Focus on European Economic Integration Q3/09

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• Focus on European Economic Integration Q3/09 (PDF, 1.5 MB) September 2009.

Studies and Analyses

• Evaluating Inflation Determinants with a Money Supply Rule in Four Central and Eastern European EU Member States (PDF, 783 kB) Mehrotra, Slacík. Mehrotra, Slacík – Focus on European Economic Integration Q3/09 We evaluate the monetary determinants of inflation in the Czech Republic, Hungary, Poland and Slovakia by using the McCallum rule for money supply. The deviation of actual money growth from the rule is included in the estimation of Phillips curves for the four economies by Bayesian model averaging. We find that money provides information about price developments over a horizon of ten quarters ahead, albeit the estimates are in most cases rather imprecise. Moreover, the effect of excessive monetary growth on inflation is mixed: It is positive for Poland and Slovakia, but negative for the Czech Republic and Hungary. Nevertheless, these results suggest that money does provide information about future inflation and that a McCallum rule could potentially be used in the future as an additional indicator of the monetary policy stance once the precision of the estimation improves with more data available. en Determinants of inflation, McCallum rule, Phillips curve, Bayesian model averaging, C11, C22, E31, E52, O52 Sep 30, 2009, 12:00:00 AM

• Economic Growth Determinants for European Regions: Is Central and Eastern Europe Different? (PDF, 835 kB) Cuaresma, Doppelhofer, Feldkircher. Crespo Cuaresma, Doppelhofer, Feldkircher – Focus on European Economic Integration Q3/09 We evaluate the monetary determinants of inflation in the Czech Republic, Hungary, Poland and Slovakia by using the McCallum rule for money supply. The deviation of actual money growth from the rule is included in the estimation of Phillips curves for the four economies by Bayesian model averaging. We find that money provides information about price developments over a horizon of ten quarters ahead, albeit the estimates are in most cases rather imprecise. Moreover, the effect of excessive monetary growth on inflation is mixed: It is positive for Poland and Slovakia, but negative for the Czech Republic and Hungary. Nevertheless, these results suggest that money does provide information about future inflation and that a McCallum rule could potentially be used in the future as an additional indicator of the monetary policy stance once the precision of the estimation improves with more data available. en Determinants of inflation, McCallum rule, Phillips curve, Bayesian model averaging, Central and Eastern Europe C11, C22, E31, E52, O52 Sep 30, 2009, 12:00:00 AM

• Macrofinancial Developments and Systemic Change in CIS Central Asia (PDF, 587 kB) Barisitz. Barisitz – Focus on European Economic Integration Q3/09 In CIS Central Asia, the institutional economic framework is found to be remarkably heterogeneous across the region: Kazakhstan and the Kyrgyz Republic are market-oriented reforming economies, Tajikistan and Uzbekistan can be characterized as hybrid economies, while Turkmenistan remains largely centrally-planned. All CIS Central Asian countries – except for Turkmenistan – have introduced current account convertibility, if obstructed by trade restrictions in the Uzbek case. Kazakhstan liberalized its capital account in early 2007. Energy and other export proceeds, remittance inflows, FDI and other capital inflows and credit booms have contributed to the region’s strong economic expansion, at least up to 2007. In this period, Central Asia has pragmatically coped with the potentially conflicting dual goals of combating inflation while preventing too strong currency appreciation (to support competitiveness). The global inflationary spike and the world financial crisis substituted a new policy dilemma for the old one: whether to give priority to fighting inflation or to bailing out credit institutions. With its relatively large banking sector, Kazakhstan was the only country really struck by this dilemma. The Kazakh authorities heavily intervened and partially nationalized the sector, which has, however, not prevented nationalized banks from defaulting. At the other extreme, the Turkmen and Uzbek financial sectors have remained insulated from international financial contagion, albeit at high costs in terms of economic development and income. en Banking, financial stability, monetary policy, exchange rate regime, Central Asia, E52, E63, G21, G28, P34 Sep 30, 2009, 12:00:00 AM

• Sir Tony Atkinson Gives 14th Global Economy Lecture at the OeNB (PDF, 421 kB) en Sep 30, 2009, 12:00:00 AM

• Selected Abstracts (PDF, 434 kB) en Sep 30, 2009, 12:00:00 AM

• Olga Radzyner Award for Scientific Work on European Economic Integration (PDF, 422 kB) en Sep 30, 2009, 12:00:00 AM