E32 - Business Fluctuations; CyclesReturn

The aim of this paper is to investigate the relationship between unemployment and economic growth in the European Union and in individual European countries. This allows to determine what the effect on the unemployment rate will be when there is a change in output. The European Union (28 countries) quarterly data used is for the period from 2000Q1 to 2017Q3. Regression analysis, co-integration analysis and a vector error correction model have also been used. The relationship between the unemployment rate and economic growth in the EU-28 for the period examined in this study is less pronounced in comparison with the other countries. A negative relationship between economic growth and a change in the unemployment rate is obtained for all the countries in the European Union (28 countries). During each stage of the period studied, the effect of hysteresis on the labour market grew. The results from the statistical analysis show that the data on economic growth and the change in the rate of unemployment in the EU-28 are co-integrated. The validity of Okun's Law for the economy of the European Union is confirmed although during the period studied the European economy went through several phases of the economic cycle.

J. C. L. S. Sismondi was a Swiss historian, economist and writer. He is often cited as the last representative of the French branch of classical economics and a key author of the small producers type of theories. He left the classical liberal school and switched to economic romanticism. He has been indicated as the first author of systematic reflection on crises in opposition to contemporary conceptions of balance.

Michał Kalecki was an original Polish economist, who is ranked among unorthodox Marxists. He focused mainly on issues of macroeconomic dynamics. He created the dynamic theory of effective demand, in which he overtook the more familiar concept of J. M. Keynes. Kalecki influenced many diverse economists, including, e.g., the first generation of post-Keynesian economics.

F. Valenta was a Czech economist, academician. He is famous for his research into micro and macro theory of innovations (including the consequences). He was interested in the development of science and technology, efficiency and innovation processes. He created the comprehensive theory of innovations. This theory is breakthrough for the classifications of innovations with innovation orders. His ideas are inspirational even nowadays in both theory and practice.

J. A. Schumpeter was an Austro-American economist, historian of economic science, political scientist, lawyer and politician, ranking among the most famous, outstanding and cited economists of the 20th century. He created a dynamic theory of development based on innovations, researched economic cycles, issues including long waves, innovations, entrepreneurship, and theory of evolution.

N. D. Kondratiev was a Russian economist and statistician. Although he was interested in planning theory, he became most famous for his modern approach to economic cycles, primarily long waves. Unfortunately, both his ideas about dynamics in economics, planning and cycles and his work for the Institute for Conjuncture are still underappreciated.

M. I. Tugan-Baranovsky was a Russian-Ukrainian economist, scientist, policy maker and journalist. He promoted the ideas of co-operativism. He tried to describe an eclectic synthesis of the marginal utility theory and the value theory of D. Ricardo and K. H. Marx. He is famous for the business cycle theory and he belongs among the best-known Russian economists.

This article's objective is to create the Composite Coincident Indicator - CCI for the Czech economy, which is useful for monitoring of the Czech business cycle and its comparison with the GDP and the Index of Industrial Production. In the theoretical part of this article, we describe three indexes which currently represent options for monitoring of business cycles. The most useful indexes are the GDP, the Index of Industrial Production and the CCI. We also compare advantages and disadvantages of these indexes for the Czech business cycle. In the empirical part of the article, we analyse 127 indicators from different parts of economics and select coincident cyclic indicators that are the most appropriate for the creation of the CCI. The most useful methods in our analysis are Hodrick-Prescott filter and cross-correlations. Besides the creation of our own CCI, we compare this composite indicator with the GDP and the Index of Industrial Production. Then we analyse prediction abilities of Composite Leading Indicators (CLI) in a relationship with the CCI, GDP and Index of Industrial Production for the Czech economy.

The aim of this paper is to analyze the structure of the current financial system, including money circulation in it, and define its influence on business cycles. The paper examines causes of disturbances in money circulation which lead to shallow or even deep economic crises. The role of central banks is marginal. The author concludes that proper functioning of the current financial system is subject to constant credit growth. If credit growth is insufficient, the system collapses due to money hoarding and other disorders in money circulation. It causes inability to repay the debts, which results in uncertainty and reduces aggregate demand. The entire study is based on US data.

Financial innovations should be regarded as a substantial element in the functioning of modern economies and financial sectors. However, their general impact is to be assessed from the present perspective, essentially depending on their particular behaviour and the role they play in the economy. Most importantly, this text follows both the Post-Keynesian and the Regulation School logic, trying to clarify business cycle volatility with respect to the intensity of innovative activities in the financial sector. The article also discusses some hypothetical causal relationships between the 2007-2008 financial and economic crisis and financial innovation activities, largely accelerated in intensity over the preceding two decades. As it is clearly demonstrated, the "Great Moderation" argument has not been entirely confirmed and a number of mainstream economists have ultimately been forced to adjust their respective approaches towards the functioning of modern economies.

The paper deals with the possible impact of the 2008-2009 financial and economic crisis on the potential output in the Czech Republic. Given the general difficulty in sketching out all the consequences of the crisis itself, the article is primarily focused on the labour market, which is regarded as an important driving force in terms of potential output fall or its growth slowdown. First, principal reasons why the potential output could have been hit by the 2008-2009 crisis are discussed in detail. The paper then analyzes a number of transmission mechanisms through which potential output could be generally impacted by severe recessions. Further, the output gap of the Czech Republic is estimated and a potential output development is drawn up. Finally, an approximate impact of the crisis on the potential product through the labour market is demonstrated. The results show that the potential output in the Czech Republic has been partially and temporarily affected in volume. This is specifically due to an adverse long-term unemployment and, to a much lesser extent, employment behaviour, in both cases seemingly in relation to the recent crisis. Likewise, Okun's law has been found to be relatively weak in the case of the Czech economy, thus further supporting the "hysteresis explanation". However, such a drop in potential output will likely not persist in the long run, provided that appropriate economic policies - in particular aiming at re-integration of long-term unemployed/discouraged workers and an increase in the employment and participation rates - are implemented.

The transformation of the world economy over the past two decades has been manifesting itself in various forms. On the one hand, there is an increasing interdependence of the world economy, which is a manifestation of the depth of the globalization process, mainly thanks to the expansion of information and communication technologies and the greater degree of the liberalization of the world economy. On the other hand, there is an increasing scale of contagion effects, where a crisis in one country or region is transmitted to the rest of the world quickly. The transformation of the world economy is also reflected in the growing influence of emerging economies both in terms of their global trade shares and their contributions to global economic growth. Despite a favorable growth dynamics over the past years, the current situation and the short-term outlook of the world economy are indeed gloomy. The multiple crises, which include oil, food and external imbalances, have led most of the advanced economies to converge to a recession. The current global slowdown is also accompanied by policy dilemmas as governments in the vast majority of countries have been scrambling to come up with the right economic incentive schemes to avert a protracted recession. Nonetheless, unlike previous crises, where countries used to choose policies unilaterally (including protectionist policies), now the world seems to favor coordination as opposed to protectionism, as the latter would mean the termination of the globalization process.

Based on cointegration analysis of daily data of the most liquid Czech stock from September 1, 1997 to February 28, 2007, a long run equilibrium relationship was revealed to exist between prices of stocks of Komerční banka (KB), České energetické závody (CEZ) and Unipetrol (UNPE). Prices time series of these stocks have a unit root and are cointegrated. There is a unique combination of these stocks which is mean reverting and can be used to achieve statistical arbitrage. However, in order to exploit this possibility, a number of challenges need to be dealt with. Investors should take into account the speed of the mean reversion rate, the size of the variation and the stability of the out of sample behaviour of this combination of these stocks.

We analyze a discrete version of a simple Kaldor model. As is typical for Kaldor model we consider an S shaped investment function. This leads to either a one or three equilibria of the model. For simplicity reasons we do not consider an S shape saving function as assumed in the original Kaldor paper. This does not affect any analytical conclusions as for presentation of dynamic properties nonlinear investment function is sufficient. Our aim is to study changes in the model dynamics under varying parameters. We study transition between one and two equilibria setup and also each of the set up separately.