Costs and benefits of unilateral euroization in central eastern Europe

Countries unable or unwilling to join a monetary union can replicate most membership effects unilaterally through either a currency board or the formal replacement of domestic currency by that of the Union. Potential benefits include lower transaction costs, lower interest rates, and lower exposure to speculative attacks. Costs include initial reserves, inadequate response to asymmetric shocks, loss of seigniorage, no lender of last resort. Expected costs and benefits have probably been exaggerated. Net effects depend primarily on the degree of monetary, real, and institutional convergence. Positive net advantages will accrue to countries that are either already converging, or wish to use a single currency to speed up convergence — especially if small. There is no legal or economic justification for EU aversion to unilateral euroization in accession candidate countries. JEL classification: F33, F36, E58, P33.     

POLAND'S NEW ECONOMIC STRATEGY 1994–97

D. Mario Nuti reviews the policies of the left-wing coalition that came to power in Poland in September 1993. There has been no change in target model, transition speed or fiscal stance. Changes in policy trade-offs and instruments - though important - are within the bounds of party alternation in any democracy. Economic recovery is strong in spite of adverse political developments.     

Black-market exchange-rate expectations and the domestic demand for money: Some empirical results

This paper analyzes the effects of expectations about future exchange-rate adjustments on the demand for money. These effects are studied empirically for the case of countries which have imposed foreign-exchange restrictions. The results obtained for Brazil, Chile, and Colombia indicate that the demand for money is significantly reduced when expectations of black-market depreciation intensify; and that when this variable (for which the proxy used is the divergence of the black-market exchange rate from purchasing power parity) is omitted from the demand-for-money function, the response of the demand for money to changes in the expected rate of domestic inflation tends to be overestimated.     

Organisatorische Planung des Asset-Liability-Managements von Versicherungsunternehmen

How to organize an insurance company’s asset-liability-Management? To answer this question a decision model is constructed which can support decisionmakers in practice. To operate the model it is assumed that the utility produced by different organizational solutions depend on the relevance of savings the insurance company manages on behalf of the insured. The relevance is (a) lower in casualty related branches and it is (b) higher in life or life related branches. The model’s outcome is that an organizational solution which gives the units more autonomy is best in situation (a). In Situation (b), however, a more centralised coordination is favourable.     

Seasoned equity offerings and the short- and long-run performance of initial public offerings in the UK

In contrast to the US practice, rights issues is the predominant method of raising additional equity capital in the London market. the UK evidence for the period 1980-1991 provides no support to the hypothesis that IPO firms deliberately underprice to signal their quality and facilitate subsequent seasoned equity offerings. the level of initial returns is related neither to the size of the issue nor to the price response at the announcement of a rights issue. the results demonstrate, however, that firms with higher first day returns are quicker in returning to the market for additional equity capital. There is also strong evidence to suggest that the announcement of a seasoned equity offering follows a period of significant rises in the stock prices of reissuing firms. Such gains are, however, dissipated quickly in the 18 months after the announcement of the seasoned equity offering. the level of underperformance is particularly pronounced for firms that raised relatively small subsequent amounts of capital in relation to funds raised at the initial offering. Thus, the paper documents a pattern of post-issue behaviour which is fundamentally similar for both unseasoned and seasoned equity offerings.     

Intra-firm trade and Swedish multinationals

Zusammenfassung Firmeninterner Handel und schwedische multinationale Unternehmen. — In diesem Aufsatz werden verschiedene Hypothesen zu den Bestimmungsgründen des firmeninternen Handels getestet, wobei einmalige Firmendaten schwedischer multinationaler Unternehmen benutzt werden. Die Ergebnisse zeigen, da\ die Neigung ausl?ndischer Filialen, von den Mutterfirmen zu importieren, positiv mit der Forschungsintensit?t des gesamten multinationalen Unternehmens korreliert ist. Einfuhrbeschr?nkungen des Gastlandes haben eine erhebliche negative Wirkung auf die Importe der Filiale von der Mutterfirma. Diese scheinen auch mit dem ProKopf-Einkommen im Gastland zuzunehmen. Die internationalen Reserven des Gastlandes schlie\lich, die herangezogen werden, um m?gliche Anreize für eine Manipulation der Transferpreise zu erfassen, führen zu keinen eindeutigen Ergebnissen.

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Résumé Commerce intra-entreprise et les entreprises multinationales suédoises. — Les auteurs testent plusieurs hypothèses concernant les déterminants du commerce intra-entreprise en utilisant des données uniques du niveau d’entreprise pour des firmes multinationales suédoises. Les résultats suggèrent qu’il y a une relation positive entre les tendances des sociétés affiliées étrangères à importer les biens des sociétés mère et l’intensité de recherche de l’entière entreprise multinationale. Les politiques des gouvernements d’h?te qui visent à restreindre les importations ont un effet significatif et négatif sur les importations des sociétés affiliées. Ces importations semblent accro?tre avec le revenu par capita du pays d’h?te. Finalement, les réserves internationales du pays d’h?te qui sont introduites comme variable approximative des incitations possibles à une manipulation des prix de transfert ne produisent pas de résultats conclusifs.

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Resumen Comercio intracompa?ía y las multinationales suecas. — Varias hipótesis sobre las determinantes del comercio intracompa?ía son sometidas a un test empírico utilizando datos a nivel de empresa para multinationales suecas. Los resultados sugieren que la propensidad de las filiales de importar de sus casas matrices está positivamente correlacionada con la intensidad de investigatión de la empresa multinational. Las políticas de importaciones restrictivas por parte de los gobiernos de los países donde operan las filiales tienen un impacto negativo significativo sobre las importaciones de la filial provenientes de la casa matriz. Las importaciones parecen aumentar con el ingreso per capita del país donde operan las filiales. Finalmente, las reservas internationales del país donde operan la filial, variable introducida para captar posibles incentivos para manipulaciones en los precios del comercio intracompania, arrojan resultados no concluyentes.