The End of Moderate Inflation in Three Transition Economies?

This paper examines the moderation of inflation in three transition economies, the Czech Republic, Hungary and Poland at the end of the 1990s. We argue that the institutions for the conduct of monetary policy in these countries were relatively weak and that monetary policy was unsupported by fiscal policy and hampered by multiple objectives. Using a VAR model of inflation, we show that, under a variety of assumptions, foreign prices and the persistence of inflation were the key determinants of inflation in these countries. From this finding we conclude that the moderation of inflation in the Czech Republic, Hungary and Poland was due largely to the decline in import prices from 1997 on, and thus it is likely be a temporary phenomenon.http://deepblue.lib.umich.edu/bitstream/2027.42/39817/3/wp433.pd

Balkan and Mediterranean Candidates for European Union Membership: The Convergence of their Monetary Policy with that of the European Central Bank

We compare the convergence with German monetary policy of the Balkan and Mediterranean country candidates for EU membership with that of countries that have recently joined the EU. Significant linkages exist between German base money stock and that of recent members of the EU; the same holds true for some of the Mediterranean region candidates for EU membership and for Slovenia and Croatia. Among the other Balkan economies and Turkey, the ability to follow the policies of the Bundesbank is nonexistent. Such weak policy coordination suggests the need for strengthening the financial sectors of these countries, for macroeconomic stabilization and for a period in which they tie their policies more closely to the ECB before they can be considered serious candidates for EU membership.http://deepblue.lib.umich.edu/bitstream/2027.42/39840/3/wp456.pd

Balkan and Mediterranean candidates for European Union membership: The convergence of their monetary policy with that of the European Central Bank

We compare the convergence with German monetary policy of the Balkan and Mediterranean country candidates for EU membership with that of countries that have recently joined the EU. Significant linkages exist between German base money stock and that of recent members of the EU; the same holds true for some of the Mediterranean region candidates for EU membership and for Slovenia and Croatia. Among the other Balkan economies and Turkey, the ability to follow the policies of the Bundesbank is nonexistent. Such weak policy coordination suggests the need for strengthening the financial sectors of these countries, for macroeconomic stabilization and for a period in which they tie their policies more closely to the ECB before they can be considered serious candidates for EU membership. --convergence,economic integration,monetary policy,transition economies

The End of Moderate Inflation in Three Transition Economies?

This paper examines the moderation of inflation in three transition economies, the Czech Republic, Hungary and Poland at the end of the 1990s. We argue that the institutions for the conduct of monetary policy in these countries were relatively weak and that monetary policy was unsupported by fiscal policy and hampered by multiple objectives. Using a VAR model of inflation, we show that, under a variety of assumptions, foreign prices and the persistence of inflation were the key determinants of inflation in these countries. From this finding we conclude that the moderation of inflation in the Czech Republic, Hungary and Poland was due largely to the decline in import prices from 1997 on, and thus it is likely be a temporary phenomenon.monetary and fiscal policy, transition economies, moderate inflation and inflation targeting

The Effects of Transition and Political Instability On Foreign Direct Investment Inflows: Central Europe and the Balkans

This paper examines the effect of transition and of political instability on FDI flows to the transition economies of Central Europe, the Baltics and the Balkans. We find that FDI to transition economies unaffected by conflict and political instability exceed those that would be expected for comparable West European countries. Success with stabilization and reform tends to increase FDI inflows. In the case of Balkan counties, conflict and instability have reduced FDI inflows below what one would expect for comparable West European countries, and reform and stabilization failures have further reduced FDI to the region. Thus the economic costs of instability in the Balkans have been quite high.http://deepblue.lib.umich.edu/bitstream/2027.42/40115/3/wp729.pd

The evolution of monetary policy in transition economies

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The end of moderate inflation in three transition economies?

This paper examines the ending of moderate rates of inflation in three transition economies, the Czech Republic, Hungary and Poland at the end of 1998. We argue that the institutions for the conduct of monetary policy in these countries were relatively weak and that monetary policy was unsupported by fiscal policy and hampered by multiple objectives. Using a VAR model of inflation, we show that, under a variety of assumptions, foreign prices and the persistence of inflation are the key determinants of inflation in these countries. From this finding we conclude that the end of moderate inflation in the Czech Republic, Hungary and Poland was largely due to the decline in import prices in the second half of 1998, and thus it may be a temporary phenomenon. --Monetary and fiscal Policy,transition economies,moderate inflation,inflation targeting

The convergence of monetary policy between candidate countries and the European Union

We compare the convergence with German monetary policy of the monetary policy of transitioneconomy candidates for EU membership, of non-transition candidates and of countries that have recently joined the EU. We find significant long- and short-run linkages between German base money stock and that of the most recent members of the EU; the same holds true for the nontransition economy candidates. Among the transition economies, the ability to follow the policies of the Bundesbank is weaker or, for some countries, nonexistent. Such weak policy coordination may reflect the need for building up the financial sectors of these countries and allowing for a period in which they tie their policies more closely to that of the ECB. --

Real and Monetary Convergence within the European Union and Between the European Union and Candidate Countries: A Rolling Cointegration Approach

We use rolling cointegration to measure the convergence of base money, M2, the consumer price index and industrial output between two reference countries, Germany and France, and recent EU members and some transition economy candidates. Counties that recently joined the EU exhibit time-varying cointegration with the reference countries over much of the 1980-2000 sample period. Cointegration for the transition economies was comparable for M2 and prices, but less so for monetary policy and industrial output. This suggests that a peg to the Euro upon accession is feasible for the East European candidates, but the benefits of joining the Euro zone are as yet limited.http://deepblue.lib.umich.edu/bitstream/2027.42/39842/3/wp458.pd

The evolution of monetary policy in transition economies

The last decade of the 20th century brought about many economic and financial changes in the economies of the former communist countries. This paper provides an overview of the developments that took place in the areas of financial markets and institutions and monetary policy in three of the most advanced transition economies, namely, the Czech Republic, Hungary and Poland. After examining the evolution of monetary policy in each country, the problems that monetary authorities have faced in these countries are highlighted, and the current approach to managing inflation is described. Although monetary policy has made a significant contribution to stabilization, the relative newness and fragility of these countries' markets and institutions remains a concern because of the heavy burden placed on monetary authorities in the battle to reduce inflation. It will be important to continue to strengthen the capital market in these countries and to provide more active fiscal policy support for monetary policy.Monetary policy ; Czech Republic ; Hungary ; Poland