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Labour Market Flexibility – Impact on the Economy

There is a widespread consensus among mainstream economists that more labour market flexibility (like in the US) is more likely to be associated with better economic performance because of the more fertile ground for innovation and productivity compared to the welfare states of Europe where labour market has a stricter feature (See Chart 1). As Sapir noted: “The stricter the employment protection legislation of a mod
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From Harrod to the Lack of Carrot

There is nothing worse than not-receiving a Nobel Prize in Economic Sciences because the candidate died too early. By and large, this was clearly what happened to Sir Henry Roy Forbes Harrod, who was born 124 years ago this day, on 13 February 1900. His intellectual legacy embraces a wide range of issues starting from smaller scale problems (e.g. whether credits tend to affect perversively the general price level, Se
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Boundless Expansion of Leading Hungarian Multinationals? – Hungarian Outward Investments in 2009-2011

Economic scholars, pundits and practitioners are becoming more and more aware of the fact that foreign direct investment can be ranked with one of the basic drivers of development through various channels (i.e. knowledge and technology transfers, triggers of R&D and innovation activities etc.). There is no gainsaying the fact that the relevance of FDI, let it be inflowing or outflowing, has gained even more subst
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Transparency and Progress – No Easy Way Out

In economics, and maybe in all aspects of life, longer term tendencies can offer much more realistic picture about how phenomena happen than any short term and fresh data. Another equally important thumb rule is that building on easily observable, measurable and interpretable phenomena during any kind of analysis can result much precise knowledge. This is because we simply cannot always understand the ‘big picture’ c
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Austerity vs. Stimulus – The Debate Continues

In one of his last columns, Lord Skidelsky argued that fiscal stimulus is in order given the current status of affairs of the global economy, especially the United States (Skidelsky, 2013). Why Lord Skidelsky does recommend stepping aside our threats from deficits and accumulating public debt and trying to re-invigorate the states development function through fiscal stimulus? At first blush, the question of “why” has
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History repeats itself, first as tragedy, second as farce?

195 years ago, Karl Heinrich Marx was born on this day. Among other things, Marx stated two things: (i) history repeats itself; and (ii) rich is just getting richer, while the poor become even poorer over time. Concerning the first tenet, recent financial turmoil which has been transmogrified into an once-in-a-lifetime economic crisis also reflects the view of Olivier Blanchard, who emphasised that after the devastat
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