Economic Archive

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  The Currency Board in Bulgaria: Theoretical Reflections and Empirical Results

  Via this article the authors would like to discuss the idea of the inter-section point of theoretical reflections and reported empirical results referring to the currency board in Bulgaria. To achieve the goal defined the article is structured in the following separate sections: first, clarification of the concept of a currency board in light of leading theoretical research; second, critical analysis and evaluation of the characteristics of the currency board in Bulgaria; third, justification ... Via this article the authors would like to discuss the idea of the inter-section point of theoretical reflections and reported empirical results referring to the currency board in Bulgaria. To achieve the goal defined the article is structured in the following separate sections: first, clarification of the concept of a currency board in light of leading theoretical research; second, critical analysis and evaluation of the characteristics of the currency board in Bulgaria; third, justification of the authors’ answer regarding the end of the currency board in Bulgaria and its replacement with another system; fourth, econometric analysis and assessment of foreign trade sector influence on the GDP in Bulgaria under the conditions of a fixed currency exchange rate and a high percentage of foreign trade of goods and services in the structure of the GDP; fifth, a study of the currency boards influence on the economic convergence of Bulgaria in comparison with leading EU economies for the period 1998 – 2012. For the authors, Bulgaria’s path to membership in the Eurozone while keeping the currency board regime during the whole period of being in the ERM II “waiting room” is logical and has social and institutional support. The argument for this is that Estonia’s example of entering the Eurozone by preserving the currency rate at the level of the currency board is the reasonable and rational national project for developing Bulgaria’s economy and financial system.

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  A New Yuan or a New Monetary System

  The research area of the present study is the Chinese yuan (renminbi). The research subject is the evolution of the Chinese yuan from a national to a global reserve currency. The paper tests the proposition that the rise of the Chinese currency is a sign of deep and qualitative changes in the international monetary system. The aim of the study is to analyse and track the evolution in the current situation in the international monetary system, in order to highlight the factors and the reasons ... The research area of the present study is the Chinese yuan (renminbi). The research subject is the evolution of the Chinese yuan from a national to a global reserve currency. The paper tests the proposition that the rise of the Chinese currency is a sign of deep and qualitative changes in the international monetary system. The aim of the study is to analyse and track the evolution in the current situation in the international monetary system, in order to highlight the factors and the reasons for the rise of the Chinese yuan and to find indications of the direction of the future development of the system as a whole.

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  Comparative Analysis of the Leading Consumption-Based Asset Pricing Models

  The article analyzes in depth the consumption-based asset pricing models, and displays most perspective contemporary trends in the field. A conceptual framework of models has been originally presented linking macroeconomic and financial relationships, and mathematical basis of the classic CCAPM has been developed. The paper also brings out the leading approaches for modification of the basic model, overcoming some of its shortcomings, and analyzes the advantages, disadvantages and the ability ... The article analyzes in depth the consumption-based asset pricing models, and displays most perspective contemporary trends in the field. A conceptual framework of models has been originally presented linking macroeconomic and financial relationships, and mathematical basis of the classic CCAPM has been developed. The paper also brings out the leading approaches for modification of the basic model, overcoming some of its shortcomings, and analyzes the advantages, disadvantages and the ability of consumption-based modern models to recreate empirical correlations in profitability and the risk of financial assets. The leading conclusion of the article is that there is still no convincing rational consensus model to reproduce adequately the characteristics of financial markets. From an econometric perspective, the closest in this endeavour is the model of long-term risk of Bansal and Yaron (2004) and its modifications.