The IMF and the countries of the Council for Mutual Economic Assistance

In November 1981 Hungary and, one week later, Poland applied for membership of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank). These applications have highlighted a subject which had been neglected for quite some time. This analysis deals with the problems and consequences which arise from the membership of countries of the Council for Mutual Economic Assistance (Comecon)—the economies of which largely conform to principles of central economic planning—in IMF, an institution organized according to market principles.     

Revised HWWA commodity price index

The pattern of international trade is changing constantly. The HWWA Index of World Market Prices of Commodities, which is weighted by imports, therefore needs to be adapted from time to time in order to preserve its relevance as an indicator of price trends in international commodity markets. It is now (as of September 2003) published with updated weights based on 1999–2001 import values and with a new price basis (2000=100).     

Russia’s foreign trade and the economic reforms

The Russian Federation now faces a totally new beginning as regards the shaping of its foreign trade relations. The demands made upon its external economic policy by the changes in the political and economic systems on the one hand and the collapse of the formerly unified economic zone of the Soviet Union on the other are so great that, in many respects, consistent answers have yet to be found. To what extent has the Russian government so far succeeded in developing a new foreign trade regime?     

Low price signals high capacity

We study pricing in a model where buyers are homogeneous and sellers have either capacity one or two. We show that if buyers observe prices but not capacities then an equilibrium exists where sellers of capacity two post lower prices than sellers of capacity one. The equilibrium satisfies the intuitive criterion.     

Increasing life expectancy and optimal retirement in general equilibrium

We analytically assess the effects of changes in longevity on the interest rate, the consumption-savings behavior, and the optimal retirement decision within a dynamic general equilibrium setting. We derive a simple sufficient condition for which the optimal retirement age always increases with life expectancy. Numerical assessment reveals that for realistic parameter values that reflect the situation in industrialized countries, the optimal retirement age indeed increases with life expectancy and the sufficient condition tends to be fulfilled. Together with the fact that the actual retirement age did not increase in industrialized countries over the last decades, while there have been large improvements in longevity, this leads us to conclude that strong monetary and institutional incentives for early retirement exist and these counteract the effects of increasing life expectancy. Our policy conclusion is that the retirement age should be partially linked to life expectancy and that incentives for early retirement should be removed.     

Price competition and market transparency: evidence from a random response technique

Surveys can increase market transparency when information asymmetries are present—but this will only happen when respondents answer questions truthfully. Sometimes, however, it might not be in the respondents’ best interest to provide truthful information on their firm or market. This will be especially true when other firms can exploit any information they provide. Understanding when, and under what conditions, respondents answer questions truthfully is important to researchers studying these markets and to policymakers using firm surveys to identify ways of improving the business environment. Using data from two countries in South Asia, this paper uses a random response technique to identify respondents that do not answer truthfully. We label these respondents as ‘reticent’. We show that respondents become more reticent when their firms face intense price competition. We argue that this is because intense competition gives respondents a greater incentive to misreport information to reduce market transparency.     

Gesundheitsfonds — effizientere Steuerung des Gesundheitssystems?

In 2009 the German central health fund was implemented. It was the result of a political compromise. One political party intended to equalise the risk structure among 130 different health care funds, and the other wanted to intensify competition and to improve efficiency among the different health insurances. The fund is flanked by a health-based risk adjustment and is aimed at sustainably ensuring the funding of the statutory health insurance system. It also constitutes the basis for competition among statutory health care funds, securing quality and efficiency in health care provision. To cover additional expenditures, health insurers had to charge flatrate premiums. A new law, which will come into effect in January 2015, will oblige health insurers to charge income related contributions. It is not clear how this will change competition among insurers. The federal government will not need to finance subsidies to low income individuals anymore. Income redistribution will only take place within the public health insurance system, exempting the privately insured and public servants from supporting low income individuals. The authors claim that the health care fund will not succeed in its aim of securing a sustainable financial basis for the statutory health insurance system. Most of the authors argue that there is no evidence of greater efficiency thus far, and they offer proposals on how to achieve improved performance.     

Raw materials prices remain low

While there has been little change in prices for industrial commodities since last autumn, the price of oil continued its downward trend to the end of the year. Many commodity exporting countries are suffering under the burden of low prices. Will the long-awaited recovery begin this year?