Ezoneplus Newsletter | Issue 2002/8/30


Contact | Unsubscribe | Editors | www.ezoneplus.org                     



Contents of this Issue


News 1:

1. Updated and revised edition of Ezoneplus Newsletter


News 2:

2. Conferences: Bologna Workshop (5/7.7.2002)


News 3:

3. Conferences: Brussels Workshop (January 2003)


News 4:

4. Regional Conferences (t.b.a)


News 5:

5. Partners´ Conference: Warsaw, 27.9.2002


News 6:

6. Outlook - Conference in Budapest, 27-30 November 2002


News 7:

7. Publications - New Working Papers



News 1


Updated and revised edition of Ezoneplus Newsletter

Unfortunately you received a preliminary, in form and content incomplete version of this newsletter. We apologize for inconveniances like ´broken` links.

For more information follow this link





News 2


Conferences: Bologna Workshop (5/7.7.2002)

From July, 5-7, the Ezoneplus team organised in Bologna an academic workshop on different markets in CEE as well as in Euroland, which will be affected by EMU-enlargement. Below, we present the major outcomes.

The discussion on Capital Markets, based on a contribution by Thomas Meyer of the FU Berlin´s Centre of Excellence, focused primarily on changes already achieved in CEE and on the need to foster financial development, since mostly they are small, less efficient, and depending on foreign capital. The Finnish participants from the Government Institute for Economic Research (VATT) pointed out that CEECs now face those same challenges the Nordic countries had to cope with 15 years ago. Thus, a strong governmental grip on the banking system may be adequate. However, the participants could not agree on whether specific case studies may be of value to future trends at all.

Concerning the section Trade and FDI, José Caétano and Aurora Galego from the University of Évora outlined that CEECs´ dependence on trade has been increased during transition. Although the potential in imports has been largely exhausted, there is still some scope for export expansion, especially because CEECs continue to profit from comparative advantages in labour and natural resource intensive commodities.
Bridging the gap to capital markets the discussion showed that,although having changed significantly over time, up to now foreign capital inflows cannot be considered to have ´crowded out` domestic investments. However, due to being more unilateral directed than trade flows, assessing future FDI movements and implications remains difficult.

During the session on Labour Markets Jaakko Kiander and Risto Vaittinen from VATT and Tiiu Paas from the University of Tartu stressed that for applicant countries EMU-membership will bear the prospect of income transfers as well as free labour mobility (depending on income differences). Despite of this, the most problematic factor of systemic transformation in the CEECs stems from migration to the current EU members, most prominently to Germany and Austria, accounting for up to a total of 350.000 people per year after enlargement. Since most of these people are likely to be well-trained workers, current EU members are supposed to benefit from this possible ´brain drain`. To fight a prospective decrease in labour market flexibility, politics must focus on labour legislation, trade unions, wage flexibilty, workers flows and job flows.

Scholars of the University of Bologna (Renzo Orsi, Fabrizio Iacone, Riccardo Rovelli, Roberto Golinelli) , during the panel session on Exchange-Rate Regimes, discussed inflation and possible costs of the eventual surrender of the currency. Regarding inflation, most participants agreed upon the fact that exchange rates are the most vital instrument to fight price increases. However, by aiming at the stabilisation of an economy the risk of a tight monetary and fiscal policy may increases, which in effect could translate into costs in terms of unemployment. Thus, two crucial questions can be raised:
1. Should the CEECs join the necessary ERM II-mechanism as soon as possible or not? Although some of them already introduced policies to be compatible with the ERM II statutes (Estonia and Hungary), others´ aims are opaque.
2. If costs do rise, who is going to pay for it?

Other issues being discussed included possible effects on the eurozone itself once the CEECs become full members. Most experts considered the Stability and Growth Pact to fulfil its stabilising role sufficiently. The contributions to the Bologna Workshop are available as Ezoneplus Working Papers 5 to 10 that can be downloaded from Ezoneplus´s Website (see 7 below).

For more information follow this link





News 3


Conferences: Brussels Workshop (January 2003)

In January of 2003, Ezoneplus is planning a scientific workshop in Brussels, consisting of an open session and one for project partners and European Commission representatives only. This event shall present the relevant results of our first year´s work and will deal with remaining research questions still to be addressed. Leaving the development of markets aside, research will then focus more heavily on ´Monetary and Fiscal Policies` and their interconnections with exchange-rate issues as well as ´Social Dimensions`.

Besides, a Euroluncheon will take place, in order to bring together academics with experts from the European and national administrations and partners from the business community. Therefore, the public session allows for presenting the projects´ outcomes to a wider public.





News 4


Regional Conferences (t.b.a)

Apart from the main event in Brussels, the project´s coordinator, the Jean Monnet Centre of Excellence of the Freie Universität Berlin will organise several regional conferences: Riga, Moscow and Budapest will be the sites of small expert meetings. A precise schedule and application forms will be announced on time.





News 5


Partners´ Conference: Warsaw, 27.9.2002

The Warsaw School of Economics will host an academic conference on the ´External Relations of the European Union - Determinants, Causal Links, Areas` in co-operation with the Polish branch of the German Friedrich-Ebert-Foundation.

Leading academics from Warsaw, Gdansk and the Polish Institute for International Affairs will debate on political interests during EU-enlargement as well as on the impact of multilateral agreements and different areas of involvement regarding issues of security politics.

For more information follow this link





News 6


Outlook - Conference in Budapest, 27-30 November 2002

The International Centre for Economic Growth (ICGE) will arrange a high-level scientific conference on exchange-rate policies in the CEE countries, sponsored by the European Commission: ´Exchange-Rate Strategies During the EU Enlargement`.

The conference will have four sessions. The first one covers recent theoretical and empirical research on the choice of exchange rate regimes, while the second assesses the recent experiences of pre-accession economies with exchange rate arrangements. The third session of the meeting will discuss the major exogenous shocks that effect exchange rate policies during EU enlargement, while the last session will be devoted to the assessment of appropriate exchange rate regimes for pre-accession economies.

For more information follow this link





News 7


Publications - New Working Papers

In case you have any questions concerning our publications please contact: info@ezoneplus.org

WP No. 4 C. Fahrholz and A. Kemmerling: ´Tertiarisierung und Transition` (in German)

The paper offers some empirical evidence on possible implications of the Balassa-Samuelson-effect (HBS) on employment structures in CEE countries. Since for the time being literature has focused on inflationary aspects only, the authors (Freie Universität Berlin) argue that HBS will come along with significant changes in the services sector. Thus, possible results could rather less employment growth than inflationary pressure. Note: This draft version is still under revision.

Download is possible from here

Note: Working Papers 5-7 are designed to function as general ´Market Reports` to our project. Thus, each of them draws heavily on an empirical ´appendix`, so called Regional Input. We will offer this data online as WP No. 5A and so forth as soon as possible.

WP No. 5 T. Meyer: ´The Eastward Enlargement of the Eurozone: The Shaping of Capital Markets` Thomas Meyer (Freie Universität Berlin) takes a close look on the CEECs´ capital markets development. In his view, they have already undergone massive changes due to the anticipation of EU- and EMU-membership. However, facing the huge amount of capital inflows, the CEECs still have to foster the evolution of their financial institutions if they seek to prevent destabilising effects.
Furthermore, to join EU and EMU will allow for ´imports` of institutional stability but the issue of corporate governance, especially how to provide for effective law enforcement will remain a prominent problem.

Download is possible from here

WP No. 6 J. Kiander, R. Vaittinen and T. Paas: ´The Eastern Enlargement of the Eurozone and Labour Market Adjustment` Jaako Kiander and Risto Vaittinen from the VATT Government Institute for Economic Research in Helsinki and Tiiu Paas (University of Tartu) assess the scope of prospective labour market adjustments. Using a general equilibrium model, the authors find that enlargement will contribute stronger to GDP output than to growth in income, because factor mobility effects dominate those of conventional trade policy.
Migration will slow output growth in the candidate countries and accelerate growth in the existing Member States, while the trends in per capita consumption will be reversed; migration increases per capita consumption in the new Member States and reduces it slightly in the existing ones.

Download is possible from here

WP No. 7 J. Caetano et al: ´The Eastern Enlargement of the Eurozone: Trade and FDI`

In an extensive paper the research team from Portugal, José Caetano, Aurora Galego, Elsa Vaz, Isabel Vieira and Carlos Vieira (Universidad da Evora), offers econometric insight in prospective developments of trade and FDI patterns between CEECs and the EU. The study also examines tendencies for sectored specialisation and the evolution of countries´ location in the process of international segmentation of production.

Since, for instance, FDI flows also depend on the size of population of the host country, smaller current EU member states such as Portugal may see it more difficult to attract foreign capital in the future.

Download is possible from here

WP No. 8 R. Rovelli and R. Golinelli: ´Monetary Policy Transmissions, interest rate rules and Inflation Targeting in three Transition Countries`

We consider a small structural model to describe the transmission mechanism of monetary policy and the dynamics of inflation. We first verify the validity of the general structure estimating it for Germany which represents a sort of benchmark model. At least one of the links required for the transmission mechanism of monetary policy, when we analyse the Central and Eastern European Countries (CEECs), reveals to be not significant when considered on the whole sample. On the contrary the results are closer to a textbook description when the attention is shifted to the second part of the sample only. We interpret this as a piece of evidence indicating that the transition is indeed operating, but it is still ongoing and in some cases it is not complete yet. We also verify that the effects of the exchange rate on both the aggregate demand and on the inflation are in agreement with the economic theory. We conclude that the exchange rate should be actively used to control the inflation in the CEECs.

Download is possible from here

WP No. 9 F. Iacone and R. Orsi: ´Exchange-Rate Management and Inflation Targeting in the CEE Accession Countries`

Inflation in Central and East European countries varied considerably over the transition phase, and econometric relationships between prices, money, wages and exchange rates are said to have been unstable during this period. In order to shed some light on the issue, this paper analyses some empirical models of the inflation process in the three earliest east European transition economies: the Czech Republic, Hungary and Poland.

Download is possible from here

WP No. 10 R. Golinelli and R. Orsi: ´Modelling Inflation in EU Accession Countries`

In 1991, the rate of inflation in the Czech Republic, Hungary and Poland was between 35% and 70%. At the end of 2001, it is below 8%. We setup a small structural macro model of these economies to explain the process of disinflation. Contrary to a widespread skepticism, which permeated a large part of previous research on these issues, we show that a simple open macroeconomic model, along the lines of Svensson (2000, Journal of International Economics), with forwardlooking inflation and exchange rate expectations, can adequately characterize the relationship between the output gap, inflation, the real interest rate and the exchange rate during the course of transition.

Download is possible from here

For more information follow this link





Unsubscribe Newsletter



Click here to unsubscribe





Contact Ezoneplus


Visit the Website

For additional information please visit www.ezoneplus.org or EMAIL your questions, comments or suggestions directly to us at info@ezoneplus.org





Editors of Ezoneplus Newsletter


Jean Monnet Centre of Excellence
Department of Political Science
Ihnestr. 22
14195 Berlin
Visit Homepage