Economic policy in an open economy under alternative exchange rate systems: Effectiveness and stability in the short and long run

Review of World Economics - Wirtschaftspolitik in einer offenen Wirtschaft unter alternativen Wechselkurssystemen: EffektivitÄt und StabilitÄt — Kurz- und langfristig betrachtet....     

The evolution of east-west trade and the role of the Ecu in Eastern Europe

Conclusion This paper arrives at the conclusion that the expanding European Community is a dominant attraction for Eastern Europe, including the former USSR. Since the Community will have privileged trade arrangements with most, if not all, of Eastern Europe, optimal monetary solutions will be strongly influenced by trade relations. The future Western European currency therefore, is also playing a dominant role in the monetary choices of Eastern Europe. We have discussed several aspects of this choice (anchor of the exchange rate regime, management of foreign reserves, parallel currency and currency of a possible payments union) and conclude that the Ecu is the dominant contender.Opinions expressed in this paper are strictly personal.     

A macroeconomic model for open economies with pegged exchange rates

Most traditional analyses of the internal-external adjustment problem has been based upon a model with only two assets, money and bonds. In this paper real capital is explicitly introduced. As a logical consequence also the investment function is assumed to be different from standard specifications. With this model the effects of monetary and fiscal policy are then shown to be substantially different from traditional results.     

An empirical study of world market influences on price formation in West Germany

In this paper price and wage determination is analyzed for 35 industries in West-Germany. Tests are made to classify industries as being competitive, discriminatory or sheltered. The chosen approach is related to the “Scandinavian” model. It is shown that about a third of the industries in the sample are not price takers in spite of international trade. Wages are strongly influenced by world market and exchange rate developments. As to the effectiveness of revaluations the results imply that, first, revaluations do provide a protection against imported inflation. Second, revaluations can be expected to produce real effects since they affect the relative price between competitively and non-competitively produced commodities and the terms of trade.     

Banking reforms in eastern European countries

This paper investigates the present state of reforms in thebanking sector of the central European countries, with occasionalcomparisons with other eastern European countries. Progressis variable across the countries of the region, but in all countriesbanking reforms generally lag reforms in other areas and muchremains to be done. Regulation generally takes the EuropeanUnion's regulatory framework as a model. Progress on paper ismuch more advanced than implementation and, as a result, allbanking systems in the region are fragile and prey to instability.The paper also looks at basic performance indicators and arrivesat the conclusion that even basic intermediation has remainedrudimentary and quite inefficient. This analysis suggests theurgency of the following measures: (I) the further opening-upof the sector to foreign penetration; (ii) the withdrawal ofthe state from bank ownership; (iii) the speeding-up of implementationof existing regulations; and (iv) the completion of the regulatoryframework, adding specific measures dealing with local problemsthat are not reflected in the 'imported' regulatory map.