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Contents of issue 5-6/2005

Łukasz Arendt - An Attempt to Estimate Poland’s NAIRU, summary, article

Mariko Akiba, Maria Lissowska - Why Do Polish Banks Limit Lending to Enterprises?, summary, article

Piotr Białowolski - Poland’s Potential Product in 1993-2004 on the Basis of the Production Function, summary, article

Michał Greszta, Wojciech Maciejewski - Combined Economic Forecasting in Poland, summary, article

Jerzy Grabowiecki - The Causes of Japan’s Economic Stagnation, summary, article

Dariusz Kiełczewski - Consumption Styles as a Reflection of Diversified Standards of Living, summary, article


Jakub Growiec - The Process of Poland’s Convergence with the European Union, summary, article


Book Review: Andrzej Czyżewski, Anna Henisz-Matuszczak, Rolnictwo Unii Europejskiej i Polski. Studium porównawcze struktur wytwórczych i regulatorów rynków rolnych (Agriculture in the European Union and Poland: A Comparative Study of Manufacturing Structures and Agricultural Market Regulators), Wydawnictwo Akademii Ekonomicznej w Poznaniu, Poznań 2004, 323 pp. - reviewed by Józef Stanisław Zegar

The 18th Economic Knowledge Competition - Tadeusz Smuga

Łukasz Arendt - An Attempt to Estimate Poland’s NAIRU

The paper deals with problems linked with calculating an equilibrium unemployment rate. Select issues concerning the theoretical aspects of the Phillips curve and Non-Accelerating Inflation Rate of Unemployment (NAIRU) estimation methods based on the Phillips curve are presented. An expectations-augmented Phillips curve was estimated using quarterly unemployment data, according to the Labor Force Survey (LFS) and core inflation excluding food and energy prices in 1995-2003. On this basis, a NAIRU level of around 12% was determined for the analyzed period using Elmeskov’s procedure. The NAIRU rate obtained in the research is similar to the equilibrium unemployment rate estimated by other authors who used unemployment inflow and outflow balance models. Poland’s NAIRU is at a high level. For example, in the United States, the corresponding rate runs at about 6%. Consequently, it is necessary to determine the causes behind this situation and take adequate measures do decrease NAIRU in Poland in the near future.

Article: PDF

Mariko Akiba, Maria Lissowska - Why Do Polish Banks Limit Lending to Enterprises?

The article sets out to check a hypothesis under which Polish banks limit lending to the corporate sector, especially small businesses. The theory holds that banks deal with asymmetric information. In addition to the objective risk resulting from potential changes in the situation of borrowers, lenders are subject to a risk involving disloyal client behavior. This may result in reduced lending to some or even all borrowers, either directly by introducing more rigorous eligibility criteria or by increasing interest rates.
A survey conducted among Polish banks indicates that they do not declare a strategy of limiting lending, but want to fend off the risk with measures such as technical improvements in the procedures for examining credit worthiness and by demanding guarantees with an adequate level of security. These requirements particularly hit small businesses, whose reporting policies are not adapted to supplying the information in question and which do not have the required level of security. Additionally, these entities are generally seen as less loyal than larger companies, and the profitability of banking operations in their case is lower. This explains why banks do not reduce their interest rate margins for these entities, which is an additional factor that discourages those applying for loans. This trend may add to the risk associated with small borrowers, by discouraging those businesses which have relatively low albeit stable incomes rather than those which pursue decidedly risky operations.

Article: PDF

Piotr Białowolski - Poland’s Potential Product in 1993-2004 on the Basis of the Production Function

The paper examines the “product gap” in the Polish economy in 1993-2004. The author estimates the non-accelerating inflation rate of capacity utilization (NAICU), and he also analyzes unemployment using the Hodrick-Prescott filter method. The results of the analysis indicate that the Polish economy in 1993-95 was below its potential level of utilization of factors of production. In 1995-99, dynamic economic growth spurred by efficient reforms at the start of the 1990s led to the overstepping of the potential level of capacity utilization. During the recession of 2000-02, the real product was lower than expected due to consistent restructuring. The rebound of 2003 led to a quick bridging of the gap. The increase of the product above its potential value was due to a lack of growth in investment spending as well as structural problems on the labor market. The author notes that the analysis of the potential level of the product should be an important element of economic policy, because it makes it possible to determine the position of the economy in the business cycle.

Article: PDF

Michał Greszta, Wojciech Maciejewski - Combined Economic Forecasting in Poland

The article attempts to combine Poland’s macroeconomic forecasts in 1995-2002 covering three categories: inflation, GDP growth and unemployment. A combined forecast makes use of information offered by several different forecasts, so it makes it possible to reduce the forecast error.
Both “simple forecast combination methods” (arithmetic mean and median) and “complex forecast combination methods” (variants of the classic variance-covariance method and the Bayes method) were used.
The results of the research show that the average error of simple combined forecasts, though worse than that of the best individual forecast, is always lower than the average error of individual forecasts. On the other hand, in the case of complex methods of combining forecasts, the average errors of these forecasts are usually greater than both the average error of individual forecasts and the average error of simple methods of combining forecasts. The work explains the causes for this situation and offers suggestions on future research into combining Polish macroeconomic forecasts.

Article: PDF

Jerzy Grabowiecki - The Causes of Japan’s Economic Stagnation

In the early 1990s, the Japanese economy, after more than three decades of robust growth, entered a phase of stagnation. The decreased rate of growth and deteriorated economic equilibrium made Japan lose its leadership in international competitiveness. The direct causes for the economic stagnation were a strong appreciation of the yen (Endaka) and speculation (bubble economy) as well as the transfer of production capacity abroad (hollowing out).
Japan’s socioeconomic system, which ensured a high rate of growth, booming exports and capital expansion from the mid-1950s, lost its momentum in the 1990s. Reforms carried out by the ruling Liberal Democratic Party proved insufficient.
The financial system, including the banking sector—which was considered a foundation of Japan’s economic power in the second half of the 1980s—found itself in a crisis. Despite many attempts and programs to improve the position of banks, the results have been unsatisfactory. The crisis of the banking system delays the process of restructuring capital and industrial groups (Keiretsu). The liberalized flow of factors of production, the globalization of production and the development of a post-industrial economy, based on services and knowledge, have revealed that Keiretsu groups are not adapted to the new economic, technological, social and international conditions of development.
The country’s economic stagnation coincided with major demographic changes in Japan. The decreased growth of the population and its deteriorated age structure put the Japanese economy in an unfavorable position from the perspective of development.

Article: PDF

Dariusz Kiełczewski - Consumption Styles as a Reflection of Diversified Standards of Living

The article aims to check a hypothesis that access to specific goods rather than consumer goods in general leads to a progressive social stratification in a contemporary society.
Social stratification is promoted by different consumer attitudes. It is primarily a function of growing differences in consumer incomes, which are a consequence of changes on the labor market, including reduced demand and supply of labor. The drop in demand results from a limited number of jobs resulting from the development of the knowledge-based economy and the accompanying computerization and automation processes. The reduced supply of labor is chiefly the result of rationalization stemming from increased consumer expectations with regard to their work. Conflicting development tendencies contribute to a qualitative diversification in consumption: homogenization versus heterogenization; democratization versus elitism and ecology versus technology. Generally, it is possible to classify consumers into two groups:
- well-to-do consumers with access to top-shelf goods and services: heterogeneous products that meet luxury needs, make use of the latest technology and possess high health values;
- low-income consumers with access to cheap homogeneous (post-Ford) goods that exclusively meet their basic needs and are technically outmoded and characterized by limited health safety.

Article: PDF

Jakub Growiec - The Process of Poland’s Convergence with the European Union

The convergence hypothesis, an implication of neoclassical growth models, is frequently discussed in literature. Empirical research shows that several additional conditions need to be met for convergence to take place. Processes such as economic integration, foreign direct investment, international transfers and knowledge and technology diffusion should help Poland catch up with more affluent European Union member states. Available data is insufficient, however, for a positive verification of the convergence hypothesis in Poland. Predictions of its potential impact on the Polish economy can be obtained thanks to an indirect approach. Overall, Poland needs about 55 years to reach 80% of the average GDP level in the 15 “old” EU member states (before the last round of enlargement).

Article: PDF

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