Inter-temporal Savings, Current Account Dynamics and Asymmetric Shocks in a Heterogeneous European Monetary Union

In the current debate on the reasons and implications of the Greek and Irish euro crisis, the intra-European current account imbalances have gained rising attention. Whereas Greece and Ireland struggle for austerity in private and public spending, Germany is urged to reduce its current account surplus by increasing wages to forestall a new build-up of unsustainable intra-E(M)U indebtedness. We analyse the emergence of intra-European imbalances since the year 1990 based on the theory of optimum currency areas. We show that the asymmetric shock of the German unification can be seen not only as the origin of the 1992/93 crisis of the European Monetary System, but also for the rising intra-European current account imbalances since the euro introduction and thereby the current European debt crisis. Based on this finding we argue that an increase of German spending to reduce its current account surplus is not only in the interest of German taxpayers to contain financial risk, but would also impose austerity on the rest of Europe. The resulting new wave of crisis could trigger a new round of monetary expansion in the EMU.monetary union, German unification, asymmetric shock, current account imbalances, inter-temporal savings, financial crisis, euro crisis, European debt crisis, theory of optimum currency areas

TARGET2 Unlimited: monetary policy implications of asymmetric liquidity management within the Euro area. CEPS Policy Brief No. 248, 13 July 2011

This paper analyses the implications of a continued divergence of TARGET2 balances for monetary policy in the euro area. The accumulation of TARGET2 claims (liabilities) would make the ECB’s liquidity management asymmetric once the TARGET2 claims in core countries have crowded out central bank credit in those regions. Then while providing scarce liquidity to banks in countries with TARGET2 liabilities, the ECB will need to absorb excess liquidity in countries with TARGET2 claims. We discuss three alternatives and their implications for absorbing excess liquidity in core regions: 1) using market-based measures might accelerate the capital flight from periphery to core countries and would add to the accumulation of risky assets by the ECB; 2) conducting non-market based measures, such as imposing differential (unremunerated) reserve requirements, would distort banking markets and would support the development of shadow banking; and 3) staying passive would lead to decreasing interest rates in core Europe entailing inflationary pressure and overinvestment in those regions and possibly future instability of the banking system

Real Convergence, Capital Flows, and Competitiveness in Central and Eastern Europe

The paper scrutinizes the role of wages and capital flows for competitiveness in the new EU member states in the context of real convergence. For this purpose it extends the seminal Balassa-Samuelson model by international capital markets. The augmented Balassa-Samuelson model is linked to the monetary overinvestment theories of Wicksell and Hayek in order to trace cyclical deviations of real exchange rates from the productivity-driven equilibrium path. Panel estimations for the period from 1993 to 2008 reveal mixed evidence for the role of capital markets for both the economic catch-up process and international competitiveness of the Central and Eastern European countries.Exchange rate regime, wages, Central and Eastern Europe, EMU accession, panel model

Current Account Balances and Structural Adjustment in the Euro Area

In the past decade, a set of euro area countries has accumulated large current account defi cits. After a brief relaxation of the euro area internal imbalances in the wake of the fi nancial crisis, it appears as if this pattern arises anew when times normalize again and Germany still sticks to export-led growth. This issue has been labelled one of the most challenging economic policy issues for Europe inter alia by the European Commission and some other players on the EU level. In this paper, we analyse the role of private restructuring and structural reforms for the urgently needed sustainable readjustment of intra-euro area current account balances. A panel regression reveals a signifi cant impact of structural reforms on intra-euro area current account balances. This implies that in particular structural reforms and wage restraint in notorious current account and budget defi cit countries such as Greece are highly suitable to support long-term economic stability in Europe.Structural reforms; current account balances; euro area; dynamic panel estimation; interaction term

Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness

Low international competitiveness of a set of euro area countries, which have become evident by large current account deficits and rising risk premiums on government bonds, is one of the most challenging economic policy issues for Europe. We analyse the role of private restructuring and public structural reforms for the urgently needed readjustment of intra-euro area imbalances. A panel regression reveals a significant impact of private restructuring and public structural reforms on intra-euro area competitiveness. This implies that private restructuring and public reforms are rather than public transfers the best way to preserve long-term economic stability in Europe.structural reforms, competitiveness, current account imbalances, euro area, European Monetary Union, dynamic panel estimation, interaction term

Real Convergence, Capital Flows, and Competitiveness in Central and Eastern Europe

The paper scrutinizes the role of wages and capital flows for competitiveness in the new EU member states in the context of real convergence. For this purpose it extends the seminal Balassa-Samuelson model by international capital markets. The augmented Balassa-Samuelson model is linked to the monetary overinvestment theories of Wicksell and Hayek in order to trace cyclical deviations of real exchange rates from the productivity-driven equilibrium path. Panel estimations for the period from 1993 to 2008 reveal mixed evidence for the role of capital markets for both the economic catch-up process and international competitiveness of the Central and Eastern European countries.Exchange rate regime, wages, Central and Eastern Europe, EMU accession, panel model

Investitions- und Finanzierungsverhalten Multinationaler Unternehmen

Das vorliegende Arbeitspapier möchte einen Beitrag leisten, das Investitions- und Finanzierungsverhalten multinationaler Unternehmen auszuleuchten. Hierzu werden auf der Grundlage der Surveys of Current Business, die vom Bureau of Economic Analysis (BEA) erhoben werden, sowie anhand von Zahlungsbilanzdaten einige stilisierte Fakten dargestellt, wobei der Fokus auf den wechselseitigen Beziehungen zwischen EU15 und USA liegt. Hierzu werden im Abschnitt B die zugrundeliegenden Konzepte der Statistik erläutert. Der Abschnitt C stellt einige Besonderheiten beim Investitions- und Finanzierungsverhalten anhand deskriptiver Statistiken heraus. Abschnitt D schließt den Beitrag mit einem kurzen Ausblick ab

Real Convergence, Capital Flows, and Competitiveness in Central and Eastern Europe

The paper scrutinizes the role of wages and capital flows for competitiveness in the new EU member states in the context of real convergence. For this purpose it extends the seminal Balassa-Samuelson model by international capital markets. The augmented Balassa-Samuelson model is linked to the monetary overinvestment theories of Wicksell and Hayek in order to trace cyclical deviations of real exchange rates from the productivity-driven equilibrium path. Panel estimations for the period from 1993 to 2008 reveal mixed evidence for the role of capital markets for both the economic catch-up process and international competitiveness of the Central and Eastern European countries.exchange rate regime, wages, Central and Eastern Europe, EMU accession, panel model

Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness

Low international competitiveness of a set of euro area countries, which have become evident by large current account deficits and rising risk premiums on government bonds, is one of the most challenging economic policy issues for Europe. We analyse the role of private restructuring and public structural reforms for the urgently needed readjustment of intra-euro area imbalances. A panel regression reveals a significant impact of private restructuring and public structural reforms on intra-euro area competitiveness. This implies that private restructuring and public reforms are rather than public transfers the best way to preserve long-term economic stability in Europe.Structural reforms, competitiveness, current account imbalances, euro area, European Monetary Union, dynamic panel estimation, interaction term

Józef Warszewicz (1812–1866) and taxonomical history of Warszewiczia coccinea (Vahl) Klotzsch

Józef Warszewicz (1812–1866) – traveler and naturalist, the main horticulturist (inspector) of the Botanic Garden of theJagiellonian University in Kraków, was one of the first plant collectors in the tropical regions of Central and South America. From his travels (1844–1850, 1850–1853) he sent and brought to Europe hundreds of previously unknown plants, primarily orchids, in addition to representatives of other families. One of the collected species was Warszewiczia coccinea (red warszewiczia in English, warszewiczia czerwona in Polish), described by Johann F. Klotzsch and named after the collector. It is a small tree or shrub with large, red inflorescences, growing wild in the American tropics and often cultivated as an ornamental. It plays a significant role in the culture of the island country of Trinidad and Tobago in the Little Antilles archipelago, where it is considered a “national plant”. The aim of this article is to highlight one of the chapters in the history of systematics (taxonomy) relating to Józef Warszewicz and the plants described on the basis of his collections, especially red warszewiczia. Many of the so-called “Warszewicz species” have survived in the taxonomy to this day. His unique collection is stored in the Herbarium of the Jagiellonian University – Herbarium Universitatis Iagellonicae Cracoviensis – KRA. There are specimens important to the science – lectotypes (model representations) of the species Warszewiczia pulcherrima (= W. coccinea).Józef Warszewicz (1812–1866) i taksonomiczna historia Warszewiczia coccinea (Vahl) Klotzsch Józef Warszewicz (1812–1866) – podróżnik i przyrodnik, główny ogrodnik (inspektor) Ogrodu Botanicznego Uniwersytetu Jagiellońskiego w Krakowie, był jednym z pierwszych zbieraczy roślin w tropikalnych regionach Ameryki Środkowej i Południowej. Ze swoich podróży (1844–1850, 1850–1853) przysłał i przywiózł do Europy setki nieznanych wcześniej roślin, w tym przede wszystkim storczyków i przedstawicieli innych rodzin.  Jednym z przywiezionych gatunków była Warszewiczia coccinea (w języku angielskim red warszewiczia, w języku polskim warszewiczia czerwona), opisana przez Johanna F. Klotzscha i nazwana na cześć zbieracza. Jest to niewielkie drzewo lub krzew o dużych, czerwonych kwiatostanach, rosnące dziko w amerykańskich tropikach i często uprawiane jako ozdobne. Odgrywa ono znaczącą rolę w kulturze wyspiarskiego kraju Trynidad i Tobago w archipelagu Małych Antyli, gdzie uznane jest za „roślinę narodową”. Celem artykułu jest naświetlenie jednego z rozdziałów historii systematyki (taksonomii) związanego z Józefem Warszewiczem oraz roślinami opisanymi na podstawie jego zbiorów, zwłaszcza z warszewiczią czerwoną. Wiele tzw. „gatunków Warszewicza” przetrwało w taksonomii do dnia dzisiejszego. Jego unikatowa kolekcja przechowywana jest w Zielniku Uniwersytetu Jagiellońskiego – Herbarium Universitatis Cracoviensis – KRA. Znajdują się tutaj m.in. ważne dla systematyki lektotypy (okazy modelowe) gatunku Warszewiczia pulcherrima (=W. coccinea)