Transition economies and trust building: a network perspective on EU enlargement

Many transition economies are characterised by a relativelyrudimentary institutional framework. Weak legislative structuresand the absence of effective market regulation and propertyright enforcement rules diminish the chance of mutually profitablebusiness transactions and—more generally—restrictthe chances for innovation and sustainable growth. Against thisbackground, we analyse the extent to which more efficient governancemechanisms can contribute to a more favourable business environment.In doing so, we adopt a network perspective. We argue that bothin developed market economies as well as in centrally plannedeconomies much of economic exchange takes place in networks.However, the characteristics of these networks, in particularthe concept of trust, can differ significantly. This leads usto conclude that the real challenge of the process of economictransition is connected to building new economic exchange networks.In this paper, we discuss this argument and analyse how thecurrent enlargement of the EU into Eastern Europe may favourablyaffect this process of institutional change in the accessioncountries.     

Kriterien des wirtschaftlichen Wachstums

Ohne Zusammenfassung     

Estimating the costs and benefits of soil conservation in Europe

Economics is about problems of choice. In erosion control, both public authorities and private land users are faced with such problems. What is the impact of erosion, both on-site and off-site, and to what extent can this impact be quantified? If we conceptualize this impact in terms of sustainability, how can we compare one type of effect against another? The former question can be answered only by natural scientists, the latter by economists and other social scientists. Weighing different aspects of sustainability requires value judgments, and economists are sometimes accused of having a jaundiced view of reality, wrongly supposing that decisions are based on rationality and denying the importance of emotion.However, let us assume that there is some mileage to be gained out of attempting to estimate the cost of erosion in an economic sense—which consists of converting the various effects into a common denominator: euros. If we can predict the impact of erosion control measures on erosion rates, we can know the benefit of these measures. The cost also needs to be calculated, not in terms of money but in terms of resources expended (which could have been used for other purposes) and in terms of possible negative impacts of erosion control (for instance, increased use of herbicides in reduced-tillage systems).There are important other considerations which economists may study. Firstly, there is the comparison of present versus future costs and benefits: how much can we sacrifice today for higher sustainability tomorrow?Secondly, there is the issue of private versus public costs and benefits: how do the goals of private land users differ from (those of?) the public good, how can this help us to predict land users’ behaviour, and what incentives would be appropriate to make them behave in such a way as to maximize the public good? Thirdly, how do we deal with uncertainty and risk?These problems loomed large in a study to support an extended impact assessment for the EU Soil Thematic Strategy, in 2005. Whereas much research has been done on erosion and its impact, much of this is on a small scale. The extent of the problem on a national, let alone a continental or a global scale, is still poorly known. The paper discusses how these problems were faced, which is not the same as saying they were resolved.     

Less Government—More Wealth? On the Macroeconomics of a Smaller Public Sector in Europe

In this paper, we analyze the reactions of European economies to a fiscal policy strategy aiming at diminishing the public sector. Within the framework of the MSG3 model, a macroeconomic model of the world economy, we perform several simulation experiments to explore the effects of reducing government expenditures permanently in different phases of the business cycle. For this purpose, we combine the fiscal contraction with negative and positive, Euro Area-wide and global, supply and demand shocks. It turns out that adverse Keynesian effects on output and employment tend to be mostly weak and short-lived, whereas long-run effects on output and employment are favorable. Due to these long-run effects, the fiscal contraction policy raises welfare as measured by an asymmetric quadratic objective function. The size of these welfare effects depends on the initial situation in a non-trivial manner.     

Die Kriterien des unteren Wendepunktes im Konjunkturverlauf

Ohne ZusammenfassungVortrag, gehalten vor den Mitgliedern des Großraumausschusses der Südostgemeinschaft der Wiener Hochschulen.