Monetary policy, macroeconomic adjustment and currency speculation under floating exchange rates: the case of Bulgaria

This paper deals with the Bulgarian experience with exchange rate policy and the related macroeconomic adjustment in the transition period. It is argued that in the context of the Bulgarian macroeconomic environment, the exchange rate regime and the exchange rate policy (or the lack of such) did play a crucial role in determining the patterns of macroeconomic adjustment in this period. A simple general equilibrium model is suggested that provides some insights into the stylized performance of an economy under certain assumptions, similar to those characterizing the transitional state of the Bulgarian economy. Finally, some aspects of Bulgarian macroeconomic performance in recent years are analysed on the basis of the available empirical information and using the framework of the theoretical model. The paper concludes with the policy lessons of this experience.     

Economic Transition in Central and Eastern Europe: Comparisons and Lessons

Abstract
There are three features which distinguish the global transition in Central and Eastern Europe: both economic and political systems are the focus of radical transformation, this institutional revolution has been largely peaceful, and a pluralistic political system emerged faster than capitalism in the economic sphere. The initial conditions, for example the inherited economic structure, the macroeconomic situation and the type of economic system, have an important impact upon the pace and effects of the subsequent market-oriented reform. There are four important reasons why the state should concentrate its activity on the sphere of its natural competence. These reasons are even more important in economies of transition. The speed of the subordinate processes of transition differs which gives rise to important issues of phasing. Macroeconomic stabilisation, microeconomic liberalisation and privatisation should be implemented at a speed close to maximum. The Polish economic reform shows that a radical and comprehensive economic program introduced in an initially socialist economy, under extremely difficult macroeconomic conditions, can be successful in spite of powerful external shocks .     

Structural changes of economics in poland and New German Countries

The process of transition of the Polish economy from a centrally planned to a market economy started in the 1980s by a series of attempts to introduce economic reforms. By 1990–95, more important changes took place. The political and economic changes in the German Democratic Republic began near the end of 1989. The first step was the monetary union of both German states in June 1990. Although German unification (in October 1990) took place relatively later than the Polish reforms, the East German changes were greater. This paper discusses various macroeconomic indicators in both regions for the period 1990–95. These indicators are the dynamics and structure of gross domestic product, population number and employment, unemployment rate, and consumption structure.     

Long-term macroeconometric models: The case of Poland

Long-term forecasts and scenario analysis should be based on macroeconometric models. The core of long-term models is extended by introducing production functions generating potential output. Their specification includes total factor productivity (TFP) being representative of technological progress. It depends on knowledge capital, i.e. human capital, domestic and foreign R&D. Several channels of transfer of foreign R&D can be distinguished.The potential output differs from the effective output, representing final demand, underlying business cycle fluctuations. To study potential disequilibria a system of equations explaining final demand must be established.Thus the long-term macroeconometric model must be a complete model. Its use may cover long-term forecasts and scenario analysis based on model simulations.The paper outlines the above specifications of the long-term model using as example a new model of the Polish economy. The model is medium-sized. It covers demand and supply side, including prices and financial flows. The results of multiplier analysis are shown revealing model feedbacks, including generation of business cycles. The results of its application are shown: long-term forecasts up to the year 2030 as well as scenarios of development of the Polish economy, including recession scenario.     

Factor-biased public capital and private capital crowding out

This paper studies the dynamic effects of public investment on private capital accumulation in a general equilibrium macroeconomic model of a small open economy with factor-biased public capital. I show that public investment induces rather complex private capital dynamics—falling in the short and in the long run, but potentially increasing along transition—if public capital augments private capital and private inputs are gross complements in production. Whether private investment is crowded in or out during transition critically depends on parameters that are empirically hard to measure, such as the labor supply elasticity and the elasticity of substitution between private inputs—a small increase in the latter from 0.5 to 0.6, for instance, turns a totally negative transitional effect into a predominantly positive one. These results help rationalize the lack of empirical consensus on the relationship between public and private investment.     

Monetary and fiscal policy transmission in Poland

This paper combines a fiscal structural vector-autoregression (SVAR) with a monetary SVAR for the Polish transition economy. Data are constructed from scratch in order to account for features of the transition economy and for delays in implementing legislated government spending and tax changes (fiscal foresight). For monetary policy, we find no price puzzles in the combined SVAR. Also, fiscal foresight variables have no statistically significant effects. We calculate an initial government spending multiplier of 0.70, which later peaks at 1.61 for the cumulative multiplier. This multiplier is much larger than multipliers estimated in previous studies not combining fiscal and monetary policy, where they were found to be close to zero. On the other hand, the tax multiplier is generally near zero in our study. We demonstrate the importance of combining fiscal and monetary transmission mechanisms when assessing the effects of government macroeconomic policies.     

The Bank of England quarterly model of the UK economy

The Bank of England first acquired a macroeconomic model of the UK economy in early 1973, and used it for forecasting in June and July of that year. The initial model was obtained from the London Business School (LBS), but the last 14 years or so have, on the part of both the Bank and the LBS, led to developments which now make the models no closer to each other than to other large scale models of the UK. This article describes the structure and central properties of the current version of the Bank model, which has some 663 variables, 134 of which are modelled by behavioural equations, 153 by technical equations, 212 identities and 164 exogenous variables. In order to provide a transitional step between the kind of models with which most macroeconomists are familiar and the full scale version of the Bank model, one part of the article presents a very simple stylized version of the full model. This is a stepping stone to the full model which is described and analysed on a sectoral basis in Part 3, with a complete listing of equations in Part 4. Some of the simulation properties, and hence full model dynamic responses, are considered in Part 5.     

Plans,disequilibria and macroeconomic policy simulations

In the paper some specific problems of applying a disequilibrium model of a centrally planned economy for policy simulation experiments are analysed. It is shown that a model in which demand, supply and plan output variables are simultaneously introduced can be used for policy simulation in a more effective way than a model which describes either demand or supply side of an economy. In the empirical part of the paper a disequilibrium-type model of the Polish economy is used for simulating alternative internal and external economic policies for 1971–80. It has been found that internal deflationary policies would have been relatively efficient in minimizing consumption excess demand at a given level of consumption output in the period investigated.     

The Optimal Speed of Transition: A General Equilibrium Analysis

We present a benchmark model for the optimal speed of transition from a state-owned to a private market economy, based on the consumption-savings decision in a closed economy. We abstract from frictions to focus on the macroeconomic conditions for accumulation of private capital and closure or restructuring of state-owned enterprises. It is shown that hard budget constraints compensate for too slow speed of enterprise closure but that an excess speed of closure may slow down transition because of output contraction effects. This will especially be the case if such a deviation occurs at early stages of transition.     

Privatization and Performance in Eastern Europe: Alternative Scenarios

The paper focuses on the possible outcomes of privatization and considers how different scenarios of privatization lead to varied macroeconomic performance. Alternative scenarios involve changes in efficiency, taxation, wages, income distribution and interactions with the world economy. The consequences of pursuing different scenarios of privatization are simulated using a Computable General Equilibrium (CGE) model. Illustrative simulations with the model are carried out for a representative economy, intended to depict a country at the outset of transition. The simulation results suggest that privatization can exert a favourable or adverse impact on the whole economy, depending on the way in which the performance of the newly privatized sector changes. The simulation analysis for Poland shows that some developments accompanying privatization processes might have contributed to recession and budget deficit.     

国际贸易与中国的实际经济周期——基于封闭与开放经济的RBC模型比较分析

本文先确定中国宏观经济波动的特征事实:消费波动与产量高度相关、投资波动大于产出的波动、净出口与GDP呈反周期变化。然后分别用封闭经济模型、小国开放经济模型和考虑了政府购买冲击的小国开放经济模型对中国经济进行实证检验。研究发现,封闭经济模型仅能解释产出、消费和投资波动的48.26%、24.39%和98.50%;而小国开放经济模型分别可以解释68.70%、69.51%、98.50%和TB/GDP率的97.42%;考虑了政府购买的小国开放经济模型的解释程度分别是83.91%、81.95%、99.63%和TB/GDP率的209.68%。比较分析表明开放经济模型比封闭经济模型能较好地解释中国的经济现象,并且随着政府购买引入到开放经济模型,该模型对经济的解释能力显著提高,说明这一模型更符合中国经济的特征事实。     

Environmentally Sustainable Transport: Definition and Long-Term Economic Impacts for Austria

The transition to an environmentally sustainable transport system involves a combination of technological and demand-side transport policies. Regulatory, educational and economic instruments can be used to enhance the development of cleaner transport technologies as well as the shift from road-based towards more environmentally benign modes of transport. This article provides estimates of overall economic impacts in the long term and describes the required change in the transport system. The article proceeds in three steps. First, this article reviews concepts of sustainability and applies them to transportation. Second, a small open economy computable general equilibrium model for Austria is developed to evaluate the long-term macroeconomic and sectoral impacts of a sustainable freight transport policy. Third, simulation results are discussed and conclusions drawn concerning the crucial features of a sustainable freight transport policy.Although the required transition within the transport system is substantial, the economic costs in terms of GDP are comparably low and employment is likely to increase slightly.     

Human capital and economic growth: A macroeconomic model for Pakistan

The paper presents a small macro model for Pakistan economy focusing the impact of investment in human capital on the key macroeconomic variables. The demand side is modeled along the Keynesian lines while the supply side is modeled as per neoclassical theory of production. This framework allows analyzing the effects of investment in human capital on supply side variables (like labor, physical and human capital) and demand side variables (like consumption and investment) at the same time.The model has small forecasting horizon in which three alternative scenarios regarding government spending on education are evaluated from 2012 to 2016. The model shows that the link between human capital and labor market is weak however a change in education spending affects output through enhancing productivity and through multiplier-accelerator principle. Though the model is small in size and forecasting horizon, it can help in evaluating the future paths of key macroeconomic variables associated with education spending.     

玉米生产规模和价格波动关系浅析

粮食价格与产量的波动是市场经济的常态,认识中国粮食价格与产量的波动规律,为宏观经济调控提供理论依据,是经济学的热点之一。结合1998—2008年相关数据,运用传统的蛛网模型研究中国玉米产量和价格的自发波动规律,得出了由市场调节的玉米产量和价格的关系,从而浅析如何稳定玉米生产,同时提出了相应的政策措施。     

An econometric model of the polish economy in the transition period

This paper discusses changes which took place in the Polish economy from 1990 to 1995. The analysis is provided by statistical and econometric methods, applying the mini-model of the national economy. The econometric model was originally estimated on the basis of monthly data covering January 1990 to December 1991. To verify the hypothesis that essential changes took place in the Polish economy during its transformation toward the market economy, the minimodel was re-estimated for the sample from January 1993 to June 1995. The parameter estimates evaluated for both periods are presented and discussed here, as well as new versions of these stochastic equations which did not have satisfactory statistical characteristics for the 1993–95 sample.     

Labour market transitions and unemployment duration: Evidence from Bulgarian and Polish micro-data1

The segmentation of the labour market is one of the most striking characteristics of the transition process in Central and Eastern European countries. Not only do the young, unskilled workers and women face a high risk of unemployment, but joblessness also varies significantly geographically. This paper sheds some light on labour market segmentation in transition countries by analysing individual records of individuals registered at the labour offices of two Polish regions (Warsaw and Ciechanov and two Bulgarian regions (Sofia and Botevgrad) over the initial three to four years of the transition to a market economy. The empirical results confirm the existence of highly selective firing and hiring processes in the Polish and Bulgarian labour markets. Overall, unskilled or poorly educated workers have the highest probability of becoming unemployed and remaining without a job for a long period of time. We also analysed the determinants of unemployment duration across regions and over time using a piece-wise constant hazard model with multiple destinations, i.e. employment and exit from the labour force. The results suggest that the unemployed with a high education and previous experience in the private sector have a higher probability of getting a new job, especially in the more dynamic labour markets, while those without previous work experience tend to stay unemployed for a longer period of time and often leave the labour market. The econometric results also suggest that the reforms of the unemployment benefit systems have produced important effects on unemployment flows.     

Formal and real ownership structure of the Polish economy: state-owned versus state-controlled enterprises

This article analyses the difference between the state’s formal and real shares in the Polish economy. We identify two basic types of corporate control exercised by the state over enterprises through ownership (in the case of majority ownership) and non-ownership tools (in the case of minority ownership). Consequently, we distinguish between two types of state enterprises: state-owned enterprises (SOEs) and state-controlled enterprises (SCEs). In post-communist economies, SCEs mainly originate from so-called reluctant privatisation, in which the transfer of ownership rights takes place without the appropriate transfer of control rights. We discuss the tools of non-ownership control used by the state. Our estimates of the real share of state enterprises in the Polish economy (which include both SOEs and SCEs) show that it is almost two times higher than the formal share (only SOEs). The share of state enterprises is also highest in the group of Poland’s largest and most important firms. We conclude that the real importance of state enterprises in the Polish economy is much higher than might be expected if only the formal share of state ownership is taken into account.     

Managing capital flows in Poland, 1995-98

Poland has been encouraging foreign direct investment, including the purchase of company shares, but has been attempting to limit the inflow of speculative short-term capital. The policy so far has been effective without the use of any capital controls. The paper explains the policy and the reasons for its apparent success. The paper also discusses the evolving threats to macroeconomic stability of the Polish economy and policy responses to these threats.     

开放经济条件下货币政策分析框架的选择

作为封闭经济条件下IS-LM模型和IS-LM-AS模型在开放经济中的拓展,M-F模型和M-F-D模型成为20世纪60—90年代开放经济宏观经济分析的工作母机。在研究开放经济中的货币问题时,M-F和M-F-D模型由于其简单明了、易于处理等优点,仍然是优先的分析工具选择。而作为M-F和M-F-D模型的新近发展,新开放经济宏观经济学框架在目前来说还难以运用于转型经济的货币政策研究。     

汇率制度、金融加速器和经济波动

本文建立一个小型开放经济模型,目的之一是探究中国开放经济中金融加速器的存在性;二是针对中国1997—2008年间宏观经济波动特征分析不同汇率制度下金融加速器效应的差异,以验证相对浮动汇率来说,固定汇率是否会加大经济波动。通过使用中国数据和ML方法估计含和不含金融加速器的DSGE模型发现,似然率检验接受前者而拒绝后者。模拟结果显示含金融加速器模型模拟数据与实际数据特征更接近,再次验证了开放经济中金融加速器的存在。固定汇率下金融加速器效应强于浮动汇率,部分解释了1997—2008年间中国经济在不同汇率制度下宏观变量波动的差异。金融加速器主要传播和放大投资效率和货币政策冲击对经济的影响,对货币需求和国外冲击也有一定的放大作用,但对技术和偏好冲击的放大作用不明显。