Jens Hölscher

Competition and Antitrust Policy in the Enlarged European Union: A Level Playing Field?

With the central and eastern European countries (CEECs) increasingly included into the international division of labour in the European economic space, we are prompted to ask whether this integration operates on a level playing field with respect to competition policy. In fact, our analysis reveals that effectiveness of implementation of competition law and policy and intensity of competition are lower in the CEECs. We find no reason to believe that the new eastern EU members struggle with the recent reforms of competition policy in the EU, nor do we see the necessity for policy action to spur effective implementation.

Exchange rate strategies of new EU entrants

This highly topical book examines the development and future prospects for economic and monetary union in Europe. European Monetary Integration examines the background to economic and monetary union from a historical perspective that distinguishes between national and supranational currency areas, and an optimal currency area theory. The gradualist transition process is also considered.

Exchange rate linkages and strategies of new eu entrants

The objective of this paper is to briefly present the current linkages that the eventual future member states of the European Union have with the common European currency area, the Euro area. Under given circumstances a hybrid system of exchange rate policy is proposed for the new EU entrants. This work is structured as follows: an introductory section briefly presents the set‐up of the current enlargement wave; a second section presents the European Monetary Union convergence criteria and the current status of the candidate countries concerning these benchmarks; a third section presents the economic rationale behind EMU; a fourth section presents the current linkage strategies of the candidate countries; and the fifth section questions what an optimal strategy could be for the new entrants. The study ends with the proposal of an Exchange Rate Mechanism 2 type of strategy as conclusion.

Oil demand in China: an econometric approach

Purpose – This study intends to explore the determinants of Chinese oil demand and to build a short‐ and long‐run model.Design/methodology/approach – The study uses the Engle‐Granger two‐stage cointegration method to create a dynamic short‐run model. Data is taken from both international data sources and the Chinese authorities themselves.Findings – The research largely confirms current research in the area. The error correction model finds that only vehicle numbers and real GDP are determinants of the demand in the short‐run. The model also shows that there is a fairly slow adjustment from the short‐run to the long‐run model.Research limitations/implications – The model also shows that there is a fairly slow adjustment from the short‐run to the long‐run model. Both models find that structural breaks exist in the data and dummy variables were significant in allowing for the regime change.Practical implications – The policy implications not only for China but the whole world are clear. Chinas demand for o...

The ‘German Model’ in Decline

The phrase, a ‘German model’, is adopted in the title although the existence of such a model is highly doubtful. The German economic post-war success story can be understood as a result of economic policy in a peculiar internal and external market constellation, whatever model is stylised (see Holscher 1994). This paper argues that the market constellations faded away, but economic policy remained as if nothing happened at all. The process of changing market constellations began in the early 1970s with the breakdown of the Bretton-Woods system of fixed exchange rates, continued with ‘eurosclerosis’ and stagnation in the 1980s, and found its preliminary last stage in the new constellation of a unified German economy. The obvious signal of the new constellation is the coincidence of a record export performance and mass unemployment, reaching figures comparable to the world economic crises of 1933.

Privatization and Competition

Chapter 4 addresses the relationship between ownership transformation and the establishment of competition. Competition is the driving force of an innovative market economy with private ownership. But privatization — the core of ownership transformation — is a necessary policy to generate a competitive private sector, but it is far from being sufficient. We discuss the problem of the ‘soft’ budget constraint, which prevails in CPEs with state-owned firms and which is a stubborn attendant of transition, when ownership transformation is conducted in a non-competitive way and a non-competitive environment. A taxonomy of privatization presents the various ways in which ownership transformation has been pursued. Finally the difficulties in creating a competitive environment are illustrated with an analysis of anti-trust policy in transition countries.

Overvalued or Undervalued Euroland Entry

This study addresses the question of the conversion rate upon joining the European Union with respect to the accession countries of Eastern Europe. The article argues in favour of an undervalued exchange rate in order to promote income generation in the new member countries. For this purpose a strategy of managed float is proposed. Countries not having the preconditions to pursue such a strategy should adopt a currency board arrangement.

Emerging Labour Markets

Chapter 5 provides an overview on the impact of transition on labour markets. It starts with some indicators describing the liberalization of labour relations. It then directs the focus on to the unemployment problem during and, possibly after, transition. The chapter introduces a model that describes the conditions for an initial rise and later fall of unemployment due to an optimal speed of restructuring the state-owned sector: the model of the optimal speed of transition (OST). Two macroeconomic concepts are used to indirectly assess the relation between market rigidities and unemployment — the Beveridge curve and Okun’s law. Both concepts suggest that the present high unemployment in countries should no longer be understood as a transitional problem or a problem of too rigid markets. It is rather a matter of too little economic growth.

Capital and Credit-based Development: Lessons from the Experience of Industrial Countries for Transition Economies in Central East Europe

The hypothesis of this chapter is that a strategy in favour of financial liberalisation in the emerging market economies of Central East Europe will lead to Anglo-Saxon types of financial sectors, including the implantation of chronic short termism and vulnerability to speculative attacks. For economic policy we argue therefore in favour of a careful rehabilitation approach following the postwar West German example (see Grunbacher and Holscher 1997).

The DM Undervaluation and West Germany’s Economic Performance

The hypothesis advanced in this paper is that the Bundesbank was fundamentally responsible for postwar economic growth in West Germany. A monetary policy which targeted price stability produced an undervaluation of the Deutsche Mark. This was the basis for West Germany’s export-driven accumulation. It is thus necessary to distinguish between the nominal and real exchange rates of the OM. The former became increasingly influenced by West Germany’s international monetary commitments, whereas the latter was additionally derived from productivity gains. Qualitative factors also played a role in export growth.