Empirical information on beef production in regions of Namibia as an aid to restructuring the livestock farming industry along equitable lines

The paper considers the regional influence of prices and access to markets on beef numbers in Namibia, given the present inequalities, by using econometric analysis of time‐series data. This is relevant because Namibia is in a process of structural adjustment following independence in 1990. and in view of the livestock industry's importance in the Namibian economy. The results accentuate the role of access to markets in beef production in Namibia. Where access is severely restricted due to lack of infrastructure, such as processing facilities and adequate transport for example in the communal regions, beef producers do not act on price incentives, or cltmatological and ecological variables. However, beef producers with limited access to markets, mainly due to high transport costs, do react to environmental changes, but not to price incentives. Only producers with easy access to markets react to both environmental changes and price incentives. The major conclusion is that the present production and marketing structure in Namibia with respect to beef is probably not optimal. The results highlight the need for an overall policy which accounts for all related industries, producers, consumers and other relevant factors simultaneously.     

Spillovers of the Conventional and Unconventional Monetary Policy from the US to South Africa

This paper assesses the effect of US monetary policy on South Africa during the period 1990–2018. We separately analyse and compare the effect of conventional monetary policy, before the Global Financial Crisis, and unconventional monetary policy, after the US monetary policy reached the zero-lower bound. Our impulse response function results indicate that monetary policy in South Africa responds mainly to local inflation, economic activity and financial conditions. While there is strong correlation between the global and South African financial cycle, the financial cycle is not transmitted to the real economy because of the sluggish response of industrial production and domestic credit, especially after the global financial crisis. We see this as an indication of the effects of structural issues to the real economy and constrained households’ balance sheet which has prevented the local economy to take advantage of low local interest rates and the global economic recovery after the crisis.     

A general equilibrium evaluation of trade and industrial policy changes in Austria and Hungary

A General Equilibrium Evaluation of Trade and Industrial Policy Changes in Austria and Hungary. — Two linked static CGE models — based on 1990 data — are used to study effects of trade liberalization, problems of migration and changes in industrial policy in Austria and Hungary. The huge differences in factor endowment (Hungary is relatively labour abundant, Austria is relatively capital abundant) gives Hungary a strong competitive position in the production and export of lowwage products. Austria should have comparative advantages in products with high capital content when trading with Hungary. Although trade liberalization helps to improve welfare, much stronger effects follow from factor migration and capital accumulation through the transformation process in Hungary.     

Macroeconomic policy,output, and inflation in the former Czechoslovakia: Some evidence from the VAR analysis

Both macroeconomic policy and structural adjustment factors influenced the dynamics of output and inflation in the former Czechoslovakia during the first phase of its transition from central planning to markets. The results of VAR analysis indicate that, following price liberalization, the impact of structural adjustment processes on the level of output was somewhat stronger than the impact of macroeconomic policy. Moreover, it seems likely that a "looser" macroeconomic policy—advocated by many as a countermeasure to a large decline in industrial production—would only worsen the situation, bringing both higher inflation and a larger decline in industrial production.     

Fundamentals and Technical Trading: Behavior of Exchange Rates in the CEECs

We incorporate technical trading into the monetary approach to exchange rates, and estimate the model for four Central and Eastern European countries that introduced the policy of free floating in the late 1990s; the Czech Republic, Hungary, Poland and Slovakia. We find that past exchange rates contribute significantly to the determination of the spot exchange rate. We also find a feedback behavior driving the exchange rate to its fundamental value although the mean reversion parameter is small. Overall, this means that these currency markets have developed a complex structure of different trader types, which already is documented for developed countries.     

External adjustment

Gross stocks of foreign assets have increased rapidly relative to national outputs since 1990, and the short-run capital gains and losses on those assets can amount to significant fractions of GDP. These fluctuations in asset values render the national income and product account measure of the current account balance increasingly inadequate as a summary of the change in a country's net foreign assets. Nonetheless, unusually large current account imbalances, especially deficits, should remain high on policymakers' list of concerns, even, for the richer and less credit-constrained countries. Extreme imbalances signal the need for large and perhaps abrupt real exchange rate changes in the future, changes that might have undesired political and financial consequences given the incompleteness of domestic and international asset markets. Furthermore, of the two sources of the change in net foreign assets—the current account and the capital gain on the net foreign asset position—the former is better understood and more amenable to policy influence. Systematic government attempts to manipulate international asset values in order to change the net foreign asset position could have a destabilizing effect on market expectations. JEL no. F21, F32, F36, F41     

Complementing EMU: Rethinking Cohesion Policy

Under EMU, the less competitive regions of the EU—usuallyassumed to be peripheral—have been widely expected tolose ground, yet it is the core of the EU that, so far, hasappeared to have suffered from the advent of the euro. Thispaper looks at the processes behind regional divergence in theEU, and presents evidence on recent and prospective trends asEMU is consolidated. Bearing in mind that the imminent enlargementof the EU will radically change the political economy of theEU's efforts to assure ‘cohesion’, policy issuesare then discussed. Looking forward to the next renegotiationof the Structural Funds, it is argued that difficult decisionshave to be taken about the extent and character of EU policy.The option of an open method of coordination for cohesion policyis put forward as a means of resolving some of the hard choices.     

Monetary Policy in the Industrial World: Reflections on some Basic Issues

Abstract

This paper is a general assessment of monetary policy in major OECD countries during the 1990s. Within a simple policy framework that combines money growth, nominal income, and an open economy IS-LM type Mundell-Fleming model, the paper discusses the major strands in the conduct of monetary policy in developed industrial economies. It throws light on such problems as “rules versus discretion”, management of exchange rates, the effect of monetary changes on income and prices, and the rupture of monetary policy with other instruments of economic policy that also affect the economy.     

International Trade and R&D Investment: Evidence from Chinese Manufacturing Firms

A current concern for China's long‐term growth prospect is whether China can become an innovative economy and achieve industrial upgrading to compensate for the gradually declining competitiveness resulting from low‐cost labor. The present study examines this issue by exploring how trade participation impacts on the R&D investment of manufacturing firms through various channels. Merging China's Annual Manufacturing Survey Dataset and the Chinese Customs Dataset allows us to study such a relationship at the individual firm level. The empirical results suggest that channels such as geographical diversification of export markets, share of imports from high‐income countries, average unit value of imports, number of intermediate goods and capital goods imports, and the trade regime are significant factors that influence firm‐level R&D investment. The study discusses the policy implications of the empirical findings in relation to industrial and trade policies that may be potentially beneficial for China's transition towards an innovative economy.     

Narrowing the development divide in ASEAN: the role of policy

Association of Southeast Asian Nations (ASEAN) is divided. Most striking is the development divide that separates the newer members (the Cambodia, Lao People's Democratic Republic, Myanmar, and Vietnam countries) from the original ones (ASEAN‐6). More rapid growth in the CLV since the 1990s, driven by trade, investment, and other market reforms, has reduced these income differences. While the development divide has narrowed, huge gaps remain. Further narrowing of these gaps will require an increase in the speed and the breadth of policy reforms. A gaping hole in the policy landscape in ASEAN is the failure to address labour mobility adequately. Ongoing demographic transitions will result in greater labour outflow. The current policy void on labour migration not only limits the benefits from trade and investment liberalisation but also increases the cost of structural adjustment. Although rapid growth has resulted in convergence between countries, it has increased polarisation within countries. This can threaten social cohesion, as well as the sustainability of future growth. In order to make growth more inclusive, there is a need to invest more in education and health and to institute land reform. Apart from directly reducing social and asset inequities, such policies will produce a workforce more able to participate in the growth process and adapt to structural change.     

Russia’s invasion of Ukraine: assessment of the humanitarian,economic, and financial impact in the short and medium term

What are the economic effects of the Ukraine war for Ukraine, Russia, and the rest of Europe? In this study, the Vienna Institute for International Economic Studies (wiiw) sheds light on the immediate consequences on the one hand, but also on the medium-term structural changes caused by the largest armed conflict in Europe since the Second World War. The Russian invasion of Ukraine has triggered a humanitarian crisis. Pre-war, almost 19 m people lived in those regions that are currently directly affected. Refugee inflows to the rest of Europe are likely to be at least three times greater than in 2015/2016. As Black Sea ports come under Russian assault, Ukraine has lost its ability to sell more than half of its exports, primarily agricultural commodities and metals. Western financial support will become ever more important as the war continues. Turning to Russia, sanctions will have a very serious impact on that country’s economy and financial sector. Despite being partly hamstrung by the fact that a large proportion of Russian reserve assets are frozen in the EU and G7, the central bank managed to stabilise financial markets by a combination of confidence-building and hard-steering measures: capital controls, FX controls, regulatory easing for financial institutions, and a doubling of the key policy rate. The medium-term and long-term outlook is negative. As a result of the war and the sanctions, the rest of Europe faces a surge in already high inflation; this will weigh on real incomes and will depress economic growth. Many European countries rely heavily on Russia for oil and gas imports: import shares are over 75% in Czechia, Latvia, Hungary, Slovakia, and Bulgaria with respect to natural gas; Slovakia, Lithuania, Poland, and Finland with respect to oil and petroleum; and Cyprus, Estonia, Latvia, Denmark, Lithuania, Greece, and Bulgaria with respect to solid fuels. Aside from energy, the fallout via trade for the rest of Europe is likely to be small. Non-energy trade and investment links between Russia and many European countries have declined in importance since 2013. There are four main areas of structural change and lasting impact for the EU (and Europe more broadly) as a result of Russia’s invasion of Ukraine. First, the EU will get more serious about defence. Second, the green transition will gather pace. Third, broader Eurasian economic integration will be unwound. And fourth, the EU accession prospects for countries in Southeast Europe could (and should) improve.

     

Medium term economic dynamics of the Euro Area

This paper analysis the Euro area’s growth over the last 15–20 years and provides a medium term outlook. We find that in a no policy change scenario, growth will be subdued, essentially reflecting the influence of weak pre-crisis trends, most notably for TFP (especially since the mid-1990’s). This trend will be exacerbated over the coming decade by the ongoing negative fallout from the financial crisis and by the emerging drag on growth emanating from ageing populations. Unlike in standard recessions, the GDP losses relative to a pre-crisis projection appear to be permanent. The picture presented could potentially improve with the implementation of an ambitious programme of structural reforms focussed on boosting employment and productivity. Since the usefulness of such policies is controversial in the current juncture with constrained monetary policy, the paper also looks at the impact of such reforms in a realistically calibrated model and concludes that fears of large permanent deflationary effects from structural reforms are exaggerated.     

Development prospects and policy for Africa: Structural adjustment and beyond

Conclusion Africa’s economic recovery in the 1990s, though somewhat fragile, is very encouraging. Policy reforms, primarily in the form of SAPs, have led to improved economic performance. However, as we approach the post-SAPs era of the 21st century, African countries need to intensify efforts in the pursuit of sound policies and further structural reforms. Much higher growth rates, exceeding 7 percent annually, are deemed as necessary to be attained and maintained over a longer period for there to be meaningful reductions in poverty. This paper has advocated a set of policy areas which need to be given priority in Africa as the 21st century approaches. African countries are in a better position now, than anytime since the crisis of the 1980s, to build a path toward sustainable development. In that regard, maintaining market-oriented policy reforms remains the imperative for the immediate future and beyond. It is now up to Africa’s leaders to provide the requisite leadership for a home-grown, rather than donor driven, attempt at sustainable socio-economic development.     

Structural and investment policy as an instrument for modernizing the Russian economy

The article considers the current situation of the structural and technological imbalance in the Russian economy, as well as the nonproportional distribution of the factors of production and financial resources. The need for structural reforms in industrial production and income generation has been shown. The author discusses priorities of structural and investment policy, direction of new technological breakthrough in the long-term national strategy of entering international technological space. Special features of development of key economic sectors have been analyzed. In conclusion, quantitative estimates of economic dynamics in the long term up to 2035 have been given, which are predetermined by implementation of planned measures of structural and investment policy that provides potential for GDP growth until 2035 at a rate of no less than 3.5% on average per year.     

Great crashes in history: have they lessons for today?

Crashes in asset markets have been common throughout history,while financial crises, defined as crises in the banking system,have in some countries and periods been as common, and in othersmuch more rare. This article examines historical attitudes tothose events, and looks at some of the events themselves. Itis concluded first, that crashes need not inevitably be followedby crises; second, that crashes without crises do not have seriouseffects on the economy; and third, that there is a policy instrument,the lender of last resort, to prevent financial crises fromoccurring even should there be a substantial preceding fallin asset markets. These lessons from history, so it is argued,hold for recent events in South-east Asia and, indeed, applygenerally to any economy. The present can still learn from thepast.     

Open economy and financial burden of corruption: theory and application to Asia

We discuss why corruption remains high and show that corruption contributes to the Banking distress and to the rapid transmission across international stock and currency markets. Undeveloped ‘derivative securities’ markets make the risk from stress-induced volatility difficult to manage. Vinod’s (1999) closed economy model is extended to indicate the asymmetry of ‘home bias’ and the effect of corruption on the value at risk (VaR). Our theory predicts that capital flight controls will be many, foreign direct investment (FDI) will be low and cost of capital will be high in corrupt developing countries, which is supported by Asian data. We include some policy recommendations regarding financial institutions and markets.     

Exchange Rate Regimes: Middling Through

Abstract

The appropriate exchange rate regime, in the context of integration of currency markets with financial markets and of large international capital flows, continues to be a policy dilemma. It is found that the majority of countries are moving towards somewhat higher exchange and lower interest rate volatility. Features of foreign exchange (forex) markets could be partly motivating these choices. A model with noise trading, non-traded goods and price rigidities shows that bounds on the volatility of the exchange rate can lower noise trading in forex markets; decrease fundamental variance and improve real fundamentals in an emerging market economy (EME); and give more monetary policy autonomy. Central banks prefer secret interventions where they have an information advantage or fear destabilizing speculation. But in the model discussed in this article, short-term pre-announced interventions can control exchange rate volatility, pre-empt deviations in prices and real exchange rates, and allow markets to help central banks achieve their targets. The long-term crawl need not be announced. In conclusion, the regime's applicability to an EME is explored.     

Eliminating contradictions in the domestic metals market under crisis conditions

The influence of foreign trade policy on the development of Russian metallurgy increased from 1990 to 2000. The 2008–2009 crisis makes it possible to critique the achieved results and what consequences metallurgical companies’ orientation toward export has had on Russia’s domestic metals market and the circulation of metal. Alternatives are considered for possible development of metallurgy as affected by the basic trends of metal and capital in the world and domestic markets.     

The Netherlands Bank's narrow monetary policy

Summary In his article Mr. Timmerman describes the way the Netherlands Bank conducts its so-called narrow monetary policy,i.e. the policy pursued in the money and foreign exchange markets. The developments during the period October 1979–July 1981 serve as example of how movements in Dutch money market rates are dominated by exogenous factors. The author concludes that in a small open economy which maintains a stable exchange rate there is no room for an independent money market policy and that the hectic developments in the international money and foreign exchange markets have made illusory what until very recently was regarded as the most important objective of the narrow monetary policy,viz. an orderly money market. P.C. Timmerman was Deputy Director of De Nederlandsche Bank N.V. and is now Managing Director of De Bank van de Nederlandse Antillen. A similar article by the author appeared inZoeklicht op beleid, liber amicorum in honour of Professor G.A. Kessler.