Ten years after regaining independence, the Baltic Countries--Estonia, Latvia, and Lithuania--are expected to be invited to join the European Union (EU) and NATO in 2004. This paper provides a macroeconomic perspective on the Baltics' remarkable economic success to date and of the fiscal...

This paper on the Baltic countries analyzes medium-term fiscal issues related to European Union (EU) and NATO accession. The paper supports the Baltic authorities’ intention to aim at balancing their budgets over the economic cycle. The paper describes the Baltics’ current fiscal position...

This paper investigates the impact of long-run terms-of-trade shocks. Analytically, we show that, if capital goods are largely importable or the labor supply is sufficiently elastic, then natural-resource booms increase aggregate investment and worsen the current account, but Dutch ‘Disease’...

In most macroeconomic models, the substitutability between domestic and foreign goods is calibrated using aggregated data. This imposes homogeneous elasticities across goods, and the calibration is only valid under this assumption. If elasticities are heterogeneous, the aggregate...

There is a widespread view that the adjustment of U.S. trade prices--and hence merchandise trade flows--in the face of the substantial dollar depreciation since early 1985 has been slower than might have been expected. This paper examines the recent behavior of U.S. trade prices, and concludes...

A mix of solid economic policies, wage moderation, and an early orientation toward Eastern Europe explain Austria’s strong economic performance. The economy has grown strong in 2007 and through the first quarter of 2008. Employment growth remains strong, but the trend of a declining...

The Austrian authorities have been making great efforts since 2003 to enhance the quality of banking supervision and keep up-to-date with banking sector developments. Banks face a reputation risk arising from exposure to money laundering/financing of terrorism risk in both domestic and...

This technical note focuses on the Austrian banking system that exhibits considerable resilience against shocks determined by stress tests. The main sources of risk lie in the credit risk arising from exposures to Central, Eastern, and Southeastern Europe (CESE) and the Commonwealth of...