Is CAPM's characteristic, security-market line a straight one?
The study first looks at the assumption made in the Capital Asset Pricing Model (CAPM) of a linear relation between market risk (beta) and expected return. For it is not known whether the linear condition for gauging market risk is well grounded. If the linearity of the characteristic lines is broken, a new market risk measure needs to be derived. The authors examined a random sample of 150 stocks from the large, medium and small-sized components of the Standard & Poor's stock market index. The linearity of characteristic lines for US stocks can be refuted at all customary significance levels, and so a semi-parametric risk measure was introduced. The study shows that when the linearity of the characteristic line is damaged, the beta of the stock market pricing model on average significantly underestimates the security's risk, and so the standard market risk measure cannot be used. Based on these findings, the authors can formulate the conclusion that it is only possible to beat the market under extreme conditions.
Post-socialist development paths
Two decades after the change of system in the Central and East European countries it becomes feasible and timely to chart their development paths. The study draws on methods of political economy to analyse change in a major system-change factor: state redistribution. The main hypothesis is that today's system of economic and social institutions is affected by the socialist past. Thus two sharply different development paths, in terms of degree of state involvement, can be distinguished, in line with the character of the former socialist system. One the author terms mixed capitalism and the other pure capitalism. Some simple measures are used to show that the mechanism of the model can also be examined empirically.
The earnings-related effect of self-confidence
Highly fatalistic, low-efficacy persons obviously believe their actions have little outcome. Greater fatalism lowers the desired effort level of employees, which may result in lower pay, while an anti-fatalistic attitude translates into more effective work, which may be rewarded with higher pay. The paper examines the pay impact of an anti-fatalistic attitude, using multi-variable statistical models to establish the positive pay impact of the personal traits examined. The study uses data from the longitudinal Hungarian Household Panel (HHP) survey of income and labour market dynamics, which also includes attitude variables. Since the widely used Rotter scale is not available for any Hungarian panel data, the author created and employed an index that is very similar to Rotter theoretically and empirically: the self-confidence scale, identifying a positive impact using multi-variable statistical models. One standard deviation increase in examined scale increases pay by around 2 per cent where other differences remain constant.
Melléklet • Innovációkutatás
Maths instruction in Bologna-type economics tuition
The basic and master's curricula for business and economics include plenty of mathematics subjects. Business and economics courses had to be rethought when the change was made across Europe to the two-cycle Bologna system. This change took place simultaneously but independently in each country and institution, so that notably different solutions can be found in each university. A retrospective comparison of maths instruction in various universities can be made by examining their operative syllabuses and subject data-sheets. The study reviews the part mathematics plays in economics, then uses comparative analysis of the maths teaching in business and economics courses at leading European and four Hungarian universities to reach a general conclusion: maths teaching in Hungary, in the field examined, has sunk to a critical level, in terms of quality and quantity.