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

25/08/2025

G as ....What Are Giffen Goods?

Ever heard of a product that people buy more of when it gets more expensive? Sounds irrational? Welcome to the world of Giffen Goods — one of the most counterintuitive concepts in economics.

🔍 What is a Giffen Good?

A Giffen Good defies the basic law of demand. Typically, when prices rise, demand falls. But with Giffen goods, the opposite happens: a price increase leads to higher demand.

➡️ These goods are:

Inferior (consumed more by lower-income individuals)

Essential staples (like bread, rice, or potatoes)

Have no close substitutes

🧠 The Logic Behind the Paradox

Let’s break it down with a simplified example:

Imagine a low-income household that spends most of its food budget on bread (a staple) and a bit on meat (a luxury).

If the price of bread rises, they can’t afford as much meat anymore.

To get enough calories, they actually buy more bread and cut back on meat.

🔁 This income effect outweighs the substitution effect, leading to higher demand for the now more expensive good.

🏛️ Historical Origins

📜 The concept was proposed by Sir Robert Giffen in the 19th century, who observed this phenomenon with bread in Britain — though it’s still debated whether this truly happened or was a theoretical model.

⚠️ Why It Matters Today

Behavioral economics and poverty studies: Giffen behavior reveals how consumption under extreme constraints can defy standard models.

Policy design: Subsidies or taxes on staples can have unexpected effects if Giffen behavior is present.

Development economics: Real-world examples observed in rural China (Jensen & Miller, 2008) show Giffen-like behavior with rice and wheat.

📣 Final Thought

Giffen Goods remind us that economic models are not one-size-fits-all. Human behavior, especially under scarcity, can break traditional rules.

💬 Have you come across real-world examples where higher prices led to higher demand? Let’s explore the anomalies.

22/08/2025

📢 New Institutional Economics Meets Basic Income — A Deeper Look at Policy Through an Institutional Lens

What happens when we examine basic income guarantees not just as policy tools, but as institutions shaped by — and shaping — economic behavior?

🧠 In one of the articles published in the Central European Economic Journal, Basic income guarantee in the perspective of institutional economics by Michał Pawłowski
the author explores the basic income guarantee through the lens of New Institutional Economics (NIE) — moving beyond the usual fiscal or philosophical debates.

📄 Article Spotlight:

“Basic Income Guarantee in the Perspective of Institutional Economics”

🔍 What’s inside:

A critical synthesis of theoretical literature and past empirical findings on basic income

A comparison between predicted and actual outcomes of basic income experiments

Application of NIE tools to understand basic income as a functioning institution, not just a policy proposal

💡 Why it matters:

This paper offers a novel conceptual approach, positioning basic income within the structure of institutions that govern behavior, reduce uncertainty, and shape incentives. By doing so, it helps bridge the gap between policy intentions and real-world results — a crucial issue in ongoing debates on universal income models.

📚 As the discourse on social safety nets evolves across Europe and beyond, especially in the post-pandemic era, this article provides fresh analytical tools for policymakers and researchers alike.

👉 Read the full paper in Central European Economic Journal:

https://sciendo.com/pl/article/10.2478/ceej-2019-0004

18/08/2025

📘 F for Fiscal Multipliers

In times of economic downturn or structural transition, one term resurfaces in both policy circles and economic research: Fiscal Multipliers.

But what exactly are they — and why do they matter, especially in the context of Central and Eastern Europe?

🔍 What is a Fiscal Multiplier?

At its core, a fiscal multiplier measures the change in national output (GDP) resulting from a change in government spending or taxation. In simple terms, it answers the question:

“If the government spends 1 euro more, how much does GDP increase?”

But advanced research shows that the answer is far from simple.

🧠 Why It’s Complex:

Modern economic models recognize that the size and direction of the fiscal multiplier depend on multiple conditions:

✔️ The state of the business cycle (recessions vs. booms)

✔️ The monetary policy stance (e.g. near-zero interest rates)

✔️ The openness of the economy (trade spillovers)

✔️ The type of fiscal measure (infrastructure vs. transfers)

✔️ The level of public debt and market confidence

In fact, in liquidity traps or during deep recessions, multipliers may exceed 1, meaning each unit of spending generates more than one unit of output — a powerful case for countercyclical fiscal policy.

🌍 Implications for Central and Eastern Europe:

In the CEE region, fiscal multipliers carry special significance. Research from both IMF and ECB suggests that:

Multipliers in small open economies (like many CEE countries) tend to be lower — due to higher import leakages

But well-targeted capital spending (e.g. EU-funded infrastructure) still delivers strong long-term effects on productivity

The effectiveness of fiscal policy is highly sensitive to institutional quality, administrative capacity, and political stability

🧾 Takeaway:

Understanding fiscal multipliers isn’t just for macroeconomists — it's essential for designing evidence-based public budgets, evaluating recovery plans, and ensuring responsible economic governance.

Let’s remember: it’s not just how much we spend — it’s how, when, and where that determines impact.

15/08/2025

📢 Competences That Connect: Entrepreneurship & Project Management

In today’s rapidly evolving labor market, the demand for individuals with diverse, interdisciplinary skill sets continues to grow. But are our current competence frameworks keeping up?

In the article Project management and entrepreneurship competences
by Taavi Tamberg Arvi Kuura and R**t Soosaar published in Central European Economic Journal (Vol. 8, Issue 1), the authors take a closer look at the potential of integrating entrepreneurial and project management competences — two fields that are increasingly overlapping in practice but remain largely siloed in education and research.
🔍 By cross-analyzing the EntreComp framework and IPMA's Individual Competence Baseline (ICB), the authors identify both strong and weak correlations between the two sets of competences. They propose a novel direction: developing a unified competence model for entrepreneurs and project managers.

📌 Key insights:

Project management and entrepreneurship share common ground but use different terminology and structures.

A conceptual integration of these fields can better prepare individuals for complex, dynamic professional environments.

The paper offers both relational linguistic and conceptual analysis to bridge the gaps.

👉 Read the full article here: https://sciendo.com/pl/article/10.2478/ceej-2021-0003

12/08/2025

📝 Call for Papers – Central European Economic Journal (CEEJ)

📣 Special Issue Theme: Economic Stability Amidst Geopolitical Uncertainty

🌍 From warzones to trade wars, from shifting alliances to supply chain disruptions — the global economy is increasingly navigating uncharted geopolitical waters. But how do economies remain stable when the political ground is constantly shifting beneath their feet?

📚 CEEJ invites scholars, researchers, and policy experts to contribute to a special issue exploring how geopolitical shocks — whether from armed conflicts, realignment of global powers, or sudden shifts in trade policy — reshape financial markets, investment patterns, business behavior, and economic governance.

💡 Guest Editors:

Viktoriya Tytok (Kyiv National University of Construction and Architecture, Ukraine)

Mushfig Guliyev (Azerbaijan State University of Economics, Azerbaijan)

🔍 Key questions include:

How do geopolitical tensions affect both developed and emerging markets?

What policy tools are most effective during wartime economies or sanctions?

Can global trade agreements act as stabilizers in a volatile world?

What are the economic ripples of nationalist policies like America First?

How do businesses operate under martial law or political uncertainty?

📅 Don’t miss this opportunity to shape the economic discourse at the intersection of politics and markets.

📌 Submit your manuscript and read more here 👉 https://ceej.wne.uw.edu.pl/call/economic-stability-amidst-geopolitical-uncertainty/

11/08/2025

🔍✨ Understanding E for ....“Endogeneity” in Economic Research: Why It Matters 📊📈

In economic research, you often hear about the challenge of endogeneity — but what exactly does it mean, and why should practitioners care? 🤔

Endogeneity arises when an explanatory variable in a model is correlated with the error term. This typically happens because of:

❌ Omitted variable bias: Leaving out a relevant factor that affects both the independent and dependent variables.

🔄 Simultaneity: When cause and effect run in both directions (e.g., prices and demand influencing each other).

📝 Measurement error: Errors in measuring key variables can create correlations with errors.

Why is this a problem? Because it violates the assumptions of classical regression models, leading to biased and inconsistent estimates. 🚫📉 In other words, your estimated effect might be misleading.

How do economists deal with endogeneity? 🛠️🔧

They use tools like:

🎯 Instrumental Variables (IV): Variables correlated with the problematic explanatory variable but uncorrelated with the error term.

⏳ Difference-in-Differences (DiD): Exploiting natural experiments or policy changes to isolate causal effects.

🎲 Randomized Controlled Trials (RCTs): The gold standard, where treatment assignment breaks endogeneity.

Why does this matter? 🧠💡

Without addressing endogeneity, policies or business strategies might be based on spurious relationships, leading to ineffective or even harmful decisions. ⚠️

Example: Suppose you want to study how education 🎓 affects income 💰. But if innate ability 🧠 (unobserved) affects both education and income, failing to account for it creates endogeneity — overstating education’s true effect. 📊⚠️

Understanding and addressing endogeneity is key to turning data into reliable knowledge — and making better economic decisions. ✅📈

04/08/2025

🔍 D for ... Disentangling — the economist’s way of saying:

"It’s complicated, but we’re going to figure out exactly what is driving what."
In a world of overlapping shocks, policies, and behaviors, disentangling effects is the core challenge of serious economic research.

Whether we’re looking at:

💸 the real drivers of inflation,

📉 the impact of fiscal policy on inequality,

🌱 or how green investment interacts with macroeconomic stability...

…it all comes down to one question:

👉 What’s signal, and what’s noise?

Through tools like:

Structural VARs

Instrumental variables
Seemingly Unrelated Regressions
Synthetic control methods

…we try to disentangle correlation from causation, and theory from coincidence.

Because in policy and in markets, mistaking one for the other isn’t just bad analysis — it’s expensive.

01/08/2025

🔍 How Transparent Are Local Budgets—Online? 💻💰

In an era where trust in public institutions is more crucial than ever, financial openness has become a cornerstone of good governance. But how do we measure it—especially at the local level?

📢 A paper Online Openness and Transparency of Local Budgets in Belarus

by Yuri Krivorotko and Dmitriy Sokol published in the Central European Economic Journal explores just that.

Drawing on global research and frameworks from the IMF, OECD, World Bank, IBP, and others, the study develops a practical methodology to assess online transparency and openness of local budgets.

🧮 Introducing the Online Local Budget Index of Transparency (OLBIT)—a tool based on expert evaluations of how well local government websites inform the public on budgeting and finance.

By analyzing:

1️⃣ The transparency level of local budgets
2️⃣ The efforts of local authorities in making that information accessible
…this study brings us a step closer to measurable, comparable, and actionable insights into public sector transparency.
📈 Greater transparency isn’t just a buzzword—it’s essential for accountability, anti-corruption, and citizen trust.

🔗 Read the full article here: https://sciendo.com/pl/article/10.2478/ceej-2021-0009

28/07/2025

🌀 C is for Creative Destruction – The Most Productive Kind of Chaos

Economics isn’t just about markets and models — it’s about change.

And few ideas explain change better than Creative Destruction.

Coined by Joseph Schumpeter, it describes the process where innovation doesn’t just improve things — it obliterates old industries, business models, and ways of working.

🚂 Railroads destroyed canal systems.

📷 Digital cameras destroyed Kodak.

📱 Smartphones destroyed dozens of other devices (alarm clocks, GPS units, voice recorders…).

🌐 And now, AI might be doing the same to half the knowledge economy.

Creative destruction isn’t failure — it’s how economies evolve.

It’s the engine behind progress, productivity, and long-term growth — even if it’s disruptive in the short run.

The takeaway?

If your business model hasn’t been threatened lately, check again.

If your firm is protecting legacy structures, it might already be falling behind.

And if you're betting on the future — don’t just optimize. Build what replaces the optimizer.

25/07/2025

💸 How Are Public–Private Partnerships Really Financed? A Look at Poland’s PPP Landscape

Public–Private Partnerships (PPPs) are often seen as innovation enablers in infrastructure and public service delivery. But when it comes to how these projects are actually financed, the research gets surprisingly thin — especially on the private sector’s side.

In article Sources of Finance for Public-Private Partnership (PPP) in Poland

by Roman Osinski published in Central European Economic Journal, we reviewed both academic and practical literature on financial resources in PPPs and took a closer look at Poland’s PPP market.

🧩 What did we find?

The dominant source of PPP financing in Poland remains bank loans.

Many projects rely partly on EU programme funding, but few diversify beyond that.

There’s a clear gap in research on the financial behavior of private partners — especially in the Central European context.

📌 We highlight key factors influencing financing choices in Polish PPPs and make the case for:

Broader exploration of alternative financing tools

Expanding the Polish PPP project database to enable deeper ex-ante/ex-post analysis

💡 If you work at the intersection of public finance, infrastructure investment, or economic policy, we believe this research adds something valuable to the conversation.

📖 Read the full paper https://sciendo.com/pl/article/10.2478/ceej-2022-0002

21/07/2025

🔍 B for ... Bounded Rationality: Why We Don't Always Choose What's 'Best' — And Why That’s Economically Rational

In traditional economic theory, we assume individuals make perfectly rational decisions to maximize utility. But real life? It's messy, noisy, and full of cognitive constraints. That’s where bounded rationality comes in.

Coined by Herbert Simon (Nobel laureate), bounded rationality suggests that people aim for satisficing—choosing an option that’s “good enough”—rather than optimizing. Why?

Because:

We lack perfect information 📉

Our brains have limited cognitive processing power 🧠

We face time constraints ⏳

In business, this plays out constantly:

Consumers don’t compare every option—they go with what’s familiar or “feels right.”

Managers rely on rules of thumb, past experiences, or intuition—not always data-driven models.

Even investors simplify: they follow trends or heuristics when full analysis is too costly.

For economists and strategists, bounded rationality isn't a bug — it's a realistic operating model. It bridges economics with psychology, and helps explain everything from consumer behavior to organizational decision-making.

📌 In a world of complexity, seeking “good enough” can often be the most rational choice.

18/07/2025

🚀 What do project managers and entrepreneurs really have in co
And how can their competences enrich each other?
In paper published in the Central European Economic Journal Project management and entrepreneurship competences by Taavi Tamberg Arvi Kuura R**t Soosaar
the authors explore the intersection of project management and entrepreneurship through the lens of competence frameworks – specifically IPMA’s ICB and the European EntreComp model.

🔍 By comparing these frameworks, the authors uncover key overlaps, hidden gaps, and the untapped potential for integration. In an era where hybrid skills are in high demand, linking these two fields could be a game-changer for both education and the labour market.

💡 The next step? A shared competence model for project managers and entrepreneurs.

📖 Read more here 👉 https://sciendo.com/pl/article/10.2478/ceej-2021-0003

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