Ezoneplus
– the Eastward Enlargement of the Eurozone
Newsletter
no. 1 (14 December 2001)
In
this issue:
2. Berlin Conference 18.-21. October 2001
3. Abstract of working paper no. 1: "New
Risks Ahead"
4. State of the art reports – forthcoming
5. Two Regional Workshops Ahead
First
of all, welcome to the start of the Ezoneplus newsletter series. Ezoneplus, an
international research project on the eastward enlargement of the eurozone
embraces research institutions from seven European countries. It is funded by
the European Commission and launched officially in August this year. The Jean
Monnet Centre of Excellence of the Freie Universität Berlin acts as project
co-ordinator and will inform about the project’s current activities every five
to six weeks via this newsletter.
The
participating research institutions from eastern and western Europe are:
Estonia:
University of Tartu
Finland:
VATT institute
Germany:
Freie Universität Berlin / Jean Monnet Centre of Excellence
Italy:
University of Bologna
Poland:
Warsaw School of Economics
Portugal:
University of Evora
Slovenia:
Institute for Economic Research
2. Berlin Conference 18.-21. October 2001
All went
well and the first Ezoneplus workshop on the "Eastward Enlargement of the
Eurozone" was a huge success for the project. Thanks to the generous
support of the European Commission and Deutsche Bank Research, we were able to
organise a fruitful environment to focus on the main aspects related to the
project’s working packages. Thus, at the heart of the Friday sessions were:
The role
of capital markets, which was covered by Thomas Meyer of the Berlin team. Prof.
Dr. Jaako Kiander from VATT, Finland dealt with labour markets development and
Prof. Dr. Renzo Orsi, University of Bologna, Italy sketched the main problems
attached to real appreciation of CEE currencies. Next Prof. Dr. Isabel Vieira,
University of Evora, Portugal revealed major issues concerning trade &
foreign direct investment, whereas Dr. Vladimir Lavrac from the IER, Slovenia
tackled prospective risks with regard to exchange rate regimes and monetary and
fiscal policies during the run-up to EMU. Finally, Achim Kemmerling, FU Berlin
developed a framework dealing with social issues stemming from enlarging the
eurozone.
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Moreover,
we were especially grateful for the asisstance of Deutsche Bank Research in
establishing the first "Euroluncheon"; a formal dinner series created
to launch informal debate between embassies, people from the banking and
industrial sector as well as academia. The first Euroluncheon took place on
Friday 19th at Deutsche Bank Research Berlin and key speeches were delivered by
Ulrich Schröder of the Bank's team in Frankfurt and the co-ordinating professor
of the Berlin team, Michael Bolle.
The
initial Ezoneplus workshop concluded with administrative and financial matters
and especially focussed on appropriate means of dissemination.
Coming
up Euroluncheon no. 2 will take place probably in February 2002 and will be
announced in time.
3. Abstract of working paper no. 1: "New Risks
Ahead"
The
Berlin team surveyed the major risks and possible benefits which stem from the
CEE countries’ ambition to join the euro area. This first working paper was
published in “Intereconomics”, Nov/Dec 2001, pp. 298-304.
WP1
Abstract - "New Risks Ahead. The Eastward Enlargement of the
Eurozone"
Eastward
enlargement is one of the hot topics in European economics. The accession of
central and eastern European Countries (CEEC) into the European Union (EU) is
accompanied by an extension of the eurozone to this region.
This paper
surveys likely outcomes and challenges of this specific feature of EU
enlargement. Moreover, the article represents the start of an international
research project dealing with these questions. Research is structured along
different markets. Hence, the impact of an adoption of the euro is analysed for
capital and labour markets as well as with respect to exchange rate and
monetary policies.
Our main
position is that the euro has in general beneficiary effects for the CEEC and
the current EU in all examined markets. However, these benefits evolve mainly
in the long run, whereas the short-term costs of adaptation to the new
situation may be high.
Although
we believe that the present value of long-term benefits exceeds these costs, it
is by no means clear that policy-makers will share this view. Due to the usual
political-economy transformation, the assessment of costs and benefits may be
different for politicians than compared to any overall perspective.
If
official policies become unforeseeable, so will private behaviour.
International investors may reverse their capital flows, draining precious
liquidity, and leading to currency and financial crises whenever they perceive
the authorities’ commitment to EMU less credible.
This
article highlights some thinkable mechanisms how any such crisis could evolve.
It, thus, sets the agenda for further research, mainly, with the focus on
appropriate policy strategies to keep adaptation costs as low as possible,
minimise other external risks, without hampering the long-term benefits.
JEL-Classification:
E0, E6, G3
Keywords:
EMU, EU enlargement, monetary integration
The
complete paper can be downloaded as a pdf-file from www.ezoneplus.org/publications.php.
4. State of the art reports – forthcoming
By
the end of the year the Ezoneplus-consortium will deliver its first state of
the art reports to the European Commission. The papers will encompass all
relevant aspects of the six major policy fields covered by the project: Capital
and Labour Markets, Trade and FDI, Exchange Rate Policies, Monetary and Fiscal
Policies, and the Social Dimension. After short revision by European officials,
the studies will become available in print in Q1 2002.
5. Two Regional Workshops Ahead
Regional Workshop in Berlin 08.02.2002
The
regional workshop in February 2002 is part of our continuing dissemination
activities. The rationale of the event is to present the project to the local
scientific community in Berlin and Brandenburg and to initiate an encompassing
academic discussion regarding the eurozone enlargement. Therefore, numerous
institutions such as the Deutsche Forschungsgemeinschaft DFG, DIW, DGAP, IEP,
SWP and Deutsche Bank Research are invited to participate in the hopefully
lively debate.
The
workshop will take place at Berlin's Humboldt university on friday, February
8th. Detailed information on place and schedule will be announced in time on
the Ezoneplus website.
By
invitation of the Warsaw School of Economics, researchers from Poland, the
Czech Republic and Germany will meet in Krakow/Poland next April. This event
will focus primarily on recent trade and FDI movements as well as on eastern
European capital markets. With regard to possible shaping and re-shaping
effects on financial markets and related actors, the workshop intends to
provide concise cross-country analysis. Since huge capital inflows allow for
less reliance on domestic savings rates on the one hand but tend to trigger
excessive real exchange-rate appreciation on the other, debate will include the
scope of national political decision-making responding to possible trade-offs.
For additional information please visit www.ezoneplus.org or EMAIL your questions, comments or suggestions directly to us at info@ezoneplus.org.
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