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The paper deals with the impact of new information on the fixed income market. We expect this to be the first study covering such a topic in Central European markets. We prepared a model of a market reaction and found out that the market is not significantly driven by new macroeconomic figures. The sharpest moves have never been caused by a new number, but developments abroad and unexpected statements of central bankers. Scheduled central bank decisions on the interest rates did not affect yields as much as these two factors. The main message of this text for short term investors is, that in contrast to the USA, it is better for them to follow trading abroad than the Czech fundamentals.

The paper shows the current state of environmental concerns in economic theory. Different economic schools have incorporated the environmental analysis into their theoretical framework. They use different presumptions, focus on different environmental aspects and come to diverse conclusions and political recommendations. However, there are many unclear frontiers between one another. This paper would like to help to understand these differences. It characterises and compares the main economic schools and theories. The paper focuses on environmental economics, ecological economics, new institutional economics, free market environmentalism, coevolutionary theory in economics and bioeconomics.

The paper deals with questions connected with the present situation on the world oil market. First, we shortly focus on the context and the historical development of the prices of oil and the reactions of the market subjects. We discuss general factors on the oil market. And then we apply these factors to the current situation on the market. We try to find the main contemporary causes of the growth of the oil prices. We come to the conclusion that the main causes are connected with the growing demand on the market in contrary to (for example) the shocks in the 1970s that were caused by limited supply. Consequently, we concentrate on the impacts of the growth of the oil prices on the world economy. We found out that the impact is still very limited because the whole world economy is growing strongly and even the impact on the price level is very narrow. At the end of the paper we mention prognosis about the future of the oil market.

The paper analyses a relationship between monetary aggregate M2 and inflation in a small open economy. The relationship between monetary expansion and inflation as well as a dynamic of income velocity of money framework in a small open economy are discussed in more details in the paper. Authors have developed a medium-term structural model using for an empirical verification of the relationship between monetary aggregate M2 and price development in tradable and non-tradable goods and services in the Czech Republic in the period 1996-2004. The empirical results of the model indicate that money has a significant impact on the price development of non-tradables. On the other hand, a statistically significant relationship between money and tradables inflation in the case of the Czech small open economy is not found. The conclusions presented in the paper suggest that the monetary aggregate should not be ignored in practical policy-making.

During 1930s and 1940s Josef Macek developed monetary theory leading to monetary policy recommendations which are deeply influenced by macroeconomic theory of John Maynard Keynes. Macek became leading Czech left-wing keynesian. His theory of money was nominalist and similarly to J. M. Keynes and G. Cassel he elaborated the concept of managed fiat money. He critisized and disapproved the quantity theory of money. In his monetary theory and his monetary policy conclusions he was a forerunner of contemporary post-keynesian monetary theories. Money supply is in his monetary theory highely endogenous and he expressed certain doubts about effeciency of monetary policy measures as antirecessionary remedy.

The article deals with analysis of the factors influencing innovation performance in new EU member countries, particularly in the Czech republic. The analysis follows the advancement of (neoschumpeterian) economic studies on interfaces between technology and economy, which are reflected in and supported by formation of the international databases on innovation as well as the regulatory policies in the fields of science, technology and innovation. Making use of the concept of national innovation system the analysis is focused on three basic factors of innovative performance: academic resources, resources of innovating firms and impact of regulatory policies on innovation performance. The available data are used to assess not only the size and structure of innovation resources but also institutional factors influencing the transformation of resources into innovative performance. The outcome of such assessment is used to articulate structural dependences and growth opportunities of domestic innovation system.

The aim of the article is to describe theoretical concepts related to the effects of state subsidies on enterprises and to discuss the magnitude and effect of state aid on enterprises during the transformation of the Czech economy. Subsidies to enterprises during transformation were high, often transparent, and above the European Union average. During 1997-2003 registered state aid reached 362 bn. CZK. More than 90 percent of the total registered state aid went to awards the rescue and restructuring of enterprises. It can be roughly estimated that during 1997-2000 state aid was twice as high as officially registered. Share of state aid to enterprises in public debt increased and reached 70 percent by 2003. Non-transparent channels of state aid distribution decrease the efficiency of state aid, as they distort market signals and decrease motivation for fair competition.

Karel Kouba belongs among the most prominent Czech economists of the second half of the 20th century. The paper analyzes his major contribution to the Czech economic thought in the context of economic reforms of the Prague Spring of 1968 and of economic transition in 1990s. In the communist era special focus is devoted to the theory of growth in the socialist economies, compatibility of plan and market and his inclusion of individual motivations into decision-making of agents within the centrally planned economy. After the Velvet Revolution in 1989, K. Kouba showed the importance of microeconomic relations for the macrostability and the relevance of institutional economy for explaining the processes during the transition period. Kouba's story has also a more general message. It shows how the biggest talents were treated during the communist era in Czechoslovakia and which dilemmas they had to face.

The paper presents a dynamic approach to the theory of uncovered interest rate parity. It is examined the dynamic relation between the actual change in spot exchange rate and interest rate differential. Authors show the hypothesis of uncovered interest rate parity is based on an ex ante view and that is the reason that the expected change in spot exchange rate cannot be replaced by an ex post approach. The dynamic approach developed in the paper is empirically tested for five transitive countries of Central and Eastern Europe. The model is estimated using both VAR and cointegration analyses. The model of error correction is also included in the empirical verification of the model.

This paper describes the main theoretical concepts of the competition, which is thought to be the fundamental social process in the economy. The protection of competition (or the competition policy) is the one of the most important parts of economic policy, because the competition ensures the freedom of choice. The theory of competition provides large number of assumptions, which were developed within the frame of various economic schools and approaches. This paper starts with the description of the history of competition policy before the coming of Adam Smith. In the middle part of the work there have been formulated basic ideological theses about economic policy. Represented are, for example, the Classics, Ordo-liberalism or Neo-austrian School. Paper is finalized by the major theses of the Harvard and Chicago school.

The question of public finance stability and the economic stability are widely discussed topics, not only in transitive and emerging economies, but also in developed countries. The aim of this paper is to find out and measure connections between the fiscal policy development and external economic stability. This research is based on a quantification of the budget deficit and public debt impact onto exchange rate in chosen countries that have recently experienced some kind of financial crisis. External competitiveness is also assessed by the fiscal policy impact onto current account balance. It is necessary to point out that monetary variables are going to be probably more important but the fiscal sector cannot be omitted. Especially nowadays when there is an integration process in EMU going on, where the fiscal policy is going to play important role in the economic stability.

2004, which was also the year of EU entry, was quite successful for the Czech economy. Economic growth accelerated, driven in particular by the investment demand and exports. After 10 years of permanent deficits, the trade balance deficit diminished significantly. The effects of EU entry, which opened new chances to the exporters, accompanied the positive impact of FDI inflows from the past. Due to acceleration of exports, industrial output registered a record high growth within the last decade. Accelerating economic growth did not provoke inflationary pressures. Two waves of VAT increase (in January and May) were absorbed until the end of the year. A strong increase in PPI resulting from high world prices of oil and gas had no spillover effect to consumer prices due to strong competition between both the producers and traders. At the beginning of 2005, economic growth continued with the same pace as in 2004, driven by investment demand and exports. Consumer demand kept on weakening, consumption of households registered the weakest growth since the end of 1998. Both the industrial production and exports reported a slowdown due to sluggish economic activity in the euro area, especially in Germany.

The situation on the labour market in East Germany is difficult since the beginning of economic transition in the early 90's. The reasons for such a situation are complex. The implementation of single currency, the collapse of East Germany's foreign trade, the privatization method and high wages should be mentioned above all. The macroeconomic reasons for the persistently high unemployment rate are supported by microeconomic reasons, too. The unification of Germany was not perceived as a unique chance to reform the outdated German labour market. Active labour market policy measures known from the old Federal Republic of Germany were not as effective as expected.

The article is concerned with analysis of independence of central banks of the EU Member States within the framework of the ESCB, as well as independence and responsibility of the ECB, and suggests an alternative institutional embodiment of its position, reflecting the specific framework of the EMU. The system of selection of members of the ECB's Executive Board blurs a real collective responsibility towards Member States, which opens possibilities for nontransparent lobbyism. Modified system is suggested so that national bank's governors have a symbolic relationship to the political representation, i.e. that they reflect a national economic policy in some way, without being bound and restricted by its formation whatsoever.

The study deals with analysis of economic reforms in South-Eastern Asia affected by financial crisis in 1990s. Authors have stressed, that it was a result of internal and external influences, which caused not only the fatal destabilization of main economic fundaments of affected countries and they have had consequences on international business authority of these countries. It was approved, that the high rate of internal interdependence of countries affected by crisis and also the interdependence on Japan, could be considered as basic, but hidden accelerators of crisis. Nevertheless using of important reforming interventions eliminated most of the economic implications of it the risks of re-outbreak of the crisis have been decreased to certain level only. For prevention against its expansion are responsible all "attended" subjects and equally they have to share on realization of reforming economic programs for its long-term elimination.

The paper presents in contribution the development of theories and opinions about competition, competitiveness and antimonopoly policy. These topics are treated starting from the oldest time, e.g. from Aristotle, through antique world, early capitalism, A. Smith and the classical Ricardian tradition. She further discusses the ruinous competition and the origin of the first framework of anti-trust legislation at the break of 19th and 20th centuries, Marx's interpretation of concentration tendencies of capitalist development and his followers, the origin of imperfect competition, ordoliberalism and the system of neoliberal politics and at last the dynamic theory of competition - concept of workable competition as well as theory of "balancing force" and the concept of so-called mature corporations.

In the inflation targeting regime the central bank makes a decision about interest rate adjustment based on a forecast, primarily of inflation. Thus a big part of the decisions on interest rate adjustments corresponds to systematic response of central bank to expected economic development. The systematic part of monetary policy - the decision pattern of central bank (similarly as behaviour of other economic agents) must be approximated for purposes of creating a forecast. The aim of this article is to approximate it through estimated monetary policy rule.

The paper consists of four parts each of them devoted to a practical aspect of inflation targeting as conducted by the Czech National Bank. The first part outlines the reasons that led to the adoption of this monetary regime and summarises other advantages for effective and transparent decision-making. The second part addresses the issue of missing inflation targets. It is argued that simple confrontation of targets with actual behaviour of inflation may give a distorted view about the actual performance of monetary policy. The third part discusses a subtle methodological controversy about the difference between so-called escape clauses on the one hand and net inflation on the other. In the last section the author presents his critical view about the role of unconditional forecast in its capacity to indicate future interest rate decisions and to provide a realistic description of transmission mechanism in a small open economy.

The Council of Economic Experts and its influence on the German economic policy are discussed in this paper. The first section concentrates on the institutional background and historical genesis of this body. Consequently, the importance of the Council in preventing a competitive and efficient economic order in the ordoliberal point of view is considered. The second section offers a comparative analysis of economic policy consultancy. Some significant institutional aspects of the German Council of Economic Experts, the US Council of Economic Advisers and the French Conseil d'Analyse Économique are examined.

This article deals with institutional measures proposed in the concept of the public budgets reform presented by the Czech Ministry of finance in December 2002 and it analyses its capability to improve the budget performance of the Czech Republic. First the performance budgeting and preconditions for its functioning are characterized. In the second part the multi-annual expenditure framework is discussed including analysis of its role in the budgetary process. A simple model shows that introduction of various steps in the budgetary process can alter the final budget. This model has proven that the multi-annual expenditure framework can limit the impact of the fiscal illusion. In the last part a new budget calendar that includes the new measures is proposed.

The objective of this paper is to demonstrate some economywide effects of the adoption of Common Agricultural Policy. The general equilibrium approach is applied. The model is designed as a static computable general equilibrium one. The model structure reflects basic neoclassical assumption, i.e. producers maximize their profit and consumers maximize utility while the government wishes to balance its budget. The scenarios follow the debate about the extent of CAP available for candidate countries. Selected macro and sectoral economic indicators are used to assess the magnitude of scenarios impacts on the national economy. Model simulations indicate that positive aspects of accession prevail over negative ones in the most respects.

The main object of this paper is to explain the significance of the key factors which determined the labour force of the Czech population in the period 1993 - 2002. These key factors are the age structure irregularities and the changes in the labour force participation rates by age. The first part is focused on the description of the demo- graphic development in the Czech Republic. The second one contains the analysis of the Czech labour force. The changes in the labour force participation rates by age had negative effect, while age structure irregularities had positive effect on labour supply in 1993 - 2002. But it is possible that in the near future the age structure will become worse because of the ageing of the Czech population. For this reason the expected demo-graphic development of the Czech population up to 2050 and its implications for future labour supply of the population are also discussed in this paper.

Since 1980's many central banks have been changing their monetary strategy to explicit inflation targeting. This new monetary concept is based on management of short-term interest rates in the context of relation between inflation prediction and central bank inflation target. Therefore we try to analyze the crucial problems of efficiency of the inflation targeting strategy - the causality and sensitivity between interest rates on Prague interbank market (PRIBOR) and Czech National Bank repo rate. For this purpose we use the framework of expectation theory with the term premium and simple deterministic regression models. We found out that as repo rate was sticky it led to higher volatility of PRIBOR before repo rate change and when the maturity of PRIBOR was increasing the sensitivity of PRIBOR to repo rate changes was strongly decreasing. In our opinion it's the result of at least partial adjustment of PRIBOR before repo rate changes.

The aim of the article is a systemic summarization of processes, ways and main determinants influencing the relation between costs and benefits connected with the CR accession to the European Union. Author attempts to find out and to classify moments on macroeconomic both microeconomic level which are relevant for maximization of the realized economic effect. New conditions of the EU single market and importance of quick adaptation of enterprises' activities to them are being discussed.

Czech economic thought during the 1948 - 1969 was full of sudden turns. Its development was determined by political conditions and spiritual climate that were result of Stalinist soviet type socialism. During the first half of the 1950s the plurality of economic ideas was substituted by the Stalinist version of marxist-leninist political economy using violent methods. Low efficiency of the command system and emerging reform climate in the USSR under N. S. Khrushchev opened the door to the reform thinking of the second half of 1950s and the 1960s in Czechoslovakia. During the 1960s the development of the reform thinking together with renaissance of the theoretical economic thinking culminated in the economic reform of Otto Šik and his team, and democratization process of the Prague Spring of 1968. Promising developments ended as a consequence of the Warsaw Treaty troops invasion in August 1968.

The paper provides a comprehensive survey of the theories of consumption functions. The Keynesian consumption function is examined in more detail under a condition of a small open economy. The paper explains the variety of consumption expenditures in the Czech Republic between 1993 - 2001. In this paper an enlarged version of the Czech consumption function, also tests Ricardian equivalence. Empirical results imply that consumer behaviour reacts rationally to an external imbalance and the economy heads to equilibrium by itself. However, the consumption reaction seems to be irrational under an internal balance. Consumers do not voluntarily reduce their consumption when deficit of public finance appears but they are forced to do so when interest rates increase as a result of the internal imbalance.

This article aims to argue with the wide-spread perception of discretionary fiscal policy as a poor macroeconomic stabilization tool, especially in comparison with the contemporary performance of monetary policy. European Monetary Union Member States are hit by the asymmetric shocks or respond dissimilarly to a common shock. This is the strongest reasoning for the rehabilitation of active fiscal macroeconomic stabilization. Prudent fiscal and debt management policies are powerful to mitigate the economic impacts of various shocks at a national level and thus to replace the loss of autonomous monetary and exchange rate policy. The resurrection of fiscal policy is contingent on the efective institutional framework for its implementation. The principle of proposed reforms in fiscal policy stems from political economics background and corresponds to recent reforms in monetary and public debt management institutions. The only way how to address the traditional incentive constraints of policy discretion is to set up an independent fiscal agency outside of Ministry of Finance.

It is generally established that the concept of monopoly refers to an existence of a single company operating on the relevant market. This interpretation, though commonly accepted and echoed by all textbooks, is incorrect. The fact of being a single supplier is not essential in forming the concept of monopoly. The essential feature of monopoly is not the fact of a single company as such but the fact of the government physical force (i.e. law) mandating the privilege of exclusivity and keeping potential competitors out of an industry. But the defect in traditional conception of monopoly had to wait - until economists invented the theory of perfect competition - before it could lead to the routine attacks against the very nature of business through the government anti-trust legislation. The concept of monopoly must be redefined and reconstructed and the vitally important distinction between economic power of business and political power of government must be recognized.

Macroeconomic policy is often evaluated solely on the basis of empirical evidence, such as observing the behavior of macroaggregates. This paper argues that this approach bears a shortcoming: "improvement" of macroaggregates can be socially undesirable under certain circumstances. Thus the sole exploration of macroaggregates is not sufficient to evaluate the macroeconomic policy -axiomatic economic theory must be used as well to determine whether the outcomes of macroeconomic policy are beneficial to society or not. The paper first offers a precise definition of a social welfare function (based as much as possible on microfoundations). Then it considers the possibility that macroaggregates might not always correlate with society's welfare. Some illustrations are covered too.

The command economy that the Czech Republic inherited from the communist system was considered unreformable. It seems as if the social and economic transition of ex-communist countries is necessary for their full inclusion among democratic countries with highly developed market economic systems. No new central European tiger has emerged since Erhard"s reform in the post-war West Germany, since welfare-statism also destroyed a genuine economic transition in the Czech Republic. Influential interest groups were able to interrupt the transition process and to stop it halfway in many areas. Political pressures to bring the Czech Republic closer to European Union's standards led to the passing of laws and government measures that were incompatible with the highly-regarded transition strategy. The development of public law at the expense of private law enforcement (in accordance with EU policy) led to the further expansion of bazaar capitalism in the Czech Republic.