycle, stabilization policy, fiscal policy, monetary policyArticle
Andrzej Wojtyna - Emerging Market Economies in the Face of a Financial Crisis: Resilience or Vulnerability?
The paper is concerned with selected aspects oftheoretical and empirical analysis that help better understand the role of factors determining the resilience of medium-developed countries to financial crises. The analysis is made in the context of the latest crisis, which began in highly developed economies.
The second part of the paper focuses on some widely disputed issues involving a theoretical explanation of the causes behind the latest crisis. Even though, in the case of emerging market economies, the original causes behind the crisis can be treated as external ones, Wojtyna says, they need to be scrutinized because of the interaction between the financial sector and the real economy. This interaction is similar in both medium-developed and highly developed countries, according to the author.
Part 3 focuses on global imbalances and their role in transmitting the crisis to and from medium-developed countries. This trend is linked with the wider problem of the costs and benefits of financial globalization and the decoupling hypothesis debated in the context of business cycles in highly and medium-developed economies.
Part 4 discusses the results of empirical studies designed to check the importance of factors determining the resilience of medium-developed countries to the latest crisis.
A more detailed evaluation of the resilience of emerging market economies to the latest crisis could be made after anti-crisis measures taken by governments and central banks in highly developed countries cease to influence these countries’ economies, Wojtyna says. Preliminary findings in this area are encouraging for medium-developed countries, he adds. According to the author, changes in macroeconomic policy as well as structural and institutional changes carried out in response to previous crises have significantly reduced medium-developed countries’ vulnerability to global crises.Keywords
: vulnerability and resilience to financial crisis, emerging market economies, decoupling hypothesis, global financial flowsArticle
Władysław Welfe, Waldemar Florczak - Slowdown of the Polish Economy: Model-Based Simulations
The global financial crisis, and especially the recession that spread across Europe in 2009, also affected Poland. While the Polish economy continued to grow throughout 2009, its growth decelerated considerably in quarterly terms.
The paper examines the determinants of the slowdown, based on a simulation macroeconomic model called W8D-2007. The model’s properties are briefly outlined, and then a baseline medium-term forecast is introduced and some simulation exercises are shown, dealing mainly with pessimistic scenarios.
By means of simulations based on the W8D model, the paper tries to show the key factors behind the serious slowdown in the Polish economy in 2009. The model examines the impact of declining exports and FDI, on the one hand, and the growing investment risk and positive changes in household consumption, on the other.
The possible impact of fiscal and monetary policies is also examined. The effects of a reduction of income tax rates and social contribution rates as well as the implications of an increased budget deficit are also shown, and finally the impact of declining interest rates on investment and consumer demand is evaluated. The likely effects of measures aimed at constraining the increase of unemployment rates are also analyzed.
The results are compared with changing forecasts for the Polish economy presented during 2009.Keywords
: econometric models, forecasting, simulations, determinants of growth, economic shocksArticle
Adam Wyszkowski - Tax Expenditures in the Tax System
The paper discusses the use of what are known as tax expenditures in various member countries of the Organization for Economic Cooperation and Development (OECD), with a view to analyzing the scope of state aid in these countries.
Tax expenditures are defined as losses to the Treasury from granting certain deductions, exemptions, or credits to specific categories of taxpayers. Tax breaks are one method that the government uses to promote certain policy objectives. Tax expenditures are an alternative to direct government spending on policy programs.
A specific feature of this type of assistance is that it takes place through the revenue side of the budget and not through direct spending. In most countries, government revenue is predominately generated from taxes. This explains why tax expenditures are usually part of the tax system and take the form of various tax breaks, exemptions, deferments or credits. Their use leads to reduced tax burdens, thus being a hidden form of subsidizing specific policy objectives or groups of taxpayers. This invariably leads to a situation in which an increased part of public spending spins out of control and is not subject to standard budgetary rules, the author says.
This form of assistance needs to be identified and evaluated properly, Wyszkowski says, because it leads to a lack of transparency in the government’s policies with regard to businesses and the public. The author analyzes this method of subsidizing in comparison with direct spending from the budget. In some cases, the use of tax expenditures in the tax system may prove to be more expensive than direct spending from the budget, according to Wyszkowski. An analysis of tax expenditures helps determine the effectiveness of specific government policies. This is especially important in the context of the ongoing debate on reforming the public finance system, Wyszkowski says.Keywords
: tax expenditures, public finances, tax system, government spending, public spending efficiencyArticle
Lesław Niemczyk - Luca Pacioli’s Research Program
The paper examines an alternative approach to the theory of economics based on a work by medieval mathematician Luca Pacioli, Summa de arithmetica, geometria, proportioni et proportionalita, published in Venice in 1494.
Luca Pacioli was an Italian mathematician and Franciscan friar, collaborator with Leonardo da Vinci, and seminal contributor to the field now known as accounting, for which he is often regarded as the “father of accounting.”
While discussing Pacioli’s research, Niemczyk sets out to show that philosopher Kazimierz Ajdukiewicz’s key theorem that “the construction of every science ispermeated by a collection of axioms that accumulate subject knowledge” also applies to economics.
The paper outlines the complex historical circumstances surrounding the publication of Summa de arithmetica—circumstances that strongly influenced the final shape of Pacioli’s work, Niemczyk says.
The author describes the essence of Pacioli’s research program and examines its link with theories governing finance and banking, insurance and managerial accounting.
The paper follows a methodology of scientific research programs proposed by Hungarian-born mathematician and philosopher Imre Lakatos (1922-1974), who argued that a theory may actually be a succession of slightly different theories and experimental techniques developed over time, that share some common idea, or “hard core.” Lakatos called such changing collections “research programs” and argued that scientists involved in such programs attempt to shield the theoretical core from falsification attempts behind a protective belt of “auxiliary hypotheses.”
Historically, one prominent example of a research program in economic sciences was that undertaken by Adam Smith in his 1776 work entitled An Inquiry into the Nature and Causes of the Wealth of Nations, Niemczyk says.
The beginnings of Luca Pacioli’s research program date back to the publication of Summa de arithmetica. Today, after five centuries of consistent development, Niemczyk says, Pacioli’s program covers several scientific disciplines and specialties, including economics, accounting, finance, banking and insurance.
Pacioli’s economic language features the kind of precision that is normally found in physics, and the axiomatic foundations of his research program make it possible for today’s economists to express themselves using logical formulas and mathematical equations, Niemczyk concludes.Keywords
: Ajdukiewicz’s theorem, economic axioms, research program, Luca Pacioli, Summa de arithmeticaArticle