50 Years of Capital Mobility in the Eurozone: Breaking the Feldstein-Horioka Puzzle

This paper assesses capital mobility for the Eurozone countries by studying the long-run relationship between domestic investment and savings for the period 1970-2019. Our main goal is to analyze the impact of economic events on capital mobility during this period. We apply the cointegration methodology in a setting that allows us to identify endogenous breaks in the long-run saving-investment relationship. Precisely, the breaks coincide with relevant economic events. We find a downward trend in the saving-investment retention since the 70s for the so-called “core countries”, whereas this trend is not so evident in the peripheral, where the financial and sovereign crises have had a more substantial impact. In addition, our analysis captures other economic events: the Exchange Rate Mechanism (ERM) crisis, the German reunification, the European financial assistance program, and the post-crisis period. Our results also indicate that the original euro design had some flaws that remain unsolved.

Development of cores acquisition model with two switching mechanisms in a retailer-oriented closed-loop supply chain system

Retailer-Oriented Closed-Loop Supply Chain (ROCLSC) is an integration of forward and reverse supply chains with retailer taking charge of the remanufacturing, distribution, and collecting activities. This type of mechanism is quite effective, since the majority of product returns management is performed by the retailer. However, in practical industries, the implementation of ROCLSC is still limited. In this study, we investigate a ROCLSC system that involves an Original Equipment Manufacturer (OEM) and a retailer. OEM plays a role as a producer of new products, while the retailer is in charge of remanufacturing, collecting, as well as selling and distributing both newly manufactured and remanufactured products. We develop a mathematical model to maximize the profit of each party. Although several studies have developed models for cores acquisition, here we apply a different cores switching mechanism. We introduced the fixed rate and flat rate mechanisms used in the business-to-business (B2B) system, where product functions are very important to consumers. In addition, this research focuses on ROCLSC where most of the existing cores acquisition models are Manufacturer-Oriented Closed-Loop Supply Chain (MOCLSC). The result of this study shows that the retailer will get higher profits when the product returns are acquired through the fixed rate mechanism, rather than the flat rate mechanism. Therefore, determining the optimal amount of cores collected through the fixed rate mechanism will increase the retailer’s profit, as well as joint profit of both parties. From the results, we also point out an interesting note that the retailer should increase efforts to sell new products along with the increasing proportion of consumer Willingness to Pay (WTP) for remanufactured products. Hence, both OEM and retailer profits can be increased consecutively

Węgiel w polsko-radzieckich stosunkach gospodarczych

Polish coal played an important role in economic relations between the People's Republic of Poland and the USSR. Its resources constituted an important element of the Soviet policy towards Poland. In 1946–1953, the forced deliveries of black fuel were a kind of donation. The Soviet authorities explained them with losses in war reparations as a result of the transfer of German lands on the Oder and Nysa Łużycka to Poland, with rich coal resources in Silesia. The Soviet Union also did not refrain from taking over some of the Polish coal deposits as a result of the forced correction of the borders in the east in 1951. Deliveries of "reparative" coal at lower prices brought Poland serious financial losses and inhibited the development of economic relations with Western countries. The export of coal under trade agreements concluded from 1945 was also economically unfavorable. The Soviet authorities imposed both excessive quotas and difficult financial conditions. From 1949, for this purpose, they used the price and exchange rate mechanism applied by the Council for Mutual Economic Assistance. Only in the 1960s did it become beneficial for Poland, and in the following decades it brought losses. The export of coal to the USSR, which in the 1980s amounted to 30% of total exports, caused a deficit of fuels on the domestic market, made it difficult to use the existing economic potential and maintain an adequate standard of living of the population. The political transformation after 1989, which introduced market regulations to foreign trade, led to the collapse of coal exports to the USSR.

Dynamic decision policy reconfiguration under outcome uncertainty

Humans and other mammals flexibly select actions under noisy and unstable conditions. To shed light on the mechanism driving this flexibility, we evaluated how the underlying decision policy evolves when humans change their minds about the most rewarding action. Participants performed a dynamic variant of the two-armed bandit task that manipulated the certainty in relative reward probabilities (conflict) and the reliability of action-outcome contingencies (volatility). We found that conflict and volatility contributed to shifts in exploratory states by changing both the rate of evidence accumulation (drift rate) and the amount of evidence needed to make a decision (boundary height). Following a switch in the optimal choice, the drift rate and the boundary height reduce, allowing variability in the accumulation process to predominate action selection, leading to a fast exploratory state. These changes facilitate the discovery of the new optimal choice, with a quick recovery of the boundary height to baseline. In parallel, the drift rate gradually returns to its asymptotic value as the belief in the value of the optimal choice stabilizes. Together, these decision dynamics suggest that, in the context of volatile two-choice decisions, humans adopt a combined information-threshold and drift rate mechanism in response to environmental changes. Unlike previous observations, we found no evidence that fluctuations in norepinephrine, as measured by pupillometry, associated with this adaptive shift toward an exploratory policy. We conclude that the multifaceted processes underlying a decision can rapidly reconfigure to adapt action selection policy under multiple forms of environmental uncertainty.

One Foot In and One Foot Out, 1990–1997

John Major had none of Thatcher’s reservations about German reunification and wanted to put Britain at the heart of Europe. But he faced growing Euroscepticism inside the Conservative Party. At Maastricht, Major secured for the UK the right to opt out or, later to opt in, to the proposed European single currency. The significance of this opt out for the longer term British sense of detachment from the rest of the EU was not then obvious. The ratification of the Maastricht Treaty in the UK, and the Major government, both nearly foundered, when the UK was forced out of the Exchange Rate Mechanism in 1991. Europe became a toxic issue in the Conservative Party. Mad Cow Disease triggered a policy of non-cooperation by the UK with the rest of the EU. Major championed the enlargement of the EU to include the newly freed countries of eastern and central Europe.

No, No, No

Thatcher got less money back from her EEC partners than she had argued for but secured a lasting deal to replace endless yearly battles for refunds. Arguments over reform of the Common Agricultural Policy (CAP) continued. Thatcher championed economic liberalization in Europe, but was opposed to the Treaty changes needed to bring it about. She compromised and got most of what she wanted, at the price of accepting that economic and monetary union (a single currency) would be pursued. Her attempt at a closer relationship with Kohl and Mitterrand was rebuffed. The Bruges speech created shockwaves around Europe. Thatcher and Howe (Foreign Secretary until 1989) were at odds over Europe. He helped force her to agree to join the Exchange Rate Mechanism (ERM). Her stridency provoked his resignation from government and her downfall. Her policies and legacy tend to be caricatured.

Roadmap for the adoption of the euro in Hungary: dangers and opportunities

In April 2003, the EU Accession Agreement was officially signed for the Czech Republic, Estonia, Cyprus, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia and the Slovak Republic. These countries are destined to become EU members in May 2004. As part of the “acquis communautaire”, participation in the new version of the exchange rate mechanism (ERM II), and subsequently in the European Monetary Union (EMU) is obligatory for all new EU members (no opt-out clause is available). Therefore, the question today for the accession countries is no longer whether or not to enter the eurozone but rather the time horizon when the entry should happen. Journal of Economic Literature (JEL) code: E42, E58, F33.