Issue 2, 2020

The specificities of the processes accompanying the accession of Bulgaria and Romania to the EU and beyond are investigated based on the example of the interconnection between foreign trade and economic growth. The dynamics and changes in the structure of foreign trade in the two countries are examined from a comparative point of view, and an attempt is made to determine how they affect the economic growth rate. The analysis covers the period 2007-2018, which was chosen because it encompasses the time from the start of Bulgaria and Romania's EU membership until the present.
JEL: F31; F43; O52

The article shows how some novel machine learning algorithms can be applied to economic problems of discrete binary choice. An examination is made of three typical business tasks – classifying overdraft applications, credit risk management, and marketing segmentation. Both traditional econometric methods (logistic regression and linear discriminant analysis) as well as five more advanced machine learning algorithms (neural networks, k-nearest neighbours, naïve Bayes classifier, random forest, and support vector machine) have been used for modelling these tasks. For all the classification tasks, the random forest algorithm robustly registers improved forecasting accuracy over the more traditional approaches. This underlines the need to supplement the classical econometric toolbox with innovative methods, with the random forest, the support vector machine, and the neural network being prime candidates.
JEL: C45; C53; D81

Few U.S. economic issues in the last half-century have engendered as frequent political controversies as the minimum wage. This article looks at both the politics behind efforts to make the minimum wage a “living wage” in recent elections, and the many relevant economic effects, such as inflation and unemployment, from both a macro- and a microeconomic perspective. The paper offers several original conceptual models, in various economic situations, which examine the regressions of eight U.S. states over the 1996-2016 period. The results show that high minimum wages can harm employment, but that moderation can aid stagnant wages in economically-improving inflationary settings without drastically reducing employment short-term.
JEL: J31; J32; E24; E31, E32

A review is made of the origin of the term “secular stagnation”, its historical development and the evolving patterns of the academic debate on the subject in recent years. A significant focus is placed on the debate over the modelling of the natural interest rates, the factors which contribute to the historically low nominal and real interest rates in many advanced economies, as well as the specific structural characteristics behind the slowdown in economic growth in economies such as the USA, Japan and Europe.
JEL: B15; N10; E50; O47