EU Accession Effects on the Demand for Manufactures: the Case of Greece

This paper analyzes the demand for manufactures in Greece and estimates the effects from the EU accession. An error correction specification of the Almost Ideal Demand System has been used. This formulation performs well on theoretical grounds, as the restrictions that are imposed by the demand theory are supported by the data provided. The results indicate that the domestic sales of manufactures are substitutes with imports from the EU and the rest of the world. Using the residuals approach, it is found that after the EU accession, imports from both sources substituted for a large part of the domestic sales.Elasticities, Error correction Almost Ideal Demand System, EU accession,

EU Accession Effects on Export Performance: The Case of Greece

This paper estimates the effects on the Greek export performance that caused by the EU accession. A simultaneous equations model of export demand and export supply has been used in order to avoid the simultaneity problem. Comparative static analysis and the residuals approach have been implemented. The results indicate that the EU accession and the consequent abolition of the export subsidies had a negative effect on the country’s export performance, instead of improving it. The main reason for this effect is that the export subsidies, during the time period that were valid, were just improved the exporters’ revenues and not used for creating new comparative advantages for the Greek products.EU Accession, Export subsidies, Simultaneous equations, Comparative static

The Term Structure of Interest Rates in the European Union

This paper uses cointegration and common trends techniques to investigate empirically the expectations hypothesis of the term structure of interest rates among the original 15 EU countries. By decomposing each term structure into its transitory and permanent components, we also examine whether the short or the long rate is weakly exogenous and thus determine the long run behavior of each term structure. The empirical results support the expectations theory of the term structure of interest rates for all the EU-15 countries. They also indicate that the long term interest rates are weakly exogenous for almost all the countries in our sample. Further, we investigate if the expectation theory of the term structure of interest rates is affected by other exogenous variables such as nominal and real exchange rates, inflation rates, inflation variance, money growth and its variance. Our evidence suggests that the inclusion of the other exogenous variables does not affect the expectations hypothesis for most of the EU-15 countries.Term Structure, European Union, Cointegration, Common Trends, Weak Exogeneity

Trade Effects due to the EU Accession: The case of Greece

This paper estimates the effects on Greek trade balance due to the EU accession. The analytical and the residuals approach were implemented. A full trade model was used, since Greece relies on imported inputs for export production and a standard model of trade may not be appropriate for the country. After the accession, the country had to liberalize its trade by abolishing all barriers, such as tariffs, quotas, financial stringencies, indirect taxes on imports and export subsidies. The gradual abolition of trade protection and promotion, which took place during the 1981 - 1992 period, had a substantial negative effect on Greece’s trade balance and led to a large increase of its deficit. This effect also implies trade creation and thus, improvement in terms of static welfare and resource allocation. The above impact is mainly based on the large increase of imports, as the accession’s negative effects on Greek exports were quite small.EU accession, trade barriers, analytical /residuals approach, trade balance, trade creation

Behavioural Equilibrium Exchange Rate and Total Misalignment: Evidence from the Euro Exchange Rate

This paper investigates whether the nominal euro exchange rate against the currencies of China, Japan, the UK and the USA converges or not to its equilibrium level. Applying cointegration and common trend techniques in the presence of structural breaks in the data, we found a valid long-run relationship between the euro/yuan, euro/yen, euro/UK pound and euro/US dollar nominal exchange rates and the fundamentals defined by the monetary model. Our modified Behavioural Equilibrium Exchange Rate model suggests that at the end of the estimated period, the euro/Chinese yuan and the euro/UK pound exchange rates follow an equilibrium process. On the other hand, the euro is considered as overvalued against the US dollar and as undervalued against the Japanese yen.Euro, BEER, Misalignment Rate, Cointegration, Structural Shifts

Term Structure Linkages Among the New EU Countries and the EMU

This paper uses cointegration and common trends techniques to investigate empirically the expectations hypothesis of the term structure of interest rates in the 10 new EU countries, and the 2 core EMU countries, France and Germany. By decomposing each term structure into its transitory and permanent components, we also analyze the possible short run and long run linkages among the term structures of these countries. The empirical results support the expectations theory of the term structure for all countries except Malta. Further, they point to both weak short run linkages and several strong long run linkages among the monetary policies of the 10 new EU and the core of the EMU. The group of the Central European countries and Latvia are prominent in the latter case.Term Structure, EU Enlargement, Cointegration, Common Trends, Granger

Enlargement and Eurozone: Convergence or Divergence

This paper investigates empirically the extent to which the ten new countries of the recent EU enlargement are ready to join the European Monetary Union (EMU). We assess the prospects of successful accession into the EMU using cointegration and common trends analysis on the nominal convergence criteria specified by the Maastricht Treaty as well as on real exchange rates and real per capita GDPs. The empirical results indicate that the enlargement countries are partially ready to join the Eurozone, and need further adjustments in their government policies to be fully prepared for joining the EMU.Economic Integration, EU Enlargement, Cointegration, Common Trends.

The Term Structures of Interest Rates in the New and Prospective EU Countries

This paper uses cointegration and common trends techniques to investigate empirically the expectations hypothesis of the term structure of interest rates for the 10 new EU countries, along with Bulgaria and Romania. The empirical results support the expectations theory of the term structure for all countries except Malta. By decomposing each term structure into its transitory and permanent components, we also analyze short run and long run interdependence among the term structures of interest rates in these countries. Our results indicate weak linkages among the term structures of the 10 new EU countries, and strong linkages between Bulgaria and Romania that hope to join the EU in 2007.Term Structure, EU Enlargement, Cointegration, Common Trends, Granger Causality

The Term Structure of Interest Rates in the New and Prospective EU Countries

This paper uses cointegration and common trends techniques to investigate empirically the expectations hypothesis of the term structure of interest rates for the 10 new EU countries, along with Bulgaria and Romania. The empirical results support the expectations theory of the term structure for all countries except Malta. By decomposing each term structure into its transitory and permanent components, we also analyze short run and long run interdependence among the term structures of interest rates in these countries. Our results indicate only weak linkages among the term structures of the 10 new EU countries, and strong linkages between Bulgaria and Romania that hope to join the EU in 2007