Aleš Bulíř

Aid Volatility: An Empirical Assessment

This article examines empirical evidence on the volatility and uncertainty of aid flows and their main policy implications. Aid is found to be more volatile than fiscal revenues-particularly in highly aid-dependent countries-and shortfalls in aid and domestic revenue tend to coincide. The article also finds that uncertainty about aid disbursements is large and that the information content of commitments made by donors is either very small or statistically insignificant. Specific policies and broader international efforts to cope with these features of aid are briefly discussed.

Sustainable Real Exchange Rates in the New Eu Member States; What Did the Great Recession Change?

The Great Recession affected export and import patterns in our sample countries, and these changes, coupled with a more volatile external environment, have profound impact on our estimates of real exchange rate misalignments and projections of sustainable real exchange rates. We find that real misalignments in several countries with pegged exchange rates and excessive external liabilities widened relative to earlier estimates. While countries with balanced net trade positions are expected to continue to experience appreciation during 2010-2014, several currencies are likely to require real depreciation to maintain sustainable net external debt. Our estimates point to somewhat larger disequilibria than those of IMF country teams, however, any estimates of equilibrium exchange rates are subject to sizable uncertainty.

Writing Clearly: The ECB's Monetary Policy Communication

Abstract The article presents a novel methodology for measuring the clarity of central bank communication using content analysis, illustrating the methodology with the case of the European Central Bank (ECB). The analysis identifies the ECB’s written communication as clear in about 85-95% of instances, which is comparable with, or better than, similar results available for other central banks. We also find that the additional information on risk to inflation and especially projection risk assessment contained in the ECB’s Monthly Bulletins helps to improve communication clarity compared to ECB’s press releases. In contrast, the bulletin’s communication on monetary developments has a negative, albeit small, impact on clarity.

Sustainable Real Exchange Rates in the New EU Member States: Is FDI a Mixed Blessing?

This essay focuses on the various macroeconomic opportunities and challenges created by the foreign direct investment (FDI) inflows in the new Member States. We question whether the macroeconomic performance of the new Member States is furthered through the overall positive impact of FDI on the trade balance or whether FDI can actually worsen the performance. Our findings suggest that in some new Member States the positive impact, foreseen by the financial markets, may be reflected in a sustainable appreciation of the real exchange rate. Such real appreciation is in most cases moderate enough to allow for smooth nominal convergence required for euro adoption. In some cases, however, this appreciation is very fast, especially in the new Member States with an initial low net external debt and massive inflows, making it challenging to fulfill the Maastricht criteria. The Maastricht criteria may be difficult to meet also in those new Member States where FDI has been channeled predominantly into services, housing construction, or non-tradable sectors in general, and where it might be required to depreciate currencies in real terms to sustain the external balance. In these countries we observe increasing net external debt without a corresponding improvement in the trade balance.

Output performance under central planning: a model of poor incentives

Centrally planned economies tend to be less efficient than economies in which agents are free to choose their output targets, as well as the means to meet them. This paper presents a simple model of planner–manager interactions and shows how planned economies can end up in a low-effort, low-output equilibrium even though they may have started in a high-effort, high-output equilibrium.

Growth Slowdown Under Central Planning: A Model of Poor Incentives

Centrally planned economies tend to be less efficient than economies in which agents are free to choose their output targets, as well as the means to meet them. This paper presents a simple model of planner-manager interactions and shows how planned economies can end up in a low-effort, low-output equilibrium even though they may have started in a high-effort, high-output equilibrium.

Privatization, Postprivatization, and Structural Problems

All economic change, especially viewed in the long term, is connected with structural change. Its course brings changes in the Gross Domestic Product (with dominance passing from the primary sector to the secondary sector and finally to the tertiary sector). Hand in hand with this go major or minor changes in the sectoral structure of the overall economy and corresponding shifts in total employment. Worker qualification demands change, and geographic shifts in production take place. Economic growth is inconceivable without constant change in the economic structure—in other words, new distribution of production factors among sectors, industries and regions. It can be said that economic development means constant economic structural change.