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This article concentrates on the development of Post-Keynesian economics since 1950s, which is one of contemporary streams of keynesian thought. Post-Keynesian economics aims at building a new paradigma in economics on the bases of the original theories of J. M. Keynes and its perfecting by an alternative theory of distribution and price formation, and the theory of endogenous money supply. This work was begun by Italian-Cambridge school, and continues by their followers in the USA. Fundamental to this approach is the belief that we live in a monetary production economy where production takes time and uncertainty is pervasive. Economic events develop in historical time. Markets do not clear, and there is no automatic mechanism that assures a tendency towards full employment of labor and other economic resources over time. Man is considered to be a social being not an optimizing machine. As the monetary production economy is inherently unstable, most Post-Keynesians propose state interventionist policies to stabilize it. At macroecfonomic level they propose keynesian type fiscal and monetary policies supplemented by an incomes policy. Many Post-Keynesians propose supply-side microeconomic policies, as well.

One of the main goals of the banking regulation and supervision is the promotion of the integrity, stability and health of the banking system as a whole. This also requires the mechanism, which would help some problem banks to gain lacking funds to meet the liquidity needs. Lender of last resort represents this mechanism. Although the aid may come from the special government institution or directly from the state budget, the role of lender of last resort is usually adopted by the central bank because of conviction that the failure of bank might have the "contagion effect" on the other banks. The emergency credits could be granted only to illiquid but solvent banks. In the article there are connected problems discussed - systemic risk, doctrine "too-large-to-fail", differences between the liquidity and solvency, and the main criteria for granting the emergency credits, with a view to the Czech banking system since 1993.

Karel Engliš was the author of the teleological theory of national economy based on the idea that the cognition and understanding of all the economic processes may be satisfactory from the scientific point of view only if it follows the purposefulness , intentionality, the choice of aims and means and the rationality of making decisions and methods in the behaviour of all the economic subjects. He pointed out that the traditional tendencies in economic theory preferred the causal approach and that they concentrated on the search and research of the causal connections in economic reality and the they missed the knowledge of the sense of human doings. In the basis of these ideas he elaborated the economic science dealing with the systems in which all the economic activity takes place. In Engliš's approach the methodological influence of the Austrian school and the noetic-philosophical influence of Kant's critical idealisme are obvious.

The Czech economy experienced a standard shake-up triggered by a gradual build-up of external imbalance that ended up with a speculative attack. As a result of the many institutional bottlenecks, the supply side of the economy was unable to keep pace with the rapid expansion in domestic demand. The mounting external imbalance was also linked with considerable internal imbalances. The contagion came in May 1997 from South-East Asia. Them followed a sharp weakening of the CZK. The CNB opted for a strategy of liquidity squeeze. Escalation of the crisis led to the adaption of managed floating of the CZK finally. The first signals of a calming of the situation emerged at the start of June. It became possible to launch a strategy to bring interest rates down. This process lasted until around the end of August. The price paid for eliminating the external imbalance was economic recession.

In the first part of this article is discussed a theoretic comparison of a standard Keynesian (income) approach and a monetary approach to the balance of payments. The monetary adjustment process is based on the monetarist assumption that money market imbalances affect the real economy and the Keynesian approach is based on a relationship between income and foreign trade. In the second part author describes a theoretic Keynesian-Monetary (K-M) model which is able to illustrate the impacts of the changes of various economic exogenous variables to a development of income and the balance of payments. The main contribution of this paper can be considered in an interpretation of the real economic development in the Czech Republic between 1993 - 1999 by the theoretic K-M and IS-LM-BP models.

Author combines two points of view on monetary problems of Czechoslovakia in the Great Depression: an outline of monetary development between two devalutions of the crown in 1934 and 1936 and an analysis of monetary theories of Karel Engliš, who was an outstanding representative of the liberal school and the governor of the Czechoslovak national bank, and the economists inspired by J. M. Keynes - Josef Macek, Karel Maiwald and Jaroslav Nebesář. In 1929 the crown was placed on the gold standard at a value of one crown equal to 44,58 miligrams of gold. The financial progress was interrupted by the Great Depression, with devaluation in 1934 and 1936, both times by 1/6 of its value. Theoretical debates concerned the major effects of these economic policy measures from the point of view of Karel Engliš and the Czech Keynesians.

In small open economies, external factors exert a strong influence on the autonomy and efficiency of domestic monetary policies. For the Czech National Bank, no exchange rate regime can guarantee a lasting degree of policy autonomy. Within the present CNB's strategy of direct inflation targeting, changes of exchange rate and of world prices proved especially hard to tackle. In 1998 and 1999, a substantially faster disinflation took place than was presupposed by CNB's own inflation targets. This helped to throw the economy into a recession. A credit crunch subsequently set out of function the most important transmission channel of monetary policy. Inflation targets were repeatedly undershot, and only a strong capital inflow initiated the money supply growth for economic recovery. A lower level of ambition to steer the economy via autonomous monetary policy is probably desirable. The "fast solutions" - a currency board, or an immediate takeover of the EUR - are neither feasible, nor would they be clearly beneficial at the present stage.

This paper compares the standard economic and a complementary socio-economic approach to the transition. While the economic approach looks at social problems from the outside and views them as costs of transition, the socio-economic approach looks at these problems from the inside and views them as a part of the social change taking place. Both approaches are here used to analyze four frictions. The first friction concerns the PAYG pension system which emphasizes intergenerational dependence and turns pensioners into a socially needy population. The second friction concerns the relation between low market wages and a higher welfare provision which creates a poverty trap and leads to a culture of dependency. The third friction concerns the insufficient incentives for middle class expansion which contrasts with the key role this class should play in the future prosperity of society. The fourth friction involves tensions between various sections of the middle class.

The paper describes inflation targeting, and tries to emphasize a difference between the theory and the practice. The strategy is highly demanding of information, and thus hard to implement reasonably in practice. Flexible inflation targeting doesn't fix inflation expectations. Its global application is dubious too. Inflation targeting is not suitable for transitive economies since there cannot be satisfactory long-run prediction model at the disposal of the central bank.

The aim of this paper is to introduce the market process as a central concept of Austrian economics as opposed to the general-equilibrium approach of the neoclassical school. In the first part the author shortly reviews the theme of entrepreneur and understanding of entrepreneurial function in the history of economic thought. In the second chapter the formation of the Austrian view of the market as an entrepreneurially driven process and simultaneous emergence of criticism of mainstream theory is explained. The chapter three describes the Austrian understanding of the market process based upon twin concepts of sheer ignorance and entrepreneurial discovery. The last chapter introduces the entrepreneurial market process theory of Schumpeter. Schumpeter's theory is subsequently compared with Kirzner's approach. The author also surveys and compares modern discussions about market process within the Austrian school of economics.

The article contains Komerční banka's analysis of the Czech economy. The authors conclude that the economy goes through a classical recession, caused by the joint working of the following main factors: waves in firms' and households' investment, volatility of foreign capital, stabilization policy mismanagement, and a credit cycle. An important part of the recession was a result of the restrictive monetary and fiscal policy of 1997, which had an impact on the economy with a one-year lag. The authors conclude that a slight recovery of demand will not come earlier than in the second half of 1999, and that it will be driven mainly by the revival of real household incomes.

This article goes through the history of the external imbalance in the Czech Republic. The first signs of imbalance appeared in 1994, negative tendencies, however, culminating at the end of 1996 and the beginning of 1997. The current account deficit has been decreasing since the third quarter of 1997 due to both domestic (sluggish demand) and foreign (recovery of growth in Western Europe) factors.
Results for 1998 support the statement that recovery of economic growth will be the macroeconomic priority for 1999 rather than external imbalance. The recovery of domestic demand could, however, - under certain circumstances - represent an import promoting impetus, which could threaten the painfully acquired and still fragile external balance. This would be very dangerous since twin deficits (fiscal deficit together with the one on the balance of payments) would not attract massive inflow of foreign investments.

Reserve requirements has been part of the monetary policy instruments of banking in many countries including member countries of European Monetary Union and Czech Republic, too. But maintaining reserve requiremnts needs a contemporary rationale, no matter what their original purposes may have been. The obvious reasons to maintain reserve requiremets are to regulate bank liquidity, to conduct monetary policy (regulation of the money multiplier or short-term interest rates) and to pay the special "tax" to the state budget. This article deals especially with the third reason but the liquidity and monetary policy are also discussed. All three rationales seems not to be equivalent to the burden of the reserve requirements on the banking system and to the distorting effects on financial markets. Only in the countries with very limited possibilities to conduct monetary policy by means of other instruments, especially of daily open market operations, there may be maintaining of reserve requirements reasonable. There are two main approaches to removing the burden of reserve requirements and making the banks more competitive to other financial institutions - to eliminate reserve requirements altogether or to pay interest rate on them. Czech National Bank has been reducing the ratios of reserve requirements since 1996 from 11.5 % of bank primary deposits to the 2 % (valid from October 1999).

Statistical analysis of sectorial and global indexes at Prague Stock Exchange in 1997 was performed. The relative variability of sectorial indexes ranged from 5 % in Mining to 29 % in Agriculture. About one half of index returns can be approximated by normal distribution. The correlation between different sectorial daily and weekly returns was statistically significant particularly between Finance and Banking, Investment funds and heavy industry sectors. As a rule, weekly correlations were roughly twice greater than daily ones. Quasi-periodic behaviour of indexes enables the trend modelling through harmonic components superposition. The first four harmonic terms were shown to be sufficient to explain 80 - 90 % of values observed. Box-Jenkins method was employed for index returns modelling. Except for two cases, simple models up to ARMA(2,2) proved to be sufficient. Further, two thirds of index returns were explained first-order models, particularly MA(1). Prevailing part of sectorial index returns exhibited random behaviour with respect to number of positive and negative events, but the opposite is true from the point of view of runs number expected. Statistically significant difference between Monday/Tuesday and Monday/Wednesday returns was revealed. Monday returns are systematically lower (weekend effect). It was found, that PX GLOB returns variance depends on the PX GLOB values. Thus, we can not exclude, an underlying generating mechanism has different structure.

In this article is compared the monetary and the exchange rate policies and their influence on the real economic situation in Hungary, Poland and the Czech Republic. In these transition countries a growth rate of a domestic demand was over taking a growth rate of an aggregate supply and this situation led into a current account deficit and into a pressure to the higher inflation.
Author discusses the substitution and the income effects of the fiscal and the monetary (especially of the exchange rate) policies on making an external balance. The comparison of the basic macroeconomic indicators (growth rate of gross domestic product, inflation and current account deficit) showed that the crawling peg exchange rate regime facilitated to improve the external balance in Poland and Hungary.
In this article is also discussed an influence of the exchange rate regime and the price deregulation process on an inflation expectation in each compared country.
In the final part of this article author focused on a problem of building an institutional framework and its influence on a development of the economic situation in the Czech Republic.

The Czech social policy in the 1990s has been oriented mainly by given economic possibilities and pragmatic political considerations. Thus there are permanently important but rather hidden objectives that can be traced in the social policy development so far: legitimacy ("social acceptability of the reform"), non-increasing, or restricted social expenditure and in consistency with both objectives the intention to eliminate the risk of potential poverty.
In the following analysis we are concerned with the question of the social policy effectiveness in terms of poverty elimination. We use the hypothesis of targeting, selectiveness and progressively redistributive effects of social policy. We question the significance of the selected characteristics (as need, generosity, strictness, targeting) for the system's effectiveness.
Our analysis suggested that the effectiveness of social transfers in terms of the potential poverty elimination was sufficient in transition. At the same time the analysis draws attention to some limits of the chosen strategy. The complex relationships between generosity - targeting - effectiveness of social policy seem topical with respect to this goal as well as in terms of maintaining the costs of social transfers at an acceptable level.

A contractual concept of wages has been introduced by the latest amendment of labor law in the Czech Republic. Preparations for EU accession require that the wage and salary act shall emphasize the principle of identical wage for work of identical value. The inequality of men and women with respect to their remuneration is determined by noneconomic factors. Women are predetermined by their education to segregation to lower-wage jobs. Currently, the women's share in labor force at productive age is approximately 43 %. Women with primary education account for about 16 %, those with secondary education for 75 % and with university-level education for 8.5 %. Women mainly do less qualified administrative work, they work in operations in the service sector and outlet network, and do auxiliary unqualified work. Wage analysis on the basis of a sample survey documents that the average women's wage in 1997 made 76 % of the men's wage. The largest differences exist in women-employees not included in wage tariff classification (71) and with nontariff remuneration (70). Wages of women working in the nonbusiness sector are higher than those of women working in the business sector. But their from-year-to-year increase is slower. The gender differences in wages are expected to be augmented as a result of unfinished transformation and stagnation.

Main purpose of this paper is to analyse reserve requirements as one of the most controversial monetary policy tool at all. The first part of the paper focuses on reserve requirements in a broader context of the monetary policy of the SBCS, the CNB respectively, during the period 1989 - 1998. The first part of the article deals with issues like the side effects of reserve requirements, rationales justifying their existence in the monetary policy instrument set or the trade-off between the monetary stability and banking industry stability goals of the central bank. This critical analyse of the role of reserve requirements in monetary policy schemes during recent years creates a useful framework for the second part. In this part potential reforms of reserve requirements are discussed and possible effects of reserve requirements on the monetary system of the Czech Republic are specified in more detail.
It is clear reserve requirement are redundant instrument within the new inflation targeting regime adopted by the CNB almost a year ago. But more important question coming to a mind is how to abolish reserve requirements without causing destructive side effects on the whole monetary and banking system. By discussing these issues the paper leads to a crucial conclusion: Czech monetary policy-makers should prefer continuous and gradual way of lowering the rate of reserve requirements to the very quick and unanticipated one even though the existence of reserve is not sustainable any more.

For the past three decades, South Korea has remained one of the fastestgrowing economy in the world. Even with the financial crisis since end of1997 to mid-1998, this country continued succesful by developmnet of strongeconomic fundamentals. The causes of financial crisis were generallyconcentrated in two main areas: influence of structural factors inherent inKorean capitalism and unsustunaible deterioration of macroeconomic results.As is well known, ratio of short term debt was extremely high. The totalforeign debt amounted to about USD 150 bill. as of end of 1997. Thefinancial panic caused liquidity crunch that stemmed from the sudden shiftin the market expectations and confidence. After the Korean government'sdecision to accept the Bailout program of IMF and rescue financialpackage, the economy has been undergoing significant changes in mostimportant spheres. There were concentradet to the area of the activities offinancial and banking institutions, restructuralization of industrialpolicy, adaptation processes of various activities of leading businessconglomerats - chaebols (merging). OOn the other hand many experts calledattention to the need for changes to the global financial system. The maininternal point of the sucess of the Reform pprogram depends on the abilityto change the industrial and export structure of doemstic economy and createthe favourable developing space for foreign investors. The danger offinancial crisis is in its expansion across Asia during past year andfinally in beginning the reverbate world-wide.

The article presents a survey of theory concerning the "credibility" and "reputation" issues until the beginning of the 1990s, when new concept of "central bank independence" emerged. The "credibility problem" described by Kydland and Prescott means, that optimal policies become sub-optimal with the passage of time, which is called "time inconsistency". When the government or monetary authority change formerly optimal policy rules, the "forward - looking" private sector can anticipate it so that time inconsistent policies lack credibility. This problem can be analysed in terms of a complete-information game between the policy-maker and the private sector. According to Barro and Gordon the policy-maker's concern for his/her reputation for precommitment can sustain the ex ante optimal policy. Canzoneri introduces imperfect monitoring of monetary policy, using a model with stochastic disturbances, which gives almost the same conclusions. Studies by Backus and Driffill, Barro, Vickers or Cukierman and Meltzer represent more or less departure from the extreme assumption of complete-information, and solve finite-time-horizon games. The main result is that uncertainity of the private sector regarding the behaviour of government or monetary authority can be sufficient to sustain the optimal policy for much of the finite time for which the game is played.

The personality and economic theory of Albín Bráf (1851-1912), professor of political economy at the Prague university, were milestones in the development of Czech economic thought.He started lecturing at the university in the Czech language (1877), and he defined the subject-matter of political economy, methods and relations between the disciplines. He adopted a new approach to the relationship between national-economy theory and economic policy. He devised a concept of the "Czech national-economy revival" on the basis of this approach as a vision addressing the ripe social and economic problems of the Czech society. Albín Bráf won over the whole generation of Czech economists by his concept. The dissemination of his ideas was facilitated by his pedagogic mastery on the ground of Charles University and Institute of Technology in Prague. His legacy was promoted, among others, by Cyril Horáček (1862-1943) and Josef Gruber (1865-1925), Albín Bráf's successors at the Prague university.

The paper discusses the effects of interaction of states under the conditionwhen property rights of individuals and states a re respected mutually. Inthese situations states compete for better supply of security and justicefor inhabitants on their own territory. These goods are produced by means ofadministrative and repressive apparatus whose activity is financed throughtaxes. This competition leads to supporting of state integrity. The stateinterest is given as a matter-of-fact (already geopolitically). Thisinterest manifests as an egoism of the state itself. Any government of anystate must lay explicit goals to itself and it is usually better informed(with respect to the production of security and justice) than any otherinstitution and individuals because it takes care about immediateacquisition and exploitation of these goods.