EU Enlargement and Trade Integration: Lessons from a Gravity Model

The authors estimate gravity models using a large panel of bilateral trade flows across 61 countries between 1980 and 2003, which are applied as a benchmark for the integration of Central and South Eastern European countries with the euro area. They show that a careful examination of the fixed effects of the model is crucial for the proper interpretation of the results. The results suggest that trade integration between most new EU member states and the euro area is already relatively advanced, while the remaining Central and Eastern European countries have significant scope to strengthen trade links with the euro area.     

Eastern European Public Opinion on Economic Issues:

Abstract Survey data on Eastern Europe is investigated with respect to two major questions: How do people view the creation of a market economy and how do they assess the speed of economic transformation and privatization. These questions are analyzed by looking at the development over 1990 to 1992 and by performing regressions with a number of demographic variables as regressors. Some findings are that the opposition to the creation of a market economy is increasing over time, that in Hungary and Poland people are quite satisfied with the speed of transformation as compared to Czechs and Slovaks, that the Polish are divided over the speed of privatization, and that the relationship between the speed of transformation and privatization is not considered to be very tight by the respondents.     

Contest Theory and Sport

Contrary to most sports fans economists tend to view tournamentsnot only as a mechanism to identify the most able and most talentedathlete(s) but also as an instrument to increase the athletes'effort levels by designing an adequate compensation system thattakes into account the specificities of the contest under consideration.The paper proceeds in two different steps: First, it reviewsthe available evidence on sports contests and identifies somepuzzles that have not yet been resolved in the literature (theempirical separation of selection and incentive effects andthe impact of incentive pay in team settings). Second, it addressesthese puzzles and offers some new evidence supporting the basicassumptions offered by economic theory.     

Economic relations with the Third World

While foreign policy as well as economic, ideological and purely humanitarian considerations all continue to play a role in economic relations between the CMEA countries and the Third World, a shift in the relative weights of these various aspects has become discernible in recent years. What conclusions can be drawn as to the future behaviour of the CMEA countries towards the developing countries?     

An Experimental Bribery Game

Essential characteristics of corruption are (1) reciprocityrelationships between bribers and public officials, (2) negativewelfare effects, and (3) high penalties when discovered. Weseparate the influences of these factors in an experiment. Ina two-player game, reciprocation is economically inefficientthrough negative externalities. A control treatment withoutexternalities is also conducted. In a third, so-called suddendeath treatment, corrupt pairs face a low probability of exclusionfrom the experiment without payment. The results show that reciprocitycan establish bribery relationships, where negative externalitieshave no apparent effect. The penalty threat significantly reducescorruption, although discovery probabilities are typically underestimated.     

Building strong brands in Asia: selecting the visual components of image to maximize brand strength

Asian brands have often struggled to develop quality images. The visual aspects of branding have received little attention on how they might be used to strengthen brand perceptions in Asia. Guidelines for designing visual brand stimuli are developed using evaluations of logos in China and Singapore. There is a significant relationship between design and the responses companies seek, including positive affect, perceptions of quality, recognition, consensus in meaning, and feng shui. How designs are perceived, and their effect on consumer responses, were similar between China and Singapore. Companies are encouraged to leverage design to strengthen their brands. In particular, they should select logo designs that are elaborate, natural, and harmonious as these created positive affect and quality perceptions, clear meaning, true recognition, and feng shui. Many of these relationships hold in the United Sates as well, implying that the visual aspects of brand strategies may accomplish companies' goals across international borders.     

Estimating exchange rate dynamics with diffusion processes: an application to Greek EMU data

Recently various exchange rate models capturing the dynamics during the transition from an exchange rate arrangement of floating rates into a currency union have been derived. Technically, these stochastic equilibrium models are diffusion processes which have to be estimated by discretely sampled observations. Using daily exchange rate data prior to the Greek EMU-entrance on 1 January 2001, we develop a rigorous estimation procedure. Our estimates point to an increasing interventionist economic policy in the run-up to the Greek EMU entrance. A comparison of this econometric indication with policy information provided (ex-post) by the Bank of Greece (BoG) in its Annual Report 2000 reveals that the BoG indeed pursued such an active policy stance (so-called institutional frontloading strategies).