This paper offers an analysis of the road from subprime and eurozone crisis to the elements of a new systemic crisis. Our aim is to research common issues that accompany each of these crises and to explore elements that hint that the financial systems are moving toward a new crisis. By holding short-term interest rates near zero, the central banks have encouraged malinvestment and speculation. Fuelling the bubble is the fear of missing out on trade. We find that actual events and movements on security markets follow a typical pattern, which indicates a serious threat for the next financial crisis. We also find enough signs that old crises lessons haven’t been learned.
The financial crises are closely connected with spread changes and liquidity issues. After defining and addressing spread considerations, we research in this paper the topic of liquidity issues in times of economic crisis. We analyse the liquidity effects as recorded on spreads of securities from different markets. We stipulate that higher international risk aversion in times of financial crises coincides with widening security spreads. The paper then introduces liquidity as a risk factor into the standard value-at-risk framework, using GARCH methodology. The comparison of results of these models suggests that the size of the tested markets does not have a strong effect on the models. Thus, we find that spread analysis is an appropriate tool for analysing liquidity issues during a financial crisis.
Andreja Nekrep, Sebastjan Strašek and Darja Boršič
This paper focuses on investment in research and development as a factor of labour productivity and economic growth. Our analysis confirms the link between expenditure for research and development (expressed in % of GDP) and labour productivity (expressed in the number of hours worked) based on selected data for EU Member States in the period 1995-2013. A causal link between variables of the concave parabola was confirmed, and the value of expenditure for research and development (2.85% of EU GDP) maximising productivity (per hour of work) was determined based on the examined data. In accordance with these findings, EU’s target of reaching 3% of GDP spent on research and development to be achieved by 2020 seems in support of reaching maximum productivity in the EU.