95 research outputs found
International financial competitiveness and incentives to foreign direct investment
In this paper an index of financial competitiveness is calculated that corresponds to the market-to-book ratio of inward FDI stocks. For a panel of five advanced economies from 1980 to 2006 it is shown that price competitiveness, stable inflation rates and registered patents have a positive impact on the index. Institutional factors like EMU membership or Anglo-Saxon legislation also play a role. Financial competitiveness in turn encourages FDI inflows whereas it benefits fixed investment relative to M&A. There is also some evidence that an innovative environment accelerates investment decisions by promoting competition among investors. --Competitiveness,foreign direct investment,international integration
Trade balances of the central and east European EU member states and the role of foreign direct investment
Given the large trade and current account deficits in some of the new EU member states the development of their external economic situation plays a role in assessing their aptitude to enter the European Monetary Union. The empirical analysis with aggregated data indicates that in the eight central and east European EU member states FDI and trade are complementary. This result is confirmed by an FDI enhanced gravity model which makes use of sectoral data provided by the Bundesbank's micro database direct investment (MIDI). The net effect of FDI on the trade balance is ambiguous, but FDI in high-tech industries clearly stimulates exports more than imports. Technological spill-over and the conglomeration of human capital seem to be important factors for the export performance. Against this background the prospects for the Czech Republic, Hungary, Slovenia and the Slovak Republic look more favourable compared to the Baltic states. --foreign direct investment,trade balance,gravity model
The international integration of money markets in the central and east European accession countries: deviations from covered interest parity, capital controls and inefficiencies in the financial sector
Based on the concept of covered interest parity it is shown that the money markets in Poland, the Czech Republic, Hungary, and the Slovak Republic meanwhile display a high degree of international integration with the euro area. Integration has strengthened continuously in the review period of 1999 to mid 2002. The segmentation that could still be observed stems from both restrictions on the short-term movement of capital and the limited development of the financial sectors in the four accession countries. While almost all capital controls have since been removed and will no longer play a role after accession to the EU, the implementation and transmission of the single monetary policy within the Eurosystem will possibly be impeded, if the financial sectors in CEE are then still underdeveloped. -- Basierend auf dem Konzept der gedeckten ZinsparitĂ€t wird gezeigt, dass die GeldmĂ€rkte in Polen, der Tschechischen Republik, Ungarn und der Slowakei inzwischen einen hohen Grad an internationaler Integration mit dem Euro-Raum aufweisen. Die Integration hat sich im Untersuchungszeitraum von 1999 bis Mitte 2002 kontinuierlich verstĂ€rkt. FĂŒr die noch zu beobachtende Segmentierung sind sowohl BeschrĂ€nkungen des kurzfristigen Kapitalverkehrs als auch die geringe Entwicklung der Finanzsektoren in den BeitrittslĂ€ndern verantwortlich. WĂ€hrend Kapitalverkehrskontrollen inzwischen fast vollstĂ€ndig abgebaut sind und nach einem EU-Beitritt keine Rolle mehr spielen werden, könnte innerhalb des Eurosystems die Implementierung und Transmission der gemeinsamen Geldpolitik beeintrĂ€chtigt werden, wenn die Finanzsektoren in Mittel- und Osteuropa noch unterentwickelt sind.
Determinants of current account developments in the central and east European EU member states - consequences for the enlargement of the euro area
The current accounts of most EU member states in central and eastern Europe have been showing growing deficits in recent years. According to panel estimates the deficits can be attributed primarily to factors characteristic for the stage of development, ie the relative income level and high capital building. The positive impact of a closing income gap, however, is largely compensated by real appreciation. The net effect of government budget deficits is rather small, since they are mostly financed by private saving. Further integration of the financial sector is likely to improve the current accounts. Although the current account positions do not require fundamental policy reversals, there are clear risks of exchange rate adjustments that should be reduced before entering the euro area. --current account,new EU member countries,catching-up process
WĂ€hrungspolitische Interdependenz der EU-Beitrittskandidaten und die Wahl eines geeigneten Wechselkurssystems: Beitrag fĂŒr den Projektbericht: WĂ€hrungspolitische Optionen fĂŒr die mittel- und osteuropĂ€ischen Beitrittskandidaten zur EU
Der vorliegende Diskussionsbeitrag entstand im Rahmen eines Forschungsprojektes ĂŒber die monetĂ€re Integration von fĂŒnf mittel- und osteuropĂ€ischen EU-Beitrittskandidaten (Polen, Tschechische Republik, Ungarn, Slowenien und Estland). Das hier vorgestellte Kapitel geht auf die wĂ€hrungspolitischen Interdependenzen in der Region ein und zieht daraus SchlĂŒsse fĂŒr ein geeignetes Wechselkurssystem der genannten LĂ€nder. Dabei erweisen sich die WechselkurselastizitĂ€ten des Sozialproduktes, die Korrelation exogener Schocks und die PrioritĂ€t monetĂ€rer bzw. realer Ziele als die entscheidenden Variablen. In der gegenwĂ€rtigen Situation ĂŒberwiegen die Nachteile fester Wechselkurse, die aus einer verminderten ReaktionsfĂ€higkeit auf exogene Schocks beruhen, die Vorteile einer verringerten WechselkursvolatilitĂ€t. Der intensive Wettbewerb innerhalb Mittel- und Osteuropas (MOE) um Exporte in die EU und eine wachsende Bedeutung stabiler Wechselkurse gegenĂŒber dem Euro könnten in der Zukunft allerdings einen gemeinsamen Ăbergang zu festen Wechselkursen sinnvoll erscheinen lassen. Gleichwohl bleibt ein generelles Fixkursregime einer wĂ€hrungspolitischen Koordination, etwa in Gestalt einer Schlange im Tunnel, in jedem Fall unterlegen. -- This paper is part of a research project on monetary integration of five EU-accession candidates (Poland, Czech Republic, Hungary, Slovenia and Estonia). The chapter presented here focuses on monetary policy interdependencies in the region and draws some conclusions on the adequate exchange rate regimes in Central and Eastern Europe (CEE). The exchange rate elasticities of output, the correlation of exogenous shocks and the priority of monetary or real targets turn out to be the decisive variables. At the present, the social costs of fixed exchange rates due to a reduced absorption of exogenous shocks outweigh the possible gains, which result from reduced exchange rate volatility. However, the strong competition of the selected countries for exports in the EU and a rising importance of stable exchange rates vis-Ă -vis the Euro may give an argument for a common switch to fixed exchange rates in the future. Nevertheless, it is argued that fixed exchange rates will always be inferior to monetary coordination in CEE, e.g. in the form of a snake in the tunnel.EWU,TransformationslĂ€nder,Wechselkurspolitik,Spieltheorie,EMU,Economies in Transition,Exchange Rate Policy,Game Theory
Timing and sequenzing der monetÀren Integration
Der vorliegende Diskussionsbeitrag entstand im Rahmen eines Forschungsprojektes ĂŒber die monetĂ€re Integration von fĂŒnf mittel- und osteuropĂ€ischen EU-Beitrittskandidaten (Estland, Polen, Slowenien, Tschechische Republik und Ungarn). WĂ€hrend die vorangegangenen Kapitel des Projekts die Vor- und Nachteile verschiedener Wechselkursregime fĂŒr die Ăbergangsphase vor einer Teilnahme an der EuropĂ€ischen WĂ€hrungsunion herausarbeiteten, befaĂt sich der vorliegende Beitrag mit dem Timing und Sequencing der monetĂ€ren Integration. Er kommt zu dem SchluĂ, daĂ eine Wechselkurskooperation erst nach einer kurzen Phase völlig flexibler Wechselkurse empfehlenswert ist. Mit dem Beginn ihrer EU-Mitgliedschaft sollten die fĂŒnf LĂ€nder auch dem EWS II beitreten, untereinander allerdings engere Bandbreiten einhalten als gegenĂŒber dem Euro. Eine Mitgliedschaft in der EuropĂ€ischen WĂ€hrungsunion wird gemÀà den Bestimmungen des EG-Vertrags frĂŒhestens nach zweijĂ€hriger BewĂ€hrung im EuropĂ€ischen Wechselkursmechanismus möglich sein, also voraussichtlich nicht vor 2005. -- This paper is part of a research project on monetary integration of five EU-accession candidates (Czech Republic, Estonia, Hungary, Poland and Slovenia). While the preceding chapters of the project have focused on the pros and cons of different exchange rate regimes for the transition phase before CEE countries may become member of the European Monetary Union, this paper deals with the Timing and Sequencing of monetary integration. It comes to the conclusion that an exchange rate co-operation should only start after a short period of fully flexible exchange rates and that the snake of five (or four) CEE-currencies should enter the EMS-tunnel at the same time as EUmembership is achieved. According to the rules of the EC-Treaty an accession to the Euro-area will only be possible after two years of successful EMS-membership, i.e. not before 2005.EWU,TransformationslĂ€nder,Wechselkurspolitik,EMU,Economies in Transition,Exchange Rate Policy
What impact do global factors have on stock market movements in emerging market economies? A Short Note
[Conclusion] It is being increasingly held in the literature that, in a globalizing world, flexible exchange rates are no longer enough to insulate an economy against external shocks. Our empirical results corroborate the observation that, in the past few years, global factors have had a crucial impact on domestic financial market prices and that it is becoming increasingly difficult for EMEs to find shelter. Global liquidity, in particular, has been the dominant element of the evolution of financial markets in the emerging economies. What this means with respect to possible policy recommendations to EMEs on how they can best protect themselves from the adverse impact of volatile international capital flows is that neither flexible nor fixed exchange rates are capable of sheltering domestic financial markets from foreign shocks and of stabilizing the valuation of domestic financial instruments. What appear more promising are efforts to exploit the advantages of financial integration while at the same time taking precautions to ensure that external shocks can be absorbed by a sound financial sector with high standards of safety. In this connection, too, a stable macroeconomic environment can also help prevent temporary disruptions from becoming a full-blown hazard to macroeconomic stability
The international integration of foreign exchange markets in the central and east European accession countries: speculative efficiency, transaction costs and exchange rate premiums
A test of speculative efficiency on the foreign exchange markets of Poland, the Czech Republic, Hungary and the Slovak republic was unable to identify a cointegration relationship between forward and spot rates against the euro for the period between 1999 and mid-2002. Econometric studies confirm the existence of a time-variable exchange rate premium in all of the above countries. However, information and transaction costs also appear to be responsible for the observed deviations from speculative efficiency. The segmentation of the foreign exchange markets is likely to hamper the coordination of national monetary and foreign exchange policies within ERM II. In addition, this segmentation increases uncertainty in setting the central rate against the euro. -- Im Rahmen eines Tests der spekulativen Effizienz auf den DevisenmĂ€rkten Polens, der Tschechischen Repubik, Ungarns und der Slowakei kann fĂŒr den Beobachtungszeitraum von 1999 bis Mitte 2002 keine Kointegrationsbeziehung zwischen Termin- und Kassakursen gegenĂŒber dem Euro nachgewiesen werden. Ăkonometrische Untersuchungen bestĂ€tigen die Existenz einer zeitvariablen WechselkursprĂ€mie in allen genannten LĂ€ndern. DarĂŒber hinaus scheinen aber auch Informations- und Transaktionskosten verantwortlich zu sein fĂŒr die beobachteten Abweichungen von der spekulativen Effizienz. Die Segmentierung der DevisenmĂ€rkte dĂŒrfte die Koordinierung der nationalen Geld- und WĂ€hrungspolitiken innerhalb des WKM II erschweren. ZusĂ€tzlich erhöht sie die Unsicherheit bei der Festlegung des Leitkurses gegenĂŒber dem Euro.
Die internationale Integration der GeldmÀrkte in den mittel- und osteuropÀischen BeitrittslÀndern: Abweichungen von der gedeckten ZinsparitÀt, Kapitalverkehrskontrollen und Ineffizienzen des Finanzsektors
Based on the concept of covered interest parity it is shown that the money markets in Poland, the Czech Republic, Hungary, and the Slovak Republic meanwhile display a high degree of international integration with the euro area. Integration has strengthened continuously in the review period of 1999 to mid 2002. The segmentation that could still be observed stems from both restrictions on the short-term movement of capital and the limited development of the financial sectors in the four accession countries. While almost all capital controls have since been removed and will no longer play a role after accession to the EU, the implementation and transmission of the single monetary policy within the Eurosystem will possibly be impeded, if the financial sectors in CEE are then still underdeveloped. -- Basierend auf dem Konzept der gedeckten ZinsparitĂ€t wird gezeigt, dass die GeldmĂ€rkte in Polen, der Tschechischen Republik, Ungarn und der Slowakei inzwischen einen hohen Grad an internationaler Integration mit dem Euro-Raum aufweisen. Die Integration hat sich im Untersuchungszeitraum von 1999 bis Mitte 2002 kontinuierlich verstĂ€rkt. FĂŒr die noch zu beobachtende Segmentierung sind sowohl BeschrĂ€nkungen des kurzfristigen Kapitalverkehrs als auch die geringe Entwicklung der Finanzsektoren in den BeitrittslĂ€ndern verantwortlich. WĂ€hrend Kapitalverkehrskontrollen inzwischen fast vollstĂ€ndig abgebaut sind und nach einem EU-Beitritt keine Rolle mehr spielen werden, könnte innerhalb des Eurosystems die Implementierung und Transmission der gemeinsamen Geldpolitik beeintrĂ€chtigt werden, wenn die Finanzsektoren in Mittel- und Osteuropa noch unterentwickelt sind.
Die internationale Intregration der DevisenmÀrkte in den mittel- und osteuropÀischen BeitrittslÀndern: Spekulative Effizienz, Transaktionskosten und WechselkursprÀmien
Im Rahmen eines Tests der spekulativen Effizienz auf den DevisenmĂ€rkten Polens, der Tschechischen Repubik, Ungarns und der Slowakei kann fĂŒr den Beobachtungszeitraum von 1999 bis Mitte 2002 keine Kointegrationsbeziehung zwischen Termin- und Kassakursen gegenĂŒber dem Euro nachgewiesen werden. Ăkonometrische Untersuchungen bestĂ€tigen die Existenz einer zeitvariablen WechselkursprĂ€mie in allen genannten LĂ€ndern. DarĂŒber hinaus scheinen aber auch Informations- und Transaktionskosten verantwortlich zu sein fĂŒr die beobachteten Abweichungen von der spekulativen Effizienz. Die Segmentierung der DevisenmĂ€rkte dĂŒrfte die Koordinierung der nationalen Geld- und WĂ€hrungspolitiken innerhalb des WKM II erschweren. ZusĂ€tzlich erhöht sie die Unsicherheit bei der Festlegung des Leitkurses gegenĂŒber dem Euro. -- A test of speculative efficiency on the foreign exchange markets of Poland, the Czech Republic, Hungary and the Slovak republic was unable to identify a cointegration relationship between forward and spot rates against the euro for the period between 1999 and mid-2002. Econometric studies confirm the existence of a time-variable exchange rate premium in all of the above countries. However, information and transaction costs also appear to be responsible for the observed deviations from speculative efficiency. The segmentation of the foreign exchange markets is likely to hamper the coordination of national monetary and foreign exchange policies within ERM II. In addition, this segmentation increases uncertainty in setting the central rate against the euro.
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