The Central and Eastern European Countries and the European Union

Cover......Page 1
Half-title......Page 3
Ttitle......Page 5
Copyright......Page 6
Contents......Page 7
Figures......Page 12
Tables......Page 15
Notes on the contributors......Page 19
Acknowledgments......Page 22
Introduction......Page 25
The overall impact......Page 27
Regional policies and the structural funds......Page 28
The macroeconomic trajectory......Page 30
EMU accession......Page 31
1.1 The recent economic recovery in the new Member States......Page 33
1.2 Inflation\'s temporary resurgence not yet a concern......Page 36
1.3 The rush to the euro: a dose of realism......Page 37
1.4 Fiscal challenges and interest rate convergence......Page 40
1.5.1 Poland\'s expansion to continue beyond 2005......Page 41
1.5.2 The Czech Republic to rely on external demand and investment......Page 44
1.5.3 Hungary\'s manufacturing sector and investment are driving accelerated growth......Page 47
1.5.4 Fiscal reforms place Slovakia as the most progressive country in Central Europe......Page 50
1.5.5 Slovenia looks to net exports to boost growth......Page 53
Estonia......Page 56
Latvia......Page 59
Lithuania......Page 61
Cyprus......Page 64
Malta......Page 66
2.1 Introduction......Page 69
2.2 The pre-enlargement situation......Page 74
2.3 General equilibrium dimensions of enlargement......Page 76
2.4 From trade liberalization to deep economic integration......Page 80
2.4.1 ‘Trade liberalization’......Page 82
2.4.2 ‘Market integration’......Page 84
2.4.3 ‘Accession’......Page 85
2.4.4 Comparison of dynamics across scenarios......Page 89
2.5 Comparison with other studies using a similar methodology......Page 92
2.6 Conclusions......Page 95
References......Page 97
3.1 Introduction......Page 99
3.2.1 What have we learned from spatial models?......Page 101
3.2.2 What does the previous evidence of empirical spatial specialisation suggest?......Page 103
3.3 Defining data and indices......Page 105
3.4 Analysis of the distribution of the evolution of spatial activity, 1985–95......Page 106
3.5 The effects of the new enlargement on the distribution of activity: from EU-15 to EU-27......Page 115
3.6 Conclusions......Page 127
References......Page 129
4.1 Introduction......Page 132
4.2 Methodology......Page 133
4.2.1 Forecasting models......Page 134
4.3 The data......Page 137
4.4.1 The Czech Republic......Page 139
4.4.2 Hungary......Page 143
4.4.3 Poland......Page 146
4.4.5 Slovenia......Page 149
4.4.6 The role of Euro area information......Page 154
4.5 Conclusions......Page 156
References......Page 157
5.2 The salience of the topic......Page 159
5.3 Our approach......Page 161
5.4.1 Classical cycles......Page 164
5.4.2 Growth rate cycles......Page 167
5.4.3 Deviation cycles......Page 169
5.4.4 Comparison with recent studies......Page 173
5.5 Conclusions......Page 175
References......Page 176
Appendix: the dating algorithm......Page 178
6.1 Introduction......Page 183
6.2 Asymmetric shocks and the Optimum Currency Areas approach......Page 185
6.3.1 Some descriptive statistics......Page 186
6.3.2 Demand and supply shocks: the Bayoumi and Eichengreen (1992) model......Page 191
6.3.3 A dynamic analysis of the degree of shock symmetry in the new Member States......Page 199
6.4 Conclusions......Page 206
References......Page 207
7.1 Introduction......Page 209
7.2 Review of the empirical literature on monetary transmission in the new Member States......Page 211
7.3.1 Methodology and data......Page 215
The basic specification......Page 216
Extensions of the basic specification......Page 219
Results......Page 220
The VAR models......Page 222
Results......Page 224
THE INTERACTIONS BETWEEN MONETARY AND FISCAL POLICY......Page 233
EVIDENCE ON THE CORRELATION OF MONETARY SHOCKS BETWEEN NEW MEMBER STATES AND THE EURO AREA......Page 237
7.4 Conclusions......Page 238
References......Page 240
8.1 Introduction......Page 243
8.2 Background......Page 244
8.3 The weak point of medium-term budgetary planning......Page 245
8.4 Public finance in the pre-accession economic programmes......Page 248
8.5 Scenarios......Page 253
8.5.1 The ‘official’ scenario......Page 254
8.5.2 The baseline scenario......Page 255
8.5.4 The ‘fiscal prudence’ scenario......Page 256
Appendix A: The results of fiscal scenarios for the CE-3 economies......Page 257
Poland......Page 258
Czech Republic......Page 263
Hungary......Page 267
9.1 Introduction......Page 269
9.2 Basic identities and some stylised facts......Page 270
9.3 How important is the current account?......Page 272
9.4 Methodologies for assessing sustainability......Page 273
9.5 Modelling the current account......Page 276
9.6.1 The model......Page 277
9.6.2 Projections......Page 280
9.7.1 Increasing the saving rate?......Page 286
9.7.2 Early adoption of the euro: is it wise?......Page 289
9.8 Conclusions......Page 291
References......Page 292
Appendix B: Short-and long-term determinants of the current account......Page 295
10.1 Introduction......Page 298
10.2.1 Privatisation of the banking sectors......Page 299
10.2.2 Restructuring: the Czech case......Page 301
10.2.3 Restructuring: the Polish case......Page 302
10.2.5 Easing the burden of non‐performing loans......Page 304
10.2.6 Restructuring and concentration in the banking sectors......Page 308
10.3 Current indicators of operational efficiency and financial stability......Page 310
10.4 Bank regulation and supervision......Page 319
10.5 Challenges to the banking sectors in the run-up to accession and the euro, and policy implications......Page 322
10.6 Conclusions......Page 328
References......Page 329
11.1 Introduction......Page 330
11.2 Model specification......Page 333
11.3 Data and spatial exploratory analysis......Page 337
11.4 Empirical analysis......Page 345
11.5 Conclusions......Page 351
References......Page 354
12.1 Introduction......Page 357
12.2 The theoretical framework......Page 360
12.2.1 The Total Factor Productivity approach......Page 361
12.2.2 The production function approach......Page 362
12.2.3 The cost function approach......Page 363
12.3.1 Data sources and definitions......Page 364
12.3.2 Output, private inputs and TFP......Page 367
12.4.1 Results from growth accounting......Page 369
12.4.2 Results from the production function approach......Page 371
12.4.3 Results from the cost function approach......Page 374
12.4.4 Comparing the results......Page 375
12.4.5 Causality and sensitivity analysis......Page 376
12.5 Conclusions......Page 379
References......Page 381
Appendix A: The data......Page 383
Appendix B: Cobb‐Douglas cost function......Page 385
Appendix C: Generalised Leontief cost function......Page 387
13.1 Introduction......Page 389
13.2.2 Saving and investment......Page 390
13.2.3 Labour market......Page 392
13.2.4 Growth accounting......Page 393
13.2.5 Regional inequalities in the new Member States......Page 397
13.2.6 A simulation exercise......Page 398
13.3.1 Which economic principles?......Page 402
13.3.2 Which policy instruments?......Page 404
13.3.3 Which policies?......Page 405
13.3.4 Which jurisdiction?......Page 406
13.4 Conclusions......Page 407
References......Page 409
Index......Page 411