This paper explores the conflict of real and monetary convergence during the EMU run-up of the Central and Eastern European new EU member states. Based on a Balassa-Samuelson model of productivity driven inflation, it finds a high probability of higher inflation in the new member states. It...

The IMF classifications of the Central and Eastern European exchange rate arrangements are heterogeneous. While one group of countries reports tight pegs to the euro, a second group seems to have moved toward (more) exchange rate flexibility. Based on the recent discussion about the accuracy of...

Although recet research has repeatedly found a negative association between investment and socio-political instability (SPI), the existence and direction of causality between these two variables has not yet been investigated. We construct an index of SPI for non-overlaping five-years periods...

One of the most enduring debates in economics is whether financial development causes economic growth or whether it is a consequence of increased economic activity. Little research into this question, however has used a true causality framework. This paper fills this lacuna by using...

An unstable macroeconomic environment is often regarded as detrimental to economic growth. Among the sources contributing to such instability, much of the blame has been assigned to political issues. This paper empirically tests for a causal and negative long-run relationship between political...