Regional investment policy impacts on FDI location in Poland (by Gábor Hunya; pp. 1-6 ) Keywords: FDI, investment policy, regional Countries covered: Poland Topics: International Trade, Competitiveness and FDI; Regional Development Creating fiscal space in the European Monetary Union (by Jan Toporowski; pp. 7-10 ) Keywords: EMU, taxation, financial sector Countries covered: European Union Topics: Macroeconomic Analysis and Policy Is there evidence of increasing fragmentation in the banking system of the euro area? (by Olga Pindyuk; pp. 11-13) Keywords: banking system, ...more

Croatia’s EU membership and the dilemma of state aid (by Roman Stöllinger; pp. 1-7) Keywords: state aid, industrial policy, shipyards Countries covered: Croatia Topics: Macroeconomic Analysis and Policy Panel data analysis of the CEECs: tracing growth determinants over time (by Doris Hanzl-Weiss; pp. 8-14) Keywords: panel regressions, growth determinatns Countries covered: CEECs Topics: Macroeconomic Analysis and Policy Japan, the United States and the euro area (by Mario Holzner; pp. 15-18) Keywords: growth, demography Countries covered: Japan, United States, euro ar...more

Political turmoil and early elections in Bulgaria (by Rumen Dobrinsky; pp. 1-4) Keywords: Bulgaria, elections Countries covered: Bulgaria Topics: Other A revival of industrial policy as a growth model for Russia? (by Peter Havlik; pp. 5-6) Keywords: industrial policy, growth model Countries covered: Russia Topics: Macroeconomic Analysis and Policy; International Trade, Competitiveness and FDI The determinants of income polarization at the household and country level across the EU (by Mario Holzner; pp. 7-10) Keywords: income polarization, fiscal policy Countries cove...more

Summary The protracted recession in the euro area will continue to be a drag on the economic growth of most CESEE countries in 2013. By and large, those countries are small open economies held hostage to the excessive fiscal austerity pursued in the euro area and the sluggish progress on the part of its policy-makers in adequately addressing the structural roots of the crisis. At the same time, the private sector demand in the CESEE countries is unlikely to recover substantially in the near term either. Wherever there will be an increase in investments, it will be primarily funded via public...more

Summary The paper undertakes an empirical analytical assessment of some of the determinants of economic growth in the EU during the past decade, with a specific focus on the Central and Eastern European (CEE) members of the EU. The methodology is based on a combination of different statistical methods and techniques including descriptive statistics and stylised facts as well as some widely used empirical models of growth, including the testing of convergence hypotheses and running panel growth regressions. During the decade prior to the global economic and financial crisis, the growth m...more

The new Multiannual Financial Framework of the European Union for 2014-2020: a comment (by Sándor Richter; pp. 1-3) Keywords: financial framework Countries covered: EU Topics: Macroeconomic Analysis and Policy Labour costs, external competitiveness and economic growth in new EU member states (by Vasily Astrov; pp. 4-11) Keywords: labour costs, competitiveness, inflation Countries covered: NMS Topics: Macroeconomic Analysis and Policy, International Trade, Competitiveness and FDI Global values – new reflections and new data on an old debate (by Arno Tausch; pp. 12-18...more

The European Commission grossly underestimates the effects of German domestic demand expansion (by Leon Podkaminer; pp. 1-2) Keywords: income elasticity of imports, external imbalances Countries covered: Germany, EU Topics: Macroeconomic Analysis and Policy, International Trade, Competitiveness and FDI The new North-South divide in Europe – can the European convergence model be resuscitated? (by Michael Landesmann; pp. 3-13) Keywords: convergence model Countries covered: EU Topics: Macroeconomic Analysis and Policy; International Trade, Competitiveness and FDI Change...more

Draghi’s démarche and the nightmare of the Bundesbank (by Jan Toporowski; pp. 1-2) Keywords: monetary policy, monetary union, euro, bonds’ buyout Countries covered: EU Topics: Macroeconomic Analysis and Policy Trade does not drive global growth (by Leon Podkaminer; pp. 3-8) Keywords: global growth, global trade, VEC Countries covered: The World Topics: Macroeconomic Analysis and Policy, International Trade A note on Kazakhstan’s Oil Fund (by Vasily Astrov; pp. 9-14) Keywords: sovereign wealth, oil revenue Countries covered: Kazakhstan Topics: Sectoral studies ...more

Eurozone crisis and fiscal austerity push half of the CESEE region into recession (by Vasily Astrov; pp. 1-3) Keywords: economic forecasts, GDP growth, inflation Countries covered: Albania, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Kazakhstan, Russia, Ukraine Topics: Macroeconomic Analysis and Policy Albania: EU, ho! (conditionally) (by Mario Holzner; pp. 4-6) Keywords: economic forecasts, GDP growth, inflation Countries covered: Albania Topics: Macroeconomic Analysis and Policy Bosnia and Herzegovina: change without evolution (by Vladimir Gligorov...more

Bulgaria: economic sluggishness expected to drag on (by Rumen Dobrinsky; pp. 1-3) Keywords: economic forecasts, GDP growth, inflation Countries covered: Bulgaria Topics: Macroeconomic Analysis and Policy Czech Republic: deepening recession(by Leon Podkaminer; pp. 4-6) Keywords: economic forecasts, GDP growth, inflation Countries covered: Czech Republic Topics: Macroeconomic Analysis and Policy Estonia: domestic demand mitigates slowdown (by Sebastian Leitner; pp. 7-9) Keywords: economic forecasts, GDP growth, inflation Countries covered: Estonia Topics: Macroeconomic...more

Main messages: Differentiated economic development in CESEE countries Strength/weakness of export sector is crucial External demand and deleveraging depress domestic demand Labour market problems increase SEE: Persistent solvency and liquidity problems Growth remains below potential absent external and policy improvements ...more

Main messages: Differentiated economic development in CESEE countries Strength/weakness of export sector is crucial External demand and deleveraging depress domestic demand Labour market problems increase SEE: Persistent solvency and liquidity problems Growth remains below potential absent external and policy improvements ...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Fasting or Feasting? Europe - Old and New - at the Crossroads, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. For the CESEE countries, wiiw expects 2012 to be a rather disappointing year. GDP growth will be rather slow – at least when judged by the past standards and the ambitions harboured only a few years ago. Some countries (Czech Republic, Hungary, Slovenia, Bosnia and Herzego...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Fasting or Feasting? Europe - Old and New - at the Crossroads, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. For the CESEE countries, wiiw expects 2012 to be a rather disappointing year. GDP growth will be rather slow – at least when judged by the past standards and the ambitions harboured only a few years ago. Some countries (Czech Republic, Hungary, Slovenia, Bosnia and Herzego...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled New Divide(s) in Europe?, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. The present economic crisis bears all the familiar hallmarks of the financial, debt-related and structural aspects of current account crises. All these aspects have lasting level effects and recovery can be very protracted. Export-led growth was an important feature of the recovery period 2010-2011, yet signi...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery: Limp and Battered, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. In 2011 the recovery will encompass all countries in the CESEE region – even the laggards that did not grow in 2010. However GDP growth will not accelerate much in countries where the recession ended already in 2010. Later on, GDP growth rates will stabilize throughout the whole region at around 4 to 5 pe...more

In a special chapter ("Debt dynamics, flow of funds and deleveraging") of the wiiw Forecast "Recovery: Limp and Battered", the debt developments of the private (households, corporate) and public sectors before and after the start of the financial crisis are examined and compared with those in the GIPS countries (Greece, Ireland, Portugal, Spain). The burden of the build-up of private sector debt before the crisis has important consequences for spending and savings behaviour of households and enterprises and hence for the development of domestic demand (consumption and investment). In this resp...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery: Limp and Battered, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. In 2011 the recovery will encompass all countries in the CESEE region – even the laggards that did not grow in 2010. However GDP growth will not accelerate much in countries where the recession ended already in 2010. Later on, GDP growth rates will stabilize throughout the whole region at around 4 to 5 pe...more

In einem speziellen Kapitel („Debt dynamics, flow of funds and deleveraging“) des Konjunkturberichtes "Recovery: Limp and Battered" wird die Verschuldungsdynamik nach Sektoren (Haushalte, Unternehmen, Staat) vor und nach dem Ausbruch der Finanzkrise untersucht und mit den GIPS-Ländern (Griechenland, Irland, Portugal, Spanien) verglichen. Die Last der privaten Verschuldung hat wichtige Konsequenzen für das Ausgaben- und Sparverhalten des Haushalts- und Unternehmenssektors und damit für die Entwicklung der Inlandsnachfrage (Konsum und Investitionen). Dabei zeigen sich sehr unterschiedliche Muste...more

The free movement of persons is a fundamental right guaranteed to European Union (EU) citizens which is about to change not only the size of migration flows but also the behavior of migrants regarding the duration of stay. In our empirical analysis we show that migrants who intend to live only temporary in Germany are more likely to remit a higher amount of money. As we have seen in the UK, strong remittances flows provoke fears among natives of a loss in domestic purchasing power. Using a general equilibrium model with altruistic households and imperfect labor markets, we show that Germany wi...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery – in Low Gear across Tough Terrain, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. All Central, East and Southeast European (CESEE) countries will return to growth in 2011. The post-crisis GDP growth will be slower than before and not suffice to generate additional jobs. The role of external demand gradually weakens, while both household consumption and gross fixed inves...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Will exports prevail over austerity?, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe, and China The Central, East and Southeast European (CESEE) economies will experience on average a minor rebound of economic growth to 1% in 2010 which will speed up to 2.5% in 2011 and 3.5% in 2012. GDP growth will be higher in the CIS countries and in Turkey, about average in the Central European N...more

Bart Los, University of Groningen, Groningen Growth and Development Centre R&D activities by one industry can have positive effects on the productivity performance of other industries, as a consequence of technology spillovers. As revealed by Wolfgang Keller in the late 1990s, severe multicollinearity problems have precluded the identification of industries that have generated the most productive technology spillovers, despite a number of sophisticated attempts. Consequently, we do not know which industries should be targeted for technology policy. This paper proposes an alternative estimat...more

Doris A. Oberdabernig, University of Innsbruck The focus of this work is to measure the effects of Structural Adjustment Programmes (SAPs) of the International Monetary Fund (IMF) on poverty and income distribution. This study tries to estimate the impacts of SAPs on a variety of poverty indicators controlling for nonrandom selection. We make use of the matching method to test for differences in poverty indicators and GINI coefficients for countries participating in IMF agreements and countries which do not. Performing Heckman regressions we study the effects in more detail. We control for ...more

Cyrille Schwellnus, OECD (with Jens Arnold) This paper uses a stratified sample of firms across Western Europe over the period 1996-2004 to test for the existence of a link between corporate taxation and productivity. Corporate taxes may reduce incentives for productivity-enhancing innovations by reducing their post-tax returns, and may reduce incentives for risk taking by firms. In addition, corporate taxes can increase the user cost of capital and reduce incentives to invest in physical capital, which may affect productivity through technological progress embodied in new physical capital...more

Christian Busch ETH Zurich This paper investigates the contributions of institutions and export concentration in determining aggregate volatility. Geographically disadvantaged countries often experience a concentrated export structure which makes them more vulnerable to external shocks. Based on a gravity regression, a measure of export concentration is constructed which is based entirely on geographical characteristics. However, since export concentration ratios are not additively separable across countries we use an inequality decomposition method in order to obtain an aggregate measure o...more

Octavio Fernández Amador (with Jesús Crespo Cuaresma) University of Innsbruck We analyse the dynamics of the standard deviation of business cycles across euro area countries in order to evaluate the patterns of cyclical convergence in the European Monetary Union (EMU) for the period 1960-2008. Based on SVAR models à la Blanchard and Quah (1989), we study the pattern of cyclical synchronization by applying the methodology put forward by Crespo-Cuaresma and Fernández-Amador (2009), which makes use of sigma-convergence methods to identify synchronization patterns in business cycle data. This a...more

Christian Hepenstrick, University of Zurich (UZH) This paper develops a Ricardian trade model that accounts for the empirically observed positive relation between the extensive margin of a bilateral trade flow (measured as the number of goods categories with positive volumes) and the per-capita incomes of the trading partners. The central mechanism is that richer agents consume a wider set of varieties, which leads to a positive relation between per-capita income of the importer and the extensive margin. The positive effect of exporter per-capita income, corresponding to the standard model,...more

Alex Mourmouras, IMF (with Steven H. Russell) Seminar organized in cooperation with the Joint Vienna Institute We study a simple neoclassical model of investment in a developing country, modified to allow for long-term projects and short-term debt. Early signals indicating low productivity of investment may lead creditors to call loans in early. In such a crisis, firms protected by limited liability default and liquidate capital, even though they do so at a loss (a "fire sale"). We show that short-term debt financing is beneficial in good (normal) times: when there is no adverse signal, ...more