Unrecorded capital flows and accumulation of foreign assets: the case of Croatia

This paper evaluates the magnitude of unrecorded capital flows and the resulting unrecorded accumulation of foreign assets for Croatia, over the period between 2000 and 2007. The problem of unrecorded capital outflows, often labeled as capital flight, has gained significance in the present global financial and economic crises, because of increasing capital scarcity in many emerging markets and transition economies including Croatia. The findings reveal relatively large amounts of unrecorded foreign asset accumulation over the observed period. A large portion of this accumulation relates to cumulative amounts of net errors and omissions term, which is interpreted as unrecorded capital flow. There are reasons to believe that this net errors and omissions item in Croatia possibly partly represents the unrecorded accumulation of foreign cash from foreign tourist spending, and/or partly results from overstated tourism income in the official statistics. However, even after excluding this item from the calculation of capital flight, the remaining unrecorded accumulation of foreign assets over the period is still substantial. Consequently, if these unrecorded flows are taken into account, Croatia’s net international investment position is improved

From a currency board to the euro: Public attitudes toward unilateral euroization in Bulgaria

Bulgaria has operated a currency board since 1997. It is expected to join the EU in 2007 and the EMU thereafter. This paper uses survey data to analyze public attitudes toward adoption of the euro in advance of EMU membership. Bulgarians are equally split in support for and opposition to euroization. The reasons to support euroization include the eliminated risk of currency devaluation and the perception that the euro is already widely used in the economy. The opposition derives from people’s attachment to the national currency and from concerns about the conversion costs involved in a switch to the euro.http://deepblue.lib.umich.edu/bitstream/2027.42/40122/3/wp736.pd

From research to farm : ex ante evaluation of strategic deworming in pig finishing

This paper upgrades generic and partial information from parasitological research for farm-specific decision support, using two methods from managerial sciences: partial budgeting and frontier analysis. The analysis focuses on strategic deworming in pig finishing and assesses both effects on economic performance and nutrient efficiency. The application of partial budgeting and frontier analysis is based on a production-theoretical system analysis which is necessary to integrate parasitological research results to assess aggregate economic and environmental impacts. Results show that both statistically significant and insignificant parasitological research results have to be taken into account. Partial budgeting and frontier analysis appear to be complementary methods: partial budgeting yields more discriminatory and communicative results, while frontier methods provide additional diagnostics through exploring optimization possibilities and economic-environmental trade-offs. Strategic deworming results in a win-win effect on economic and environmental performances. Gross margin increases with 3 to 12 € per average present finisher per year, depending on the cyclic pig price conditions. The impact on the nutrient balance ranges from +0.2 to –0.5 kg nitrogen per average present finisher per year. The observed efficiency improvements are mainly technical and further economic and environmental optimizations can be achieved through input re-allocation. A user-friendly spreadsheet is provided to translate the generic experimental information to farm-specific conditions

The Effect of Ambient Temperature on Cold Start Urban Traffic Emissions for a Real World SI Car

The influence of ambient temperature on exhaust emissions for an instrumented Euro 1 SI car was determined. A real world test cycle was used, based on an urban drive cycle that was similar to the ECE urban drive cycle. It was based on four laps of a street circuit and an emissions sample bag was taken for each lap. The bag for the first lap was for the cold start emissions. An in-vehicle direct exhaust dual bag sampling technique was used to simultaneously collect exhaust samples upstream and downstream of the three-way catalyst (TWC). The cold start tests were conducted over a year, with ambient temperatures ranging from – 2°C to 32°C. The exhaust system was instrumented with thermocouples so that the catalyst light off temperature could be determined. The results showed that CO emissions for the cold start were reduced by a factor of 8 downstream of catalyst when ambient temperature rose from -2°C to 32°C, the corresponding hydrocarbon emissions were reduced by a factor of 4. There was no clear relationship between NOx emissions and ambient temperature. For subsequent laps of the test circuit the reduction of CO and HC emissions as a function of ambient temperature was lower. The time for catalyst light off increased by 50% as the ambient temperature was reduced. The results show that the vehicle used is unlikely to meet the new – 7oC cold start CO emission regulations

The effect of ambient temperature on cold start urban traffic emissions for a real world SI car

The influence of ambient temperature on exhaust emissions for an instrumented Euro 1 SI car was determined. A real world test cycle was used, based on an urban drive cycle that was similar to the ECE urban drive cycle. It was based on four laps of a street circuit and an emissions sample bag was taken for each lap. The bag for the first lap was for the cold start emissions. An in-vehicle direct exhaust dual bag sampling technique was used to simultaneously collect exhaust samples upstream and downstream of the three-way catalyst (TWC). The cold start tests were conducted over a year, with ambient temperatures ranging from – 2°C to 32°C. The exhaust system was instrumented with thermocouples so that the catalyst light off temperature could be determined. The results showed that CO emissions for the cold start were reduced by a factor of 8 downstream of catalyst when ambient temperature rose from -2°C to 32°C, the corresponding hydrocarbon emissions were reduced by a factor of 4. There was no clear relationship between NOx emissions and ambient temperature. For subsequent laps of the test circuit the reduction of CO and HC emissions as a function of ambient temperature was lower. The time for catalyst light off increased by 50% as the ambient temperature was reduced. The results show that the vehicle used is unlikely to meet the new – 7oC cold start CO emission regulations

Implications of ERM2 for Poland’s Monetary Policy

This study proposes an extension to the inflation targeting framework for Poland that takes into consideration the exchange rate stability constraints imposed by the obligatory participation in the ERM2 on the path to the euro. The modified policy framework is based on targeting the differential between the domestic and the implicit euro area inflation forecasts. The exchange rate stability objective enters the central bank reaction function and is treated as an indicator variable. Adjustments of interest rates respond to changes in the relative inflation forecast, while foreign exchange market intervention is applied for the purpose of stabilizing the exchange rate. The dynamic market equilibrium exchange rate is ascertained by employing the Johanssen cointegration tests and the threshold generalized autoregressive heteroscedasticity model with the in-mean extension and generalized error distribution (TGARCH-M-GED).http://deepblue.lib.umich.edu/bitstream/2027.42/40188/3/wp802.pd

Rational inattention, inflation developments and perceptions after the euro cash changeover

This paper uses the euro cash changeover to test theories of finite informationprocessing capacities on the side of consumers. It argues that the denomination of prices in a new currency has increased the information-processing requirements for consumers by more than for sellers, a wedge that can lead to price increases. The size of the wedge should depend on the complexity of the currency conversion rates. In line with this theory, the paper finds that the evolution of prices for food products around the cash changeover varied across countries, depending on the complexity of conversion rates. These changeover effects are found in particular for goods with prices below one euro sold in mid-priced stores. The paper also finds that cross-country differences in the mismatch of perceived and actual inflation in the aftermath of the cash changeover are linked to differences in the complexity of conversion rates. JEL Classification: D84, E31, E58, L11euro cash changeover, perceived inflation, rational inattention

The Effects of euro Adoption on the Slovak Economy

In this study we assess the effects of euro adoption from an economic perspective. The benefits and disadvantages of Slovak entry to the euro area were discussed already when the euro adoption strategy was adopted. This analysis utilizes the latest information, using the set euro adoption date and the chosen euro adoption scenario. We attempt to quantify the most important effects, so that the costs and benefits can be compared. The costs and risks related to the euro area entry will depend on economic conditions and policies. Therefore we analyze the economic policies, which should support euro adoption, the issues of optimal timing of euro area entry and the impacts of euro adoption on citizens, businesses and the state administration.