Our focus in this paper is macroeconomic policy in the countries of Central Europe: The Czech Republic, Hungary, Poland and Slovakia. All four are committed to joining the European Union. Accordingly, their macroeconomic policies need to put them on a credible path towards meeting the entry...

As the European Community (EC) unifies its financial markets and fixes its exchange rates, the EFTA countries are liberalizing capital movements to the same extent. The EFTA countries thus face a decision on financial markets and exchange rate policy: should they essentially join the European...

The new and prospective entrants to the EC join an economic environment that itself is undergoing rapid change. The combination of the European Monetary System (EMS) and the integration of European financial markets in 1992 will alter substantially the environment of monetary and fiscal policy...

This paper considers the Portuguese transition towards full membership of the European Community in the light of the conflicts between domestic political objectives and the process of economic integration and liberalization. The paper studies two "integration episodes", the development of an...

When the 1987 general elections brought a durable government to Portugal, the national environment was still inflationary. Nevertheless, thanks to the efforts of successive ministers of finance/central bank governor pairs, the criteria for Economic and Monetary Union (EMU) were met and the...

This paper presents a simple model of the effects of exchange rate flexibility on the transmission of income shocks. The starting point is the traditional channel through exports and imports known as the "locomotive". The intertemporal exchange rate model presented here also allows for the...

In the classic analysis of smuggling, importers choose the optimal mix of legal and illegal trade, given trade taxes and the technology of detection. This paper introduces an inconvertible currency into the framework, so that illegal trade is valued at a rate higher than the (fixed) official...

This paper reviews the traditional ambiguity of Portuguese policy towards external liberalization. Product and labour markets have become segmented as a result of the soft budget constraint faced by large corporations and job protection in the public sector. Relaxation of entry requirements into...

Globalization, governance and economic performance affect each other in very complex mutual relationships. In this Paper, we establish a clear and well-circumscribed hypothesis: ‘Is there an effect of globalization on governance?’ To test this hypothesis or, even more specifically, to test...