Exchange-rate policy in eastern Europe and EU integration

The paper examines potential conflicts between rapid EU integration of economies in transition (EiTs) and their pursuing catch-up by focusing on exchange-rate policies. After justifying the proposed inquiry, official pronouncements on ER policies that EUcandidates are expected to pursue in the run-up to and upon their accession are summarized, and the salient features of recent debates on ER regimes recalled. Inasmuch as EiTs must modernize and reconcile this obligation with EU membership, in spite of the EU's cohesion experience, the paper combines real and nominal convergence issues with institutional changes upon EU accession to draw a novel perspective on the desirable postaccession transition regime for EiTs with a fairly active ER policy and the EU's cohesion strategy. Core components of such a strategy are advocated

Transforming trade and payments in transition economies Ð the regional dimension

Abstract The paper examines the desirability, on economic fundamentals, for the transition economies (TEs) to replace their inherited integration format with another regional compact while awaiting merger into the European Union (EU). Many reasons were invoked to negate this. On economic fundamentals too much faith was placed in the predictability and theoretical strength of the gravity model for predicting normal bilateral trade flows and in the seamless merger of TEs in global trade and financial networks to offset any initial transformational imbalances. Opportunities for regional cooperation have not been seized largely for political and security rather than sound economic reasons. This is a suboptimal policy choice not only in governing the transition but also in governing the processes for eventually playing a constructive role in the EU's single market.