Publications of Baniak, A.

On the Determinants of Foreign Direct Investment in Transition Economies

Foreign direct investment (FDI) brings host countries capital, productive facilities, and technology transfer as well as new jobs and management expertise. Thus, it is important to understand why in many transition countries FDI inflow is lower than expected. The goal of this study is to explore some important factors determining flow of FDI into transition countries. In particular, we analyze the legal environment for FDI in some transition economies. Then we model the impact of stability of the economic and legal environment on the pattern of FDI. Our analysis shows that (1) higher variability of basic macroeconomic fundamentals reduces the flow of FDI, (2) high volatility of fiscal and business regulations makes the inflow of FDI smaller, and (3) macroeconomic and legal instability leads to adverse selection of the investors. Based on theoretical findings we formulate a clear message to policy makers stating that in order to attract significant inflows of long-term and nonspeculative foreign capital, first of all, a stable economic and institutional environment is needed. ABSTRACT FROM AUTHORCopyright of Problems of Economic Transition is the property of M.E. Sharpe Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The volatility of prices in the English and Welsh electricity pool

The volatility of spot prices has been a notable feature of the English and Welsh Electricity Pool since its formation in 1990. This study investigates the possibility that the volatility of spot prices is strongly affected by the functioning of the contract market for electricity. This paper suggest that generators with market power may have an incentive to create volatility in the spot market in order to benefit from higher risk premia in the contract market. A simple theoretical model is used to illustrate this argument. Nonparametric techniques are used to test for changes in volatility after the expiry of the coal contracts in 1993 and during the price cap of 1994-1996. Strongly significant increases in volatility are found in the latter period.

A note on comparative statics for a labor-managed firm engaged in exporting

The behavior of a labor-managed firm (LMF) producing both for the domestic market and for export is analyzed assuming that it competes with a foreign profit-maximizing firm (PMF) in the export market. Conventional wisdom suggests that a LMF facing an increase of demand in the foreign market will cut sales in this market. We show that, with high enough sales in the domestic market, the LMF will sell less at home and more abroad after an introduction of an export subsidy. We also show that, under the same condition, the LMF will increase foreign sales after a devaluation of the domestic currency. Thus, the LMF reacts in a manner similar to that of a PMF.