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Bulletin No 41 The first article in this Bulletin outlines the principal conclusions
of a new CEPR Report on the implications of recent developments in
Eastern Europe for the process of economic and monetary integration in
the West. This Bulletin also contains reports of the second CEPR/NBER
International Seminar on International Trade, devoted to the Uruguay
Round, and of lunchtime meetings on the pricing of initial public
offerings in the UK, the US and Japan and on the economic effects of
acid rain in Europe. A panel of CEPR Research Fellows argues that the transformation of the economies of Eastern Europe and the continued integration of the West European economies are complementary. Successful reforms in the East will lead to significant net exports of energy and agricultural goods, with heavy pressure on the CAP. The increase in East European imports of capital goods will be largely met by (West) German exports, while German demand will also rise becaouse of the transfers to support consumption levels in the East. In the short run, this should be accommodated by an upward realignment of the Deutschmark within the EMS, while in the long run lower per capita all-German income will entail a depreciation of the Deutschmark. International Trade The 1990 International Seminar on International Trade, held in Cambridge, Massachusetts and co-sponsored by CEPR and the NBER, was devoted to `Analytical Issues and Developments in the Uruguay Round'. Papers presented considered the implications of the GATT negotiations on `traditional' items such as agriculture and textiles and clothing and on new items such as intellectual property rights and trade in services. Initial Public Offerings At a CEPR lunchtime meeting in September, Tim Jenkinson argued that a comparative analysis of the operation and pricing of new equity issues in the UK, the US and Japan provides little empirical support for popular theories of why these initial public offerings are systematically underpriced. Acid Rain At a CEPR lunchtime meeting held in October to mark the launch of issue no. 11 of Economic Policy, David Newbery argued that the uniform cross-country reductions of sulphur dioxide emissions of the type currently proposed are an economically inefficient means of combating acid rain. Discussion Papers Colin Mayer and Damien Neven argue that the regulation of investment managers should be based on the imposition of heavy penalties in the event of misconduct, but that regulation of market-makers in equities would be better based on capital requirements. Sweder van Wijnbergen analyses how the possibility of a policy reversal may impede the prospects of a successful trade reform through distortionary effects on the intertemporal prices used by consumers. Ronald MacDonald and Mark Taylor find evidence of the long-run convergence of nominal and real exchange rates and of money supplies for EMS member currencies, but not for non-members, over the period 1979-88. Dani Rodrik argues that the adoption of free trade by developing countries as the sole response to the debt crisis inherited from the 1980s may lead to unrealistic expectations of what may be achieved. Barry Eichengreen analyses changes in the levels of international lending and in exchange rate regimes over the last century and assesses their implications for the future of European monetary unification. Rudiger Dornbusch considers the roles of fiscal austerity, foreign lending and structural reform in ensuring the credibility necessary to the success of macroeconomic stabilization programmes and the subsequent resumption of growth. Peter Bofinger analyses alternative strategies of tying the East European currencies to an `ecu-peg' and establishing an East European Payments Union as intermediate steps in the integration of the East European economies into the monetary arrangements of the European Community. Daniel Cohen and Richard Portes consider the influence of interest rates and `systemic risk' on the secondary market prices of short-term and long-term LDC debt. |