Benefits and Dangers of EU Enlargement

A new macroeconomic evaluation of EU enlargement is undertaken with a world macroeconomic model taking into account all possible integration effects: trade effects, Single Market effects, factor movements (FDI, migration) and the costs of enlargement. Due to the differences in size of the regions involved, on average the CEEC – measured in terms of real GDP – will gain around 10 times more from enlargement than the EU. Hungary and Poland can increase their real GDP by around 8 to 9 percent over a 10-year period, the Czech Republic gains a little bit less (5 to 6 percent). The EU on average would gain around 0.5 percent of real GDP over a 6-year period. Although, on average enlargement is a win-win game, the impact is quite different in the separate EU member states, with Austria, Germany and Italy gaining the most and losses for Spain, Portugal and Denmark. Hence, EU enlargement may not only be beneficial but might be a risky undertaking. Due to the regional different impact, enlargement acts like an exogenous shock leading to asymmetric disturbances in the EU. This could pause the process of business cycle synchronisation and might impair monetary policy in Euroland at the beginning of the enlargement process. A two-step integration of the CEEC into the EU – first the participation in the Single Market and only later into the EMU – is therefore preferable under the aspect of macroeconomic stability in Euroland.     

Selected transition and Mediterranean countries: an institutional primer on EMU and EU accession

The paper examines the institutional channels through which Economic and Monetary Union (EMU) in the European Union (EU) can affect the transition countries of Central and Eastern Europe and three Mediterranean countries that aspire to join the EU.
After describing the current institutional framework for relations between the EU and these countries, the paper considers two categories of institutional implications of EMU. The first stems from the need to satisfy the Maastricht convergence criteria before joining the euro area. Although the Maastricht criteria are not accession criteria, many of the countries reviewed are already formulating their macroeconomic policies in a way that will facilitate convergence toward the Maastricht targets. The second implication stems from the need to adopt the EU's institutional and legal provisions in the area of EMU, such as those referring to the establishment of independent central banks, the prohibition of central bank financing of the government and the liberalization of capital movements. Finally, the paper discusses some of the key policy issues that EMU raises for the countries reviewed, in particular regarding exchange rate policy, capital account liberalization and the possible conflict between growth-enhancing measures and the Maastricht criteria.     

Business cycles in EU new member states: How and why are they different?

This paper uses the business cycle accounting framework to investigate the differences between economic fluctuations in Central and Eastern European (CEE) countries and the euro area. We decompose output movements into the contributions of four economic wedges, affecting the production technology, the agents’ intra- and intertemporal choices, and the aggregate resource constraint. We next analyze the observed cross-country differences in business cycles with respect to these four identified wedges. Our results indicate that business cycles in the CEE countries do differ from those observed in the euro area, even though substantial convergence has been achieved after the eastern EU enlargement. The major differences concern the importance of the intra- and intertemporal wedges, which account for a larger proportion of output fluctuations in the CEE region and also exhibit relatively little comovement with their euro area counterparts.     

Managing TFT-LCDs under uncertainty: When crystal cycles meet business cycles

Understanding the correlation between the crystal cycle and the business cycle is important, because it can help managers to anticipate change, reduce environmental uncertainty, and formulate operational objectives. To this end, we focused on China and the U.S. in our analysis. We found that the economic indicators that were the most relevant in the characterization of China's huge and burgeoning TFT-LCD market are gross domestic production and industrial production. We complemented this finding by conducting similar analyses in the U.S. market using a more comprehensive list of economic indicators.     

Macroeconomic surprises and short-term behaviour in bond futures

This paper analyses the effect of macroeconomic news on the price of the ten year Treasure bond future. We consider 15 fundamentals and we analyse the effect of their forecasting errors conditional upon their sign and the momentum of the business cycle. To obtain a smooth effect of the news arrival we estimate a Polynomial Distributed Lag model. Using 10 minutes sampled data for 9 years, we conclude that 1) releases affect the bond future for only few hours, 2) their effect depends on the sign of the forecast error, 3) their effect also depends on the business cycle and 4) the timeliness of the releases is significant.     

当前我国经济运行的周期性波动特征

目前我国经济运行正处于存货投资短周期波动的扩张期、固定资产投资增长短周期和中周期波动的扩张期、产业结构升级中周期波动的衰退期和中长周期波动的复苏期。与这一系列经济活动的周期性变化特征相对应 ,我国GDP增长正处于短周期波动的扩张期、中周期波动的复苏期和中长周期波动的谷底。我国经济已进入了新一轮的快速增长期 ,而且短期内不会出现大幅度波动现象 ,政府仍应采取中性宏观经济政策。     

The New Keynesian business cycle achievements and challenges

The New-Keynesian (NK) business cycle model has presented itself as a potential “workhorse” model for business cycle analysis. This paper seeks to assess afresh the performance of the baseline NK model and its various extensions. The main theme of the paper is that although the dynamic NK literature has secured a robust defence to criticism arising, inter alia, on account of lack of microfoundations, it still has a long way to go in terms of providing a fully satisfactory model of the business cycle. In this regard, it is conjectured that explicitly accounting for the role of heterogeneity in business-cycle dynamics could lead towards a viable solution.

解读马克思与熊彼特的"二分法悖论"

理论界流行着关于马克思与熊彼特的"二分法悖论",马克思认为"资本主义制度最终不能继续生存是因为其经济失败",而熊彼特则认为"资本主义制度最终被摧毁是因为其创新而取得的经济成功".本文旨在通过比较马克思与熊彼特的经济发展的思想后,探讨了这两位经济学家得出截然不同的结论的原因.     

Re-employment probabilities over the business cycle

Using a Cox proportional hazard model that allows for a flexible time dependence in order to incorporate business cycle effects, we analyze the determinants of re-employment probabilities of young workers in the USA from 1978–1989. We find considerable changes in the chances of young workers finding jobs over the business cycle despite the fact that personal characteristics of those starting jobless spells do not vary much over time. Therefore, government programs that target specific demographic groups may change individuals’ positions within the queue of job seekers, but may only have a more limited impact on average re-employment probabilities. Living in an area with high local unemployment reduces re-employment chances as does being in a long spell of non-employment. However, the damage associated with being in a long spell seems to be reduced somewhat if a worker is unemployed in an area with high overall unemployment.

Nowcasting sales growth of manufacturing companies in India

The performance of private corporate sector is used as an important demand indicator for monetary policy making. As these data are received with a lag, assessing and monitoring of corporate sales on a real-time basis poses a significant challenge to policy makers in India. In this context, this article attempts to nowcast quarterly sales growth of Indian manufacturing companies and GDP growth of India using dynamic factor modelling framework. A multiple-level framework through turning point analysis and elastic net structure is used to overcome the overfitting problem during variable selection. Empirical results show improvement in forecast accuracy for one quarter ahead nowcast using 3-factor and 4-factor models over the benchmark model. However, absolute dominance of 3-factor models over 4-factor models was not established. As such, the article has proposed a forecast combination technique to nowcast sales growth of manufacturing companies in India.     

Hans Singer's model of the severity of recessions

This paper draws attention to the innovative but neglected workof Hans Singer on the dynamics of unemployment. Influenced byKeynes, in the late 1930s Singer enquired into the relationshipbetween the inflow into unemployment—resulting primarilyfrom (involuntary) separations from employment—and thesize of the resultant fluctuations in the level of unemployment.His focus was on the determinants of the severity—measuredin terms of how far unemployment rises—of recessions.We illustrate his approach by looking at quarterly data forthe claimant count and its associated inflow and outflow inthe UK over the period 1989–2003, a period which includesone major recession episode. In addition to drawing attentionto Singer's ideas, the paper also extends his model by takinginto account recent empirical evidence on the behaviour of oneof the key variables in his model. We argue that, with thisextension, Singer's elegant and parsimonious model of unemploymentdynamics is a useful complement to Keynes's ideas on the fluctuationsin aggregate demand and output, and is of contemporary relevance.