Currency Boards in the Baltic Countries: What Have We Learned?

Straightforward exchange rate arrangements known as currency boards have gained popularity during the past decade. Among transition economies, Estonia first introduced a currency board in 1992, followed by Lithuania in 1994 and Bulgaria in 1997. Currency boards have been useful in achieving macroeconomic stabilisation, and they may have helped the Baltics become the first countries of the former Soviet Union (FSU) to achieve economic growth after the slump in production of the early 1990s. Moreover, Baltic inflation performance has been substantially better than in other FSU countries. Both in Estonia and Lithuania the present exchange rate system has been accompanied by strong real appreciation of the currency, although it is widely accepted that the currencies were very much undervalued when they were initially pegged. However, if rapid real appreciation is accompanied by increases in labour productivity, the present pegs can be maintained. Banking crises in Estonia and Lithuania have not been particularly severe, so apparently rigid currency pegs have not been accompanied by excessive financial sector instability. The tight fiscal policies pursued in both countries, especially Estonia, have been instrumental to the success of these currency board arrangements.     

Corruption perceptions versus corruption incidence: Competition for rents across Russian regions

This paper examines the effects of different competitions for favors on the prevalence and perceptions of corruption across Russian regions. Results show that while greater general competition (measured by regional population size), increases both perceived and actual corruption, competition among enterprises only increases corruption perceptions, while competition among government employees increases actual, but not perceived, corruption. Privatization activity and unemployment fail to affect either measure of corruption. Finally, the effects of urbanization differ on perceived and actual corruption. Besides Russia, these findings are somewhat unique to the broader literature.     

The impact of a biased starting position in a single negotiation text type mediation

This article examines whether a biased starting position impacts the outcome of negotiations using a Single Negotiating Text (SNT) (Raiffa 1982) type, two-party mediation. Two separate experiments were conducted, one in Helsinki and one in New Mexico, that systematically tested this issue and related questions. The article argues that, if a biased starting point is not compensated for by the path taken in subsequent steps, the bias will have considerable impact on the final outcome of the negotiations. In both experiments, the mediator played a very insignificant role, since the bias was incorporated into the text prior to the initiation of the exercise. In actuality, the experimenter played the role of the mediator, but only facilitated an exchange of information between the parties. The results of our experiments strongly support the hypothesis that such bias has a significant impact on the outcome of the negotiations. The article concludes by presenting suggestions for developing starting SNTs.