tag:blogger.com,1999:blog-222549152011-06-08T08:15:55.589+02:00This blog is intended to provide a platform for discussion on economic transition. The primary focus is on economic developments in Central and Eastern European Countries, yet the forum is also open to issues of economic transition in Asia.tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.comBlogger281100tag:blogger.com,1999:blog-22254915.post-25517555964500967052007-02-24T21:55:00.000+01:002007-02-24T22:26:39.513+01:00

Am extremely busy recently, hopefully I will manage to start posting a bit more often again…All four large CEECs that joined the EU in 2004, have had problems with fiscal deficits in excess of 3% GDP practically through their entire history of EU membership. They have seen the Commission Excessive Deficit Procedure applied and have in fact done hardly succeeded in reducing the deficits.Three of

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1168691390007188572007-01-13T13:16:00.000+01:002007-01-13T13:29:50.036+01:00

The Maastricht Update:Sources: Eurostat, ECB, EBRD Transition Report 2006 , Inflation 2006m11, Interest 2006m12, Exchange rate up to 12/01/2007. Check post for details.Note: * - currently not fulfilling MC; (a) Exchange rate criterion value calculated as maximum deviation (+ or -) of the daily exchange rate from reference value in the last two years. The reference value is in case of ERM II

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1164314107105266322006-11-23T21:25:00.000+01:002006-11-23T21:35:52.526+01:00

We decided to provide indication on how the CEECs perform according to the EMU entry criteria laid down in the Treaty of Maastricht which entered into force on 1/11/1993. The idea is the indicators to be regular (for instance monthly) – but lets see how it works ;)The Maastricht Criteria:Inflation – annual inflation (of CPI) rate no higher than the average inflation rate in 3 EU Member States

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com1tag:blogger.com,1999:blog-22254915.post-1164286459630245882006-11-23T13:44:00.000+01:002006-11-23T18:55:22.133+01:00

The issue of flat taxes in CEECs has been given wide attention, including posts on this blog (see Taxes – linear or not?), though (as we mentioned in the previously cited post) for a number of reasons the arguments in favor of “flat” taxes in the CEECs are rather anecdotal than backed with theoretical analysis or empirical facts.A September IMF working paper (IMF WP/06/218) by Keen, Kim and

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com1tag:blogger.com,1999:blog-22254915.post-1163691393714473232006-11-16T15:10:00.000+01:002006-11-16T16:36:33.730+01:00

Today, in light of the discussion on the possible emergence of a new trading platform ('Banks plan to rival European exchanges' in FT 15/11/2006 ) which caused some stir-up in the major European exchanges, I would like to turn to smaller, regional equity markets, whose members will probably not be, at least primarily, of major interest for the founders of the above projects. To initiate a series

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1161801133790395552006-10-25T20:23:00.000+02:002006-10-25T20:32:13.806+02:00

As the EU is currently still celebrating the year 2006 as the European Year of Workers’ Mobility it may be a good idea to review what restrictions on intra-EU mobility still apply towards the CE-8, and how this celebration is reflected in declarations on the opening up of the labor markets towards the 2007 two candidates – Bulgaria and Romania.Upon the previous (1/May/2004) enlargement of the EU,

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1159727396422094292006-10-01T20:24:00.000+02:002006-10-04T12:47:43.256+02:00

Last week (26th of September) the European Commission gave a green light to the 2007 enlargement which will encompass the two South-East European states. This followed a discussion on the suitability of the countries in question, be it on grounds of relative poverty, the state of economic and political reforms or on the issue of fighting organized crime. Bulgaria was the one to create most

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1158748744867648862006-09-20T12:12:00.000+02:002006-09-21T10:00:47.296+02:00

In the past months, many voices have raised the fact of unsustainability of the twin deficits troubling Hungary. Among others, we expressed preoccupation about the build up of the fiscal and current account deficits (fiscal deficit for the year was recently predicted to exceed 10% of GDP, for an overview of the developments see: Hungary - heading for trouble? , Hungary - continuing to head for

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1158315751149619822006-09-15T12:12:00.000+02:002006-09-15T20:32:20.163+02:00

Recent declarations show that the enthusiasm among the NMS about early euro membership is fading. Before EU entry most countries declared they would like to join “asap”, and most seemed committed to doing so – but recent developments show that it will take much longer before they adopt the European common currency. We reviewed the exchange rate regimes in the NMS some time ago (to be found here),

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1158065862588382842006-09-12T14:53:00.000+02:002006-09-12T14:57:42.603+02:00

Finally, back – but this time no numbers, just a loose comment. I recently came across a WB report on corruption (or rather anticorruption) in transition economies which certainly deserves some attention.The problem of corruption is well present in policy debates by now. It is named as one of the most serious obstacles to the development in transition economies, and generally developing

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1153240400534101022006-07-18T18:29:00.000+02:002006-07-18T18:35:04.953+02:00

An article in todays FT (18/07/06, Hungary’s new tax rises go against the east European trend” by Christopher Condon) raises preoccupation about the proposed tax increases citing various voices that it have a negative effect on FDI inflows.However, if we look at the situation closer – a serious decrease in FDI because of the recent rise in corporate profit tax from 16% to 20% seems rather

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com1tag:blogger.com,1999:blog-22254915.post-1151935533329937762006-07-03T15:23:00.000+02:002006-09-15T20:39:39.030+02:00

There seems to be a recent rise in preoccupation about the large twin deficits in Hungary. The voices include last month’s IMF report(6th of June )and today’s FT commentary by W.Munchau. Is the situation really so serious?Figure 1. Hungarian forint against euro(left scale, red) and BUX stock market index (right scale, blue) in 2006. Dates marked by vertical lines(see text for more details) (19

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1151852454674833532006-07-02T16:57:00.000+02:002006-07-02T17:04:56.873+02:00

Today just a graph and small facts – but a discussion will come…Figure 1. Stock market indices (PX – Prague; BUX – Budapest, WIG – Warsaw + FTSE London and DJ-US), all shares, home cur. index rescaled for last session in 2001 =100, dates 1994-2006.Source: DataStreamAmid the recent falls in the three main stock markets of the NMS (Budapest, Prague and Warsaw) we can see that these markets co-move

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1150804997735750802006-06-20T14:01:00.000+02:002006-06-20T14:03:17.760+02:00

The question is related to the previous post. The most striking issue about the composition of household credit in CEECs is that while currently consumer credit is at a comparable level to the Eurozone (5% of GDP on average in “New Europe” i.e. 8 NMS + Bulgaria, Romania, Croatia and Turkey, as compared to 7% of GDP of EMU average in 2004, Coricelli et al.) mortgage lending, despite quadrupling

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1150800365046807772006-06-20T12:40:00.000+02:002006-06-20T12:46:05.060+02:00

I have just recently participated in a conference where a session was devoted to credit in developing markets - 4 papers on potential credit booms in CEECs (details and all 4 papers downloadable here) were presented. Generally the issue seems a relatively ‘hot topic’ though the scope for substantial research is limited both by the quality of data and the high degree of uncertainty of the tools

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1148831771395427162006-05-28T17:50:00.000+02:002006-10-02T20:26:25.246+02:00

Again, just some data and graphs - comments and a discussion should follow at some point.Figure 1. Developments in yearly real GDP, (1989=100), 1989-2005.Source: Groningen Growth and Development Centre . Note: colors represent from top to bottom(according to 2005 value): Green - old EU (Spain, UK, France, Germany, Italy), yellow - CEEC-5 (Poland, Slovakia, Slovenia, Hungary, Czech R.), red -

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com1tag:blogger.com,1999:blog-22254915.post-1147034483052958922006-05-07T22:37:00.000+02:002006-05-08T10:03:12.870+02:00

And so, a comment sparked by your comment:Yes, inflation targeting has proven relatively successful in the CEECs, but the success has been more in bringing down inflation, than in allowing the countries to adopt the euro.So, in my opinion the fixed exchange rate arrangements of the Baltics need not be condemned. Sure, if we take as the main criteria the goal to enter the EMU asap after entering

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1146591075641642792006-05-02T19:23:00.000+02:002006-05-02T19:31:54.676+02:00

I will reflect on the posting of different exchange rate regimes in the CEECs. In the literature, the exchange rate regime is a mirror image of the monetary regime since central banks can either try to control the exchange rate or inflation, but not both at the same time.In the late nineties inflation targeting monetary regime was adopted explicitly in three new European Union countries: the

Dejan Krusechttp://www.blogger.com/profile/08307186086150419871noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1146248627920581782006-04-28T20:03:00.000+02:002006-05-28T15:28:30.080+02:00

Today not many comments, but just some facts about exchange rate regimes in selected transition economies. A more extensive comment should arrive at some point.Generally, the TEs embarked on a whole variety of routes in terms of exchange rate regimes – from full floats to currency boards. Moreover, as some maintained the same regime since early 1990s, some went through gradual regime changes, and

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1145623735348510092006-04-21T14:35:00.000+02:002006-04-21T14:48:55.373+02:00

A recent declaration from the governor of the National Bank of Hungary (NBH) on the forint being in “serious danger”(FT 20/04/2006) initiated some discussion on the situation in the Central European state. Although the timing of the statement sparked accusations of political interference of the governor, yet is hard to contest its sheer content. Additionally, The Economist of April 15th (“Lynx

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1144427698479521482006-04-07T18:23:00.000+02:002006-04-09T13:54:44.426+02:00

The hot debate on opening up of labor markets of “old” EU states has much more angles than in traditionally perceived. Feared by the West and most desired by the East, it seems to be of important magnitude: in the UK, there are 350 thousand legal workers from the NMS, ( Commission Report ) of which most relatively young (80% under the age of 34, 44% under the age of 24), with another 100 thousand

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com1tag:blogger.com,1999:blog-22254915.post-1143224953257455082006-03-24T18:05:00.000+01:002006-11-23T14:11:50.026+01:00

The “linear” or “flat” tax was often referred to as a theoretical concept, but seems to be an appealing notion in some of the emerging markets of CEE. There, pioneered in the mid 1990s by Estonia and subsequently the rest of the Balitcs, it has been (in various mutations) accepted by 9 countries and sparks discussion in several others.So what is it that is so appealing about the idea of taxing

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1142261021592583252006-03-13T15:08:00.000+01:002006-03-15T10:05:21.353+01:00

George Parker and Ralph Atkins in FT (13/06/2006, “Lithuania set to become victim of tough EU single currency stance”) confirm the determination of the Baltic State to join the single currency – its central bank is expected to apply for euro membership amid warnings that its application will be rejected. Joaquim Alumnia the EU monetary affairs commissioner warned against the “unpleasantness” of

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1142252621242824042006-03-13T13:14:00.000+01:002006-03-13T13:23:41.373+01:00

The enlargement of the EU entailed serious obstacles to the access to labor markets of the western EU states for workers from CEECs. On the date of entry, only three “old” EU states (U.K., Ireland and Sweden) decided to open-up their labor markets to citizens from new EU members. Other countries, Germany and Austria among the ones with a toughest stance, proposed different “transition” periods

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com2tag:blogger.com,1999:blog-22254915.post-1141839193619940722006-03-08T18:31:00.000+01:002006-03-08T18:33:13.620+01:00

Well, I finally found the mentioned article (FT 30/01/06 p.15 “Monetary union is not for the poor”). The author, W. Munchau, contributes to the discussion on whether Estonia and Lithuania should join the euro, raising the point that the inflation criteria, which the two countries recently do not fulfill, may be used as a neat tool to prohibit (or actually post-pone, though indefinitely) their

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1141382222781452552006-03-03T11:35:00.000+01:002006-03-03T11:37:02.800+01:00

The front page of today’s FT (3/03/06), reports that the tax commissioner of the EU is to press ahead with the plans of tax base harmonization in Europe. Additionally, there are plans of introducing a tax to fund the EU budget.As for the first case, the discussion about harmonizing the corporate tax base and tax rates has a fairly long history, possibly almost as long as the EU itself. Once in a

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com0tag:blogger.com,1999:blog-22254915.post-1140979813551720742006-02-26T19:46:00.000+01:002006-03-08T19:50:25.706+01:00

Dejan - just some follow-ups from my side on your post:As for this article its part of a more broad discussion of whether the NMS are suitable for euro adoption. The issue that immediately springs to my mind is the discussion of whether the Maastricht criteria (MC) can fulfill their original task of assessing this. I am quite surprised that this discussion does not focus upon the relevance of the

tomasz kozlukhttp://www.blogger.com/profile/03119497429401043385noreply@blogger.com1tag:blogger.com,1999:blog-22254915.post-1140359020182965722006-02-19T15:22:00.000+01:002006-02-19T17:54:07.466+01:00

The recent article in Financial Times (17th of February, 2006) deals with the possible delay of Lithuania and Estonia to join the (European Monetary Union) EMU on the January 1st 2006. Lithuania is likely going to overshoot the Maastricht's inflation criterion of 2.8% in October's European Commision (EC) Convergence report - delayed from July. This is highly unfortunate for its fragile economy,

Dejan Krusechttp://www.blogger.com/profile/08307186086150419871noreply@blogger.com0