Focus on European Economic Integration Q2/07

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• Focus on European Economic Integration 2/07 (PDF, 2.1 MB) June 2007.

Studies and Analyses

• Editorial (PDF, 110 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM

• Development in Selected Countries (PDF, 674 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM

• On the Determinants of Currency Crises: The Role of Model Uncertainty (PDF, 354 kB) Cuaresma, Slacík. Crespo Cuaresma, Slacík – Focus on European Economic Integration 2/2007 In this contribution, we tackle explicitly the issue of model uncertainty in the framework of binary variable models of currency crises. Using Bayesian model averaging techniques, we assess the robustness of the explanatory variables proposed in the recent literature for both static and dynamic models. Our results indicate that the variables belonging to the set of macroeconomic fundamentals proposed by the literature are very fragile determinants of the occurrence of currency crises. en Jun 30, 2007, 12:00:00 AM

• Credit Growth in Central and Eastern Europe Revisited (PDF, 172 kB) Backé, Égert, Walko. Backé, Égert, Walko – Focus on European Economic Integration 2/2007 This short study builds on earlier work by Égert, Backé and Zumer that analyzes data up to the end of 2004 and presents updated results on the deviations of private sector credit-to-GDP levels from their estimated equilibrium levels in the ten new Central, Eastern and Southeastern European EU Member States and in Croatia. The study uses new data on lending and its determinants until end-2006, which show that the levels of private sector credit to GDP continued to catch up with their long-run equilibrium levels in 2005 and 2006. Moreover, in a few countries, credit levels have already become fairly elevated relative to the underlying fundamentals. The paper discusses implications for policymaking in European emerging economies on the basis of these developments, focusing on the contributions the most important policy domains can make to managing dynamic financial sector deepening and its implications for macroeconomic developments. en Jun 30, 2007, 12:00:00 AM

• Exchange Rate Arrangements and Monetary Policy in Southeastern Europe: An Update (2004–2007) (PDF, 249 kB) Barisitz. Barisitz – Focus on European Economic Integration 2/2007 This contribution updates a study published in 2004. Four of the ten countries analyzed (Bosnia and Herzegovina, Bulgaria, Croatia and the Republic of Macedonia) continue to feature hard pegs and nominal exchange rate anchors to the euro, while four others (Albania, Romania, Serbia and Turkey) conduct loosely managed floats, and – with the exception of Albania – introduced inflation targeting in 2005 or 2006. One country (Montenegro) and one nonsovereign territory (Kosovo) remain unilaterally euroized. Although all countries have upheld prudent monetary policies supported by strengthened fiscal positions, disinflation has slowed down in recent years. Recent upticks of inflation have been triggered by rising wage pressures, accelerating credit booms, food price spikes caused by extreme weather conditions, and increases in oil prices, utility tariffs and indirect taxes (with some of the latter being one-off factors). While the antiinflationary effectiveness of pegs continues to be satisfactory overall, the comparatively brief experience with inflation targeting has already delivered good results in some cases. In other cases it may yet be too early to judge. The impact of capital flows on monetary policy has been on the rise, creating new challenges, and triggering repercussions (in both ways) for inflation rates. en Jun 30, 2007, 12:00:00 AM

• Development and Regional Disparities – Testing the Williamson Curve Hypothesis in the European Union (PDF, 398 kB) Szörfi. Szörfi – Focus on European Economic Integration 2/2007 In this paper I examine the relationship between within-country regional disparities and the development of nations in the enlarged European Union. Using panel data methods, I find evidence on the Williamson curve hypothesis, which says that disparities are lower in the early stages of development, peak in middle-income stages, but diminish again as a country becomes rich. More importantly, however, I point out that several factors have a greater influence on disparities than national income. Among these country-specific factors, the date of EU accession plays an outstanding role, being responsible for more than one-half of the differences in regional disparities between the Member States. Four other factors connected to EU membership are also possible reasons for the disparities: the economic transition process in the new Member States, Economic and Monetary Union, the funds made available by the EU Structural and Cohesion Funds as well as effective institutions. en Jun 30, 2007, 12:00:00 AM

• Selected Abstracts (PDF, 58 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM

• Currency and Competitiveness – The OeNB’s Conference on European Economic Integration 2007 (PDF, 152 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM

• The "East Jour Fixe" of the Oesterreichische Nationalbank (PDF, 66 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM

• Olga Radzyner Award for Scientific Work on European Economic Integration (PDF, 47 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM

• Statistical Annex (PDF, 263 kB) Focus on European Economic Integration 2/2007 en Jun 30, 2007, 12:00:00 AM