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We examine integration of financial markets and banking sectors in Central and Eastern Europe and the euro area. We study co-movements between government bond and equity markets of Germany and those of Poland, Czech Republic, Hungary, as well as Slovenia and Slovakia (the two recent euro members). We assume that financial integration is essential for subsequent monetary convergence, as it will enable the euro candidates to mitigate systemic risk and avert potentially destabilizing shocks. Government bond yields of the Czech Republic and Poland show high correlation with German yields, in contrast to those of the remaining countries. Equity returns of Slovenia and Slovakia show no correlation with German returns, while those of the three euro candidates show high correlation. The banking sectors of the Czech Republic and Poland show higher integration with the euro area than do Slovakia and Slovenia, while Hungary, dominated by country-specific shocks, lags behind all the others. Comparative Economic Studies (2014) 56, 376-395. doi:10.1057/ces.2014.16 Keywords: financial markets, financial integration, government bond markets, equity markets, Central and Eastern Europe, financial crisis JEL Classification: E42, F33, G15, INTRODUCTION Integration of financial markets within a common currency area has been rather downplayed in the classic optimum currency area literature. Yet, we believe that it is an important condition [...]

This article elaborates a theory of combined and uneven development that takes the dimensions of spatiality, labour and institutions seriously. Drawing on this conceptual framework, an account is given of the way the 2007-2008 crisis was inflected in the countries of Central and Eastern Europe. The integration of these countries with the global economy has taken place in different ways through trade, investment and finance. This has not only been a source of unevenness within and between them, but has also determined the form and severity with which they have experienced the crisis. The combined and uneven development perspective is therefore able to provide a rich and more dynamic account of economic development and the transmission of the crisis. Further, rather than labour being treated as one among many institutions, it is privileged in its potential role of instigating deep social change. Keywords Combined and uneven development, crisis, Central and Eastern Europe, Trotsky, labour, Introduction Following the comparative capitalisms (CC) research agenda (Crouch et al. 2009; Hall & Soskice 2001), attempts have been made to grapple with the question of what sort of capitalism [...]

This article assesses attitudes toward the market economy among educators of the Former Soviet Union and Eastern Europe before and after a one-week intensive seminar in economic education. Specifically, it looks at how attitudes differ, at the start of the seminar, by the reform status of the educators' countries and how those attitudes change after a week of market-based economics instruction. Analysis shows that attitudes do indeed vary by reform status, with educators from the more reformed countries showing much more positive attitudes at the start of the seminar than those from the less reformed countries. Additional influences on attitude include gender, education level, economics knowledge, years in education, and prior western-style economics education. After an intensive seminar in economic education, all educators show improved attitudes toward markets, with greater gains among those from the less reformed countries., INTRODUCTION From 1995 through 2006, the Council for Economic Education (CEE) in New York, through its Cooperative Education Exchange Program (CEEP), conducted a series of economics seminars for educators from [...]

Two UK-based geographers specializing in the economies of East-Central Europe and the former Soviet Union review the character and consequences of the global economic crisis in these countries, focusing on how forms of gee-economic and geopolitical integration undertaken during their post-socialist transitions have contributed to economic vulnerabilities exacerbated by the emerging crisis. Particular emphasis is placed on the consequences for East-Central Europe of adhering to a development model based on internationalization of the financial sector, cheap credit, and increasing reliance on exports to compensate for energy resource imports. The authors explore the likely distancing within the broader region of a group of new 'insiders' (Euro-zone countries as well as the new EU member states) from an uneven landscape of 'outsiders' (including Ukraine and other FSU states), as well as some of the recent tensions emerging between old and new EU member states. Journal of Economic Literature, Classification Numbers: F210, F360, G010, O180, P200. 8 figures, 9 tables, 111 references. Key words: global financial crisis, East-Central Europe, former Soviet Union, European Union, European Commission, European Economic Area, European Neighborhood Policy, European Central Bank, CIS, U.S. banks, EU banks, cure, currency devaluation. Eurasian Geography and Economics, 2010, 51, No. 1, pp. 1-34. DOI: 10.2747/1539-7216.51.1.1

This paper explores the impact of the USD/EUR exchange rate on inflation in the Central and East European countries (CEEC). In particular, we analyse which portion of the variation in inflation in the CEEC can be attributed to the USD/EUR exchange rate, as an external shock. In addition, we study to what extent USD/EUR exchange rate shocks influence inflation in the CEEC. A vector autoregression model with block exogeneity restrictions is employed to trace the impact of the USD/EUR exchange rate fluctuations on inflation at each stage along the distribution chain. We find that the USD/EUR exchange rate has different levels of impact on inflation among the CEEC with different exchange rate regimes. Our empirical exercise shows that the USD/EUR exchange rate accounts for the Largest share of inflation volatility in the CEEC with stable exchange rates of the domestic currency against the euro. Furthermore, the extent of the USD/EUR exchange rate's influence on inflation in the CEEC is the largest in the economies with stable exchange rate regimes. These results might be important in the context of the price stability requirement of the Maastricht Criteria: in addition to the internal challenge of keeping tow inflation and dealing with the difficulties of the price convergence process, the applicant countries could face problems beyond their influence. doi: 10.1057/ces.2008.37 Keywords: external shocks, USD/EUR exchange rate, Central and East European countries, exchange rate pass-through, vector autoregression JEL Classifications: F41, E3, 011, P2, INTRODUCTION During the last few years, there has been growing empirical support for the idea that external factors might have a leading role in explaining business cycles in small open [...]

This article analyzes the interaction between economic crises and partisan politics during International Monetary Fund program initiation in Latin America in the 1980s and Eastern Europe in the 1990s. The author argues that economic crises are at least in part in the eye of the beholder, and therefore policy responses reflect the interaction between crisis intensity and the government's partisan interpretation of the crisis, which in turn depends on the nature of the economic crisis and its broader regional and international environment. Using cross-country statistical evidence from the two regions, the article shows that certain types of crises, such as liquidity shortfalls, elicit similar responses across the ideological spectrum and regional contexts. By contrast, debt repayment and domestic crises are more prone to divergent ideological interpretations, but the extent of partisan divergence is context sensitive in that it occurred during the Latin American debt crisis but not in the post-communist transition. Keywords: economic crisis, International Monetary Fund; economic reform; partisanship; Eastern Europe; Latin America

In this article, we sought to empirically validate an instrument for measuring country institutional profiles for the promotion of entrepreneurship in a sample of 254 business students from three emerging [...]

The structural conditions in the 'borderline' countries were never favorable for post-communist democracy promotion and external democracy promotion. The most effective approach to democracy promotion thus far was the combination of political conditionality with significant political/economic incentives, best illustrated by the European integration process.

The relation between macroeconomic variables and ideals of future work are examined in students from Central and Eastern European (CEE) countries and the United States. It is concluded that macroeconomic factors are markedly related to job values, whereby wanting a well-paid job is associated with poorer economic conditions, and wanting a career is associated with better economic conditions, while helping others and having time for family are least important to CEE students.

In Central and Eastern Europe, economic reform consistent with Bretton Woods and European Union (EU) demands has replicated not only the rules and institutions that prevail in Western societies but also their patterns of consensus and conflict. Although central bank policy has been largely depoliticized in the 2004 accession states through the institutionalization of central bank independence, agricultural interests were mobilized--in some instances against the EU--in the course of accession negotiations. This article argues that as they engage in the explicit transfer of economic policy to postcommunist states, international institutions simultaneously transmit beliefs about who has legitimate claims on the state. The methods through which international institutions help construct new markets in transition states have consequences for the development of domestic cleavages and for the cultivation of political support for economic integration. Keywords: central banks; agriculture; postcommunist transition; international institutions; constructivism

The Central and Eastern European transition countries used Foreign Direct Investment (FDI) as a tool for economic growth from 1980 onwards but the expected 'trickle down' effect did not always occur. The situation of FDI in transition countries as it exists in 2006 is assessed through an examination of the existing literature on the subject.

Impact of eastern European economies' organizational environment on their relation with Western countries in business transactions is analyzed.

The study shows that in some countries the African American economy is very important for supporting household incomes and in other countries the household or social economies are predominant. It is hypothesized that economic activities that take place outside the law could lead to a decline in confidence in the state, although there are important variations between countries.

A study examines the powerful role of the national idea, both positive and negative, in the regime, state, and economic transitions that have taken place in post-communist Eurasia. The variable effects of imperial rule in the region, from the Habsburgs through to the experiences of the Soviet bloc and the Yugoslav, Soviet, and Czechoslovak ethnofederations are emphasized.

A critical discussion of a widely popular ideas-centered interpretation of transformative processes in post-communism, the view that during the 1990s, politics in Eastern Europe was dominated by the ideology of neoliberalism is presented. Arguments reveal that the ideas-centered analyses that dominate accounts of socioeconomic change in post-communism rest on questionable assumptions, faulty logic, and fragmentary empirical findings.

An econometric model analyzing the effects of adopting the European Unions acquis communautaire on the labor market trends in Central and Eastern European Countries is presented. The model also examines the effect of institutional uncertainty on job creation and job destruction in these countries. The risks of adopting inefficient social and labor policies on employment are also assessed through the model.

Byline: Bart van Ark (1,3), Marcin Piatkowski (2) Keywords: O31; O47; O52; P27 Abstract: This paper investigates the productivity performance of CEE countries vis-a-vis the EU-15 during the 1990s to detect sources of convergence between the two regions. The paper shows that changes in labour intensity have been an important source of productivity convergence during the 1990s, and are likely to remain so in the near future. It is also found that despite lower income levels, ICT capital in the CEE-10 has contributed as much to labour productivity growth as in the EU-15. Industry analysis shows that manufacturing industries that have invested heavily in ICT have been key to the restructuring process. As such ICT may therefore have been an important source of growth but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services. The paper therefore includes a New Economy Indicator that reflects the existence of conducive environment for continued ICT investment and diffusion. It shows that further reforms are much needed for CEE countries to enter a second convergence phase in the coming decades. Author Affiliation: (1) Groningen Growth and Development Centre, The Netherlands (2) TIGER (Transformation, Integration and Globalization Economic Research) Leon Kozminski Academy of Entrepreneurship and Management, Warsaw, Poland (3) The Conference Board, New York, USA Article History: Registration Date: 01/01/2004 Article note: This paper is written as part of a project on 'Information &amp Communication Technologies as Drivers of Economic Development in Post-Communist Countries' sponsored by USAid (Grant No. 220/001.6). The industry data for the EU-15 (section 4) are updated estimates derived from a study sponsored by DG Enterprise of the European Union (O'Mahony and van Ark 2003). We are grateful to Robert Inklaar and Edwin Stuivenwold for statistical assistance, and to various commentators on this paper at seminars and workshops. We benefited in particular from comments by Bart Los and Marcel Timmer. The authors are solely responsible for the results presented and any remaining omissions.

The reasons for the positive growth recorded by the Eastern European and Baltic countries are explained. It was found that total factor productivity and GDP in the region grew together with the inflow of foreign direct investment (FDI), and the marginal contribution of FDI to growth is greater than that of domestic investment.

A study analyzing the impact of bringing central and eastern European countries into European Union fold, on market access, regional gross domestic products, employment rates, and regional economies, within European Union, is presented.

The impact, of inducting new members from central and eastern Europe in European Union, on the automobile and automotive industries of the region, is analyzed.

The 'demand-driven' approaches to development planning currently promoted by development agencies assume that it is possible to obtain accurate information about community preferences for project outputs. Whereas dozens of techniques are used to assess community preferences, limited research has been conducted on the potential effects of data collection mode on findings. In this research, four different modes (a household, 'intercept' and telephone survey, and a series of focus group discussions) were all employed to assess residents' willingness-to-pay for improved water supply services in Odessa, Ukraine. Findings from these exercises suggest that data elicitation mode effects such as social desirability and time pressures can bias the results obtained in demand-assessment research and lead to substantively different conclusions and policy recommendations. Key words--willingness-to-pay, contingent valuation, demand assessment, water supply, CIS/ Eastern Europe, Ukraine

Byline: Christian Amplatz (1) Keywords: [beta] and [sigma] convergence; Central and Eastern Europe; club convergence; comparative growth analysis; Eastern Enlargement of the EU; economic convergence Abstract: A critical discussion of a comparative growth analysis about Central and Eastern European (CEE) countries is performed. The main conclusion is that there was economic convergence for most CEE accession candidates, but not between them and Western Europe. Results do justify a separation into first and second-wave accession countries, but also undermine differences in Central and Eastern Europe between accession and non-accession countries. This paper critically examines theories and empirical studies for three types of convergence, namely [beta],[sigma] and club convergence. Each can be in absolute terms or conditional to the long-term equilibrium (steady state) for each country. Empirical results are provided for all types of convergence from 1996 to 2000, both with population-weighted and non-weighted data. The analysis is performed for differently framed country subgroups considering even Western Europe for better comparability. Once absolute convergence is found through a unit root test about a standard deviation time series of cross-sectional income per capita, the regression coefficient for initial income per capita with the average growth over the sample period as dependent variable ([beta] convergence) establishes the speed of this process. The same method applies to the conditional version by using the distance of the income from the corresponding steady state instead of the level of GDP. Then Markov chain probability matrixes (club convergence) provide information about the past behaviour of the whole cross-sectional income distribution over time, but also about intra-mobility of single countries. Author Affiliation: (1) Ulmenstrasse 3, D -- 60325, Frankfurt am Main, Germany Article History: Registration Date: 15/09/2004

The economic effects of post-communist transition on literary culture, which was traditionally highly valued in Eastern Europe, are examined. The changes in the environment for literary publishing and the extent of loss suffered by the writers in post-communist societies since 1989 are illustrated.

The exchange rates for nine Central and Eastern Europe countries are only partially explained by the Balassa-Samuelson effect.

Byline: Dalia Grigonyte (1) Keywords: currency board; exchange rate regimes; fiscal discipline Abstract: The paper focuses on the impact of currency boards on fiscal policy in transition economies. Starting with an overview of theoretical and empirical studies in the related area, it tests for the interaction between monetary policy regimes and fiscal policy in Central and Eastern European countries who aim for the membership in the European Union. The theoretical background of this study lies in the model of Tornell and Velasco (1998). They demonstrate that fiscal transfers do not ultimately depend on the chosen exchange rate and monetary policy, but only on the world's real rate of interest and the rate of time preference of the fiscal authority. A sample of 10 accession candidates constitutes a group of countries which go through similar macroeconomic stabilisation processes but have chosen different nominal anchors. The paper investigates whether there are any systematic differences between those countries with a currency board arrangement and those without. The empirical evidence suggests that currency boards enhance fiscal discipline in Central and Eastern European countries. Author Affiliation: (1) Center for European Integration Studies/ ZEIb, University of Bonn, Bonn, Germany Article History: Registration Date: 17/10/2004

The relationship between European Union (EU) manufacturing imports from the south and central and the Eastern European Countries (CEEC) is analyzed. It concludes that an increase in the high-skilled to low-skilled labor ration lowers competition in intermediate goods trade between the EU-South and the CEEC.

Abstract The purpose of this paper is to calculate purchasing power parity rates and the real exchange rate using several methods of calculation to estimate long-run equilibrium real exchange rates [...]

The article develops a model of exchange rate regime choice centered on the tradeoff between internal price stability and external competitiveness. The model allows for institutional costs of altering exchange rate arrangements. The main implication of the model is a nonlinear relationship between the rate of inflation and the choice of regime for the next period. The model also suggests that a major inflationary shock, like the one to which all Central and Eastern European economies were subject when they allowed prices to be determined by the market, should give rise to a tightening of the exchange rate regime, followed by a gradual introduction of more flexibility as inflation subsides. A series of regressions on a sample of thirteen Central and Eastern European economies yield results consistent with the hypothesis. JEL Classification Numbers: F31, F41 Keywords: Transition, exchange rate policy, inflation, I. Introduction The choice of exchange rate regimes by Central and Eastern European (CEE) transitional economies exhibits a surprising degree of heterogeneity both across countries and over time. The region [...]

To various degrees, Central and Eastern European countries increased their participation to the world economy over the last ten years. In particular, they accepted the challenge of trade openness and attracted significant foreign direct investment. This paper assesses the impact of these major changes on output growth in this region. Results of a panel data analysis suggest that increased EU integration and openness as well as reduced import duties were favourable to development. There is also evidence that increased FDI inflows may be associated with better output performances. Keywords: Transition, Openness, FDI, Development, Panel data JEL Classification Index: F15,052, 1. Introduction During the first ten years of transition from plan to market, Central and Eastern European countries (CEEC) implemented comprehensive reform programs and achieved essential economic transformations. (1) The [...]

Abstract The balance of payments barrier is the biggest obstacle to growth in Eastern Europe. This problem stems from the existence of individual national currencies which dynamically increases the risk [...]

The privatization of business enterprises in the countries of Eastern Europe has brought beneficial increases in sales and productivity. After more than three years, labor productivity increases are more significant in private enterprises than in state companies, except in Romania.

The author is with the Federal Ministry of Economics and Technology in Berlin. This paper was presented at the conference 'Eine unterschatzte Dimension? Zur Rolle wirtschaftskultureller Faktoren in der osteuropaischen Transformation' in Bremen December 7-8, 1998. The author would like to thank the participants of this conference and two anonymous referees for helpful suggestions on an earlier draft. The views expressed in this paper are strictly those of the author., ********** The Heterogeneity of Progress and Performance Assuming that Central and Eastern Europe lacked the political, legal, economic, and social institutions of a market economy, it has generally been argued [...]

SOKOL M. (2001) Central and Eastern Europe a decade after the fall of state-socialism: regional dimensions of transition processes, Reg. Studies 35, 645-655. Following the collapse of state-socialism a decade ago, Central and Eastern European countries (CEECs) opted for democracy and market economy. There was a widespread belief that transition to a market economy via neo-liberal 'shock therapy' would lead to a quick closure of the wealth gap with the West. A decade later, however, neo-liberal expectations of convergence under market conditions never materialized. Instead, 'New Europe' has been experiencing fragmentation and growing disparity between 'West' and 'East' and also within the 'East' itself. In examining regional patterns, and building on the strengths of institutional and 'radical' approaches, this article challenges neo-liberal accounts of uneven development in Eastern Europe. It argues that diverging economic trajectories should be understood in the light of the structural legacies of both the s tate-socialist and pre-socialist past and the way these are exposed to, and interact with, international political economy.

I. Globalization and economies in transition: the experience of the past ten years A. INTRODUCTION: THE HUMAN COSTS OF TRANSITION The transition over the past ten years to democracy and [...]

Byline: Agnes Benassy-Quere (1), Amina Lahreche-Revil (2) Keywords: currency pegs; currency baskets; euro; Central and Eastern European Countries Abstract: We study whether Central and Eastern European Countries (CEECs) have an incentive to use the euro as a monetary anchor. Adapting a cross-section estimation method initiated by Bayoumi and Eichengreen, we show that, compared to an optimum currency area standard, the CEECs have paid too much attention to the USD in the past and should prefer the euro to the dollar as a nominal anchor. Through a theoretical model that takes external constraints into account, we then show that the CEECs should also have an incentive to stabilize their currencies in real terms against a basket where the euro would be prominent. Author Affiliation: (1) University of Lille 2 and CEPII, 9 rue Georges Pitard, 75015, Paris, France (2) University of Amiens and CEPII, France Article History: Registration Date: 09/10/2004

A German economist analyses the structure of capital flows to Central and Eastern European countries following the Russian financial crisis in August 1998. Special attention is devoted to the behavior of equity flows and their impact on the stock exchanges in the region and on enterprises' ability to raise capital. In addition, the paper provides an assessment of the effects of the establishment of pension funds on the development of the stock exchanges and evaluates the prospects for several newly established trading places for stocks of companies from Central and Eastern Europe.

A challenge to the dualist model that commits the self-employed in Easter Europe to marginal economic sectors is presented. Data are used to demonstrate that there are two distinct classes of the self-employed in Eastern Europe.

The development of venture entrepreneurship has aided economic development in post-communist countries successfully transitioning to a market system. Proper institutional arrangements are a crucial factor in the growth of this sector.

The performance of Eastern European nations during their transformation from planned into market economies during the 1990s is compared to Austria's performance after World War II. Topics include Austria's successful policy of gradual change leading to economic growth and the failure of Eastern Europe to adapt to rapid market liberalization.

The successes of East European economies after 1948 were based on an idea of development that served the interests of those controlling those societies and not their citizens. When these economies began to fail in the 1970s and 1980s, the leaders switched to a market economy, but in a way that misunderstood the limits of its potential.