The EU eventually responded to the growing pleas for membership by announcing that the special relationship between Western and Eastern Europe would be assured through association agreements pursuant to Article 235 of the Treaty of Rome. Initially, the EU did not intend to make any reference in the Europe Agreements to future membership of the Association countries.
A major indicator in the Europe Agreements, which highlights the EU's fundamental concern over its own interests rather than assisting Eastern Europe in the transition process, are the trade provisions. In essence, these maintain significant, potentially long-term barriers to trade between the EC and the East, particularly in sensitive sectors such as steel, textiles and agriculture. A second obstacle to the Associate countries' accession are the relatively weak institutional links created by the Europe Agreements. Convergence of laws is another important condition which needs to be satisfied before membership is granted to the Eastern European applicants. The present approach excludes the Eastern Europeans from exemption from the EU's anti-dumping law; it shuts them out of most of the EU's decision making; and it limits the effectiveness of their attempts to harmonise their legislation with the EU. Taken collectively, it seems certain that these exclusions will seriously restrict the Associates' prospects of rapid integration into the EU.
The compromise may involve complicated negotiations between member states and also with potential applicants. Keywords: European Union, Eastern Europe, Europe Agreements, accession, integration barriers, institutional links, approximation of laws Volume: 1999 Issue: 1 Year: 1999 File-URL: http://www.vse.cz/pep/36 File-Format: text/html Handle: RePEc:prg:jnlpep:v:1999:y:1999:i:1:id:36 Template-Type: ReDIF-Article 1.0 Author-Name: Bruno Sergio Sergi Title: Fiscal issues in post-communist economies: a pragmatic and aggressive fiscal rule Abstract: This paper illustrates why a tough fiscal policy in East Europe may be rethought. Western economic policy theories may be fashionable but sometimes fail when applied to transition economies. It is advanced a new proposal for guiding fiscal policy where top priority is given to the ratio government debt/GDP and not to implement a tough deficit policy. Selected transition economies have low debt, then a more pragmatic economic strategy combined with a feasible and wise budget rule on fiscal policy may build up a scenario of economic recovery and sustainable membership in a perspective enlarged European Union. Keywords: fiscal policy, economies in transition Volume: 1999 Issue: 1 Year: 1999 File-URL: http://www.vse.cz/pep/37 File-Format: text/html Handle: RePEc:prg:jnlpep:v:1999:y:1999:i:1:id:37 Template-Type: ReDIF-Article 1.0 Author-Name: Jiří Trešl Title: Prague stock exchange: sectorial indices development in 1997 Abstract: Statistical analysis of sectorial and global indexes at Prague Stock Exchange in 1997 was performed. The relative variability of sectorial indexes ranged from 5 % (Mining) to 29 % (Agriculture). The normal distribution was appropriate roughly for one half of index returns. Daily (resp. weekly) correlation coefficients between different sectorial daily and weekly returns were statistically significant particularly between Finance and Banking, Investment Funds and Heavy Industry sectors with typical values from 0.2 to 0.5 (daily) and from 0.4 to 0.6 (weekly). Quasi-periodic time course of indexes enables the trend modelling through harmonic components superposition. The first four harmonic terms were capable to explain 80-90 % of values observed.
Time behaviour of index returns was modelled using Box-Jenkins method. As a rule, simple models up to the second order proved to be satisfactory. Further, two thirds of index returns were explained by the first order moving average model. Prevailing part of sectorial index returns exhibited random behaviour with respect to number of positive and negative events, but the opposite is true from the point of view of runs number expected. The weekend effect has been found with Monday returns systematically lower. The dependence of PX - GLOB returns variance on the PX - GLOB values may give rise to an idea about different generating mechanism at different levels. Keywords: capital market analysis, financial time series, return modelling, stock behaviour Volume: 1999 Issue: 1 Year: 1999 File-URL: http://www.vse.cz/pep/38 File-Format: text/html Handle: RePEc:prg:jnlpep:v:1999:y:1999:i:1:id:38 Template-Type: ReDIF-Article 1.0 Author-Name: Dawit Alemu Bemerew Title: Cointegration between stock market indices: the case of the slovak and czech stock price indices Abstract: This paper provides an empirical investigation of long-term relationship between the stock market indices of the Czech and Slovak Republic. The empirical work applies log of weekly average data on the Czech PX - 50 and the Slovak SAX from September 1995 to December 1997. Empirical investigation is conducted by means of unit root tests and the EngleGranger methodology of cointegration test. The result from the unit root tests shows that individual stock indices are nonstationary - I(1). The result from the cointegration test shows that there is no long-term relationship between the two indices, even though, the strong economic ties and policy coordination between the two republics seem to be in favor of some cointegration. Keywords: Czech stock exchange, Slovak stock exchange, econometric analysis, stock indices Volume: 1999 Issue: 1 Year: 1999 File-URL: http://www.vse.cz/pep/39 File-Format: text/html Handle: RePEc:prg:jnlpep:v:1999:y:1999:i:1:id:39 Template-Type: ReDIF-Article 1.0 Author-Name: Kateřina Šmídková Title: Estimating the fundamental equilibrium exchange rate for the czech economy Abstract: When currency turbulences hit the CZK in May 1997, the research presented in this paper had been nearly finished. It tried to contribute to the discussion of sustainability of external development of the Czech economy by comparing signals given by a set of indicators to signals implied by the estimates of fundamental equilibrium exchange rate (FEER) for the CZK.
Interestingly, the method of indicators did not give an unambiguous answer. Specifically, when applied to the Czech data, debt as well as solvency indicators did not imply a danger of external crisis. Financial indicators with a shorter-time horizon did send some warning signals. Indicators of competitiveness watched by large international investors considered the CZK to be overvalued since 1995.
In order to gain more decisive conclusion concerning the danger of external crisis, the structural approach was employed. The model simulations of the FEER indicated that the CZK became overvalued in 1996 with respect to the central parity of the exchange-rate band. This conclusion was quite robust taking into account behavior of both the real economy as well as decisive external financial flows. The Czech experience with currency turbulences provided an unintentional measure on how good the warning indicators were. The FEER methodology was able to conclude that there was a need for a policy shift in the end of 1996 although it did not give the clear warning that the exchange-rate regime itself was not sustainable. Keywords: fundamental equilibrium exchange rate, external imbalance, Czech economy Volume: 1999 Issue: 1 Year: 1999 File-URL: http://www.vse.cz/pep/40 File-Format: text/html Handle: RePEc:prg:jnlpep:v:1999:y:1999:i:1:id:40 Template-Type: ReDIF-Article 1.0 Author-Name: Marie Bohatá Author-Name: Jan Mládek Title: The development of small and medium-sized companies in the czech republic Abstract: This article focuses on the development of small and medium-sized enterprises (SMEs) in the Czech Republic (Czechoslovakia) after the Velvet Revolution in 1989. It starts with the approach to SMEs at the early stages of economic transformation aiming at the reestablishment of a market economy and further deals with the systemic policy of the Czech government towards SMEs. In order to characterize the current business environment and performance of the sector, it offers results of empirical surveys as well as data published by the Czech Statistical Office. On the basis of analytical results there are formulated some policy recommendations. Keywords: business environment, privatization, restitution, small and medium-sized enterprises, state policy, state support Volume: 1999 Issue: 1 Year: 1999 File-URL: http://www.vse.cz/pep/41 File-Format: text/html Handle: RePEc:prg:jnlpep:v:1999:y:1999:i:1:id:41