The Macroeconomic Effects of Losing Autonomous Monetary Policy after the Euro Adoption in Poland

There are many issues associated with the Eurozone accession of Poland. The goal of this paper is to analyse one, but very important aspect, namely - the macroeconomic impact of the loss of autonomous monetary policy. In order to answer this question, we build a two country DSGE model with sticky prices. We begin by evaluating the performance of our model. Next, we investigate how joining the Eurozone will affect the business cycle behaviour of the main macroeconomic variables in Poland. We find that the Euro adoption will have a noticeable impact on the Polish economic fluctuations. In particular, the volatility of domestic output increases and the volatility of inflation decreases. Also, in order to quantify the effect of the Euro adoption, we compute the welfare effect of this monetary policy change. Our findings suggest that the welfare cost is not large.Monetary policy, EMU accession countries, Euro

Globalization and the Polish economy: stylized facts and simulations using a Computable General Equilibrium Model

The aim of the paper is to quantitatively assess the impact of globalization on the economy of Poland in the medium term. Four channels of the impact of globalization are distinguished: (i) trade openness, (ii) productivity improvement, (iii) labour migrations, (iv) liberalization of the services sector. We employ a computable general equilibrium model with multiple industries and households and imperfect competition features. Our results show positive and quite significant effects of globalization on the performance of the Polish economy, stemming mainly from productivity improvements and liberalization of services. The sizeable expected migrations result in negative effects of globalization by decreasing growth potential and causing upward pressure on wages. At the sectoral level, globalization is particularly beneficial to some exporting sectors and skilled segments of the labour market.globalization, computable general equilibrium, labour migrations, trade liberalization

Globalization and the Polish economy: stylized facts and simulations using a Computable General Equilibrium Model

The aim of the paper is to quantitatively assess the impact of globalization on the economy of Poland in the medium term. Four channels of the impact of globalization are distinguished: (i) trade openness, (ii) productivity improvement, (iii) labour migrations, (iv) liberalization of the services sector. We employ a computable general equilibrium model with multiple industries and households and imperfect competition features. Our results show positive and quite significant effects of globalization on the performance of the Polish economy, stemming mainly from productivity improvements and liberalization of services. The sizeable expected migrations result in negative effects of globalization by decreasing growth potential and causing upward pressure on wages. At the sectoral level, globalization is particularly beneficial to some exporting sectors and skilled segments of the labour market

The Investment Behaviors of Manufacturing Enterprises

The aim of the research was to identify the motives behind the investment decisions of manufacturing enterprises in Poland in 1996-2003. The analysis was conducted with the use of probit models and an extensive body of panel data applying to individual enterprises to determine the probability of an investment decision. The author discovered that three key factors encouraged investment by manufacturing enterprises in all the surveyed groups (exporters, publicly traded companies, private domestic and foreign enterprises and companies with foreign capital). The first factor is the expected demand for an enterprise’s products, reflecting prospective sales possibilities. Another important factor is the use of production capacity, reflecting the company’s possibilities for expanding its volume of production on the basis of existing resources and assets. Both these factors are complementary with regard to the description of the investment process. Enterprises wanting to expand their sales tend to make investment decisions when their existing fixed assets are insufficient to increase the supply of products. The third key factor that determines investment decisions is prior involvement in a long-term investment process and the continuation of work in progress. In light of the research, the cost of raising funds and the restrictiveness of monetary policy are only loosely related to the course of investment processes in Poland

Неэффективность аллокации занятости в конъюнктурном цикле в Польше

The authors have calculated the cyclical component of the inefficiency gap regarding the allocation of employment in the Polish economy in the period 1995 Q1–2011 Q2 and decomposed the inefficiency gap into its component elements related to wage and price markups. Inefficiency gap was found to be strongly procyclical while both markups appeared to be anticyclical. The fluctuations in the wage markups explain ca. 69% of the variance of inefficiency gap. Inefficiency gap fluctuates over the business cycle with ca. one-quarter lag against the GDP. The calculated measures of ineffective allocation were used to analyse the reaction of the economy to monetary policy shocks and to identify the key characteristics of cyclical fluctuations in the Polish labour market seen in the given period. The authors also analysed the links between the inefficiency of employment allocation and the related concepts of the demand gap and unemployment gap. There are significant differences between the results obtained for the Polish economy as compared with the results regarding the US economy and the euro area. The major differences refer to a lower importance of wage markups in explaining the variability of the inefficiency gap in the case of Poland and to the different character of fluctuation of price markups, which are procyclical in the USA, acyclical in the euro area, and anticyclical in Poland. The analysis of the conditional correlation (based on the VAR model) suggests that different reaction of price markups to monetary shocks may be one of the causes of those differences.Авторы рассчитали составную циклическую часть разрыва неэффективности распределения занятости в польской экономике в период 1 кв. 1995 – 4 кв. 2011. Этот разрыв был декомпозирован на отдельные части, связанные с зарплатными и ценовыми маржами. Была отмечена сильная процикличность разрыва неэффективности и антицикличность обоих видов маржи. Циклическими флуктуациями зарплатной маржи объясняются ок. 69% вариаций разрыва неэффективности. Разрыв неэффективности колеблется в конъюнктурном цикле с опозданием в 1 квартал по отношению к ВВП. Рассчитанные таким образом единицы неэффективности были использованы в анализе реакции экономики на шоки денежной политики и при идентификации ключевых характеристик циклических колебаний на рынке труда в Польше в исследуемый период. Были проанализированы также их связи с такими концепциями, как разрыв спроса и разрыв безработицы. Выявлены существенные разницы результатов в применении к польской экономике по сравнению с наблюдениями, касающимися США и зоны евро. Эти разницы касаются относительно меньшего значения заработных марж при объяснении переменчивости разрыва неэффективности в случае экономики Польши и разниц в характере флуктуации ценовых марж, которые являются процикличными в США, ацикличными в зоне евро и антицикличными в Польше. Анализ условных корреляций (на основании модели VAR) указывает на то, что одной из причин этих разниц может быть различная реакция ценовых марж на шоки денежной политик

The Responsiveness of Employment to Changes in GDP and the Flexibility of Labor Market Institutions in Poland

The article investigates the impact that the growing use of flexible work arrangements in Poland has on employment and on how it is responding to changes in GDP. The analysis covers the period from the first quarter of 1995 to the final quarter of 2012. It focuses on Impulse Response Functions (IRF) based on Vector Autoregressive models (VAR) for GDP and various employment measures. The results reveal some changes in the responsiveness of employment when aggregate demand changes, the authors say. However, the data does not confirm a link between these changes and an increased use of flexible work arrangements. Meanwhile, changes in responsiveness and the divergence of long-term trends between the main sectors are cyclical in nature, the authors argue. They conclude that the growing role of flexible work arrangements has an unclear impact on the relationship between employment and production in individual business sectors.Celem artykułu jest zweryfikowanie czy stopniowe upowszechnianie elastycznych form zatrudnienia w Polsce znajduje odzwierciedlenie w zmianach reakcji zatrudnienia na PKB. Jako metodę badawczą zastosowano analizę wrażliwości zatrudnienia na dynamikę PKB w okresie 1995q1–2012q4, polegającą na estymacji funkcji reakcji na impuls (IRF), opierającej się na wielu modelach wektorowej autoregresji (VAR) dla PKB i miar zatrudnienia. Uzyskane wyniki badania wskazują, że na poziomie zagregowanym oraz w rozbiciu na sektory zachodzą pewne zmiany we wrażliwości zatrudnienia na popyt zagregowany, lecz dane nie potwierdzają zależności pomiędzy uelastycznieniem a tymi zmianami. Silnie widoczna jest natomiast cykliczność zmian we wrażliwości oraz rozbieżność długookresowych trendów pomiędzy głównymi sektorami gospodarki. Na podstawie badania można postawić wniosek, iż trudno jest jednoznacznie wskazać, czy zmiany w zależności zatrudnienia od produkcji w poszczególnych sektorach powiązane są bezpośrednio z rosnącą rolą elastycznych form zatrudnienia

The Role of Market Services in the Polish Economy

The study aims to either validate or disprove the hypothesis that market services, alongside industry, played a key role in spurring the development of the Polish economy in 1995-2012. The authors conduct a multifaceted empirical analysis that addresses a range of research questions related to the role of structural change and variations in relative prices in economic growth. The article also examines the behavior of industry and services during a business cycle and the internal differentiation of market services. The results of the authors’ macroeconomic analyses are based on national accounts data from 1995-2012. The article scrutinizes differences across service sectors in terms of the levels and dynamics of labor productivity and employment, based on firm-level data from 2005-2012. The authors find that the role of market services in employment in Poland steadily increased in 1995-2012. At the same time, due to technological change, industry enjoyed stronger growth in labor productivity and total factor productivity (TFP). The prices of manufactured goods steadily fell compared with services. However, the cyclical variability of employment and value added was clearly lower in market services. Due to substantial heterogeneity across firms within the considered categories, the authors say they were “unable to identify significantly higher dynamics of exports-intensive, capital-intensive, business-to-business (B2B) or knowledge-based services.” On the basis of their research, the authors predict that, due to the increasing role of market services, Poland’s economic growth will be slower but more stable in the future.Celem artykułu jest weryfikacja hipotezy, że usługi rynkowe odgrywały, obok przemysłu, kluczową rolę w procesach rozwojowych gospodarki Polski w latach 1995-2012. Cel ten zrealizowano poprzez uszczegółowioną, wielowątkową analizę empiryczną, pozwalającą odpowiedzieć na pytania badawcze związane z rolą obserwowanej w Polsce zmiany strukturalnej oraz zmian cen względnych w objaśnianiu dynamiki wzrostu gospodarczego, a także zachowaniem przemysłu i usług w cyklu koniunkturalnym oraz zróżnicowaniem wewnętrznym usług rynkowych. Wyniki analiz makroekonomicznych oparto na danych z rachunków narodowych z lat 1995–2012. Ponadto opierając się na danych jednostkowych na poziomie firm z lat 2005–2012, przeanalizowano różnice pomiędzy poszczególnymi branżami usługowymi pod względem poziomu oraz dynamiki produktywności pracy i zatrudnienia. Uzyskane wyniki są następujące. W latach 1995–2012 obserwowano w Polsce systematyczny wzrost udziału usług rynkowych w zatrudnieniu. Równocześnie jednak produktywność pracy oraz całkowita produktywność czynników (TFP) rosły wolniej w tym sektorze w porównaniu z sektorem przemysłowym, w związku z relatywnie szybszym postępem technologicznym w przemyśle. Systematycznie spadała też cena względna dóbr przemysłowych w porównaniu z usługami. Zmienność zatrudnienia i wartości dodanej w cyklu koniunkturalnym była natomiast wyraźnie mniejsza w usługach rynkowych. Na tle wysokiej heterogeniczności firm w ramach poszczególnych branż, nie stwierdzono istotnie różnej dynamiki rozwojowej usług eksportointensywnych, relatywnie kapitałochłonnych, skierowanych do biznesu (B2B), ani usług opartych na wiedzy. Z uzyskanych wyników wyprowadzono prognozę, że gospodarka polska będzie w przyszłości wskutek zwiększającej się roli usług rynkowych rosnąć nieco wolniej, ale stabilniej niż dotychczas