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Balázs Kotosz

Abstract

One of the most important synthetist of the practical socialist theory is János Kornai. In his works he tempted to describe the working mechanism of the socialist economy in actual practice.

The first part of the paper is to gather special keywords and analytical tools of Kornai’s description. As economist, the main tool is the description of demand and supply without the mathematical formalization of demand and supply functions, and without any Marshall crosses. Instead of them, the theory is based on quantity (stock, slack, shortage, forced substitution), on friction (caused by rigidity, resistance, and information asymmetry), and on soft budget constraint.

In the second part, we investigate if the tools and keywords correspond to economic streams. The first apprehension is that economy (either capitalist or socialist) is declared to be far from Walrasian equilibrium. The conservators of this “non-equilibrium” steady-state are the different forms of friction. The rigidity is one of the main keywords of the New Keynesian theory, surpassing price rigidity that was headstone of Keynes’s General Theory. Kornai attends to the adjustment of quantity (and not, or barely price), but he applies neoclassical analytical tool set (marginal analysis, comparative statics to separate substitution and income effect, etc.) in some (but rare) formal analysis. The soft budget constraint theorem determines the impossibility of neoclassical results because under those conditions the demand theoretically is not limited, but it is in reality. The removal of this contradiction requires devices borrowed from other social sciences.

Finally, the third part sets a question: the characteristics of Kornai’s description may be interpreted as the specialty of socialism (i.e. Kornai had no choice, the practical socialism has classical, neoclassical and new Keynesian features), or it is just his own logic that made his analyses such mixed. The answer is double. As Kornai did not take on the mathematical formalization of his theory, he had not to pin down himself to any theoretical economic school. His works about the socialist economy are decisively descriptive, as a non-market economy cannot be seen through the applied neoclassical algebra.

Open access

Isaac Kwesi Ampah and Balázs Kotosz

Abstract

The spending patterns of governments in the world especially developing economies have changed significantly over the last several decades. The main objective of this paper is analysing the relationship between government expenditures and growth in Burkina Faso’s economy. The study focuses on testing the various versions of Wagner’s hypothesis using the Burkina Faso data between 1960-2015 by an Autoregressive-Distributed Lag (ARDL) model. Cointegration tests, the long-run parameters and causality tests found valid Keynesian and Wagnerian relationship, but results are sensitive to the variable definition; the use of relative and absolute measures, local and international currency leads to a different conclusion.

Open access

Imre Lengyel and Balázs Kotosz

Abstract

The majority of Central and Eastern European post-socialist countries acceded to the European Union in 2004. The integration of these economies to the Union had begun earlier, which was strengthened by grants from the Structural Funds after the accession. One of their aims is to facilitate the catching up processes of less developed regions and their convergence to the average of older member states. In our study1, we examine the success of the catching up processes of the NUTS3 regions in the four Visegrad Group countries (V4), i.e., the Czech Republic, Hungary, Poland and Slovakia, between 2000 and 2014 to the average of the 15 initial member states of the European Union. Is there a process of catching up in each region, and if so, is it at a similar or a highly different rate? We analyze the development of GDP per capita at Purchasing Power Parity, and we examine disparities in the level of catching up using entropy-based Theil indexes. We provide a detailed analysis of two of the influencing factors of the catching up process of regions. Firstly, we look at whether the catching up process of the regions took place in a similar or very different way compared to the national average. Secondly, we examine how the size of the biggest city of the regions affected catching up, and whether the role of the biggest city of region can be shown.