Ezoneplus Newsletter | Third Issue 2002/5/6 |
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News 2: |
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News 1 |
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Research workshop in Berlin: On
Friday, April 26, the Jean Monnet Centre of Excellence and the graduate
programme “Das neue Europa” of the German Research Foundation (DFG)
conducted a joint research workshop on key issues of the Eastward
Enlargement of the eurozone. Located at the Berlin city hall “Rotes
Rathaus”, Prof. Dr. Gert-Joachim Glaeßner (Humboldt-University), Prof. Dr.
Michael Bolle and Prof. Dr. Hanns-Dieter Jacobsen (Free University Berlin)
led the discussion, involving PhD-students, researchers and
representatives of the media. Dr. Hubert Grabisch from the Institute for
Economic Research Halle delivered the key note speech and focused mainly
on the exchange rate criterion outlined in the Maastricht treaty. Apart
from necessary efforts to lower inflation and long-term interest rates, to
him, participation in the exchange rate mechanism ERM II imposes the
biggest obstacle for CEE countries, since financial markets will become
tempted to “test” the credibility of any semi-fixed exchange rate
arrangement. Due to the decision making process while fixing the parity
(ECB, Commission and Council), choosing the equilibrium rate will
eventually remain a political question. Thus, Prof. Bolle argued that the
ECB will strongly oppose any deviation from the criteria set while
anticipating this political room of manoeuvre. The full text of Dr.
Gabrisch: “Politische und Ökonomische Dimensionen einer Osterweiterung der
Euro – Zone” is available at:
The second part of the workshop was devoted to
the development of capital markets (Thomas Meyer) and the Social Dimension
of the eastward expansion of the eurozone (Achim Kemmerling). Thomas Meyer
explained the far reaching maturation of CEE capital markets thus already
anticipating both rounds of enlargement and realising efficiency leaps.
However, the issue of corporate governance bears much more controversy to
the CEE countries. Whether the huge influence of foreign investors via FDI
and/or portfolio investment will induce governance structures and
behaviour similar to western European standards and e.g. thus improving
the effectiveness of corporate law in these countries is far from evident.
Quite the contrary, though less probable, could also hold true: foreign
investors may become tempted to “squeeze” regulatory loop holes and
benefit at the expense of domestic actors and financial intermediaries.
This question has immediate implications on the timing of EMU membership.
Another aspect of foreign entry is whether the import of modern banking
institutions comes at the expense of domestic lending and third, Thomas
Meyer concentrated on forms of capital supply and possible effects of
destabilisation from the exposure to reversal of flows. However, EBRD date
strongly suggests that given continuous liberalisation and
diversification, the GDP growth effect of international capital flows
easily outweighs this risk. Finally, Achim Kemmerling took a closer look on what kind of social aspects will become relevant in the upcoming years and how mainly western labour markets will be “reshaped” by EU-enlargement. Contrary to conventional wisdom, the most significant risk ahead is much less migration rather than the enhanced competition within labour markets across the eurozone itself. Due to a reallocation of agricultural/regional and structural funding and due to a much more heterogeneous union, budgetary restrictions to finance the welfare state become higher and pressure on wage bargaining procedures should grow. In fact, since costs as well as benefits will be dispersed asymmetrically across Europe, competition within labour markets and their institutions will gain momentum. By now, it appears unclear whether this form of external impulse will be sufficient to trigger substantial reform or rather induce social dumping or will leave western member states “sitting on the dock of the bay...”. |
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News 2 |
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Conferences:
Finally, July 4-5 will see the next major Ezoneplus conference. This time organised our the Italian research partners the event will take place at the University of Bologna For more information follow
this links |
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News 3 |
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Working paper no. 4 (forthcoming) Christian Fahrholz and Achim Kemmerling of the
Berlin group currently work on a working paper covering so far neglected
labour market developments in the CEE countries. If the Balassa-Samuelson
effect holds true and structural inflation will appear, then this might
have negative impact on the labour markets since employment ratios may
remain below the optimum level, indicating an “employment gap”. The paper
will be available online by the end of
May. For more information follow
this link |
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News 4 |
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Literature - Below
you will find recent papers and studies relevant to our research project
which you may find helpful. European
Commission: Economic Forecasts for the Candidate Countries, Spring 2002:
(Enlargement Papers No. 9), April 2002. European
Commission: Report on macroeconomic and
financial sector stability developments in candidate countries
(Enlargement Papers No. 8), April 2002.
This is the first annual report of the DG ECFIN on CEE countries. It entails an overview, outlining main common themes on macroeconomic and financial sector stability challenges in candidate countries, and thirteen country-specific chapters.
Lommatzsch,
Kirsten; Tober, Silke: ”Geldpolitische Aspekte der Erweiterung des
Euroraums”, in: DIW Wochenbericht 15/02. The
authors present an empirical analysis on the impact of the so-called
Balassa-Samuelson-effect and conclude that no significant impact on CEE
countries or the eurozone is to be expected. Moreover, given stable
expectations of the financial markets , CEE countries should be quite
easily able to bring inflation down according to the Maastricht criterion.
However, more urgent than to focus on real inflation developments seems to
concentrate on the decision-making process within the ECB. According to
Lommatzsch, Tober a combination of constituencies and rotation would be
appropriate, thus securing a
major clout of the biggest economies of the
eurozone. http://www.diw.de/deutsch/publikationen/wochenberichte/docs/02-15-1.html Quaisser,
Wolfgang; Hall, John: ”Toward Agenda 2007: Preparing the EU for Eastern
Enlargement”, Osteuropa-Institut München, Working paper no. 240, February
2002. This
paper provides a concise overview of the expected (asymmetry of) costs and
benefits of the eastward enlargement of the EU, including urgent
reformulation of agricultural, structural and regional policies. Whereas
enlargement itself should not induce any sort of financial crises, since
it has been underway in fact since 1990/1991, the European Union “ - at
present - is not in a financial and institutional position to cope with
the full range of challenges looming on the enlargement horizon.”
http://www.lrz-muenchen.de/~oeim/wp240.pdf Schweikert,
Rainer: Der Euro als Ankerwährung. Die mittel- und osteuropäischen
Beitrittsländer zwischen Transformation und Integration. Kieler
Studien 312, Berlin, Heidelberg: Springer, 2001. Reflecting
the risks of fixing the CEE currencies too early to the Euro, Rainer
Schweikert offers a concept of an enhanced convergence indicator including
business cycles, composition of trade flows, real effective exchange rates
and developments of the PPP, in order to assess possible costs for the CEE
countries. Comparing the candidates to a “reference group” of Greece,
Ireland, Portugal and Spain, the study concludes that Estonia already
comes close to EMU member Greece whereas, by 2004, Poland, Slovenia, the
Czech Republic, Hungary and Lithuania should reach comparable levels of
economic maturity, too. Thus, risks if any, stem from the adoption
procedure, namely the membership in the ERM II.
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Editors of Ezoneplus Newsletter |
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Note: Content for the Ezoneplus newsletter is submitted by the Jean Monnet Centre of Excellence, Freie Universität Berlin. Although the Centre had editorial discretion, we will not accept any liability in respect of the information presented above. Freie Universität Berlin Jean Monnet Centre of Excellence |
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