Central European Economic Journal, Dluga 44/50, Warsaw (2025)

20/10/2025

I us for .... Opportunity Cost

🧠 Definition

Opportunity cost refers to the value of the next best alternative foregone when a choice is made. In simple terms:

When you choose one option, what are you giving up?

This isn’t just about money — it applies to time, resources, labor, or even attention. Opportunity cost is a core concept in economics, because scarcity forces trade-offs.

🔬 Why It Matters in Advanced Research

In advanced economic modeling, opportunity cost is baked into almost everything:

In growth theory: Allocating capital between consumption and investment.

In labor economics: Choosing between time spent working vs. studying.

In environmental economics: Conserving resources today vs. exploiting them for immediate growth.

In cost-benefit analysis: Evaluating public policy, where every funded project means another one isn’t.

Economists don't just ask, "Is this profitable?" — they ask, "Is this the best use of limited resources?"

📈 Real-World Example

A government invests €100 million in building a new high-speed rail line. The opportunity cost?

Not using those funds for education reform.

Not funding hospital infrastructure.

Or not reducing public debt.

Even good decisions carry costs — and opportunity cost helps illuminate what’s unseen, not just what’s spent.

🤔 Why You Should Care (Even If You're Not an Economist)

Opportunity cost is a decision-making superpower.

Every “yes” is also a “no” to something else. Whether you're running a company, allocating research funding, or just deciding how to spend your Sunday, this concept applies.

💬 What’s the opportunity cost of not understanding opportunity cost?

Probably missing better choices.

18/10/2025

Perception of Financial Security in Assessing Business Continuity by SMEs in Poland by Bartłomiej Nita and Angelika Kaczmarczyk

📢 How do small and medium-sized enterprises (SMEs) in Poland understand and prioritize financial security? Is there a measurable link between their perception of financial security and their market experience?

Our latest article explores these pressing questions, offering empirical insights into the financial behavior and mindset of 500 SMEs across manufacturing, trade, and services sectors.

💡 Key findings:

Financial security is most often associated with a stable customer base, available funds, and maintaining liquidity.

Older SMEs place greater importance on these indicators.

Most companies rely on informal trust-based methods to assess their business partners—rarely consulting financial statements.

📊 Using a CAWI survey, along with chi-square tests, Fisher’s exact test, and Monte Carlo simulations, this study sheds light on how the theory of financial security intersects with real-world SME practices.

🎯 Why this matters:

Fills a significant research gap in SME financial behavior in Central and Eastern Europe.

Links SME perceptions of financial security to the going-concern principle.

Provides actionable insights for SME managers, auditors, and policymakers.

📘 Read the full article here 👉 https://reference-global.com/article/10.2478/ceej-2025-0015

13/10/2025

🔤 — N is for Non-stationarity 📉📈

Spoiler: It’s not about trains.

Economists love their time-series data — GDP growth, inflation, unemployment, you name it. But before you run a regression and start making predictions, there's a lurking villain you need to rule out: Non-stationarity.

📊 What is it?

A time series is non-stationary when its statistical properties (like mean and variance) change over time. Think of it like trying to predict someone’s mood based on yesterday's emotions — while they’re on a rollercoaster.

📉 Why it matters:

Running standard models on non-stationary data can lead to spurious results — relationships that look strong but are actually meaningless. (No, GDP doesn’t correlate with your coffee intake — probably.)

📚 So what do researchers do?

Differencing the data

Testing with tools like the ADF test

Exploring cointegration when two non-stationary series move together (hello, long-term equilibrium!)

⚠️ In short: If you're doing time-series analysis and haven’t checked for non-stationarity... your model might be lying to you.

10/10/2025

🔁 | Rethinking Consumer Behaviour in Finance 💡💸

How well do we really understand consumer decision-making in financial markets?

In this theoretical deep dive - The Frailty of Models, the New Era, or a Rotten World of Consumers’ Financial Behaviour? by Anna Warchlewska published in the Central European Economic Journal, the author explored the structure of consumer behaviour models — with a special focus on how they apply (or fail to apply) to the financial services sector.

📌 Why it matters:

Despite a growing body of literature, there’s still no coherent framework that fully integrates consumer behaviour theory with the complex dynamics of the financial sector. Existing models often fall short — too static, too narrow, and slow to account for socio-economic shifts or generational differences.

🔍 What is proposed:

A multi-dimensional model that incorporates:

Generational identity (Cy)

Types of financial products/services (Xy)

Motivation (My)

Capacity (Capy)

Opportunities (Oy)

This approach bridges insights from economics, sociology, psychology, and anthropology — reflecting the real-world complexity of financial decisions.

🧠 Whether you're a researcher, policymaker, or financial practitioner, this paper invites you to reconsider how consumer models are built — and why they must evolve.

📖 Read the full article here: https://lnkd.in/dvc7bDh6

—

08/10/2025

📢

We are pleased to announce the publication of a new article

Determinants of External Audit Fees: Empirical Evidence from the Audit Market in Kosovo by Vese Qehaja Keka and Arber Hoti
examining the determinants of external audit fees in Kosovo’s evolving audit market.

📊 Drawing on data from the Kosovo Council for Financial Reporting (KCFR) and licensed statutory audit firms (2019–2022), this study investigates how client characteristics and audit firm attributes shape audit pricing in a transitional economy.

🔍 Key contributions include:

Evidence that larger and more complex clients face higher audit fees

Confirmation that audit firm size significantly impacts pricing

Limited influence of client risk and corporate governance under current conditions in Kosovo

Integration of institutional-void theory into audit pricing models in a micro-economy context

Isolation of the regulatory effects of Law 06/L-032, with insights into brand premium dynamics

This paper also connects to broader post-2020 debates on digitalisation, inflation, and market concentration within emerging audit markets.

📖 Read the full article in the latest issue of Central European Economic Journal.

🔗 https://reference-global.com/article/10.2478/ceej-2025-0014

07/10/2025

Sure! Here's a professional and engaging LinkedIn post idea that the CEEJ (Center for Eastern European Economics and Journalism) could share during Nobel Prize Week, with a focus on the Nobel Memorial Prize in Economic Sciences. The post ties in history, relevance, and curiosity — perfect for a LinkedIn audience:

🎓 Nobel Prize Week Spotlight: The Economics Behind the Prize

As Nobel Prize Week kicks off, we’re reflecting on some of the most influential Nobel Memorial Prizes in Economic Sciences — not only for their academic merit but for how they've shaped our understanding of the real world.

💡 Did you know that the 2009 Prize went to Elinor Ostrom — the first woman to win the economics prize — for her groundbreaking work on how communities manage common resources without central regulation? Her insights have influenced everything from climate policy to urban planning.

Or that the 2019 Prize awarded to Abhijit Banerjee, Esther Duflo, and Michael Kremer introduced experimental approaches to fighting global poverty, changing how NGOs and governments evaluate policies?

From game theory and market design to behavioral nudges and climate economics, Nobel-winning research continuously reshapes the boundaries between theory and practice.

At CEEJ, we celebrate these ideas not only as academic achievements — but as tools for understanding and improving our societies, economies, and institutions across Central and Eastern Europe.

📚 This week, we’ll be sharing reflections on impactful economic research and what it means for the future of journalism, policy, and public understanding.

➡️ Stay tuned. Let’s make economics more accessible — and more actionable.

06/10/2025

This week, M is for Menu Costs — and no, it’s not just about restaurants 📖🍝.

Menu costs refer to the real costs firms face when changing their prices. These costs can be literal — like printing new menus or catalogs — but also strategic, such as updating websites, retraining staff, or confusing customers with frequent price changes.

🧠 Why does it matter?

Menu costs help explain price stickiness — the phenomenon where prices don’t change immediately in response to shifts in supply or demand. Even small costs of changing prices can lead firms to delay price adjustments, contributing to short-run economic rigidities and inefficiencies.

In fact, this seemingly small friction has big implications in macroeconomics. It’s a key feature in New Keynesian models, helping economists understand how monetary policy affects output and employment in the short term.

📌 Example:

During a surge in input costs, a bakery might hesitate to raise prices daily, even if profit margins are shrinking — not because it’s hard to print new price tags, but because of customer perception and the effort of frequent changes.

So next time someone says inflation is just "prices going up," ask them: Have you considered the menu costs? 😉

—

03/10/2025

Is the EU’s Carbon Border Adjustment Mechanism (CBAM) a Legitimate Tax Tool or Green Protectionism? ⚖️🌱

We are proud to present CEEJ publication exploring the legal and fiscal legitimacy of the EU’s Carbon Border Adjustment Mechanism (CBAM) — a tool central to Europe's decarbonisation strategy and a new frontier in environmental diplomacy.

📄 Read the full article in CEEJ:

The European Union Carbon Border Adjustment Mechanism as a Green Tax Policy Instrument

by Susana Aldeia

https://sciendo.com/pl/article/10.2478/ceej-2025-0006

🔍 What’s inside?

This study takes a legal research approach to evaluate whether CBAM aligns with EU tax principles while fulfilling its dual purpose:

✅ As an environmental policy tool, it aims to:

Prevent carbon leakage

Encourage global decarbonisation, especially in trade partners

Promote a healthy environment (a right now recognised by the UN)

✅ As a fiscal mechanism, it:

Upholds the principle of tax neutrality

Enhances legal certainty for long-term industrial investment

Supports fiscal justice by pricing carbon fairly across borders

🌐 Why does this matter?

CBAM’s global implications are profound — especially for developing countries reliant on carbon-intensive exports to the EU. As the mechanism enters into force, understanding its legal and fiscal foundation is crucial for:

Policymakers

Trade partners

Climate advocates

Legal scholars

Business leaders navigating industrial decarbonisation

📚 This article contributes to academic discourse by framing CBAM not only as an environmental innovation but also as a legally sound fiscal instrument in line with EU tax law and principles of sustainable development.

💬 Join the conversation: What role should tax law play in the climate transition?

🔗

29/09/2025

🔤
L is for… "Liquidity Trap"

In economics, a Liquidity Trap occurs when interest rates are close to zero and savings rates remain high, making monetary policy ineffective.
Even if central banks inject more money into the economy, people or firms hoard cash instead of spending or investing. It’s like pressing the gas pedal… and nothing happens.

📉 In a liquidity trap:

Conventional monetary policy (like lowering interest rates) doesn’t stimulate demand.

Confidence is low, and uncertainty is high.

Fiscal policy may become the only viable tool to kickstart the economy.

The concept was made famous by Keynes, but modern-day economists still debate its causes and how to escape it.

💬 What’s your view — is the liquidity trap still a real threat in today’s post-pandemic, high-debt, high-inflation world?

26/09/2025

📢 How sensitive is corporate investment to internal cash flow in emerging markets like Poland?

💼 In times of economic uncertainty, this question becomes even more crucial — and the findings from this paper, published in Central European Economic Journal (CEEJ), are as relevant today as ever -

📊 Cash flow sensitivity of investment: Evidence from the Polish listed companies

by Marian Nehrebecki

📌 https://sciendo.com/pl/article/10.2478/ceej-2020-0009

🔍 This study explores whether listed firms in Poland rely heavily on internal funds for investment — a classic question in corporate finance and monetary transmission. Using firm-level data from the Warsaw Stock Exchange and NewConnect (via EMIS), it finds:

✅ Cash flow has a strong, significant positive effect on investment, suggesting capital market imperfections and costly external financing.

📉 The effect is stronger during slowdowns, indicating tighter financial constraints when firms need capital the most.

🏦 These results support the balance-sheet channel of monetary transmission — showing how firm-level financial health mediates the impact of monetary policy.

🧠 In an era where central banks are constantly recalibrating policy, understanding these micro-level dynamics is critical for crafting effective macro responses.

🔁 Your thoughts? How does this align with other emerging markets you study?

22/09/2025

Did you know that some of the most important observations about economic growth are over 60 years old — and still shaping today’s models?

🔹 K is for Kaldor’s Facts

First introduced by economist Nicholas Kaldor in 1961, these are six “stylized facts” about long-term economic growth in developed economies.

They include observations like:

Capital per worker and output per worker grow over time

The capital-output ratio is roughly stable

Labor’s share of income remains constant (though this is debated today)

The rate of return on capital is steady

Why does it matter today?

Modern growth theory — from Solow to endogenous models — still uses Kaldor’s facts as a benchmark.

They remind us that economic theory must match real-world patterns.

💡 Kaldor’s Facts: Simple observations, profound implications.

19/09/2025

📢 Trade Agreements: Gains That Fade?

Preferential Trade Agreements (PTAs) are widely seen as engines of export growth — but do their benefits stand the test of time?

In this thought-provoking study Beyond the Initial Export Boost: The Erosion of Trade Agreement Benefits

Eyal Ronen investigates the long-term effects of the Stabilization and Association Agreements (SAAs) on Poland’s export competitiveness in the Western Balkans. Using survival analysis and a novel dataset on non-tariff measures (NTMs), the paper shows that while SAAs initially boost exports — especially via tariff reductions — the effects decay significantly over time.

📉 After 5 years: a 51% drop

📉 After 10 years: an 84% drop

Sectoral discrepancies also emerge, driven in part by NTMs, revealing uneven export resilience across industries.

This study contributes to a more nuanced understanding of how trade policy impacts evolve — and why policymakers must consider both temporal erosion and non-tariff barriers when designing strategies to sustain competitiveness.

🔍 Key concepts: Export competitiveness | Non-tariff measures | Survival analysis | Trade agreements

📄 Read the full article i

https://sciendo.com/pl/article/10.2478/ceej-2024-0010

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