Pilgrims to the Eurozone: How far, how fast?

Cataloged from PDF version of article.In our analysis, we re-examine the nominal and real convergence of all recent 10 European Union (EU) members to EU standards. Testing for monetary convergence has significant implications for interim optimal exchange rate and monetary policies before a formal and permanent link to the euro, while real convergence is the ultimate objective of economic integration. Novel features of the paper include broader measures of real convergence in both euro as well as local currencies, an examination of inflation and interest rate convergence with respect to the Maastricht benchmarks, and employment of more appropriate tests of convergence allowing for structural breaks. The results indicate slow but steady per-capita real income convergence towards EU standards. On the other hand, evidence indicates significant strong inflation and interest rate convergence. Policy implications of the paper are also discussed. © 2006 Elsevier B.V. All rights reserved

Magnetic field dissipation in neutron star crusts: from magnetars to isolated neutron stars

We study the non--linear evolution of magnetic fields in neutron star crusts with special attention to the influence of the Hall drift. Our goal is to understand the conditions for fast dissipation due to the Hall term in the induction equation. We study the interplay of Ohmic dissipation and Hall drift in order to find a timescale for the overall crustal field decay. We solve numerically the Hall induction equation by means of a hybrid method (spectral in angles but finite differences in the radial coordinate). The microphysical input consists of the most modern available crustal equation of state, composition and electrical conductivities. We present the first long term simulations of the non--linear magnetic field evolution in realistic neutron star crusts with a stratified electron number density and temperature dependent conductivity. We show that Hall drift influenced Ohmic dissipation takes place in neutron star crusts on a timescale of 1 Myr. When the initial magnetic field has magnetar strength, the fast Hall drift results in an initial rapid dissipation stage that lasts 10-50 kyr. The interplay of the Hall drift with the temporal variation and spatial gradient of conductivity tends to favor the displacement of toroidal fields toward the inner crust, where stable configurations can last for 1 Myr. We show that the thermally emitting isolated neutron stars, as the Magnificent Seven, are very likely descendants of neutron stars born as magnetars.Comment: 14 pages, 10 figure

The determinants of vulnerability to currency crises: country-specific factors versus regional factors

We investigate the determinants of exchange market pressures (EMP) for some new EU member states at both the national and regional levels, where macroeconomic and financial variables are considered as potential sources. The regional common factors are extracted from these variables by using dynamic factor analysis. The linear empirical analysis, in general, highlights the importance of country-specific factors to defend themselves against vulnerability in their external sectors. Yet, given a significant impact of the common component in credit on EMP, a contagion effect is apparent through the conduit of credit market integration across these countries under investigation

Developmental perspectives on Europe

The crisis of 2008–2009 has ended, stockmarkets skyrocketed in 2012–2013, while growth of the real sector remained sluggish in Europe. This article attempts to explain the latter puzzle. Analyzing long term factors, the costs of short-termism in crisis management become obvious. The limitations of EU as a growth engine are highlighted

Are Proposed African Monetary Unions Optimal Currency Areas? Real, Monetary and Fiscal Policy Convergence Analysis

Purpose – A spectre is hunting embryonic African monetary zones: the EMU crisis. This paper assesses real, monetary and fiscal policy convergence within the proposed WAM and EAM zones. The introduction of common currencies in West and East Africa is facing stiff challenges in the timing of monetary convergence, the imperative of central bankers to apply common modeling and forecasting methods of monetary policy transmission, as well as the requirements of common structural and institutional characteristics among candidate states. Design/methodology/approach – In the analysis: monetary policy targets inflation and financial dynamics of depth, efficiency, activity and size; real sector policy targets economic performance in terms of GDP growth at macro and micro levels; while, fiscal policy targets debt-to-GDP and deficit-to-GDP ratios. A dynamic panel GMM estimation with data from different non-overlapping intervals is employed. The implied rate of convergence and the time required to achieve full (100%) convergence are then computed from the estimations. Findings – Findings suggest overwhelming lack of convergence: (1) initial conditions for financial development are different across countries; (2) fundamental characteristics as common monetary policy initiatives and IMF backed financial reform programs are implemented differently across countries; (3) there is remarkable evidence of cross-country variations in structural characteristics of macroeconomic performance; (4) institutional cross-country differences could also be responsible for the deficiency in convergence within the potential monetary zones; (5) absence of fiscal policy convergence and no potential for eliminating idiosyncratic fiscal shocks due to business cycle incoherence. Practical implications – As a policy implication, heterogeneous structural and institutional characteristics across countries are giving rise to different levels and patterns of financial intermediary development. Thus, member states should work towards harmonizing cross-country differences in structural and institutional characteristics that hamper the effectiveness of convergence in monetary, real and fiscal policies. This could be done by stringently monitoring the implementation of existing common initiatives and/or the adoption of new reforms programs. Originality/value – It is one of the few attempts to investigate the issue of convergence within the proposed WAM and EAM unions