Theoretical Aspects of Currency Crises

The paper presents three generations of theoretical models of currency crises. The models were drawing on the real crises. The first-generation models were developed after balance-of-payment crises in Mexico (1973.82), Argentina (1978.81), and Chile (1983). The second-generation models arose after speculative attacks in Europe and Mexico in 1990s. Finally, first attempts to built the third-generation models started after the Asian crisis in 1997.98. The paper also explains the mechanism of currency crisis, provides an overview of the crises literature, and defines the types of crises. This work is intended to summarize the current level of knowledge on the theoretical aspects of currency crises.currency crises

Economic Transition in Russia, the Ukraine and Belarus in Comparative Perspective

The authors of this paper try to analyze the similarities and differences in the starting conditions, adopted policies, and achieved results of the above three countries. The first part of the paper will be devoted to the initial conditions: the economic heritage of the FSU (especially of the perestroika years), differences in the economic structures of the discussed countries, and the level of their mutual interdependence. The second part contains a comparative analysis of the liberalization, stabilization, and privatization processes in each country. The third part presents the differences in macroeconomic performance and the progress of the transition. In the final part we try to analyze the political and other reasons for the observed differences.Economic Transition, Russia, Ukraine, Belarus, Liberalization, Stabilization, Privatization

Economic Reforms in Kyrgyzstan

This article describes Kyrgyzstans achievements in the stabilization and liberalization of the economy and the majority of progress in this area that occurred in the first half of 1994. One may include Kyrgyzstan in the group of states that have adopted the radical variant of transition to market economics, a group to which the majority of Central European states and the above mentioned Baltic states belong. Kyrgyzstan has become a clear leader in economic transformation in Central Asia. Moreover, the progress in this area has been accompanied by a broad democratization of political life and an open, pro-Western orientation in foreign policy. These economic and political reforms represent the effect of the political course embarked upon in 1991 by the president of the republic, Askar Akayev. Thus far, they have made Kyrgyzstan an oasis of democracy and social peace in a region wracked by powerful ethnic and religious conflicts and whose political and economic regimes are of a significantly less liberal and democratic character and possess strong elements of the post-communist or even neo-communist order.transition, economic reforms, Kyrgyzstan, foreign trade, macroeconomic policy, liberalization, free trade zone

Bosnia and Herzegovina - Meeting Copenhagen economic criteria for accession to the EU

Delegation of the European Commission based in Sarajevo, Bosnia and Herzegovina (BH) granted the consortium represented by ECORYS a contract for EU support to the Economic Policy Research Unit, a subdivision of the Economic Policy Planning Unit of the Council of Ministers of Bosnia and Herzegovina. As part of this project activities a subproject was designed trying to assess the position of BH against the benchmarks of the Copenhagen economic criteria and to identify policy measures for meeting the criteria. The issues of particular relevance to the project included: presentation of the Copenhagen economic criteria, analysis of the existing situation in the country, strategic and policy documents addressing the subject, identification of gaps to be filled in order to achieve the benchmark, and policy recommendations. In July, 2006 ECORYS appointed the Center for Social and Economic Research (CASE), an international, non-profit research and advisory institution, to research on the subject. The research project team comprised experts: Messrs. Rafa³ Antczak (team leader), Wojciech Paczyñski, and Ranko Markuš, Mmes. Ma³gorzata Antczak and Karina Kostrzewa, assisted by Mr. Erol Mujanovic. The report was based on available national account and microeconomic data, strategic and policy documents of the BH governmental bodies, relevant reports by international organisations, EU institutions, academic and research centres and opinions of key stakeholders. The analytical research on the economic developments in BH by international financial institutions, especially the IMF and World Bank, as well as domestic bodies, especially the Economic Policy Research Unit, was extensively exploited in the research. However, the primary focus of the research was on structural and institutional aspects facilitating or impeding functioning of a market economy in the BH and country's capacity to cope with competitive pressure and market forces within the EU. Therefore, the report focuses on background analysis of economic factors influencing the functioning of market economy and the capacity to withstand the competition in the EU market. The research consists of four main parts. In Part 1, the Copenhagen economic criteria are presented in a comparative perspective of the recent experiences of the new member states and acceding countries to allow diagnosing of the most important gaps to be filled by BH. Part 2 analyses macroeconomic developments in BH, presenting them in a comparative perspective relative to EU candidate countries. The special focus is on two fields where BH faces particularly difficult challenges: labour market and foreign trade. Also, the three scenarios of BH catching-up with the EU are presented. Privatisation process which is one of the most important institutional and structural features of every transition economy and especially relevant from the perspective of meeting the Copenhagen criteria is analysed in Part 3. Part 4 comprises analysis of microeconomic developments in BH with the elements of the financial analysis of enterprises, both state and private. The financial analysis of enterprises concentrates on current situation and identification of trends in microeconomic developments to identify comparative advantages, assess productivity, and to position the BH enterprise sector towards the potential competition on the EU markets. Finally, Part 5 includes policy recommendations for decision makers both from the BH government and the EC. The research is supplemented by the Annexes providing background pieces of information on the analysed topics. The project team established contacts with representatives of international organizations, the BH governmental bodies, and research community in BH to collect pieces of information and consult on research topics. However, the authors of the researchers bear the sole responsibility for the pieces of information and opinions presented in the report.Bosnia and Herzegovina, Copenhagen criteria, EU accession, European integration, competitiveness

The Episodes of Currency Crises in the European Transition Economies

The series of currency crises which hit several developing countries in the 1990s did not leave the emerging market economies of Central and Eastern Europe unscathed. However, contrary to the experience of Mexico in 1995 and South East Asia in 1997-1998, the roots of the crises in our region were usually less sophisticated and easier to identify. Most crisis episodes in the former communist countries fit nicely with the ”first generation” canonical model elaborated in 1979 by Paul Krugman and developed in 1980s by other economists. In this model, fiscal imbalances are the main factor leading to depleting international reserves of the central bank and speculative attacks against national currencies. This was the main reason behind all currency crises in our region, very often closely related to serious microeconomic weaknesses and delays in structural and institutional reforms. The only minor exception was the Czech Republic where the devaluation crisis in May 1997 (of rather limited magnitude) was caused by over-borrowing of the enterprise sector, an unreformed financial sector, and political turmoil rather than by fiscal imbalances and an excessively expansionary monetary policy. This volume, following another collection of similar monographs related to Latin American and Asian regions, presents five episodes of currency crises in Eastern Europe in the second half of 1990s. Four of them were related to post-communist economies and one (Turkey) to a developing economy aiming to integrate with the EU and suffering many macroeconomic and structural weaknesses similar to those of the transition group. Bulgaria in 1996-1997 represents the first episode of a full-scale financial crisis, involving drastic currency devaluation and near-hyperinflation, a banking crisis and a near default on debt obligations. The roots of the crisis were fully domestic and, although severe, were restricted to Bulgaria. Russia's financial crisis in August 1998, despite similar characteristics and domestic roots as in Bulgaria, had an important international dimension. On the one hand, the first speculative attacks against the ruble in the fall of 1997 were triggered by crisis events in Asia, particularly in Hong Kong and Korea. On the other hand, when the Russian crisis erupted, it provoked a huge contagion effect across all the countries of the former USSR. It also caused a big turmoil on all segments of the international financial market, bringing the danger of a recession in the US and other developed countries, and triggering a currency crisis in Brazil few months later. The monographs on Ukraine and Moldova present two case studies of such a contagion effect. However, one should remember that these two economies (as well as most other FSU economies) experienced the same weaknesses and vulnerabilities as in Russia. Thus Russian events could only accelerate the crisis in these countries which was, in any event, hard to avoid. Finally, we present the analysis of the recent financial market crisis in Turkey, which fortunately has been stopped by fast and substantial IMF and World Bank support and has not evolved into a full-scale currency crisis.transition economies, crisis, fiscal policy, Bulgaria, Moldova, Russia, Turkey, Ukraine

Russia: Political and Institutional Determinants of Economic Reforms

The purpose of this study is to analyze the course, determinants and political economy of economic reforms in Russia conducted in the period 1985-2003. The year 1985 can be considered an important turning point in Soviet/Russian history, marked as it was by the election of Mikhail Gorbachev to the position of General Secretary of the Communist Party of Soviet Union (CPSU) and (de facto) leader of the USSR. This nomination brought an end to two decades of political consolidation of the communist regime connected with the name of General Secretary Leonid Brezhnev and his short living successors (Yurii Andropov and Konstantin Chernenko), often referred to ex post as 'the stagnation period' (vremya zastoya). Gorbachev initiated a series of important political and (to a lesser extent) economic reforms, which led eventually to the collapse of the communist regime and the disintegration of the Soviet empire in 1991. Thus, 1991 must be seen as another dramatic turning point in Russia's contemporary history. From the end of 1991 onwards political and economic reforms have been carried out by the new Russian state that emerged after the disintegration of the USSR. This paper aims to explain the political and institutional determinants of economic reforms in the Russian Federation. It has been carried out under the Global Research Project on 'Understanding Reforms' organized and financed by the Global Development Network (GDN)1 as one of 30 country studies covering a broad set of developing and transition economies. It presents the project's intermediate results and will be the subject of further discussion as well as analytical and editorial work in the near future. The case of Russia is very important and interesting from the point of view of GRP 'Understanding Reforms' goals and agenda, for many reasons. First, all transitions from communist regimes and centrally-planned economies to democratic capitalism represent a much more complex, complicated and difficult reform experience than policy reforms observed in developing countries, especially when they relate to just one or a few specific policy areas. Thus, learning the transition experience, particularly in its early phase, can provide an extremely valuable empirical input to 'understanding reform' and provide answers to the project's key questions: 'why reform?', 'what reform?', and 'how well did the reform perform?'economic reforms, transition, Russia, reform sequencing, political reforms, institutional reforms, political economy.

Identification of genetic variants associated with Huntington's disease progression: a genome-wide association study

Background Huntington's disease is caused by a CAG repeat expansion in the huntingtin gene, HTT. Age at onset has been used as a quantitative phenotype in genetic analysis looking for Huntington's disease modifiers, but is hard to define and not always available. Therefore, we aimed to generate a novel measure of disease progression and to identify genetic markers associated with this progression measure. Methods We generated a progression score on the basis of principal component analysis of prospectively acquired longitudinal changes in motor, cognitive, and imaging measures in the 218 indivduals in the TRACK-HD cohort of Huntington's disease gene mutation carriers (data collected 2008–11). We generated a parallel progression score using data from 1773 previously genotyped participants from the European Huntington's Disease Network REGISTRY study of Huntington's disease mutation carriers (data collected 2003–13). We did a genome-wide association analyses in terms of progression for 216 TRACK-HD participants and 1773 REGISTRY participants, then a meta-analysis of these results was undertaken. Findings Longitudinal motor, cognitive, and imaging scores were correlated with each other in TRACK-HD participants, justifying use of a single, cross-domain measure of disease progression in both studies. The TRACK-HD and REGISTRY progression measures were correlated with each other (r=0·674), and with age at onset (TRACK-HD, r=0·315; REGISTRY, r=0·234). The meta-analysis of progression in TRACK-HD and REGISTRY gave a genome-wide significant signal (p=1·12 × 10−10) on chromosome 5 spanning three genes: MSH3, DHFR, and MTRNR2L2. The genes in this locus were associated with progression in TRACK-HD (MSH3 p=2·94 × 10−8 DHFR p=8·37 × 10−7 MTRNR2L2 p=2·15 × 10−9) and to a lesser extent in REGISTRY (MSH3 p=9·36 × 10−4 DHFR p=8·45 × 10−4 MTRNR2L2 p=1·20 × 10−3). The lead single nucleotide polymorphism (SNP) in TRACK-HD (rs557874766) was genome-wide significant in the meta-analysis (p=1·58 × 10−8), and encodes an aminoacid change (Pro67Ala) in MSH3. In TRACK-HD, each copy of the minor allele at this SNP was associated with a 0·4 units per year (95% CI 0·16–0·66) reduction in the rate of change of the Unified Huntington's Disease Rating Scale (UHDRS) Total Motor Score, and a reduction of 0·12 units per year (95% CI 0·06–0·18) in the rate of change of UHDRS Total Functional Capacity score. These associations remained significant after adjusting for age of onset. Interpretation The multidomain progression measure in TRACK-HD was associated with a functional variant that was genome-wide significant in our meta-analysis. The association in only 216 participants implies that the progression measure is a sensitive reflection of disease burden, that the effect size at this locus is large, or both. Knockout of Msh3 reduces somatic expansion in Huntington's disease mouse models, suggesting this mechanism as an area for future therapeutic investigation