An Econometric Macro-model of Transition: Policy Choices in the Pre-Accession Period

Bank of Slovenia
Macroeconomics 04/2004;
Source: RePEc


This paper analyses current policy choices facing the candidate countries for EU accession using newly developed econometric macromodels of Poland, Hungary, the Czech Republic, Slovenia and Estonia. The models allow for endogenous growth, and they have been incorporated into an existing global econometric model (NiGEM). This allows long-term projections to be made consistently with expected developments in other economies and allows full feedbacks with the rest of the world so that we can understand impacts on existing EU members as well as the candidate countries. This paper has several novel features, in that we use modern panel data techniques on short time series data in order to construct models of a number of economies. In constructing the models, we have taken special care to consider the roles of openness and foreign investment on productivity and growth. Different policies toward growth and the enhancement of technology transfer are analysed using the models, and policy advice on the accession and integration are made.

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    • "Compared to the calibration in Babecký, Bulíř, and Šmídková (2008), these new estimates for a larger and longer sample show somewhat higher export elasticities 1  and 3  , a lower real exchange rate elasticity of imports 1  , and a higher FDI elasticity of imports 3  . Both calibrations produce broadly comparable estimates of elasticities to the previous studies Šmídková, Barrell, and Holland (2002), Bulíř and Šmídková (2005, 2007) that relied on panel-data results from Barrell et al. (2002). Therefore, to assess the robustness of the model simulations, we employ the two most recent of these sets of elasticities for the calibration of the baseline model. "
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    • "The parameters used in equation (4) have been calibrated using panel data regression results from table 2, departing from the calibration used in Šmídková, Barrell, and Holland (2002), Bulíř and Šmídková (2005) and (2007) that relied on panel data results from Barrell et al. (2002) and Šmídková et al. (2002). Equations (1) and (2) have been estimated in a panel comprising the four forerunner countries of Greece, Portugal, Spain, and Slovenia where trade developments now seem past the period of fast transitional growth. "
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    • "The parameters used in equation (10) have been calibrated using panel-data results from Barrell et al. (2002) and Šmídková et al. (2002) (Table 1). We note that, first, the integration gain is significant: a one-percentage point increase in FDI increases net exports by almost 0.5 percent. "
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