Focus on European Economic Integration Q1/06

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• Focus on European Economic Integration 1/06 (PDF, 2 MB) März 2006.

Studien und Analysen

• Editorial (PDF, 67 kB) Focus on European Economic Integration 1/2006 en 31.03.2006, 00:00:00

• Developments in Selected Countries (PDF, 368 kB) Focus on European Economic Integration 1/2006 en 31.03.2006, 00:00:00

• Monetary Transmission in Central and Eastern Europe: Gliding on a Wind of Change (PDF, 541 kB) Coricelli, Égert, MacDonald. Coricelli, Égert, MacDonald – Focus on European Economic Integration 1/2006 This paper surveys recent advances in empirical studies of the monetary transmission mechanism (MTM), with special attention to Central and Eastern Europe (CEE). In particular, while laying out the functioning of the separate channels in the MTM, it explores possible interrelations between different channels through which they may amplify or attenuate each others’ impact on prices and the real economy. The empirical findings for CEE are then briefly compared with results for industrialized countries, especially for the euro area. We highlight potential pitfalls in the literature and assess the relative importance, and potential development, of the different transmission channels, emphasizing the relevant asymmetries between Central and Eastern European countries (CEECs) and the euro area. en 31.03.2006, 00:00:00

• Interest Rate Pass-Through in Central and Eastern Europe: Reborn from Ashes Merely to Pass Away? (PDF, 443 kB) Cuaresma, Égert, Reininger. Crespo-Cuaresma, Égert, Reininger – Focus on European Economic Integration 1/2006 In this study, we seek to better understand the interest rate pass-through in fi ve Central and Eastern European countries – the Czech Republic, Hungary, Poland, Slovakia and Slovenia, the CEE-5 – and compare it with the pass-through in selected euro area countries – Austria, Germany and Spain. We fi nd that the pass-through is not operational for long-term market rates because of the unstable yield curve. We fi nd evidence that the pass-through from policy rates even transits through short-term market rates to long-term retail rates. Although nearly complete pass-through is detected for corporate lending rates in a majority of the CEE-5, pass-through estimates for several retail rates are generally lower than those reported in the literature, given the absence of cointegration between policy rates and long- or even short-term market rates. Although the pass-through is usually higher in the CEE-5 than in Austria and Germany, it has been declining over time in particular in Hungary and (with respect to lending rates) in Poland. The adoption of the euro seems to have slightly increased the pass-through in Spain and Austria but not in Germany. en 31.03.2006, 00:00:00

• Credit Growth in Central and Eastern Europe: New (Over)Shooting Stars? (PDF, 371 kB) Backé, Égert. Backé, Égert, Zumer – Focus on European Economic Integration 1/2006 This paper analyzes the equilibrium level of private credit to GDP in 11 Central and Eastern European countries on the basis of a number of dynamic panels containing quarterly data on Central and Eastern European economies, emerging markets and developed OECD countries. In doing so, we propose a unifying framework which includes factors driving both the demand for and the supply of private credit. We emphasize that relying on in-sample panel (i.e. including only transition countries) estimates for transition economies is problematic not only because of the upward bias of the estimated constant and slope coefficients due to the initial undershooting and the ensuing steady adjustment toward equilibrium, but also because of the instability of the equations estimated for transition economies. The use of out-of-sample (i.e. excluding transition economies) panels suggests that some of the transition economies might have already come close to equilibrium by 2004, whereas others have private credit-to-GDP ratios which are well below the level the fundamentals would justify. en 31.03.2006, 00:00:00

• Monetary Transmission in the New EU Member States: Evidence from Time-Varying Coefficient Vector Autoregression (PDF, 383 kB) Darvas. Darvas – Focus on European Economic Integration 1/2006 This paper studies the transmission of monetary policy in selected new EU Member States with structural time-varying coefficient vector autoregressions in comparison with that in the euro area. In line with the Lucas Critique, reduced-form models, like standard vector autoregressions (VARs), are not invariant to changes in policy regimes. Many of the new members of the EU have experienced changes in monetary policy regimes, which calls for the use of a time-varying parameter analysis. Our results indicate that some parameters change significantly, altering the shape of the impulse response functions. Monetary policy is most powerful in Poland and comparable in strength to that in the euro area and is least powerful in Hungary, while the strength of monetary policy in the Czech Republic lies in between. We explain these results by the credibility of monetary policy and openness. en 31.03.2006, 00:00:00

• Ukraine: Macroeconomic Developments and Structural Change with a Special Focus on the Energy Sector (PDF, 272 kB) Barisitz, Pemmer. Barisitz, Pemmer – Focus on European Economic Integration 1/2006 Major traits of Ukraine’s macroeconomic and structural development since the turn of the millennium constitute the focus of this study. Following a brief look back at the decade-long recession of the 1990s, the authors identify positive terms-of-trade shocks, the cumulative effect of structural reforms and the strong recovery of domestic demand as the underpinnings of the country’s robust economic recovery of 2000–2004, while a halt, respectively reversal, of terms-of-trade gains and a deterioration of the investment climate are regarded as the driving forces of the sharp slowdown of 2005 and early 2006. Fiscal policy and tax reforms, monetary and exchange rate policies, and the evolution of external accounts are analyzed in more detail. Given Ukraine’s extremely energy-intensive economic and export structure and concomitant vulnerability, energy and gas sector developments are given prominence on the structural front. A near-term economic outlook wraps up the study. en 31.03.2006, 00:00:00

• Highlights (PDF, 286 kB) Focus on European Economic Integration 1/2006 en 31.03.2006, 00:00:00

• Statistical Annex (PDF, 117 kB) Focus on European Economic Integration 1/2006 en 31.03.2006, 00:00:00