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Contents of issue 9/2006

Andrzej Adamczyk, Tomasz Tokarski, Robert W. Włodarczyk - ‘Transformation Unemployment’ in Central and Eastern Europe, summary, article

Aleksandra Rogut, Sylwia Roszkowska - Conditional Convergence in Transition Economies, summary, article

Paweł Marszałek - The Difficulties of Coordinating Monetary and Fiscal Policies in the Modern Economy, summary, article


Jakob Svensson - Eight Questions About Corruption, article


Book Review: Jeffrey Sachs, Koniec z nędzą. Zadanie dla naszego pokolenia (The End of Poverty: Economic Possibilities for Our Time), Wydawnictwo Naukowe PWN, Warsaw 2006, 389 pp. - reviewed by Marek Lubiński

The Podlasie Region: Prospects for Development - Tadeusz Smuga

Andrzej Adamczyk, Tomasz Tokarski, Robert W. Włodarczyk - ‘Transformation Unemployment’ in Central and Eastern Europe

Market transition in Central and Eastern Europe triggered many new socioeconomic developments. One of them was the appearance of open unemployment vastly different from that noted in most developed economies around the world. As a result, the term “transformation unemployment” began to be used in literature on the subject. The authors of the article analyze the trend from a theoretical point of view and then follow up with an empirical study of unemployment. They present changes in the labor force and GDP in several groups of countries: Central Europe (Czech Republic, Poland, Slovakia and Hungary) plus Slovenia; Lithuania, Latvia and Estonia; Russia, Ukraine, Belarus and Moldova; Georgia, Armenia and Azerbaijan; and Balkan countries (former Yugoslav states except Slovenia as well as Albania, Bulgaria and Romania). The authors offer a statistical analysis of GDP growth and unemployment in individual groups of countries. In the final part of the article, the most important conclusions are summed up. These include the fact that the analyzed groups of countries display major differences in unemployment rates, along with changes in employment figures and labor productivity. Moreover, in most these countries, GDP growth has had a limited effect on unemployment. The only exception is Central Europe, though the European members of the Commonwealth of Independent States and transition economies in the Balkans also stand out positively.

Keywords: unemployment, labor force, GDP, transformation, Central and Eastern Europe
Article: PDF

Aleksandra Rogut, Sylwia Roszkowska - Conditional Convergence in Transition Economies

The authors set out to determine if the convergence theory passes the test in 25 transition economies. On the basis of statistical data for the years 1991-2004, using an econometric model, they analyze the influence of GDP per employee on the growth of labor productivity. They also consider other factors with an influence on sustainable economic growth. Considering the significant heterogeneity of the analyzed economies in terms of market reforms and institutional conditions, the authors divided the sample into three relatively homogenous groups: 10 new European Union member states excluding Cyprus and Malta; 12 CIS countries; and five Southern and Eastern European economies. The authors evaluated conditional convergence in individual groups of economies, concluding that economies with lower GDP per employee at the start of transition were characterized by a higher rate of growth for most of the analyzed period. GDP per employee primarily depended on investment in physical and human capital, the share of government spending in GDP and inflation. Moreover, the analysis showed that convergence processes in individual countries led to converging long-term economic growth rates, which were positive rather than neutral, contrary to the classic convergence theory.

Keywords: convergence, GDP, productivity, transition
Article: PDF

Paweł Marszałek - The Difficulties of Coordinating Monetary and Fiscal Policies in the Modern Economy

The paper examines issues related to the coordination of fiscal and monetary policies. The author discusses the implications of delayed monetary and fiscal decisions and the difficulties involved in setting economic policy goals. He also describes the “one-armed policymaker” syndrome and the “zero bound problem.”
The discussion indicates that proper coordination makes it possible to limit delays in economic policy. It also offsets the shortage of instruments at the disposal of policy makers and helps prevent deflation pressure, while increasing the efficiency of economic policy under “the zero bound problem.” All this increases the probability that monetary and fiscal policy makers will successfully attain their goals.
The author concludes that the relationships between monetary and fiscal policies are much deeper and more complex than they seem to be, going beyond their traditional perception in terms of inflation and budget deficit financing. Moreover, considering the limitations of fiscal policy that reduce its flexibility, coordination efforts should primarily support the position of the central bank as a prime decision maker with considerable room for maneuver. Fiscal authorities should essentially limit themselves to supporting central bank activities and pursuing well-designed policies.

Keywords: coordination, delay, monetary policy, fiscal policy
Article: PDF

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