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Danie Francois Meyer, Chama Chipeta and Richard Thabang Mc Camel

Abstract

Price stability supports accelerated economic growth (GDP), thus the main objective of most central banks is to ensure price stability. The South African economy is experiencing a unique monetary policy dilemma, where a high inflation rate is accompanied by high interest rates and low GDP. This is an unconventional monetary policy scenario and may hold strenuous repercussions for the South African economy. This dilemma was held as the rationale behind this study. The study investigated the effectiveness of the use of the repo rate as an instrument to facilitate price stability and GDP in South Africa. Long-run, short-run and casual relationships between interest rates, inflation and GDP were therefore analyzed. The methodology is based on an econometric process which included a Johansen co-integration test, with a Vector Error Correction model (VECM). Casual relationships were also tested using Granger causality tests. Results of the Johansen Co-integration test indicated the presence of co-integrating long-run relationships between the variables and a significant and negative long-run relationship between the repo rate and inflation rate was revealed, whereas GDP and inflation rate exhibited a significant and positive long-run relationship. The study also found short-run relationships between inflation and GDP, but not for inflation and the repo rate. Further areas of potential research may fixate towards the assessment of other significant alternative policy tools which may be utilized by various countries’ monetary policy authorities to influence supply specific inflationary pressures led by the cost-push phenomena, especially in the short-run.

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Maciej Wysocki and Cezary Wójcik

Abstract

The aim of this paper is to analyze fiscal sustainability in Poland after joining EU between 2004-2017. Unlike previous studies, which analyzed weak measures of fiscal sustainability, we analyze fiscal sustainability measures in the strong sense. Contrary to previous studies we estimate individual, not panel, fiscal reaction functions which allows us to provide possibly a more accurate picture of fiscal policy outcomes in Poland. Moreover, our empirical analysis takes a closer look at the series of structural breaks that occurred after the global crisis. Based on our analysis we may tentatively conclude that despite cyclical fiscal deterioration during the crisis fiscal policy in Poland has been sustainable in the strong sense up until 2017.

Open access

Bartosz Łamasz, Natalia Iwaszczuk and Oleksandr Ivashchuk

Abstract

The contemporary refining sector has to contend with many types of risks, among which price risk is considered to be the foremost. Moreover, refineries define it as a commodity risk and identify it with both opportunities and threats carried by changes in prices of crude oil and products of refining. In this paper, we present selected methods that may protect enterprises in the refinery sector from the consequences of rapid fluctuations in oil prices. The focus is mostly on the opportunities offered by commodity options. Skillful combination of the above-mentioned derivatives in optional strategies enables hedging of the purchase prices of raw materials within fixed price ranges. In order to examine the effectiveness of using these strategies, the parameters of the commodity options from the New York Mercantile Exchange are utilized. The analysis of the West Texas Intermediate (WTI) crude oil prices covers the period from June 2014 to March 2018. Three different strategies from the vertical spread group have been taken into consideration, namely, short butterfly spread, long strip, and long strap. European call and put options with different strike prices have been used in the construction of these strategies. The comparison of the results achieved in the research indicates that there is an answer to the question of strategies that ought to be used at various levels of oil price changes. Moreover, the empirical results reveal that during rapid fluctuations in crude oil price (<10% month on month [MOM]), the median of most variants (80%) for the three considered strategies was positive. Furthermore, 70% of variants gave positive results, with price changes between 5% and 10%, whereas for price fluctuations of >5%, the strategies turned out to be an ineffective protection. The best results with rapid fluctuations in oil prices were obtained in the long strip strategy. Additionally, increasing the exercise price of options used in this strategy improved the mean for the final results. The higher exercise prices of the options also resulted in greater sensitivity of the effectiveness of the long strip strategy on the level of changes in oil prices. For the strategy variant with the At The Money (ATM)+10% options, the Pearson’s correlation coefficient between the final result and the WTI oil prices in the analyzed period amounted to –0.91. For variants with the ATM+5% and ATM options, the value of this coefficient was –0.85 and –0.71, respectively. It is also worth noting that the consequence of increasing strike price in the long strip strategy was higher standard deviations for the final results. The empirical results might be useful information for oil refineries. It can help refineries to create a more successful price risk management policy, which may thus protect the companies from the negative consequences of unfavorable crude oil price movements.

Open access

Aleksandra Komorowska and Tomasz Mirowski

Abstract

Improving energy efficiency and building a low-emission economy are fundamental elements of sustainable development. The concept is based on a rational-energy economy and is aimed at limiting the negative consequence of the impact of energy on the environment. The main purpose of the paper is to assess the application of activities for both improving energy efficiency and building a low-emission economy, undertaken in Małopolska . Thermomodernization, installations of renewable energy sources, replacement of inefficient heating sources, and low-emission transport are among the cofinanced activities in the implemented programs. The first section of this paper discusses existing legal acts in the European Union, at the national and provincial levels, related to the analyzed issue. The second section contains description of the actions undertaken for improving energy efficiency and air quality, as well as for increasing the use of renewable energy sources, in Małopolska. The third section includes a qualitative assessment of the effects obtained and further directions for activities in this field.

Open access

Błażej Motyka

Abstract

Scholars and practitioners indicate that low level of employee engagement at work is currently one of the most alarming global economic problems. The potential consequence of this phenomenon is declining work performance. Therefore, it becomes important to understand the concept of work engagement, its meaning for employees, and implications for employers. The article is a systematic review of the body of literature, presenting the results of research on the association between employee engagement and various performance categories. The paper’s objective is to summarize prior studies based on their ordering and categorization, identify gaps in the current knowledge, and propose an agenda for future research. The article presents these findings in a synthetic manner, offering practical and academic implications arising therefrom. Results of the review indicate that, in the case of most peer-reviewed publications, a statistically significant relation between employee engagement and numerous categories and subcategories of performance was confirmed.

Open access

Adam Szyszka

Open access

S M Rashed Jahangir and Betul Yuce Dural

Abstract

The main objective of this study was to investigate the impact and causality of crude oil and natural gas on economic growth in the Caspian Sea region. Here, the study applies ordinary least square (OLS) method and Granger causality test using time series data from 1997 to 2015 to ascertain the impact and causality of crude oil and natural gas on economic growth. The results, according to the OLS method, evince that crude oil and natural gas have a significant impact on economic growth of the region. Alongside, considering causality test, gross domestic product (GDP) does Granger cause (unidirectional) crude oil price and export which denotes that GDP can help to forecast crude oil price and export; however, crude oil price and export cannot help to forecast GDP. Surprisingly, this direction is unlikely for GDP and natural gas. GDP and natural gas have unidirectional, but opposite causal relationship, i.e., natural gas price and export do Granger cause GDP which signify that natural gas price and export can help to forecast GDP; however, GDP cannot help to forecast crude oil price and export.

Open access

Kornelia Osieczko and Jan Polaszczyk

Abstract

The energy security is a subject often picked by government representatives of current times, who take actions influencing geopolitical relationship of Europe and globe. It is an important aspect because of its economical, ecological and environmental nature. Tensions between countries of Eastern Europe, legislative changes made by European Union and rapidly increasing demand in the energy sector lead players to securing their resources and its supplies, along with infrastructure. Energy Security Index (WBE) proposed by A. Sokołowski (2010) and Kościuszko Institute is an effective tool for measurement, impartial assessment and classification of analyzed economies, checking their flexibility and possibilities in the international energy arena. The index is built as multidimensional comparison analysis, which gives the prospect of creating rankings. This article presents the essence of energy security in the context of an economic potentiality in the gas sector, with the chosen elements counting into WBE and its applications. The vast aggregate is created by calculations, using worked data, to summarize assessment of energy security status of examined country. The authors tried to compare chosen elements of WBE of neighboring Polish and Ukrainian economies. As an addition, based on data availability, information is enriched by appropriate commentary. Graphics shows the essence and summary of gas transportation infrastructure in both countries and gives the idea of possibilities of cooperation between them.

Open access

Magdalena Kozińska

Abstract

The passive side of a bank’s balance sheet is characterized by considerable variety. Additionally, the intention of the supervisors is that the bank losses are covered according to a specific order, which foresees that the owners are the first to be exposed, followed by the creditors (but some of the bank’s liabilities are essential for the continuation of the operations and it is not recommended that they are redeemed or converted into shares). The sequence of covering losses expected in the supervisory regulations is often inconsistent with the order resulting from the hierarchy of claims established in the bankruptcy law. In such a situation, implementing actions involving the write-down or conversion into shares of subsequent categories of debt may entail breaking the basic principles of bankruptcy and resolution law: the pari passu and no-creditor-worse-off rules. The purpose of the article is to identify situations in which the indicated rules are breached, as well as to review and evaluate national solutions that have been implemented to ensure compliance with the above mentioned rules. To this end, the relationship between the structure of the passive side of the bank balance sheet, supervisory regulations in the area of capital adequacy and the resolution principles were analyzed. As a result, four situations have been identified where there is a risk of breaking the already mentioned rules. The review of national solutions implemented to address the problem suggests that they lead mainly to its shift to the next category in the claims’ hierarchy, but does not eliminate it. A similar effect is also provided by the amendment of the BRR Directive, which aims mainly to harmonize solutions introduced at national level.