Monetary policy in the transition to a market economy: The case of Hungary

In the centrally planned economies of Eastern Europe, monetary policy played a subordinate role, there were no capital-market institutions and the banking system was single-tier. All this has to be changed in the transition to a market economy. The example of Hungary, which abolished the traditional system of central planning as early as 1968, shows some of the pitfalls to be avoided.     

Democracy and prosperity in two decades of transition1

This article revisits the relationship between democracy, liberalization and prosperity in transition countries, using a panel of 25 countries over 20 years. Earlier investigations found political and economic liberalization to be positively correlated although the relationship between political liberalization and prosperity remained unclear. In this article, the results are ambiguous regarding the relationship between democracy indicators by Freedom House and the Polity Project on one hand and growth on the other. This contribution therefore investigates the component variables of these indicators to determine their degree of influence. The findings suggest that basic constitutional rights and constraints on the government rather than political competition as such may be conducive to both economic liberalization and prosperity in the transition countries.     

Jurisdictional competition for quality standards: Competition of laxity?

Regulatory competition arises where governments mutually accept quality standards in a common market. It has been claimed that regulatory competition will be subject to market failure and lead to competition of laxity in a sense that only the lowest possible quality standards survive regulatory competition. In this paper, it is shown that these results do not need to follow. First, if not a large number of small jurisdictions but a small number of large jurisdictions compete for quality standards, then the resulting quality standards will end up above the minimum level, albeit still below an efficient level. If no subsidies are allowed in order to compensate for losses by producers working under strict quality standards, quality standards will generally converge to the level of the jurisdiction with the lowest quality preferences, but not below this level. A second argument against a competition of laxity result is that quality standards of governments may be better judged by consumers than product qualities by producers. As far as this is the case, regulatory competition may even be superior to a harmonized quality standard.     

一体化区域的最优规模

本文从两种不同的视角分析了一体化经济区域和政治区域的最优规模。我们假定政治制度促使一体化的运行，并由此产生政策制定成本。从所谓的“内部人最优”的观点来看，一体化区域内一个普通成员国的代表性国民的净效用应该实现了最大化，而从所谓的“全球最优”的观点来看，这个地区内所有国家（包括分属于不同一体化区域的国家以及不属于任何一体化区域的国家）平均水平下的代表性国民净的效用也应该实现了最大化。在经济一体化区域内，内部人最优规模下所产生的收益小于全球最优规模下的收益，因此，就所有分属于不同地区的国家而言，一体化区域的规模偏小。而在政治一体化区域内，情况正好相反，整个区域会随着国际安全的加强而获益，与全球最优规模相比，这些一体化政治区域显得规模偏大。     

Warum die Politik die Globalisierung nicht liebt

Die Globalisierung wird von der Politik als ein Problem dargestellt und von der ?ffentlichkeit skeptisch betrachtet. Welche Erkenntnisse hat die Wirtschaftswissenschaft zum Ph?nomen „Globalisierung“? Sind die Probleme „Arbeitslosigkeit“ und „Krise der sozialen Sicherungssysteme“ auf die Globalisierung zurückzuführen? Welche Aufgabe hat die Wirtschaftspolitik in den Zeiten der Globalisierung? Prof. Dr. Thomas Apolte, 46, ist Direktor am Institut für ?konomische Bildung der wirtschaftswissenschaftlichen Fakult?t der Westf?lischen Wilhelms-Universit?t Münster.     

Secession Clauses: A Tool for the Taming of an Arising Leviathan in Brussels?

Several scholars have recently come out in support of the argument by James Buchanan that each member state of the European Union be given the right to secede from the EU. According to these scholars, a simple majority ought to be sufficient for secession, since this would help check the tendency of EU institutions to increase their power against the will of both member states and individuals. This paper, however, argues that while secession may be a means to increase individual liberty vis-a-vis a central government, it may also be abused by a majority in order to oppress the minority of the respective jurisdiction's inhabitants. Since in a federation different government levels check each others' power, thereby enhancing individual freedom, secession removes one of these governmental levels and, hence, distorts the existing system of checks and balances. This paper argues that such a drastic step has the character of a constitutional act and thus should be decided on under rules reserved for post constitutional legislation.     

Democracy,dictatorship, and transformation: A proposal for a constitution-guided systematic change in formerly Soviet republics

A system transformation contains complicated social dilemmas and special-interest problems. Thus it is frequently suggested that democratic decisionmaking is inappropriate for introducing a market economy in the former socialist countries. In this paper I argue that this view rests on a nirvana approach, because it neglects the dynamics of authoritarian governments. It is shown that dictatorships tend to serve even narrower special interests than democracies and are therefore usually less likely to pursue a consistent transformation policy. However, a dictatorship could, under certain cultural and social conditions, have some advantages over democracies. But those conditions are barely present in the formerly socialist countries. Moreover, a dictatorship can by its very nature not be committed and cannot even commit itself to a certain public policy. Hence, there is only one instrument to mitigate social dilemmas in transformation countries: a set of constitutional rules. Some basic properties of a constitutional approach of system transformation are introduced in the last section of the paper.     

A theory of autocratic transition by government leaders: prerequisites to self-enforcing democracy

Economics of Governance - This paper aims at contributing to a better understanding of the conditions of self-enforcing democracy by analyzing the recent wave of autocratic transitions. Based on a...