Issue 6, 2023

Over the last decade, no issue in economic policy has caused greater controversy than the effects of fiscal deficits on economic growth. Fiscal deficits have been a significant cause of worry for many developed countries, notably the Eurozone. Even if short stimulants were justified, particularly after the crises of 2008-2009 in response to the global financial crisis, they have resulted in chronic fiscal deficits, growing debt, and depleted fiscal buffers in the medium to long term. This paper investigates, using STATA econometrics, how fiscal deficits affect the economic growth rate in Eurozone Countries. We use annual data for Eurozone countries from 2001 to 2020, totalling 346 observations. The study relied on secondary data from the World Bank's databases. To estimate the effect of fiscal deficits on economic growth, we used a random effect model. The dependent variable GDP growth was analysed through the effect of Public and publicly guaranteed debt from publicly issued or privately placed bonds Inflation, GDP deflator, Unemployment, Foreign direct investment, net inflows as a percentage of GDP, Domestic credit to the private sector as a percentage of GDP. Our research findings reveal that the variable Inflation and Domestic credit to the private sector affect GDP growth and are statistically significant.
Keywords: Fiscal deficit; GDP growth rate; Inflation; Eurozone
JEL: F4; F43; H89

This paper models wealth concentration in 11 EU members from the CEE region using official data for the period between 1995 and 2021 and applies panel econometric methods. The analysis uses the world inequality database (WID.world) for deriving wealth distribution and inequality measures. Our results suggest that inequality and wealth concentration grow at the expense of the middle class and the poorer half of the population. Regression results suggest that the main contributors to wealth inequality are the Great Recession of 2008–2009, inflation, house prices, and bond prices, while GDP per capita, equity prices and various interest rates restore a more equal net wealth distribution. Other variables are also found to have direct or indirect (instrumental variables) associations with the wealth concentration (the dependent variables).
Keywords: wealth inequality; wealth determinants; GINI; CEE; panel regression
JEL: D31; E01; G51; D63

This paper extends the neoclassical model of economic growth by introducing human capital into production function and studies the impact of educational reform on economic performance. In the author’s model, the government taxes consumption to reallocate the resources to educational needs, which is one of the most prominent ingredients of human capital. The tax increase has costly consequences for the economy in the short-run, regarding the slowdown of economic activity, and the consumption loss. Thereafter, the increase in education builds additional human capital, making people more productive, recovering economic activity and stabilizing consumption at even higher levels in the long run. Thus, in the longer term, it is beneficial for the economies with low human capital to devote resources in favour of educational reforms, even though it carries the risks of political capital loss due to short-run economic costs. In the short run political capital decreases as a result of the implemented reform costs, which, on the other hand, indicate the cumulative loss of consumption. In the long run, however, the policymaker regains its political capital. Governments with low reputation cannot implement structural reforms.  Besides, the authors compare the impact of low-efficient educational reforms with the impact of highly effective ones and come to the conclusion that consumption is formulated at a lower level in the former case.
Keywords: neoclassical growth; fiscal policy; education expenditures; education reform
JEL: E13; E62; H52; I28

In recent years the question of labour productivity has gained new relevance as a result of digitalization and economic crises, and their effects on the transformation of distributive trade business. The purpose of this study is to make a comparative analysis of labour productivity in the wholesale and retail trade in Bulgaria and ten countries of Central and Eastern Europe that have made the transition to a market economy and to bring out the trends and reasons for the labour productivity gap. The analysis is descriptive and mainly uses the outpace ratio to measure the productivity gap between Bulgaria and each of the countries through a comparison of two main indicators: turnover and gross margin per person employed. The data from Eurostat are used with a focus on the period between the two economic crises in 2008 and 2020-2021.
Keywords: labour productivity gap; retail and wholesale trade; digitalization
JEL: M21

This study aims to measure the influence of COVID-19 on the capital structure of Western Balkans commercial banks, before and during COVID-19 using annual data for the period 2015 - 2020.  Using pooled ordinary least squares regressions, the relationship between bank book leverage as the dependent variable and bank-specific explanatory variables such as profitability, Tier 1 capital, bank size, collateral, earnings volatility, and liquidity is investigated. COVID-19 as an independent variable is also presented in this paper. GDP and inflation are control (constant) variables that influence the outcome. By regressing the panel data, we conclude that the comparison of factors affecting the capital structure of the respective commercial banks, in the form of profitability, leverage ratio, size, collateral, earnings volatility and liquidity, before and during the COVID-19 pandemic, tend to have significantly different values.
Keywords: Capital structure; COVID-19; book leverage; banking sector; Western Balkans
JEL: G23; G30; G32

The implementation of QR code technology aims to make it easier for MSMEs and consumers to create a cashless society. However, many MSMEs still need to implement digital payment methods over time. This research aims to evaluate the acceptance of QR codes for MSMEs, especially regarding the role of innovativeness, security, and ease of use. This research targets MSMEs in Indonesia that have used the QR Code as a tool for making transactions. Questionnaires were distributed via Google form online, totalling 489 respondents who filled out. After the data is obtained, it is analyzed using a partial least square using smart-pls 4.0. Behaviour intention (BIQ) is the most influential construct on user behaviour (UBQ). The other most significant factors are convenience (PEUQ) and security (PSQ) for users. Meanwhile, other variables such as Personal innovativeness (PI), PEUQ, PSQ, and perceived usefulness (PUQ) can increase the positive impact on Perceived value (PVQ). Several factors, such as PEUQ and PSQ, can positively influence PUQ. However, there is a construct with few results: Perceived usefulness on intention to use. This is because MSMEs are more oriented toward consumer needs to buy products and services. So these findings provide insight for the government and service providers to improve security, convenience, and necessary QR code features that support MSME business activities.
Keywords: Innovativeness; perceived value; QR Code Payment; security; technology adoption
JEL: B26; D91; F65; G41; M21

There have been numerous assessment systems and publications for the competitiveness of farming enterprises around the globe due to the high academic, business and policy importance of this problem. Common shortcomings of most evaluating frameworks are that they are based on unlike competitiveness understanding, principles and criteria, traditional indicators of technical and accountancy efficiency, factors productivity, the profitability of activity, firms market share etc. Other deficiencies of dominating approaches are that they are focused on a certain (size, juridic, sectoral, territorial) dimension of farming structures, and the ignorance of a critical governance aspect of a farm’s competitiveness. This paper suggests a holistic multi-pillar framework for assessing the competitiveness of farming structures and evaluating the absolute and comparative competitiveness of Bulgarian farms of major juridical types, economic sizes, product specialization, and ecological and geographical locations. A hierarchical system consisting of four pillars of farm competitiveness (Economic efficiency, Financial endowment, Adaptability and Sustainability), and appropriate four Criteria, seventeen particular and five integral indicators are used to measure the competitiveness levels. The study has found that the competitiveness of farms in the country is at a good level, but there is significant differentiation in the levels and factors of farms with different juridical types, sizes, specializations and ecological and geographical locations. Besides the juridical type, other dimensions of farming structures like economic size, product specialization, location, market or self-sufficiency orientation, are (sometimes more) important for determining their absolute and comparative competitiveness. Critical for maintaining the competitive positions of Bulgarian farms are their low productivity, income, financial security, and adaptability to changes in the natural environment. For the improvement of the later weaknesses are to be directed farm management strategies and public policy support measures. A large portion of farms of different types has low competitiveness, and if adequate measures are not taken in due time to improve management and restructuring farms, the efficiency of state support, etc., a significant part of Bulgarian farms will cease to exist in the near future.
Keywords: competitiveness; pillars; assessment; farms
JEL: D23; L22; M13; O17; Q13

The paper shows that there is a need in most of the Balkan countries to change the law governing the insolvency issue by clearly defining insolvency and thereby removing the confusion surrounding it from the legislation. It is also essential to harmonize the legal provisions so that the term insolvency is used consistently throughout the legal text. The paper also shows the need to define solvency properly in textbooks and present the correct methodology to assess solvency. In this way, it can be expected that neither the term (in)solvency nor the (in)solvency indicator(s) will be incorrectly used by scholars from the Balkan region.
Keywords: insolvency law; solvency; solvency ratio; solvency analysis; firm performance
JEL: K22; M41; G32; G33

Since 2016, large-scale industrial operations in Jordan have declined. Modern Management Accounting Techniques (MMATs) may aid in the execution of strategic plans, the completion of tasks, and the performance of a firm. Improving firm performance may necessitate monitoring the compatibility between MMATs and contextual variables that determine performance. This study investigated the influence of external factors on MMATs and OP. It also identifies the influence of MMATs on OP and their mediating influence on the relationship between external factors and OP. The cross-sectional survey included responses from 46 different firms that are traded on the ASE. The results revealed that there are positive influence of external factors in MMATs adoption. Also, external factors have a positive influence in improve OP. In addition, MMATs adoption leads to improve OP. Furthermore, MMATs adoption is a significant mediator between external factors and OP.
Keywords: external factors; intensity of market competition; modern management accounting techniques; organizational performance; perceived environmental uncertainty
JEL: M41

The present study examines the impact of financial ratios on the stock prices of Indian manufacturing companies. Since the manufacturing sectors play an essential role in the economic development of an emerging market like India, the study results can be helpful for investors looking to invest in India, and, in particular the manufacturing companies operating in the country. The study consists of a balanced panel dataset of selected manufacturing companies from fourteen manufacturing sectors listed on the NIFTY 500 index. The study employs the Prais-Winsten panel regression technique, which uses panel-corrected standard error estimators to analyze the data and derive the necessary empirical outcomes. The results reveal that the valuation ratios, namely market-to-book value, enterprise value multiple, and earnings per share, along with asset efficiency, exhibit a positive and significant relationship with the share prices. On the other hand, dividend payout and leverage exhibit an insignificant relationship with the share prices.
Keywords: financial ratios, share prices; Prais-Winsten panel regression; Panel corrected standard errors; manufacturing companies; India
JEL: B26; C23; G10

The article reviews the results of recent multidisciplinary research on economic development, challenges and risks in the contemporary conditions of overlapping crises in national, European and global context presented at the scientific conference with international participation, organised by the Economic Research Institute at the Bulgarian Academy of Sciences.
Keywords: overlapping crises; inflation; growth; economic, social, sectoral and regional policy; uncertainty; EU integration; labour market; demographic development; inequalities and poverty; sustainable development; company's performance
JEL: E00; F00; J00; M00; O1; Q00; R1