Issue 2, 1998

The study is aimed at analysing basic methodological issues of GDP estimates converted into a common currency using PPPs in the practice of international comparisons as well as at relating these issues to estimation of real GDP for Bulgaria.
The first section considers the PPPs concept and its relation to the exchange rate (ER) concept. The evolution of the ideas about PPPs concept as well as approaches to PPPs estimation is studied. The methodology and progress of the UN International Comparison Project (ICP) is described.
The second section presents estimates of GDP using PPPs of international comparisons, including Bulgaria from the beginning of the century up to the present. The historical and economic changes during this comparatively long period determine three quite different by nature subperiods: until the end of World War II, under the conditions of centrally planning (1945-1989) and during the transition to a market economy (after 1989).
The results of the first participation of Bulgaria in the European Comparison Programme of real GDP in 1993 are briefly described. An approach is applied to derive GDP estimates based on PPPs around a benchmark year.
The importance of the problems considered for the country in connection with the urgent tasks of the transition is pointed out.

The accelerated process of contemporary technology change corresponding accelerated qualitative changes in the man thinking revolution, in the concepts for society development.
There is not enough knowledge on technology change as an economic object of investigation. In this connection the aim of the study is to present classical and author's definitions of new basic concepts, to classify the applied approaches, to summarise the problems and main conclusions of completed investigations on the base of a thoroughly examination of current specialised literature. The European conception and policy towards technology change is summarised which would be a base for clearer definition of Bulgarian development priorities.
The conclusion is that a main problem today is councious of the broader significance of the current transition in the economy and the connected necessity to put the technology change as nucleus of the economic development, as a base for national strategy and policy and incorporation onto the European Union.

The research examines the problem concerning the impact of the inflation on the financial results and the investment of the companies. The relation of the inflation and financial results of the company is characterized. The decision making about investment under condition of inflation is examined. A survey of the models of inflation accountancy in the companies and the Bulgarian method of adjustment of balance of accounts and the statements of income and expenditure is made. On the basis of data about 1993 and 1994 inflation rates in Bulgaria, its impact has been analyzed over the pattern of spending, the financial results, the size and structure of the assets and liabilities for twelve companies acting in different branches of industry. Special attention has been paid to the change in the stockturn, liquidity, and providing the companies with own financial means.The changes of the structure of the assets of these companies are examined.

In this study we show the importance of the small and middle enterprises for the industrial development of Bulgaria by comparison with the economic situation in the more developped countries.
The emphasized point here is the clarifying of the essential characteristics of these economic units. We support the thesis that without such a characteristics, which should be in a legislative form too, we can not expect positive results. We also pay attention to the factors that infer the formation and functioning of the small and middle enterprises. In the study we emphasize that enterprises of such type are not transitional. They are and will be of vital importance not only now but in future too.

Reforms in Bulgaria lead to a market but not a competitive market economy. There is no an aimed science and technology policy in them, which to develop the competitive power.
It is necessary to be created a national strategic program which to be directed to complex and historically fast setting up the basic qualitative characteristics of competitive economy in the developed countries. This requires a radically new, complex and perspective approach to the carrying of the whole social and economic reforms.
An integral part of these reforms is the active scientific policy, making appropriate changes in science and technologies.

Theoretical and applied problems of the correctness at evaluation of the output in the System of the National Account (SNA) are examined in the study. It makes experiments to elaborate and to put in to practice different methods for improvement of the correctness at the evaluation of the output. First, it is examined the theoretical problems connected with "pure branch", the units in the SNA, the inflation and the import output. Second, it is given different proposals for using these methods in the statistical practice as is pointed their priorities.

It is well known that in the market economies the prices vary. This fact creates substantial problem when forecasting the necessary financial flows connected with firms' effective functioning. This research offers an approach based on "Monte Carlo" method with the help of which simulatively are prognosticated the market prices‘ variations. With the help of this approach the managing personnel have the possibility to use different variations of firm strategies at the possible combinations of varying value indexes of the corresponding prices. In the way such a strategy may be chosen which is well adapted to all possible market price combinations and which gives best economic results.

We investigate the possibility that the observed deviations of the money demand and of the price changes can be explained by the rational expectations Cagan's inflation model in the specific case of the transition economy in Bulgaria. We examine the time series properties of the monthly data for the period from January 1991 to December 1996. The validity of Cagan's inflation model is tested using an econometric technique independent of the assumptions concerning expectations formation. We are able to reject the null hypothesis of no co-integration confirming validity of the model for the sub-period from January 1995 to December 1996. Both lagged rates of money growth and lagged inflation rates are used for instrumental variables estimation of the rational expectations model.