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41. Price Level Convergence, Relative Prices, and Inflation in Europe

Author:
John H. Rogers
Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
If price levels are initially different across the euro area, convergence to a common level of prices would imply that inflation will be higher in countries where prices are initially low. Price level convergence thus provides a potential explanation for recent cross-country differences in European inflation, a worrisome development under the ECBs "one-size-fits-all" monetary policy. I present direct evidence on price level convergence in Europe, using a unique data set, and then investigate how much of the recent divergence of national inflation rates can be explained by price level convergence. I show that between 1990 and 1999 prices did become less dispersed in the euro area. Convergence is especially evident for traded goods, and more in the first half of the 1990s than the second half. By some measures, traded goods price dispersion across the euro area is now close to that across U.S. cities. Despite an on-going process of convergence, deviations from the law of one price are large. Finally, I find a statistically-significant and robust negative relationship between the 1999 price level and 2000 inflation rate in Europe, and that the contribution of price level convergence to explaining inflation differentials is often quite important economically. Still, factors other than price convergence explain most of the cross-country inflation differences.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Europe

42. The Effects of Convergence: Internationalisation and the Changing Distribution of Net Value Added in Large German Firms

Author:
Anke Hassel and Jürgen Beyer
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper examines whether and how the increasing internationalisation of firms impacts on the operation of a co-ordinated market economy. Following the tenets of agency theory it assumes that an emerging market for corporate control changes the monitoring mechanisms that oversee management. Since Anglo- American forms of monitoring are usually associated with a higher return for investors compared with Continental European firms, a change in the distribution of the net value added of firms is expected. Using financial data on 59 large German companies, the paper shows that the emerging convergence of German corporate governance practices to Anglo-American standards has had a weak, but significant, impact on the distribution of net value added. This is in contrast to the impact of the internationalisation of firms on product markets, which does not have an effect. Since the market for corporate control is, however, still underdeveloped in Germany, the main effects remain to be seen.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
America, Europe, and Germany

43. An Anchor in the Mud

Author:
Leon Aron
Publication Date:
09-2001
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
For almost two centuries—since Alexander Pushkin's masterpieces laid the foundation—Russian literature has persisted in addressing the core issues and dilemmas of human existence, taking humanity's measure, and explaining Russia and Russians to themselves and the world. Even during the Soviet era, when virtually all of Russia's finest writers and poets were exiled, killed, imprisoned, savagely censored, or forbidden to publish, the tradition lived in underground samizdat, manuscripts smuggled abroad, and in the state-run literary magazines of the “liberal” persuasion, especially during political thaws.
Topic:
Democratization, Economics, and Emerging Markets
Political Geography:
Russia, Europe, Asia, and Soviet Union

44. Structure and Context in the Study of Post-Soviet Russia

Author:
Leon Aron
Publication Date:
01-2001
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The Berlin Wall fell eleven years ago, and nine years have passed since Boris Yeltsin launched the Russian economic revolution by abolishing state control over prices. Although minuscule in historic terms, the time elapsed still furnishes a wealth of data for a provisional analysis of the key factors that shaped the political, economic, and social character of post-Communist nations. The same structural variables may help gauge the future—at least in the short to medium term.
Topic:
Democratization, Economics, and Emerging Markets
Political Geography:
Russia, Europe, Asia, and Berlin

45. EMU and the Developing Countries

Author:
Benjamin J. Cohen
Publication Date:
03-2000
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The purpose of this paper is to explore economic and political implications of Europe's Economic and Monetary Union (EMU) for developing countries. In strictly economics terms, influences will be communicated through both trade and financial channels. Economies in the developing world will be affected by changes in European growth rates as well as by EMU's impact on transaction costs and enterprise competitiveness within Europe; they will also be impacted by changes in the structure and efficiency of Europe's capital markets. Modifications may be anticipated in borrowing and investment practices at the private level as well as in reserve and debt-management policies at the official level. In political terms, developing countries will be most directly influences by the anticipated rivalry between Europe's new single currency, the euro, and the dollar, which will compel developing countries to reconsider their own national currency strategies. Three conclusions stand out. First, except for selected groups of countries with particularly close ties to the EU, most economic linkages appear marginal at best. It is much easier to enumerate possible channels of transmission than to find many that appear quantitatively significant. Second, among economic effects of EMU, financial channels seem to matter more than trade channels. And third, across the full range of possible linkages, the most lasting influences for developing countries may well turn out, notably, to be political rather than either trade or financial. Significant changes are likely in exchange-rates regimes in many parts of the developing world.
Topic:
Emerging Markets, Government, and International Political Economy
Political Geography:
Europe

46. Will the Euro Trigger More Monetary Unions in Africa?

Author:
Patrick Honohan and Philip R. Lane
Publication Date:
03-2000
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We analyse the prospects for greater monetary integration in Africa, in the wake of EMU. We argue that the structural characteristics of African economies are quite different to the EMU members but that much can be gained from monetary cooperation, as an external agency of restraint and in promoting stability in the financial sector. EMU has only a marginal impact on the net benefits of monetary cooperation but the euro would be a natural anchor for any African monetary unions. Indeed, the most likely route to new monetary cooperation in Africa is via a common peg to the euro.
Topic:
Emerging Markets and International Political Economy
Political Geography:
Africa and Europe

47. Gas For Oil Markets

Author:
Koji Morita
Publication Date:
02-2000
Content Type:
Policy Brief
Institution:
Chatham House
Abstract:
Public projections by the International Energy Agency, the US Energy Information Administration and the European Commission suggest that, with present policies, world consumption of gas will roughly double by 2020, taking about 5% of the primary energy market from other fuels. About half this gain will be at the expense of more carbon-intensive fossil fuels, mainly coal, but the other half will replace carbon-free nuclear energy. The net effect on the growth of greenhouse gas emissions will therefore be small. For comparison, gas consumption increased in the past 20 years by almost 80%, at the expense of other fossil fuels. Half the increased gas demand is projected for developing countries, compared with 45% of the increase over the past 20 years and their present share of about a quarter of total world gas consumption.
Topic:
Economics, Emerging Markets, Energy Policy, and Environment
Political Geography:
United States and Europe

48. U.S. Assistance for Market Reforms: Foreign Aid Failures in Russia and the Former Soviet Bloc

Author:
Janine R. Wedel
Publication Date:
03-1999
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Since the fall of the Berlin Wall in 1989 and the subsequent breakup of the Soviet Union in 1991, the governments of the United States and other Western countries have provided massive aid to promote a transition to the free market in Central and Eastern Europe and the former Soviet Union. But aid for market reforms in the region has been largely ineffective. Whether provided in the form of technical assistance, grants to political groups or nongovernmental organizations, loans and guarantees to the private sector, or direct financial aid to post-communist governments, that aid has been plagued by a number of problems. The failed $22.6 billion bailout of Russia by the International Monetary Fund in July 1998 only confirmed the flawed nature of the aid-for-reform approach.
Topic:
Economics and Emerging Markets
Political Geography:
Russia, United States, Europe, Eastern Europe, Asia, and Soviet Union

49. Modell Deutschland as an Interdenominational Compromise

Author:
Philip Manow
Publication Date:
05-1999
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Usually, Germany's social market economy is understood to embody a compromise between a liberal market order and a corporatist welfare state. While this reading of the German case is certainly not entirely wrong, this paper argues that only if we account for the close intellectual correspondence between lutheran Protestantism and economic liberalism on the one hand and between Catholicism and welfare corporatism on the other, can we fully comprehend the nature of the German post-war compromise. In particular, this perspective allows to better explain the anti-liberal undercurrents of Germany's soziale Marktwirtschaft. It was especially the role which Protestant Ordoliberals ascribed to the state in upholding economic order and market discipline which accounts for the major difference between 'classic' and 'German-style' economic liberalism. Yet, the postwar economic order did not represent a deliberately struck compromise between the two major Christian denominations. Rather, Germany's social market economy was the result of the failure of German Protestant Ordoliberals to prevent the reconstruction of the catholic Bismarckian welfare state after the authoritarian solution, which Ordoliberals had endorsed so strongly up until 1936 and from which they had hoped there-inauguration of Protestant hegemony, had so utterly failed. Since the ordoliberal doctrine up to the present day lacks a clear understanding of the role of the corporatist welfare state within the German political economy, its insights into the functioning logic of German capitalism have remained limit. The paper also claims that accounting for the denominational roots of the postwar compromise allows us to better understand the relationship between consociationalism and corporatism in 'Modell Deutschland'.
Topic:
Economics, Emerging Markets, and Government
Political Geography:
Europe and Germany

50. On the Regulation of Telecommunications Markets

Author:
Manfred J. Holler
Publication Date:
08-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper discusses the theoretical concepts underlying recent developments in the regulation of telecommunications in Europe, the USA and developing countries with respect to efficiency and welfare. It focuses on analysing standardization problems, pricing rules and entry condition related to networks and network effects and derives preliminary policy recommendations for the telecommunications industry through a discussion of network models and related empirical evidence.
Topic:
Emerging Markets, International Political Economy, and Science and Technology
Political Geography:
United States and Europe