Spectral study of options based on CEV model with multidimensional volatility

Author(s): Ivan Burtnyak,Anna Malytska / Language(s): English Issue: 1/2018

This article studies the derivatives pricing using a method of spectral analysis, a theory of singular and regular perturbations. Using a risk-neutral assessment, the authors obtain the Cauchy problem, which allows to calculate the approximate price of derivative assets and their volatility based on the diffusion equation with fast and slow variables of nonlocal volatility, and they obtain a model with multidimensional stochastic volatility. Applying a spectral theory of self-adjoint operators in Hilbert space and a theory of singular and regular perturbations, an analytic formula for approximate asset prices is established, which is described by the CEV model with stochastic volatility dependent on l-fast variables and r-slowly variables, l ≥ 1, r ≥ 1, l ∈ N, r ∈ N and a local variable. Applying the Sturm-Liouville theory, Fredholm’s alternatives, as well as the analysis of singular and regular perturbations at different time scales, the authors obtained explicit formulas for derivatives price approximations. To obtain explicit formulae, it is necessary to solve 2l Poisson equations.

The Dynamics of Good Governance in Promoting Energy Security: The Case of Bangladesh

Author(s): Sakib B. Amin,Irteza Ali Tauhid,Umme Marzana / Language(s): English Issue: 1/2017

In the modern era, energy and its sustainability have emerged as one of the most important economic issues worldwide. It is widely believed that no country has managed to embrace development without ensuring a sustainable energy supply that could be accessed by a large portion of the population. Thus, this concept of energy sufficiency is of greater importance for the underdeveloped countries those, historically, had not been able to match their local energy demand. Apart from the inefficiencies and resource constraints associated with the energy sector, lack of good governance within an economy is believed to be a critical issue in aggravating energy crisis in those countries. However, following strategic impotence, political unwillingness and inefficient governance of the energy sector, the underdeveloped countries have failed to mitigate the energy deficits which in turn have hampered the development prospects in those countries. This paper highlights the potential roles good governance can play to promote energy security considering the case of Bangladesh, a developing country that is leaving no stones unturned in becoming a middle-income country by 2021. Besides, the role of good governance in complementing fuel diversification as a tool for ensuring energy security has also been put forward. Thus, the government of Bangladesh should reinstate good governance within the economy creating a favourable environment for investment in the energy sector which would enhance competition and mitigate inefficiencies in energy generation, transmission, and distribution.

Един друг свят е възможен – (концепции за бъдещето на капитализма)

Author(s): Svetla Toshkova / Language(s): Bulgarian Issue: 5/2018

The study examines the newest tendencies in the development of the economic theories in the context of the radical changes in the structure and methodology of the economic theory in the course of denial of the neoliberal economic model and searching for a new political economic paradigm. It discusses some of the newest concepts of the future of capitalism in which we rediscover the meaning of Marx’s economic theory: about the globalization that he has foreseen and described brilliantly; the ‘explosion’ of capitalism and offensive of the commodity fetishism; the unequal development and concentration of the capital and the conflicts caused by them; the domination of the financial capital and the bursting of the fictitious capital with all the crisis consequences; the subjects of the inequality, exploitation and the critics of the moral principles of the capitalism. Today all these topics are a challenge to a "modern" reading of Marx concerning the problems, boundaries and future of capitalism.

Kriza neoliberalne financijalizacije na evropskoj poluperiferiji - prekarnost tržišta rada u Bosni i Hercegovini

Author(s): Anđela Pepić / Language(s): Serbian Issue: 15/2018

Social transformations and the transition process from socialist/command into market economy in Bosnia and Herzegovina (BiH), accompanied by war atrocities triggered a whole scale of different economic and social challenges: de-industrialization, high unemployment, dubious privatizations, pauperization, ethnic rivalries and the persistence of structural disparities accompanied by processes of financialization. The Western Balkan countries, under EU integration and financialization directives, had to follow and abide the large scale of regulations and conditionalities in order to achieve the EU membership. The Euro-zone crisis had a spill-over effect on the already economically weak Balkan countries, resulting in an even greater instability in markets, decrease of labour and living standards in the region, including BiH. The effects of crisis were most visible in February-March 2014 when workers’ protests broke out (with larger citizens’ support). The protests pointed to the increasing precarity of the labour market and the rising potential of new conflicts that are now shifting from those based on ethnic and religious grounds to classist and industrial ones. Financialization and European integration conditionality seem unable to address the issue of sustainable development, accompanied by full employment and a re-launch of welfare reforms. In 2014, the EU, IMF and WB jointly pushed for a new agenda of reforms in BiH through Compact for Growth and Jobssupported by the German-British Initiative. These reforms, for which a statement of commitment has been signed by BiH officials resulting in unlocking of BiH’s road to EU, include labour market reforms while at the same time boosting and deepening the process of financialization. The proposed reforms inadequately addressed the issue of flexible and secure labour market, i.e. they only bring forth further insecurity and instability of the labour market visible through increase of part-time employment, temporary and atypical work engagements and contracts. Given the BiH is positioned as European semi-periphery dependent on relations with European Union Member States, the financialization and crisis of Euro-zone and European Union had a spill-over effect to BiH. All this has further brought to increase of precarious labour and workers' poverty.

Will Brexit Make or Break Great Britain?

Author(s): David W. Ellwood / Language(s): English Issue: 2/2018

Thomas Hobbes and the Political Economy of Peace

Author(s): Patricia Springborg / Language(s): English Issue: 04/2018

Thomas Hobbes’s theory of war is currently being re-examined as part of a re-examination of realism in international relations theory which claims to be Hobbes-based. I am not alone in maintaining that Hobbes was first and foremost a peace theorist, rejecting the usual grounds for war, pretexts based on just war, infringements on property or trade, and thus trespass. But those who examine the three-fold causes of war that Hobbes gives, as “competition”, “diffidence”, and “glory”, have generally not noticed the relation between Hobbes’s theory of war and empire. While Hobbes makes remarkably few references to the colonial ventures of Great Britain, for reasons that we will consider, his theory of empire, like his theory of war, is based on classical notions of internal balance and the homeostasis of the body politic along Aristotelian lines. His treatment of the polity as a natural body is consistent with his materialist ontology and he treats war and empire in terms of both “intestine diseases” and pathologies that afflict the body politic from without. The upshot is a theory remarkably backward-looking in terms of its emphasis on the health of the body politic and the politics of balance, which forbid “vain-glorious wars” and demand that overly-powerful subjects, towns of “immoderate greatness” and grandiose enlargements of dominion be excised, like Aristotle’s “big foot” whose disproportion spoils the proportion of the body as a whole.

Political Unity and the “Existential Meaning” of Conflict. On Carl Schmitt’s The Concept of the Political (with some remarks on The Dreyfus Affair in Hannah Arendt’s The Origins of Totalitarianism)

Author(s): Thomas Petersen / Language(s): English Issue: 04/2018

The article deals with the conflict as an indispensable element of democracy and politics from the perspective of Carl Schmitt’s concept of the political. According to Schmitt, the specific criterion of the political is to be found in the friend-enemy distinction. Denoting the utmost degree of association and dissociation, it corresponds to other antitheses (good-evil, beautiful-ugly, profitable-non-profitable, etc.), but is independent of them and should not be mistaken for them. Understood in this way, the political for Schmitt has an existential meaning, as it characterizes human life as such and as conflict cannot be solved in advance through some general norm or by a neutral third party. Although Schmitt’s definition seems to limit the proper phenomenon of the political to the state – which as political unity monopolizes the friend-enemy relationship and excludes enmity from its domestic affairs – the author finds in Schmitt’s “secondary concepts of the political” the possibility to think the conflict as the principle of domestic politics as well. This would mean to accept antagonism as inevitable and legitimate, without moral or other disqualification of the opponent, and to subdue conflict to the rules of political quarrel and debate. In the second part of the article, the author discusses Schmitt’s critique of liberalism. Although at first sight liberalism seems to be a negation of the political, in the last instance it not only fails to elude the political, but exacerbates and intensifies the conflict. By presenting its claims as universal, it disavows its adversaries as “enemies of humanity”, falling in this way victim to political hypocrisies. In the last part of the article, the author considers some similarities between Schmitt’s and Hannah Arendt’s understanding of the political. Despite all differences between them, these can be noticed in Arendt’s treatment of the Dreyfus Affair in the Origins of Totalitarianism, where she makes clear that conflict is not only a threat to the “political entity”, but can also be the way in which that entity is saved.

Ekonomske osnove federalizma

Author(s): Vlatko Mileta / Language(s): Croatian Issue: 03/1990

The economic aspect of the relationships between nationalities in Yugoslavia cannot he fruitfully viewed through a confrontation of federation and confederation. Instead one must accept as one’s starting point the maximal independence of the republics and fullest affirmation of nationhood that achieved market economy integration on the basis of interests. An approach starting from a limited sovereignty of the republics and an original sovereignty of the common state is inacceptable in this context as it makes equality between peoples impossible. The author evaluates the establishment of economic sovereignty on the part of the republics from the point of view of modem theories of integration: functionalism, pluralism, liberalism, and institutionalism. The starting point for all these is that more complex forms of integration are achieved through such development which does not allow for any symmetry. Symmetries are regularly based on violence. In the fast part of his article the author indicates the areas where symmetry creates problems: the relationship of developed and undeveloped regions, general economic conditions, unique lax systems.

Privredna federacija ili konfederacija

Author(s): Vladimir Gligorov / Language(s): Croatian Issue: 03/1990

Socialist Yugoslavia is founded upon two contradictory principles — socialism and federalism. While the first one requires centralization and autoritarianism, the second presupposes autonomy and liberality. Socialism results in a bancrupt economy and bancrupt stale; therefore, abandoning it does not at the same time mean that either federalism or confederalism is being affirmed. A presupposition for their affirmation is that principles of legal autonomy and liberal freedoms should be pushing back socialist principles. It is the author’s position that there are no essential differences between federation and confederation. Their economic aspect relates to tax union, monetary union, and fiscal devolution, the difference being that in the ease of a confederation these questions are settled through contracts and in that of a federation they are comprised in the constitution.

(Zlo)upotreba pojma suverenosti u federalnim odnosima

Author(s): Slobodan Samardžić / Language(s): Croatian Issue: 03/1990

In theoretical discussions the concept of sovereignty relates exclusively to political communities and denotes the highest, indivisible and inalienable power at their disposal. In discussions in Yugoslavia the expression »economic sovereignty« extends the use of this concept into the economic sphere. Since sovereign power requires someone to sustain it, namely a sovereign, it cannot be depersonalized; the author therefore tries to establish the consequences (for the economic relations between federal units) of the fact that — in the constitutional arrangements of 1974 — sovereignty does not have a real subject to sustain it. Unable to discover a concrete subject of responsibility the author concludes that this is the consequence of deriving the concept of sovereignty from that of nation. A federal system based on relationships between nations can easily turn into an autocratic system. Only two ways of limiting the consequences of the sovereign power of a nation or of a constitutional person are historically known to exist — parliamentary government and a federal system of state government.

Homogenizacija interesa i ekonomska unija

Author(s): Rajko Tomaš / Language(s): Croatian Issue: 03/1990

The functioning of society presupposes a homogenizing o f interests. This implies the precondition that certain criteria should be established by which such interests should be recognized that might be based on identity, interest grouping, and conflict. Yugoslav society finds itself in a deep crisis of interest homogenization, the later being limited to the criterium of identity (national) and the criterium of conflict. Instead of an authentic process of homogenization of economic interests through interest grouping, in Yugoslavia homogenization has regularly been effected by a "unifyier" with the purpose of achieving a political union. The author maintains that in the economic sphere the solution fir federal relations is to be found in the fanning of Yugoslav o as an economic union. This has to be achieved through a confrontation of interest groups constituted through a homogenization of economic interests.

Konfederalizam i jugoslavenska ekonomska unija

Author(s): Zdravko Petak / Language(s): Croatian Issue: 03/1990

In a consideration of economic federalism the central problem is how to answer the following question: how is economic union to be maintained within a decentralized political system? In the ease of Yugoslavia the best answer is provided by a con federative model. The author believes that confederation represents the best form for solving society’s key problem — the covering of the costs run up by the bancrupcy of socialism. To support this the author makes use of the principles of decentralization within the theory of public choice.

Za konkretnu raspravu o federalizmu

Author(s): Zvonimir Baletić / Language(s): Croatian Issue: 03/1990

This study stresses the insufficiency of thinking related to abstract models of federalism. It makes a pica for a concrete discussion in which the social substratum within which communities have their origin will be taken into consideration. The theory of social choice, the theory of coalitions, and game theory, are suggested as offering such approaches that make a concrete analysis possible. Special attention is paid to the concept of sovereignty. It is pointed out that sovereignty is limited by the very fact that the achievement of certain benefits implies taking certain commitments. Sovereignty, including economic sovereignty, signifies therefore that the state makes decisions on the basis of free will yet that this will is always subjected to real limitations.

Ekonomske funkcije federacije

Author(s): Ivan Ribnikar / Language(s): Croatian Issue: 03/1990

The author looks at the benefits that individuals will enjoy in the sphere of economy once the (con)federation is established. The basis of these benefits is the internal common market. The role that common currency and monetary policy, as well us taxation and fiscal policy play, in reducing the costs of labour and capital in such a market is given special consideration. The basic economic functions of the federation appear to be the securing of a functioning internal market and the prevention o f monopolies.

Republičke ekonomije i jedinstveno jugoslavensko tržište

Author(s): Stjepan Zdunić / Language(s): Croatian Issue: 03/1990

This article examines the controversial thesis that separate national economies within the borders of the individual republics have come into being as a result of the Constitution o f 1974. This thesis is opposed by a thesis on regional economies. The unique Yugoslav market is then discussed from the perspective o f the economic system s particular character in connection with the system's financial sphere and the efficiency of the economy as a whole. The circulation o f commodities and services in their connection with financial circulation is then diseased leading to an estimation of interconnections, on the hash of interest, between the economies of the republics and their role in the development of an efficient economy in the republics and in Yugoslavia.

Privredna reforma, pravna infrastruktura i politika

Author(s): Jakša Barbić / Language(s): Croatian Issue: 01/1990

Politics and economics are interdependent, with politics proving crucial for the state of the economy, and there is therefore a very close link between the economic and the political crisis, not only as regards their origins but also their possible solutions. It is impossible to view the economic reform separately from the political reform, while the legal infrastructure is just another element of their linkage. Reviewing the legal infrastructure of Yugoslavia before the introduction of the economic reform, the author concludes that frequent changes in legislation and inadequacies of the legal system were one of the causes of the economic crisis. They necessitated a constant realignment of the national economy and produced a whole series of limiting factors. One of the fundamental characteristics of that period was the massive interference of politics in the economy. The second part of the paper examines the legal structure on which the economic reform so far has been based. The author notes that the three tenets of the reform can be realized only if the behaviour of economic subjects is radically changed, which implies also important changes in the country’s legal system. The most difficult task of the economic, and more generally social, reform in Yugoslavia will be to replace social ownership in the economy by other forms of ownership Politics has a vital role to play in removing the remaining ideological barriers which still hinder that process. Legislative activities, on the other hand, should systematically strive to reduce the volume of legislation and cut down the degree of normativeness in economic life.

Natura non facit saltus

Author(s): Vlatko Mileta / Language(s): Croatian Issue: 01/1990

The new concept of social and economic development of Yugoslavia proposed by Ante Marković has three components: ideological, political, and market-economic. In the ideological sphere, the most important concept is that of »new socialism«, which can be described — as presented by Marković himself — as social democratic socialism. However, judging by his actual moves. Marković must be seen as a reformer or real existing socialism, since all the centers of statal and para-statal power still remain outside the control of the people The political sphere is concerned with the joint existence of the nations and ethnic groups in what is now Yugoslavia. Marković's approach in this area is to seek solutions in a new centralization. The third component belongs to the economic sphere, and it has two levels — one which concerns the problem of ownership and the other which concerns the market. Although he has introduced different forms of ownership, Marković has left the problem of social ownership unresolved. The expression »integral market« as used by Marković does not correspond to the modem understanding of that term. Concluding that the Prime Minister's reform concept has both good and bad points, the present author rejects his insistence on quick changes.

Bolivijska hiperinflacija i stabilizacija

Author(s): Jeffrey Sachs / Language(s): Croatian Issue: 01/1990

The paper begins with an analysis of the social causes of inflation in Bolivia, noting that they are to be sought in the instability of the Bolivian regime following the removal from power of General Hugo Banzer in 1978 and the outbreak of the external debt crisis in the early eighties. Next follows an account of the measures of economic policy adopted in August 1985, which over a short time almost completely eliminated the inflation running at an annual rate of 20,000 per cent. In contradistinction to the heterodoxal model applied in Brazil, Argentina and Israel, the model applied in Bolivia was the ortodoxal model, relaying on the tying of the exchange rate to the most relevant strong currency, elimination of the budget deficit, freezing of wages and salaries in the public sector, and unfreezing of the producer prices.

Evropski izazovi i jugoslavenske opcije

Author(s): Radovan Vukadinović / Language(s): Croatian Issue: 01/1990

With non-alignment as its key component, Yugoslavia's foreign policy has for many years been geared towards geographically distant and historically very different partners. It is only recently, at the moment of crisis, that Yugoslavia has turned towards Europe as a way of overcoming its present difficulties. That is why particular attention is now being paid to the European Economic Community as a synonym for a modern and successful economic grouping. Until the early eighties, both Yugoslavia and the European Community were satisfied with the development of their relations. However, with the deepening of the internal crisis and the absence of realistic prospects of improvement, Yugoslavia started to view the Community in a new light, with three different approaches gradually emerging in the debates. Similarly, with the dynamically changing domestic and international environment, different views emerged of the Alps-Adriatic Regional Community, which many saw as a quicker and easier way of Yugoslavia’s integration in the European developments. Without forgetting the greater objective — Yugoslavia’s full integration into Europe — regional cooperation and integration should be seen as a way that is simpler and equally useful and acceptable for all those involved.

Complexul militaro-industrial ucrainean – un factor de influenţă supraregional. O analiză în cheie economico-evoluţionistă

Author(s): Silviu Petre / Language(s): Romanian Issue: 1-2/2017

In spite of the fact that IR Theory has been under constant state of borrowing from Social Sciences and Economy, this marriage remains shallow and with marginal consequences. The main schools of thought in International Relations Theory (neorealism, liberalism, constructivism, etc.) usually no dot concern themselves with topography or theorizing about spatial proclivities. Our perspectives argues that the ongoing crisis between the Russian Federation and Ukraine can be viewed through the lenses of Evolutionary Economic Geography (EEG), an emerging synthesis trying to blend the evolutionary process in economy with the influence of geographical factors. Moreso, we conclude that the Ukranian condrunum may riple and bear consequences for the American pivot in Asia.