Contents of issue 5/2014
Tomasz Grabia - The Phillips Curve Controversy, summary
Jerzy Kleer - Institutionalization of Social Space by Public Goods, summary
Krystyna Gawlikowska‑Hueckel - Industrial and Cohesion Policy and The EU’s Reindustrialization Plan: Implications for Poland, summary
Marek A. Dąbrowski - Foreign Exchange Reserve Accumulation and Economic Growth in Middle‑Income Countries, summary
Joanna Mackiewicz‑Łyziak - The Impact of Public Debt on Consumer Inflation Expectations in Europe, summary
Robert Socha - Asymmetry Between Crude Oil and Retail Fuel Prices in Poland, summary
Łukasz Piętak - Regional Convergence in Spain in 1995–2012, summary
Book Review: Ewa Gruszewska, Instytucje a proces tworzenia kapitału w Polsce
(Institutions and the Process of Capital Formation in Poland), Uniwersytet w Białymstoku, Białystok 2013, 532 pp. - reviewed by Anna Ząbkowicz
Book Review: Anna Matuszczak, Zróżnicowanie rozwoju rolnictwa w regionach Unii Europejskiej w aspekcie jego zrównoważenia
(Sustainable Development of Agriculture in the European Union: Regional Diversification), Wydawnictwo Naukowe PWN, Warsaw 2013, 363 pp. - reviewed by Grzegorz Ślusarz
Book Review: Anna Skowronek‑Mielczarek, Uwarunkowania rozwoju małych i średnich przedsiębiorstw w Polsce
(Factors Determining the Development of Small and Medium Sized Enterprises in Poland), Oficyna Wydawnicza SGH, Warsaw 2013, 233 pp. - reviewed by Robert Nowacki
Tomasz Grabia - The Phillips Curve Controversy
The article discusses the controversy among economists over the so‑called Phillips curve, which shows the relationship between unemployment and inflation in an economy.
The complexity of mechanisms that govern the economy causes inflation and unemployment to be mutually interdependent, the author notes. The relationship between these two indicators has been the subject of economic research since the 1950s when the Phillips curve was first commonly applied.
The article consists of an introduction, three main parts, and a summary. The first part analyzes the position and slope of different versions of the Phillips curve. The second part focuses on the controversy surrounding the hypothesis of rational expectations and the equilibrium unemployment rate. The third part attempts to answer the question whether the Phillips curve should continue to be used in modern macroeconomic analysis. The article ends with a summary and conclusions. The author concludes that the Phillips curve may take various shapes in both the short and long run depending on the type of inflation, which can be of either the demand‑pull or cost‑push variety, and the fact whether its positive consequences outweigh negative ones or vice versa. In addition, Grabia argues that the Phillips curve in its extended versions can still be used as an effective analytical instrument in macroeconomics.Keywords
: Phillips curve, rational expectations hypothesis, equilibrium unemployment rate, sand effect, grease effectJEL classification codes
: E52, E62, J30Article
Jerzy Kleer - Institutionalization of Social Space by Public Goods
The article focuses on what the author defines as the destruction of social space—understood as an area of collective functioning for individuals and larger groups of people within organized entities. The destruction of social space is the result of breaking rules governing the institutional order, both formal and informal, the author argues. This leads to various dysfunctions such as distrust, fear and greed. The process of destroying social space is a common phenomenon in the wake of globalization and the IT revolution, according to Kleer.
Social space is being destroyed mainly due to the emergence of a uniform pattern of governance in the form of a free‑market economy and the existence of diversified political, social and cultural systems in various countries, the author says. In the early 1990s, a mostly successful attempt was made to impose a unified model of development based on the neo‑liberal theory, Kleer notes, adding that this model is largely responsible for the progressive destruction of social space.
The process of destroying social space is taking place at the global and national levels, according to the author. At the global level, this is reflected by a lack of global order and different types of competition. At the national level, the process has been more diverse. At both levels, the process results in breaking the existing institutional and legal order, Kleer says. The destruction of social space at the global level has a substantial impact on what happens at the national level, though internal factors play a key role, the author argues. He adds that the process of destroying social space is reflected in major income disparities, job market problems, a substantially reduced supply of public goods, dubious ties between politics and business, and corruption.
The concept of global public goods could help restore order to the social sphere, according to Kleer. This could be a multi‑stage process based on ideologically neutral global goods complying with the rules of a free‑market economy, the author argues. He adds that participation in this process should be voluntary and initially dominated by whole countries rather than smaller entities.Keywords
: institutionalization, public goods, social space, destructionJEL classification codes
: H19, H40, H50, F02, F50, F55Article
Krystyna Gawlikowska‑Hueckel - Industrial and Cohesion Policy and The EU’s Reindustrialization Plan: Implications for Poland
The paper looks at whether the European Union’s industrial and cohesion policies for the 2014–2020 period can contribute to the reindustrialization of EU regions and to what extent this objective is reflected in Poland’s economic development strategy.
The author uses a method based on analyzing trends in the development of industry and in EU industrial policy as well as plans for reinvigorating European industry contained in strategic EU and Polish government documents.
The EU’s Strategy 2020 confirms a distinct evolution in the European Commission’s approach to industry, according to the author. This is reflected in a focus on not only horizontal activities, Gawlikowska‑Hueckel says, but also—in a novel approach—on sector‑specific activities, including support for the restructuring of beleaguered sectors, the author argues. The reindustrialization process will be supported by cohesion policy through measures such as co‑financing smart strategies and investment in industry.
But this strategy may prove to be ineffective, Gawlikowska‑Hueckel warns. She adds that the development of a modern industry in Europe will mostly depend on the location preferences of corporations, which have become independent market players in this era of globalization and are choosing investment destinations to suit their own interests. Therefore a “renaissance” in European industry will largely depend on the conditions on the internal market and on whether or not it provides an attractive alternative to countries with lower production costs, Gawlikowska‑Hueckel says.
As for Poland’s strategy, new measures to support the renewal of industry should be taken, taking advantage of synergy effects in industrial and cohesion policy, the author says. At the moment strategic government documents rule out sector intervention. Given the aims and instruments of industrial and cohesion policies, Gawlikowska‑Hueckel concludes, cohesion policy can have a more “pro‑industrial” effect.Keywords
: reindustrialization, new industrial policy, cohesion policy, development strategy, smart specializationJEL classification codes
Marek A. Dąbrowski - Foreign Exchange Reserve Accumulation and Economic Growth in Middle‑Income Countries
The paper examines whether foreign exchange reserve accumulation contributes to economic convergence and growth processes in what are known as middle‑income countries. The author’s analysis is divided into two research tasks with respect to the relationship between reserve accumulation, on the one hand, and processes of convergence and economic growth, on the other. The first task is to offer a credible explanation of this relationship. The second task is to provide stronger empirical evidence on the nature of the relationship extending beyond the results of simple correlation and regression analyses.
There are four main channels through which reserve accumulation impacts per capita GDP growth, according to Dąbrowski: the Keynesian channel of investment stimulation, the international competitiveness channel (related to the revived Bretton Woods system hypothesis), the saving and investment channel (linked with the presence of financial constraints), and a channel alleviating the adverse effect of institutional weaknesses and market failures on economic growth.
The author finds that, first, reserve accumulation has a strong and significant effect on convergence and economic growth regardless of the measure used in the analysis. Second, the relationship between reserves and per capita GDP growth is stronger in the sample with high- and middle‑income countries than in the sample covering all the countries, Dąbrowski says. Third, the effect of reserve accumulation on economic growth is not only through the direct international competitiveness channel but also through other channels, the author concludes.Keywords
: foreign exchange reserves, convergence and economic growth, emerging market economies, mercantilismJEL classification codes
: F43, F31, F41, E21Article
Joanna Mackiewicz‑Łyziak - The Impact of Public Debt on Consumer Inflation Expectations in Europe
The study analyzes the impact of public debt on consumer inflation expectations in 20 selected European countries.
According to the so‑called fiscal theory of the price level, fiscal policy may influence the inflation rate. Consequently, it may also influence inflation expectations.
In order to check whether or not European consumers understand the relationship proposed by the fiscal theory of the price level, the author estimates an inflation expectations equation with the public debt‑to‑GDP ratio as one of the explanatory variables. Moreover, the author analyzes the macroeconomic efficiency of inflation expectations with respect to public debt. Mackiewicz‑Łyziak estimates the equations using panel data. The results suggest that in low‑indebted countries the public debt level does not significantly influence consumer inflation expectations. In heavily indebted countries, on the other hand, higher public debt leads to an increase in inflation expectations, the author notes. Moreover, in countries with high public debt, consumers tend to process data on debt in an effective manner, Mackiewicz‑Łyziak says, while in low‑indebted countries expectational errors are not orthogonal with respect to information on the public debt level. The author concludes that the research points to the existence of an additional channel—an “expectations channel”—through which high public debt affects future inflation.Keywords
: public debt, inflation expectations, fiscal theory of the price level, panel dataJEL classification codes
: D84, E31, E62Article
Robert Socha - Asymmetry Between Crude Oil and Retail Fuel Prices in Poland
The article explores an asymmetry between the prices of crude oil on international markets and the prices of fuel at Polish gas stations. According to the author, retail fuel prices in Poland tend to change faster when the price of crude oil increases rather than when it falls. The author conducts an empirical investigation using a cointegration analysis followed by more complex approaches: an asymmetric error correction model (ECM) and an ECM model with threshold cointegration.
The study found an asymmetric relationship between the price of crude oil and pump prices in the case of liquefied petroleum gas (LPG) and diesel fuel and no asymmetry for gasoline, the author says. Moreover, when the price of crude oil increases, diesel fuel prices at Polish gas stations tend to respond almost twice as fast as when the price of crude oil decreases, Socha says. This can be attributed to price differences between various types of fuel and differences in the structure of consumers, according to the author. Gasoline is the most expensive fuel and from a customer’s point of view it is a good benchmark for current trends on the Polish fuel market, the author argues. He adds that the rising price of crude oil on the global market after 2004 was the main reason for increased fuel prices at Polish gas stations. In the case of gasoline, retailers have been ready to adjust prices to changes in market conditions almost immediately because gasoline is mostly bought by households, Socha says. In the case of diesel fuel, price adjustment has often been delayed, the author argues, because this type of fuel is predominately purchased by businesses.Keywords
: price, crude oil, liquid fuels, asymmetry, cointegrationJEL classification codes
: C22, C52, Q31Article
Łukasz Piętak - Regional Convergence in Spain in 1995–2012
The article examines the process of regional convergence in Spain from 1995 to 2012. The author uses both beta- and sigma‑convergence measures. The research confirms the existence of absolute convergence in Spain during the studied 17‑year period, the author says. Regions with a high level of per capita income in the base year had lower economic growth rates, Piętak notes, adding that “income dispersion around the average income was reduced, confirming the existence of sigma‑convergence.” The research shows that there was a process of convergence in labor productivity in the analyzed period. In the case of labor productivity the capital/labor ratio played the key role, Piętak says, while capital productivity was less important.
The author also examined the process of convergence for two other factors affecting labor productivity: human capital and R&D expenditure. In this case Spanish regions showed a strong convergence in the analyzed period, Piętak notes.
The author used Polish, English and Spanish research reports when writing the article. Statistical data on Spain and its autonomous regions used in the paper come from Spain’s National Statistics Institute and AMECO, the annual macroeconomic database of the European Commission’s Directorate General for Economic and Financial Affairs. Piętak also used data made available by Spain’s Bancaja Foundation and the Valencian Institute of Economic Research (IVIE).Keywords
: regional convergence, per capita income, factor productivityJEL classification codes
: E32, R11, R12Article