According to the logic of the Friedman rule, the opportunity cost of holding money faced by private agents should equal the social cost of creating additional fiat money. Thus nominal rates of interest should be zero. This logic has been shown to be correct in a number of contexts, with and...

The use of fixed-term contracts has proliferated during the past decade in many European countries due to the relaxation of their regulation. Policymakers aimed to reduce labor-market rigidities by offering to firms these flexible contracts with little or no dismissal costs but with a finite...

This paper asks how to design a revenue-maximizing auction in the presence of post-auction market competition and asymmetric information. In this situation, bidders, depending on the auction mechanism, can signal their type through their bidding behavior which influences the outcome of the...

This paper forwards a new way of accounting for the experimental evidence related to the Ultimatum Game. We argue that players in this game have reasons to be both fair and self-interested, but the balance between these two considerations cannot be expressed in terms of a tradeoff. We test our...

We present an analysis of the intra-industry nature of agri-food trade between Hungary and the European Union, following the Association Agreement signed in 1991. A slight growth in intra-industry trade (IIT) is indicated by the Grubel-Lloyd index. However, it is not uniform by product group or...

I shall argue that the Interactive Party-State (IPS) model (Csanádi, 1997) allows us to place the Chinese and Hungarian party-state structure and dynamics into a common framework. This framework sheds light on the structural reasons behind the different functional effects of reforms. This paper...

According to various studies, sovereign bond spreads often deviate from any "sensible" perception of default risk. It is usually attributed to behavioral effects (overreaction) or illiquidity. The former explanation imposes some irrationality or bounded rationality on investors; while the latter...

We examine the competitiveness of Hungarian agriculture in relation to that of the EU, based on four indices of revealed comparative advantage, for the period 1992 to 1998. Consistency tests suggest that the indices are less satisfactory as cardinal and ordinal measures, but are useful in...

This paper explores the stability properties of the steady state in the standard two-sector real business cycle model with a sector-specific externality in the capital-producing sector. When the steady state is stable then equilibrium is indeterminate and stable sunspots are possible. We find...

This paper investigates the link between competition and efficiency for the Hungarian corporate sector during various phases of the transition process. We employ frontier production functions to explore differences among groups of firms, and to identify the typical adjustment process of each...