Behavioral Macroeconomics and Macroeconomic Behavior [28/03/2005]
Akerlof, G.
This paper considers how behavioral macroeconomists, incorporating realistic assumptions grounded in psychological and sociological observations, have produced models that comfortably account for the following six macroeconomic phenomena: the existence of involuntary unemployment, the impact of monetary policy on output and employment, the failure of deflation to accelerate when unemployment is high, the prevalence of undersaving for retirement, the excessive volatility of stock prices relative to their fundamentals, and the stubborn persistence of a self-destructive underclass. In the spirit of Keynes’ “General Theory”, behavioral macroeconomists are rebuilding the microfoundations that were sacked by the New Classical Economics.
A Common Currency for Belarus and Russia? [27/03/2005]
Gulde, A.-M., Jafarov, E., Prokopenko, V.
This paper discusses costs, benefits, and implementation challenges of a possible currency union between Belarus and Russia. It shows that Belarus and Russia are economically closely linked but nevertheless do not fulfill all “optimal currency area” criteria, especially the macroeconomic symmetry condition. Furthermore, we argue that the different speeds of economic liberalization over the past decade have resulted in different economic structures, with Belarus still dependent on monetary financing of budgets and industries. However, a final cost-benefit analysis also needs to consider that currency unification may bring substantial benefits from reduced transaction costs, an improved macroeconomic environment in Belarus, and by acting as a catalyst to advance structural reforms in Belarus.
Macroeconomic Consequences of the Currency Union of Belarus and Russia [26/03/2005]
Klepach, A., Vardevanyan, G., Osipova, O., Petronevich, M., Shagalov, G.
This paper considers two different scenarios of the macroeconomic consequences of a Currency Union of Belarus and Russia according to the method of direct estimation and the macroeconomic model. The method of direct estimation was based on the data as of 2002. The macroeconomic model used the data as of 2004. That year allowed to take into account the inertial economic development of the countries and its changes under the influence of establishment of a Currency Union. The comparative analysis of the macroeconomic indicators, economic legislation, and systemic characteristics of Belarus and Russia shows that the countries are not ready to the close monetary integration without serious negative consequences like in the European Monetary Union. Belarus and Russia are not converged enough and do not fulfill the criteria of optimal currency areas.
Institutional Foundations of the Union State’s Economy: Bankruptcy Issues [25/03/2005]
Chernovalov, A.
The Belarusian legislation on bankruptcy and its enforcement correspond to the radical pro-debtor model. It focuses on interests of a debtor and the state. However, the ongoing integration process of Belarus and Russia will certainly lead to further development of the appropriate legislation in both countries. First of all, the unified legislation should correspond to the moderate pro-debtor model of bankruptcy. The reason is that the radical pro-debtor features of the legislation hamper transformation and restructuring of enterprises and thus contribute to conservation of the situation when around half of the Belarusian enterprises are loss-making. At the same time, the moderate pro-creditor model of the Russian legislation still leads to the functional misuse of the bankruptcy institution.
Core Inflation: Some Methods of Calculation and Evaluation (The Case of Ukraine) [24/03/2005]
Wozniak, P., Mykhaylychenko, M.
Monetary policy is usually focused on long-term inflation trends. Therefore, it is necessary to know the underlying inflation trends, i.e. to filter the conventional CPI series by eliminating the influence of short-term noise so as to get the indicator of core inflation. The authors look for an optimal indicator of annual core inflation for Ukraine. The techniques employed for obtaining the population of investigated core inflation series include both frequently used as well as new statistical methods. The choice of an optimal indicator was made using standard theoretical criteria.
An Abnormal Country [23/03/2005]
Rosefielde, S.
Andrei Shleifer and Daniel Treisman recently rendered a summary verdict on the post-Soviet Russian transition experience finding that the Federation had become a normal country with the west’s assistance, and predicting that it would liberalize and develop further like other successful nations of its type. This essay demonstrates that they are mistaken. It shows factually, and on the norms elaborated by Pareto, Arrow, and Bergson that Russia is an abnormal political economy unlikely to democratize, westernize or embrace free enterprise any time soon.
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