BULLETIN 38/39 April/June 1990

IN THIS ISSUE...

In the lead article, Alberto Giovannini proposes several modifications to the Delors Report's proposals for the European System of Central Banks. This Bulletin also reports a conference on trade and industry in `1992', workshops on product and labour markets, twentieth-century European productivity and financial asset markets, and lunchtime meetings on economic reform in Hungary and on LDC debt.

European Monetary Union
CEPR Research Fellow Alberto Giovannini proposes that, if the EMS is to remain stable during the transition to monetary union, bilateral central rates must be irrevocably fixed from Stage I and destabilizing speculation met by accelerating the union. The Eurofed should begin as two separate bodies charged with responsibilities for exchange rate intervention and the coordination of national monetary policies.

European Integration
At a CEPR conference with Confindustria in Urbino, Italy, papers covered the implications of EC integration for trade with EFTA, Eastern Europe and the rest of the world, technology and taxation policies, the structure of employment and foreign direct investment.

Product and Labour Markets
The Centre held a workshop with the UK Department of Employment on the links between product and labour markets. Issues discussed included the effects of monopoly power in product markets on wages and employment and the influence of bargaining between firms and workers on output, investment and innovation.

Market Microstructure
The third workshop of the European Science Foundation Network in Financial Markets took place at the Université de Lausanne. Papers focused on recent institutional developments in European bond and stock markets, insider information and the behaviour of foreign exchange markets.

European Productivity
Participants in a CEPR workshop discussed the implications of recent developments in industrial economics and in growth theory for research into cross-country differences in productivity over the last century, both within Europe and between Europe and the USA.

Economic Reform in Hungary
At a February lunchtime meeting, David Newbery contrasted the revolutionary events of late 1989 with the earlier Hungarian programme of economic reform and argued that the success of the present reform programme will depend on the commitment of the authorities to a predictable regulatory environment, in particular to the abolition of discretionary taxes and subsidies.

LDC Debt
At a lunchtime meeting in March, Richard Portes and Daniel Cohen presented preliminary results of their recent research into the secondary market for LDC debt.

Discussion Papers

Marcus Miller and Paul Weller analyse exchange rate behaviour under rational expectations and random shocks to domestic prices.

Jaime de Melo and L Alan Winters investigate the costs of VERs to exporting countries.

Siv Gustafsson studies the relationship between female labour force participation, relative income and fertility rates.

William Branson reviews the constraints imposed on macroeconomic policy by financial market integration.

Stephen Broadberry and Nicholas Crafts review the implications of UK macroeconomic policy in the 1930s for long-term productivity growth.

Richard Baldwin argues that the US-Japan Semiconductor Arrangement has made the market less competitive, leading to cartelization and a rise in world prices.

José Viñals finds that Spain has still to experience a large part of the `EEC-cum-1992' shock, but that EMS membership is the best available exchange rate mechanism for Spain.

George Alogoskoufis examines the relationship between inflation and the balance of payments under fixed and managed exchange rate regimes over the last century.

Raquel Fernandez and Dani Rodrik explain the political unpopularity of trade reform in a formal model based on uncertainty.

Paul Klemperer examines the social costs and benefits of patent protection.

Andrew Hughes Hallett examines both necessary and sufficient conditions for the effectiveness of the target zone proposal as a means of exchange rate management.

Guido Tabellini presents a formal model to explain the existence and size of social security provision.

Alessandra Casella argues that the existence of a currency union does not preclude its central bank from applying different monetary policies in different parts of the union.

Paul Seabright assesses the effects of potential competition on incumbent firms' behaviour under oligopoly.

Seppo Honkapohja and Urho Lempinen consider the effects of the level and structure of government financing on the macroeconomic equilibrium.

Giuseppe Bertola and Ricardo Caballero present a new target zone model of exchange rate behaviour that allows for recurring stochastic realignments and explains the behaviour of exchange rate data under the EMS.

Jaime de Melo and David Roland-Holst examine the welfare gains to Korea from trade liberalization.

Jaime de Melo and Sherman Robinson consider the implications of trade externalities for strategies of export-led growth in developing countries.

Jaime de Melo and David Tarr estimate the costs of protectionism in the US.

Dani Rodrik studies the Turkish experience of inflation and trade liberalization under the Özal government.

Victor Norman and Siri Strandenes assess the possible effects of the deregulation of European airlines on intra-Scandinavian air routes.

L Alan Winters considers the effects of surveillance on EC imports as an instance of strategic trade behaviour on the part of exporting firms and governments.

Peter Bofinger proposes a modification of the Delors Report's proposals to improve the Eurofed's ability to maintain the stability of the price level and of the EMS itself in the face of speculative attacks.

David Vines presents a generalized model of growth and adjustment in LDCs.

Richard Baldwin examines the potentially large effects of small transaction costs on the perceived efficiency of foreign exchange markets.

Willem Buiter and Urjit Patel assess the dangers of high public debt in India.

Paul Levine and Joseph Pearlman analyse governments' credibility under rational expectations.

Julia Darby and Simon Wren-Lewis examine underlying productivity trends for the G7 countries over the last twenty years.