The components of the real exchange rate in Hungary

This paper provides a statistical analysis of the components of real exchange rate in Hungary for the period 1991-1996. The real exchange rate is decomposed into a tradable and a nontradable rate. The following main conclusions are valid: 1. The Balassa-Samuelson effect, which presumes a real appreciation when productivity in the tradable sector grows faster than in the nontradable sector, is markedly substantiated by the data for Hungary. 2. The homogeneity assumption of the traded sector is not justified by the data. The traded sector defined by the usual statistical terms does not indicate PPP to hold. 3. The relative (common currency) price of the traded sector shows fluctuations driven by changes in the nominal exchange rate. 4. Fluctuations in the relative (common currency) price of the traded sector are larger than fluctuations of relative prices of nontradables in terms of tradables. In other words prices of the traded and non-traded sectors behave similarly to nominal exchange rate shocks: they have similar inertia. 5. A summary conclusion comprising findings of 1-4: for Hungarian data the definition of statistical categories of trading and non-trading sectors are useful in separating industries according to their rate of technological change, but it is much less helpful in separating good substitutes from poor substitutes for internationally traded goods. In section 1 we describe the way we decomposed the real exchange rate. In section 2 we try to explain the determinants of the components, in section 3 we try to arrive to a quantification of the rate of change of the equilibrium real exchange rate in Hungary.

Historical structure of the human and rodent periodontium

Adult human dental tissue and young rat jaws with developing teeth were investigated. The tissues were fixed by immersion in 4% buffered paraformaldehyde. Decalcified tissues were embedded into paraffin or sectioned on a freezing microtome. Paraffin sections were stained with hematoxylin and eosin. Frozen sections were stained with calcitonin generelated peptide (CGRP) antibodies using avidin-biotin systems and peroxidase labelling. The histology of the acellular cement and the histology of the periodontal ligament were analyzed and the course of the Sharpey-fibers and the epithelial rests of Malassez were described in human samples. The epithelial sheath of Hertwig in developing rat maxillae and mandibles (postnatal days 1-11) were depicted. The layers of the Hertwig-sheath were described. We observed the numerical increase of CGRP-stained nerve fibers during these postnatal days. The CGRP-stained nerve fibers appeared before the development of the dental root indicating the presence of growth factors which guide the sensory axons. We hypothesize that the epithelial sheath of Hertwig plays essential role in the development of cementoblasts, periodontal fibroblasts and alveolar osteoblasts. Furthermore, the growth factors secreted by the Hertwig-sheath may stimulate the axonal growth, too

CEC5: On The Estimated Size of the Balassa-Samuelson Effect in CEC5 Countries

In this paper we try to give a summary on the importance of the productivity based real appreciation e.g. the Balassa-Samuelson (BS) effect in five Central and Eastern European (CEC5) countries, namely the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia. We develop our approach from two directions. Firstly, we try to apply a common simple analytical framework for producing some stylised facts, and obtaining a “guesstimate” of relative price movements due to different sectoral productivity growth rates. Secondly, we try to summarise the econometric evidence available for the countries, both from individual country and panel estimates. It seems clear from the analyses, that both approaches gives a size of the BS effect not exceeding 2% per annum on CPI inflation vis-à-vis Germany. The numbers obtained are somewhat different, that one would conclude from the change in relative prices in the countries considered. This result might be explained by the fact, that the BS hypotheses did not hold exactly in the past, other factors like change in the sectoral wage rates, pricing behaviour and indermediate product prices also contributed to the behaviour of the nontradable and tradable price ratio. As these estimates are based on past data, when productivity differentials were higher than current figures, it is very likely, that as the catch-up goes by, the possible magnitude of the effect will be even smaller. From this one might conclude that real convergence should not necessary danger the fulfilment of the Maastricht Treaty Criteria on inflation.

How Far has Trade Integration Advanced? An analysis of actual and potential trade of three Central and Eastern European countries

This paper investigates the trade integration of three Central and Eastern European countries, namely the Czech Republic, Hungary and Poland, using the gravity model for trade as an analytical device. Beside the usual variables in such a model, we have also incorporated the FDI variables. According to our results, in the context of the most important Western European relations, it is Hungary that achieved the highest level of integration. Czech exports have also integrated, but there is still a very considerable potential there. Poland has integrated in exports to a much smaller extent than in imports. CEFTA-oriented trade has also gone up considerably, although the level of actual trade has not yet reached its full potential, except in the Czech Republic. Vis-a-vis South-East Asia, we have found overintegration for imports, but could see no signs of convergence for export towards this region. Our estimates support the trade-enhancing role of bilateral FDI. Paradoxically, the potential trade of the three countries estimated with FDI variables appears to be less than that suggested by the basic setup of the gravity model. We formulated two hypotheses to explain this, and supported one by a probit model. Finally, we tested for convergence and found that actual data indeed converged toward the estimated trade potential.

Cellular distribution of B-raf protein kinase in the brainstem of the adult rat. A fluorescent immunohistochemical study

The Raf-kinases can be activated by growth factors, cytokines and neurotransmitters. Previous studies in our laboratory proved the presence of Raf proteins in the neurons and astrocytes of the forebrain. The present study investigated the localization of B-Raf protein in the brain stem of the rat. Use was made of polyclonal anti-B-Raf serum which detected B-Raf molecules in our Western blotting experiments. Monoclonal tyrosine hydroxylase and dopamine-G-hydroxylase antibodies were used to identify catecholaminergic brainstem nuclei and to study the co-localization of B-raf protein in them. We found the widespread distribution of B-raf-protein-like immunoreactivity in every segment of the brainstem. Mainly neurons were stained, but weakly immunoreactive glia-like cells were observed, too. Strongest staining was detected in the motor cranial nerve nuclei, the giant neurons of the reticular formation and in the raphe nuclei. The catecholaminergic structures displayed medium-to-weak B-raf-like immunoreactivity. The neurons of the locus ceruleus and the substantia nigra stood out with a conspicuous B-raf-like immunoreactivity. The B-raf protein was localized in the perinuclear cytoplasm and in thick, dendrite-like processes. The ubiquity of 3-raf kinase suggests its important contribution to the regulation of the normal cell cycle in these neurons

Determinants of Real Exchange Rate Fluctuations in Hungary

This paper investigates the different sources of real exchange rate fluctuations in Hungary. We consider the effect of tradable pricing behavior and nominal rigidities in tradable real-exchange rate movements, and investigate the importance of relative productivity changes between the tradable and nontradable sector in relative price (nontradable/tradable) adjustments. We formulate a policy reaction function to separate the effect of tradable pricing shocks from policy shocks. The framework we use is a two sector open economy real exchange rate model. Its contemporaneous structure is used for the identification of structural shocks. Since the effect of policy shocks on tradable real exchange rate was not significant, our results suggest that nominal rigidities did not play an important role during the period under consideration. The evolution of nontradable prices and relative (nontradable/tradable) prices were well explained by nontradable output shocks. Thus, the Balassa-Samuelson-effect seems to have been at work in Hungary during the first eight years of transition.

Hungary in the NIGEM model

This paper presents a nationwide economy model for Hungary used by the National Bank of Hungary for analyzing the effects of world shocks, for quarterly forecasting exercises and other policy simulations. The study has two main goals: Firstly, we present the model for the Hungarian economy, developed in collaboration between the National Bank of Hungary and the National Institute of Economic and Social Research. The model is a one-sector aggregate economy model with a theoretically consistent supply side. A particular role is given to foreign direct investments in explaining the sources of growth both in the production process and foreign trade. Secondly, there is a brief discussion of the National Institute’s Global Econometric Model (NIGEM), to which the Hungarian model is linked. In this setup, we are also able to analyze the effect of world shocks on the domestic economy. For testing model properties, we present policy simulations for various shocks. A case study on the effect of the Russian crisis on Hungary is also discussed for the purpose of testing parameter adequacy.