Focus on Transition

Editorial 
Recent Economic Developments
Developments in Selected Countries 
Franz Schardax et al.

Studies

EU Enlargement to the East: Effects on the EU-15 in General and on Austria in Particular. An Overview of the Literature on Selected Aspects 
Jarko Fidrmuc, Gabriel Moser, Wolfgang Pointner, Doris Ritzberger-Grünwald, Paul Schmidt, Martin Schneider, Alexandra Schober-Rhomberg, Beat Weber
The literature survey on selected aspects of Eastern enlargement of the EU covers a broad range of issues. Some of them are analyzed in more detail in studies which are published in this issue of Focus on Transition, others you will find in Focus on Austria 2/2002, another publication of the OeNB. All in all, the survey tries to summarize the available literature on the macroeconomic effects of EU enlargement in terms of growth, welfare and trade, capital markets, fiscal aspects and the labor market. Furthermore, regional implications are also dealt with. The survey concludes that gains from the enlargement outweigh its costs, which, however, may be significant in selected areas in the short run. In general, the effects on Austria are greater than those on the European Union as a whole. 

Austria’s Direct Investment and EU Enlargement 
Rene Dellmour
The opening of Eastern Europe in 1989 triggered foreign direct investment (FDI) by Austria’s mostly small and medium-sized enterprises. In the meantime the accession countries have become not only an important market for Austrian exports, but also a preeminent location for subsidiaries. This article explores some characteristic features of Austrian affiliates as well as Austrian investors. Although the foreseeable accession to the EU is probably not going to induce a new wave of FDI, existing affiliates should profit from stronger growth, and investors can expect increasing returns from their investment. 

Growth Effects of European Integration: Implications for EU Enlargement 
Jesus Crespo-Cuaresma, Maria Antoinette Dimitz and Doris Ritzberger-Grünwald
The effect of European integration on the long-term growth of the current EU Member States is studied by means of panel data methods. The length of EU membership is found to have a significant positive effect on economic growth, which is relatively higher for poorer countries. The existence of a growth bonus from EU membership appears to be inconsistent with neoclassical exogenous growth theory. While previous empirical studies tend not to find positive growth effects of regional integration, the present study suggests an asymmetric, convergence-stimulating impact of EU membership on long-term growth. 

Selected Aspects of Monetary Integration 
Iikka Korhonen
The paper estimates monetary conditions indices (MCI) for three EU accession countries: the Czech Republic, Poland and Slovakia. Its purpose is to assess the relative importance of the exchange rate and the interest rate in the transmission of monetary policy. The MCIs and associated MCI ratios are derived from estimated IS curves. It is found that the MCI ratios are roughly comparable to the ratios found for present EU member countries in earlier studies. In general, the exchange rate seems to play an important role in the transmission of monetary policy, which is to be expected in small, open economies. Moreover, the relative underdevelopment of financial markets in the earlier part of the sample period may have influenced the estimations. However, owing to data limitations, the results are only tentative. 

An Early Warning Model for Currency Crises in Central and Eastern Europe 
Franz Schardax
This paper presents an early warning model for currency crises for a sample of quarterly data from 12 Central and Eastern European transition countries. A review of the relevant literature shows that a number of indicators contain useful information for early warning purposes when evaluated according to the signal approach. In a next step, the appropriateness of the signal appoach’s underlying functional specification is investigated by means of bivariate regressions on one economic variable in different functional specifications. On the basis of this analysis, two multivariate probit regressions with all statistically significant economic variables on a (0,1)-distributed crisis variable are estimated. For in-sample forecasts, the predictions of both model specifications proved to perform significantly better than random guesses as well as some comparable early warning models. In general, the model appears to track developments in individual countries rather well, with the exception of countries with consistently strong macroeconomic fundamentals. With respect to economic interpretations, the results of this study lend support to the hypothesis that currency crises in Central and Eastern Europe may be considered "first-generation" types of crises.  

OeNB Activities
Lectures organized by the Oesterreichische Nationalbank
EU Enlargement and Agriculture in the Accession Countries – Implications for the National Budgets of the Accession Countries
and for the EU Budget – Martin Banse 
EU Enlargement and Agriculture in the Accession Countries – Implications for the National Budgets of the Accession Countries
and for the EU Budget – Andreas Freytag 
Are Transition Countries Overbanked? An Answer from the Perspective of Industrial Organization Theory – Christa Hainz
The "East Jour Fixe" of the Oesterreichische Nationalbank – A Forum for Discussion
Why Unilateral Euroization – Makes Sense for (Some) Applicant Countries – Jacek Rostowski 
Real Exchange Rates in Transition Countries – Laszlo Halpern, Ronald MacDonald and Bos´tjan Jazbec 
Olga Radzyner Award for Scientific Work On Monetary and Finance Themes
for Young Economists from Central, Southeastern and Eastern European Transition Economies – Invitiation to Submit Applications 
Technical Cooperation of the OeNB with Central and Eastern European Transition Countries 

Statistical Annex
Compiled by Andreas Nader and Wolfgang Maschek
Gross Domestic Product 
Industrial Production 
Unemployment Rate 
Consumer Price Index 
Trade Balance 
Current Account 
Total Reserves Minus Gold 
Central Government Surplus/Deficit 
Gross External Debt 
Exchange Rates 
Official Lending Rate