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Contents of issue 5-6/2007

Andrzej Wojtyna - The Theoretical Aspect of the Relationship Between Institutional Change, Economic Policy and Growth, summary, article

Joanna Działo - The Impact of Political Factors on the Instruments and Results of Economic Policy, summary, article

Joanna Tyrowicz - The OCA Theory and Its Empirical Application for the EMU, summary, article

Jan Hagemejer, Ewa Kaliszuk - The Reduction of Customs Duties on Non-Agricultural Goods as Part of the WTO Doha Round and the Move’s Implications for Poland’s Foreign Trade, summary, article

Władysław Welfe, Waldemar Florczak - A Medium-Term Forecast for Poland’s Economic Growth: Sustained Recovery, summary, article

Aleksander Kowalski - Privatization and the Capital Market, summary, article


Tomasz Motowidlak - European Union Measures to Improve Energy Efficiency, summary, article


Book Review: Paul A. Samuelson, William A. Barnett (eds.), Inside the Economist’s Mind: Conversations With Eminent Economists, Blackwell Publishing, 2007, 419 pp. - reviewed by Jerzy Wilkin

Book Review: Kazimierz Kuciński (ed.), Energia w czasach kryzysu (Energy at a Time of Crisis), Difin, Warsaw 2006, 220 pp. - reviewed by Ewa Duchnowska

Jobs, Employment, Training - Tadeusz Smuga

Andrzej Wojtyna - The Theoretical Aspect of the Relationship Between Institutional Change, Economic Policy and Growth

The paper examines the latest trends in theoretical research into possible interactions between institutional change and economic policy in the process of growth. Even though the article focuses on changes in the theoretical approach to economic growth and development, the author analyzes these issues in combination with actual economic processes. New trends and processes that have taken place over the past decade or so have led to radical changes in economic theory. This is primarily because the previously used and recommended tools were inefficient. The author describes past experiences that defy traditional interpretation and call for a more adequate approach. The article shows that institutional change is seen as an important factor not only in development economics, but also in empirical studies of economic growth conducted as part of mainstream economics. The author’s analysis of the current stage of research shows that, contrary to expectations, the differences between economic policy and institutional change are still unclear; they are mostly intuitive and arbitrary in nature, and the terms themselves are either imprecise or, in some cases, left completely undefined. This means that researchers have insufficiently examined the complementariness, substitutability and relative autonomy of institutions with regard to economic policy, the author concludes. Consequently, in the coming years, those conducting research into economic growth should analyze the role of institutions and economic policy with greater precision, Wojtyna says.

Keywords: institutional change, economic policy, growth, development economics
Article: PDF

Joanna Działo - The Impact of Political Factors on the Instruments and Results of Economic Policy

The paper examines the impact of political factors on the instruments and effects of economic policy. The author analyzes several theoretical models to determine the ways in which politicians seek to influence the economy. The analysis comprises both “traditional” models based on irrational voter behaviors and “new-generation” models that assume that, after all, voters behave in a rational way. Traditional models include an “opportunistic political cycle” model developed by Nordhaus and a “partisan cycle” model developed by Hibbs. Both these models are based on “the Phillips curve.” Under the Nordhaus model, before parliamentary elections, the economy tends to grow fast and employment remains low; then, as election day approaches, inflation tends to rise. After the elections, the economy usually displays a recessionary trend. This pattern does not depend on the political orientation of those in power. On the other hand, under the Hibbs partisan model, there are differences in the inflation/unemployment pattern depending on the political orientation of the ruling party in terms of whether it is rightist or leftist.
New-generation models assume that voters behave in a rational manner and cannot be “fooled” all the time. The assumption of rationality reduces the extent and likelihood of regular political cycles, although it does not eliminate them, the author says. Instead of regular multi-year electoral cycles, there are short electoral cycles that involve monetary and fiscal policy instruments rather than economic policy outcomes.

Keywords: opportunistic political cycle, partisan cycle, rational and irrational voter behaviors, public debt, budget deficit
Article: PDF

Joanna Tyrowicz - The OCA Theory and Its Empirical Application for the EMU

The paper probes the notions of an “optimum currency area” (OCA) and “business cycle synchronization” in the context of convergence within the European Monetary Union (EMU). Analyzing the latest literature in this area, the author concludes that most of the measures currently used and promoted ignore the key advantages and disadvantages of an optimum currency area. At the same time, the paper attempts to apply a common tool of gravity equation to test the possible impact of the EMU on trade patterns among EU member states. By implementing a traditional notion of gravity equation, the author demonstrates that, as far as international trade is concerned, it is possible to move trade flows from non-EMU countries to those using the single European currency.

Keywords: optimum currency area, European Monetary Union, gravity equation, business cycle synchronization
Article: PDF

Jan Hagemejer, Ewa Kaliszuk - The Reduction of Customs Duties on Non-Agricultural Goods as Part of the WTO Doha Round and the Move’s Implications for Poland’s Foreign Trade

The paper examines the effects of a multilateral reduction of customs duties on non-agricultural goods, under a “nonlinear Swiss formula,” on Poland’s foreign trade, including both exports and imports. As part of the Doha Development Round of the World Trade Organization (WTO), countries are trying to work out a mathematical formula according to which national customs tariffs would be reduced. This is the key focus of ongoing negotiations concerning Non-Agricultural Market Access (NAMA). The author analyzes the newest version of the Global Trade Analysis Project (GTAP), known as GTAP 6.0, according to four scenarios. The GTAP model is a multiregional, multi-sector model that is often used to study the effects of commercial policy. The author describes the results of the multilateral negotiations according to their state as of the end of August 2006. The scenarios analyzed by the author differ in terms of “reduction coefficient A” under the Swiss formula. However, in all variants, the coefficient for developed countries is lower than that for developing countries.
The analysis shows that the reduction of customs duties will have a limited impact on Poland’s foreign trade. All scenarios point to a small increase in the volume of exports and an insignificant drop in the volume of imports, accompanied by a rise in import prices and a decline of export prices. The deterioration of the country’s terms of trade is the most visible in the most radical scenario. The European Union as a whole would be more visibly affected than Poland by the planned reduction of customs duties. Similarly, the move would lead to limited changes in the overall volume of industrial production in Poland, though, in terms of individual sectors, there will probably be a clear drop in the production of clothing, textiles and leather goods, accompanied by a small increase in output in the wood industry. Changes in the volume of trade, production and employment are the most visible in the radical scenario. In all options, the reduction of customs duties will have no perceptible influence on Poland’s gross domestic product, though GDP in purchasing power parity terms will decrease as a result of deteriorated terms of trade. There will be a marginal deterioration in the overall level of prosperity in Polish society. This will be due to the fact that the drop in terms of trade will outweigh the increase of consumer surplus.

Keywords: Doha Development Round, Global Trade Analysis Project, Non-Agricultural Market Access, consumer surplus
Article: PDF

Władysław Welfe, Waldemar Florczak - A Medium-Term Forecast for Poland’s Economic Growth: Sustained Recovery

The authors offer a medium-term projection for Poland’s economic growth in 2007-2011. The forecast was prepared with the use of an annual macroeconomic model developed at the Łódź University Faculty of Econometric Models and Forecasts. The model, which takes into account a number of exogenous variables and the latest trends in both the Polish economy and around the world, yields moderately optimistic conclusions about the possible paths of the country’s economic growth. In addition to the forecast, the authors discuss basic problems and threats to Poland’s future economic growth.

Keywords: econometric models, forecasts, economic mechanisms
Article: PDF

Aleksander Kowalski - Privatization and the Capital Market

The article examines the relationship between privatization and the development of Poland’s capital market during the country’s transition from central planning to a free market. The paper traces the role of privatization in the process of building a capital market and the influence of the capital market on the course of privatization. The analysis is based on some widely known capital market theories, methods of analysis and simple statistical methods including correlation coefficients. As a result of the analysis, the author formulates the following conclusions: first, privatization, accompanied by the necessary legal and institutional regulations, was indispensable for the development of the stock market; second, the capital market had a significant contribution to the effectiveness of privatization processes; third, the government, in its capacity as the seller of shares of privatized enterprises on the capital market, acted no less rationally than private investors.

Keywords: privatization, capital market, stock, investors, effectiveness
Article: PDF

Tomasz Motowidlak - European Union Measures to Improve Energy Efficiency

The author describes the effects of energy conservation measures on the European Union’s economy. He analyzes the possible benefits of efforts to promote a more economical use of energy resources. The author focuses on a package of measures and instruments for an improvement in energy efficiency proposed by the European Commission, analyzing their possible application. He also describes the system of “white certificates” already used in several EU countries, and the practical effects of this mechanism. The research methods used by the author include a descriptive analysis and comparative analysis based on tables and charts with statistical data. The article confirms that energy conservation has great potential for the EU. In the coming years, new measures are likely to be adopted to make the use of energy more efficient in EU member states.

Keywords: energy efficiency, energy conservation, white certificates, energy market
Article: PDF

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