The introduction of various tax expenditures by the tax authorities, mostly in corporate income taxation (CIT), in order to kick start development in areas affected by the war as well as in economically underdeveloped areas has been characteristic of the Croatian tax system since 2000. Although...

Estimation of the cost of capital is difficult in developed markets and even more difficult in emerging markets. Investments in the emerging markets are more risky than in the developed markets but return is also higher. The key question here is whether the return on investments in emerging...

Based on a heterogeneous firm set-up, we model firms’ access to the internal capital market, bank finance as well as bond finance and investigate how firms’ adjustment among multiple sources of finance affects their performance in foreign direct investment and aggregate industry...

This paper reviews the empirical literature concerning the impact of economic integration on the size and the composition of the public budget. From a theoretical perspective, a pessimistic view highlights the threat that economic integration constitutes to the action of the public sector. An...

This paper analyses the determinants of the changes in sovereign bond spreads in emerging European markets before and during the recent global financial crisis. In particular, these determinants are associated with changes in market sentiment and in domestic macroeconomic fundamentals. The model...

Government financial and performance guarantees have been issued in Croatia since 1996, to support funding and ensure favourable borrowing conditions in the financial market for companies in majority state ownership. However, government guarantees have rarely been part of defined strategies and...

Traditional statistical tests of serial independence of stock price changes often show that stock markets are inefficient. Our analysis on daily and monthly data confirms this finding for the Croatian and U.S. markets in the 2002-2010 period. However, this result seems to be mainly due to the...

Almost all macroeconomic indicators change upon shocks influenced by the global financial crisis that has also spilled over to the public sector, seriously threatening fiscal sustainability. The aim of this paper is to estimate public debt sustainability in the crisis and post-crisis period from...

The global financial crisis has affected the Croatian local public sector. In such circumstances, local government units’ debts and borrowing should be approached with caution. The highly interwoven financial operations of local government units and their utilities indicate the need for...

Spreads on government bonds are a collective expression of differences in the level of development, risk, expected returns and other essential characteristics of states or regions the bond yields of which we wish to compare. At issue here is a collective expression of factors that work on the...