Issue 3, 2023

The political passions of the last three years have prevented the general public from appreciating the long-awaited event – the accession to ERM II, which is undoubtedly an important achievement and the last step towards full membership of the Eurozone. In a broader sense, the monetary union can be considered as a preparatory stage for the transition of the European Union to the next form – Political Union. In practice, however, this does not happen, and the eurozone expansion process is currently slowing down. The main goal of the proposed article is to dispel some of the fears that have been instilled in recent months, related to the upcoming accession of Bulgaria to the Eurozone. The main theoretical concepts regarding the benefits and disadvantages of joining a monetary union are examined. The initial prerequisites, the structure and functioning of the modern monetary regime, as well as some of the peculiarities in the development of the Bulgarian economy, are analysed.
Keywords: Euro; Optimum Currency Areas; Integration
JEL: E58; F36

This article empirically examines the fiscal policy elements affecting economic growth in 27 European countries and Switzerland (Without the United Kingdom). The research objective is to estimate the impact of macroeconomic variables such as tax revenue, government expenditure and public debt on the economic development of 28 European countries. The study employs a panel ordinary least squares (POLS) technique with a fixed effect estimation method. The Hausman test was applied to support the validity of the fixed effect over the random effect estimation model. Annual secondary data for the period 1995-2020 were used, including 728 observations. Based on the results, it may be inferred that the increase in government expenditure and tax revenue leads to an increase in economic growth in 28 EU countries. However, the higher rates of public debt lead to a decrease in economic growth. From the standpoint of fiscal policy, we conclude that Keynesian theory in the 28 EU countries was present. The study has empirically established the importance of fiscal policy tools in European countries. The study calls for the establishment of moderate fiscal policy strategies that would help ensure solvency and stimulate economic growth.
Keywords: fiscal policy; budget deficit; economic growth; Keynesian theory
JEL: E62; H62; E12; E13

Within the EU, the applied decomposition of the GDP per capita over 1999-2021 reveals that labour productivity is a dominant contributor to economic growth, followed by employment, though the impact of each factor is largely non-uniform among countries. Although the fast-converging economies benefit from productivity gains, the core EA countries have lost some of their long-term growth capacity. Despite the implemented measures, almost all EU countries experience an aggravating age structure. In 2020, digitalization was evidenced to have mitigated the negative effects of COVID-19 on productivity and employment. The estimated panel model accounts for these developments by including other relevant convergence factors such as human capital, regulatory quality and debt. The investments are empirically inferred to be a transmission channel of the positive impact of higher institutional quality and the adverse influence of higher debt stock on economic growth. While in times of high indebtedness, the expenditures on education are found to be crowded out by interests, the low debt is not necessarily associated with greater spending on education. Eventually, these inferences are graphically supported by the three-club formation derived through the K-means clustering algorithm. Although such distribution is generally in line with the neoclassical growth theory, it also reveals disturbing EU heterogeneity due to worsening demographic dynamics, rising indebtedness and insufficient regulatory quality. The derived club formation is not tightly related to EMU membership. Overall, to enhance the speed and quality of the convergence, the EU countries have to strengthen their institutional and fiscal framework.
Keywords: convergence; clubs; covid-19; institutions; debt; clustering
JEL: O43; O47; C38

The article argues that tax morale is an essential component of social capital with a significant impact on tax compliance and tax collection. Against this backdrop, the results of the study are based on a questionnaire survey in Bulgaria, conducted among 1280 employed individuals. They work in enterprises that are representative of the country’s economy in terms of economic activity, size, and geographical location. We design an index to assess the tax morale of the respondents and use it to address a series of questions. What is the tax morale of the Bulgarian population currently? What factors possibly influence it? Are there any differences between various population groups, based on socio-demographic or socio-economic characteristics? The results show that tax morale in Bulgaria is heterogeneous. Such findings lead to certain conclusions about economic policy reforms. By influencing the tax morale of the population, policymakers can improve tax collection. Our estimations show that a relatively large share of the population in Bulgaria has average or low tax morale. We point out that one of the most effective ways to increase tax revenues is through targeted measures to improve the tax morale of specific groups of people with a high inclination to participate in the shadow economy and evade taxes. Using statistical tests and ordinal regression models, this article provides empirical evidence that the profile of these individuals includes low income, living in regional cities, younger age and poor education.
Keywords: tax morale; tax collection; shadow economy; economic policy; ordinal regression model; Bulgaria
JEL: H26; H30; K42; O17

The article reveals the domestic and foreign practices of using the main types of financial incentives for public-private partnership: direct financial support, subsidies, guarantees and insurance and government benefits. It was found that concessional lending, provided mainly by international development banks, plays an important role in direct financial support. Such support is especially relevant in the initial stages of project implementation due to the lack of skills and financial resources to achieve effective results. Emphasis is placed on the active participation of public authorities in the lending process, which involves the signing of international agreements and the provision of state or local credit guarantees. Given the low level of development of the financial market in Ukraine, the expediency of using interest rate subsidies is justified, which compensates for the difference between market and preferential rates. It is proved that in the process of state incentives in the form of tax benefits, preferential tariffs for private partners, lease or leasing benefits, public authorities must take into account the annual losses of the state budget from the provision of such benefits. In this regard, to minimize the negative consequences, it is necessary to apply financial incentives, taking into account the impact on the budget and financial and economic activities of economic entities, to introduce an effective system of control over their use. Carrying out a comprehensive analysis of the use of financial incentives in domestic and international practice made it possible to identify problems that hindered their successful implementation in Ukraine.
Keywords: financial incentives; public-private partnership; soft loans; guarantees and insurance; subsidies; tax benefits
JEL: G32; G38; H54

This paper estimates private wealth in Bulgaria using different official sources of macroeconomic and survey data. Due data availability reasons, the 1995-2020 period is analysed. Net wealth is calculated by capitalising incorporated and non-incorporated entrepreneurs’ income, combining it with administrative and survey sources of data on real and financial wealth and liabilities. The net wealth of Bulgarian households is rising in nominal EUR and PPP terms, so is inequality. From the end of 1995 until the end of 2020 net wealth of Bulgarian households (individuals) has grown eightfold, from EUR 41.7 bln to EUR 381.8 bln, while per adult and per capita measures have grown tenfold, from 8.5 thousand euro to 92.2 thousand euro and from 4.9 to 55.2 thousand euro respectively. The geometric average rate of growth (CAGR) amounts to 9.3% yearly for the net wealth, 10% for the net wealth per adult and 10.1% for the net wealth per capita. For the period under review, the bottom half of individuals own less than 5.1% of net wealth on average, while the top decile and percentile own 65.3% and 10.6% of total net wealth on average, respectively, while the Gini coefficient grows to 0.75 at the end of the period but accepting values between 0.63 and 0.81 over the analysed period.
Keywords: wealth; inequality; wealth distribution; wealth concentration; income capitalisation; GINI
JEL: D31; E01; G51; D63

The purpose of the article is to highlight the results of the study of counteracting the shadow economy in the system of ensuring the economic security of the agricultural sector and its impact on the poverty level of the population. The relationship between the shadowing of the economy and the growth of the poverty level in Ukraine is substantiated, which is confirmed by the results of cluster and regression analysis. A study of the dynamics of the integral indicator of the level of the shadow economy and changes in the volume of real GDP in Ukraine is conducted and the volume of official GDP created by shadow wages is estimated. Predictive assessments of the level of the shadow economy and poverty in the coming years have been made, and growth trends have been established. It has been found that the growth of the level of the shadow economy has a significant impact on the population poverty indicator. The regional features of the spread of the shadow economy and population poverty are analyzed, as a result of which it has been proved that a higher standard of living of the population and a lower level of poverty are observed in the border and industrially developed regions.
Keywords: shadow economy; economic security; legal relations; agricultural sector; economic security of agriculture; Ukraine
JEL: О17; Q10; Q14

In the transition to a greener economy, countries need suitable indicators to follow progress on sustainability. One such metric, the ‘circularity rate’, indicates the share of recovered resources used in the economy which substitute for primary raw materials. The current paper analyses 27 European Union member countries to study the effects of selected waste management and resource efficiency indicators as well as several socio-economic determinants on the circularity rate. Results indicate that four factors emerge as equally important – GDP per capita, research and development expenditure, resource productivity and environmental tax revenues, where past values of R&D expenditure and resource productivity are especially useful in predicting the circularity rate. The research findings also emphasise the importance of adequate environmental taxation policy and its role in driving circularity. Finally, suggestions for future research on the topic are made to expand the model and allow for comparisons with other countries on their path to a circular economy.
Keywords: Circularity rate; Circular economy; Resource efficiency; Recyclable materials; Environmental taxation
JEL: H23; O13; Q53; Q56

Socially responsible human resource management (SRHRM) is a basic action of human resource management (HRM) divisions used by businesses, companies, or organizations in accomplishing external corporate social responsibility (CSR) agendas. The purpose of this study is to examine the relationship between the CSR in human resources and organizational legitimacy in Indonesia. . Also, in our study, PLS-SEM was used to assess the relevance and effectiveness of various CSR strategies. The evaluations of 46 employees in Jambi, Sumatra, Indonesia, were used for this purpose. The data were analyzed by using PLS-SEM, which revealed a robust and positive link between employee-focused CSR actions and organizational legitimacy. The findings provide useful information for companies looking to improve their resource optimization and internal stakeholder management by implementing CSR policies correctly and efficiently.
Keywords: Human resources; management; organizational legitimacy
JEL: G4; H3; J24; L2; L3; O15

The paper explores the relationship between economic openness, development and urbanisation in sustainable ecosystems. The investigation is based on the balanced panel data for QUAD countries from 1991 to 2019. By using PMG-ARDL, this paper follows affiliation amid sustainability and openness. The results reported indicate the existence of an encouraging association between sustainability and urbanisation both in the case of Australia and India. The ECT value for all the panels is negative and noteworthy, confirming the existence of short-term affiliation too. The granger causality analysis also reveals that in the case of the US and India, there existed bi-directional causation amid sustainability and urbanisation. Knowing well that the countries are party to the “Kyoto Protocol and Paris agreement”, but there is still a necessity to preserve and promote the impetus concerning sustainability in arousing inclusive awareness concerning the realisation of sustainable ecosystems. More so, subsidising schemes and promoting awareness programmes are recommended, such as incentivising sustainable urban planning and green power purchase agreement and adoption of green bonds for energy infrastructure needs.
Keywords: Environmental Sustainability, Urban Growth, Foreign Investment, ARDL and Sustainable Ecosystems
JEL: C23, C33, F15, R11, Q56