Issue 1, 2017

Internal control is defined as a comprehensive process integrated in the activity of the organization and implemented by its management and employees. It aims to provide a reasonable confidence level of achievement of the set goals. The main elements of the internal control according to COSO model are five - control environment, risk management, control activities, information and communication, and monitoring. The internal control system in every organization is different and unique as it reflects the specifics, the size, the organizational structure, the complexity and scope of activities, the administrative and business environment, the level of regulation, the management style, etc. However, in order to control its activities, every organization needs all of the five elements of internal control. The article focuses on one of the five elements of internal control – the risk management. Well-managed risk-taking is seen as a prerequisite for sustainable improvement of the activities of the organization.
JEL: M 290; G320

Net Premuim Reserves are in the center of life and pension insurance. Usually they are associated with the individual accounts of the insured while the collective account, being collective property of the insured and a very important part of the reserves, remains out-of-the-way and somewhat in the background. The focus here is on the nature and functions of the collective account using a pension plan as an example. This might be a basis for some conclusions about general insurance.
JEL: G22

The
article aims at synthesizing the main features of Bulgarian enterprises which trade with Sub-Saharan Africa, as well as of those who are interested in the region. The current state of Bulgaria’s trade's relations with countries from that part of the world is outlined. Based on a representative survey of 1000 Bulgarian companies, the expectations of Bulgarian businesses towards these relations are investigated. Some general characteristics of the respondents are highlighted, analyzing the structure and attitudes of Bulgarian companies engaged or expressing interest in trade with Sub-Saharan Africa. The article examines the opinion of Bulgarian enterprises on the reasons why Bulgaria has lost its influence and traditional trade partners in the region.
JEL: F14; F50; D22

Current empiricism does not reveal much how low quality institutions hamper economic growth in developing countries, and which particular form of institutional failures harms more. This paper fills up this gap by experimenting with a broad new data set on institutional quality comprising 42 economies pertaining to 30 Sub-Saharan Africa and 12 Latin America. Six indicators of institutional quality from Kaufmann et al. (2005 and 2007 databases) are used in several endogenous growth equations prior to the downturn of the world economy. After performing a battery of econometric tests, our major findings unravel that, besides improving institutional capital, developing countries must imperatively adopt drastic public sector reforms to foster economic growth. Moreover, a more vibrant public sector, free from corruption, which adopts market friendly policies, and ensures a more effective delivery of public services would indeed be growth perpetuating.
JEL: 011; 043; 047; 054; 055

The research is motivated by the models of non-walrasian disequilibrium and the attempts to set up a concept of monetary policy in the summary framework of dynamic stochastic general equilibrium (DSGE). The key points in the analysis are the imbalances investment-savings and the "gap" between market real interest rate and natural rate of interest, generated by real and nominal shocks and different forms of friction. The main focus is the role of the natural interest rate that balances savings and investment at general equilibrium. The analysis changes some traditional perceptions of alternative rules for managing of interest rate as a part of monetary policy. In particular, the article highlights the advantages of adaptive versus optimization rules for interest rate, where information on natural interest rate is not enough and the principle of Taylor is inapplicable due to the limited response of the central bank to the excess inflation/deflation.
JEL: Е52; Е58; G01; G28

This article
presents the development of investment theories after the age of the prevailing Modern Portfolio Theory and Capital Asset Pricing Model. It starts with a review of the main theoretical and empirical presumptions of the Efficient Market Hypothesis. The emergence of behavioral finance is monitored, focusing on its contribution to the investment theory and practice. A special attention is paid on the speculative price bubbles. The paper reveals the prerequisites for their emergence, the phases through which a typical price bubble passes, and the methods for calculation of the probability for their collapse. The securities with an infinite maturity are highlighted. An example for a price bubble on the Bulgarian Stock Exchange is investigated in details. Therefore the historical performance of the main Sofix stock index is examined.
JEL: G120; G170

This article summarizes the life and work of Irving Fisher – one of the most influential economists of the 20th century, famous in his lifetime for being a genius. Besides his groundbreaking contributions to economics, he is also a pathbreaker for topics related to mathematics, statistics, nutrition, health, political stability and peace. His contributions to economics, theoretical and applied, are still used in economics textbooks. This article provides a brief survey of Fisher’s work. It is closely related to the introduction of neoclassical theory in the US at the end of the 19th century. An overview of some of them and elaborate on his model of intertemporal choice are presented. This model is an important link between the general equilibrium theory, the theory of money, the theory of investment and the theory of consumption. The main reasons are being put forward for the Fisher’s work to sound contemporary in the new millennium.