Projects / Programmes
Alignment of the Slovenian economy and development identity of Slovenia in the EU
January 1, 2009
- December 31, 2013
| Code |
Science |
Field |
Subfield |
| 5.02.00 |
Social sciences |
Economics |
|
| 5.03.00 |
Social sciences |
Sociology |
|
| 5.05.00 |
Social sciences |
Law |
|
| Code |
Science |
Field |
| S180 |
Social sciences |
Economics, econometrics, economic theory, economic systems, economic policy |
| Code |
Science |
Field |
| 5.02 |
Social Sciences |
Economics and Business |
economic policy, EMU, integration, postkeynesian model of transition, neoclassical shock therapy, neoclassical gradualism, Slovenia, transition and economic performance, type I reforms, mergers and acquisitions, economic nationalism, implementation of the EU regulation, Societas Europea, one-tier governance system, workers co-determination, Companies Act
Researchers (15)
Organisations (3)
Abstract
Slovenia decided to implement the fast-track approach for joining the EMU. Although it limits a number of exchange rate and macroeconomic risks, the strategy of quick euro adoption simultaneously requires a highly orchestrated domestic economic policy intervention. Lowering of inflation in Slovenia to comparable euro area level will be evidence that the gradual approach to economic transformation after 1990s, as it has been practiced in the Slovenian economy, is compatible with swift monetary integration and ultimate adoption of the euro.
Ex post analysis of transition models brings out significant Post Keynesian elements in many countries, especially in Slovenia. In the economic policy performed by Slovenia during the transition there has been a mix between Neoclassical (shock) therapy and Keynesianism. Without an explicit reference to Keynes there were many measures assuring a high level of aggregate demand that enabled a rapid exit from transformational depression to stable economic growth and decrease in unemployment, but under persistent moderate inflation.
Furthermore the research group has been researching the field of financial markets and especially: connection between business cycles and financial markets' cycles, financial markets' efficiency in transition countries, financial crises determinants in emerging economies, management and avoiding of financial crises and profits and risks connected with mutual funds.
Capital accounts liberalization has especially in the last ten years caused teutonic shifts in ownership structure in Europe as well as in transition countries. These development enabled consolidation of the European strategic industries (airplane industry, armament industry, space program), but has also pointed to risks which occur with entrance of foreign capital in strategic sectors – especially in the field of energy. It has become a very challenging task for national governments to control home economic developments as well as fulfilling national economic goals. Our research shows that expectations of politicians, media and professionals differ to a great expent. Unlike Politics and media, the profession did not judge these processes through the prism of so called. National interests.
Along with contextual research according to the program of the research group also methodological research has been carried out. It is of utmost importance especially due to the fact that emerging of new economies as well as integration processes are bringing the challenge of short time series, which often prevent consistent causality analysis as well as forecasting. Therefore we are developing new methods for the analysis of short time series, especially in the field of detection of nonlinearity. The solutions, which we already developed, have been tested not only in the field of economics, but also in the medicine. The developed methods showed high robustness and resolution which is extremely important in the analysis of time series. The methods were successfully applied with financial market analysis, where using the sample of ten transition countries we could prove some specialties, which are valid for new transition financial markets.
Dissemination has represented an essential output of the research group, here meaning especially legal consolidation of the European corporate governance system. In thie very field the research team has been consulting lawmakers when preparing the Slovenian Companies Act, changing of the Codex on public companies' governance and co-operation with the project of the one-tire corporate governance system introduction in Slovenia.
Significance for science
The global recession started in 2008 shook the foundations of the world economy. It has initiated a new reflection on economic paradigms. It became clear that with the start of the 21st century the previous economic momentum has been exhausted. That momentum has been based on information technology revolution on one hand and on the end of the cold war causing an accelerating globalization on the other. The economic policy based on the Washington Consensus and neoclassical paradigm needs a thorough reconsideration. The recession with many element of a depression for which Lucas (2002) had been convinced that had not presented a real threat any more, opened some new chapters of the depression economics (Krugman 2009). This should be more a challenge to form new paradigms for the 21st century than the return to Keynesianism. With the theoretical and empirical researches we have adressed the elements that can be integrated into the new theoretical concept of economic foundations. The fields of time series analysis and neural networks have relevance outside of strictly economic scientific discipline, so the new models and methodologies on these fields could contribute to other scientific disciplines as well. Our research proposes a new way of using publically available information in order to outperform the market. We suggest that, under the assumption that “target-to-real ratio” is stationary; it could be implemented in several trading and/or portfolio optimization techniques. We use target price to develop TRP ratio and implement this information into the optimization models. We use deviation from the mean reverted TRP ratio to indicate future potential of the stock. Our portfolio outperformed the best-performing benchmark by more than 25% and returned 47% ROI in the challenging market conditions. The theory of purchasing power parity is subject of investigation of numerous empirical papers. Explicit research on PPP theory has yielded varying results, partly as a result of the different estimation techniques, observation periods and data sets that have been employed; and partly because of factors that complicate the law of one price. Researchers, however, agree on two issues related to this exchange rate theory: first, real exchange rates tend to converge on levels predicted by PPP in the long-run; and second, short-run deviations from the PPP relationship are substantial and variable. An additional progress in explaining the PPP concept has been made by addressing the possible nonlinear reversion of real exchange rates towards their long-run values. There are numerous factors in international trade that can cause nonlinear movements of real exchange rates, notably frictions arising from transport costs and trade barriers, heterogeneous interactions of agents in the foreign exchange market concerning the proper exchange rate adjustment, and effects of official intervention in the foreign exchange market. Examining the nonlinear adjustment towards PPP levels in reforming European countries is therefore particularly important, since it is widely recognized that these countries were during the process of introducing market mechanisms exposed to a range of institutional changes as well to numerous real shocks which very likely affected their real exchange rates.
Significance for the country
Slovenia was hit by the global recession in a likely stronger manner than the most of the developed countries. After almost two decades of virtually stable economic growth when the annual GDP rate never fell below 3%, the economic and political life suffered a substantial shock. Thus a thorough reflection about the position of Slovenia in the global and regional economic relations is needed. It should be upgraded with a new concept economic policy and reforms. This research program enables such reflection. The comparative analysis in which Slovenia is faced with other comparable countries in EU is of utmost importance. The convergence processes on the wider common market are important as well. These empirical results are faced with the theoretical concepts based on economic, political and sociological analysis of the Slovenian economy and society. Advanced research methods are used to reach a thorough understanding and applicable results. Also after its independence Slovenia has carried out with the model of rationally closed economy. Statistically it is now shown in untipical relation between foreign equity and debt capital with the last one prevailing. Even before recent economic crisis in Slovenia, our research required consistent economic policies. Such policy could compensate problems of defficient saving, which occured as a consequence of deficient privatization institutional frame apart from using the opportunity to attract modern knowledge. Frequent dissemination of results of this part of research enabled Slovenian economic policy an insight in empirical facts as proved in the EU economies and especially in comparable EU member states. The debate about the validity of purchasing power parity has a long tradition in economic theory and is accompanied by an extensive empirical research. The relative instability in real exchange rate movements of transforming European economies since the beginning of the nineties is explained in the literature by a range of factors. Despite of growing interest for PPP in reforming economies, the empirical evidence for this group of countries is far from being so comprehensive as it is for developed market economies. Our research, therefore, tried to fill this gap in the empirical literature by expanding the investigation of PPP theory for a group of 12 Central and Eastern European economies. The testing of the theory for these countries reveals that the PPP is essentially a long run phenomenon, and that the judgment on the validity of parity conditions for individual reformin country remains conditioned by the choice of the numeraire currency. The documented empirical support for the PPP in selected reforming European economies at the same time indicates the degree of economic integration of these countries with the developed market economies. Before the outbreak of the international financial crisis, Slovenia and some other new EU members recorded high rates of economic growth. However, during the financial crisis this process slowed significantly.Using cluster analysis, we find that Slovenia is one of the EU countries that has been most heavily affected by the crisis. These countries typically have an underdeveloped financial system, where a greater role is played by banks that mainly provide debt financing at shorter maturities. Over the course of the financial crisis, this financing recorded the largest decline, which translated into an above-average slowdown in economic activity. Statistically significant differences between the countries where the impact was greater and those where it was smaller have thus been found, particularly in the developmental and structural indicators for the financial system, which indicates the significance of long-term financing to the economy. We conclude that the stability and development of financial systems could be an important factor in explaining the impact of the financial crisis in individual EU countries.
Most important scientific results
Annual report
2009,
2010,
2011,
2012,
final report,
complete report on dLib.si
Most important socioeconomically and culturally relevant results
Annual report
2009,
2010,
2011,
2012,
final report,
complete report on dLib.si
