Financing the Transition of Previously Centrally Planned Economies: Macroeconomic Effectson Western Europe
December 1, 1994
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Summary
Under alternative assumptions on the likely developments in external financing of PCPE transition, and based on a multi-country, forward-looking model that includes a simplified PCPE block, we simulate the response of PCPEs to a transfer of capital from the industrial countries, and assess the potential implications for Western Europe over the next ten years. Real interest rates in Western Europe are likely to experience only mild upward pressure, and most macroeconomic aggregates are likely to change by substantially smaller magnitudes than typical over the business cycle.
Subject: Balance of payments, Capital flows, Consumption, Exports, Financial institutions, Imports, International trade, Loans, National accounts
Keywords: Capital flows, capital-importing country, Consumption, Eastern Europe, Exports, financing effort, import constraint, import shock, Imports, investment equation, investment relation counterpart, investment scenario, Loans, PCPE model, PCPEs' investment, PCPEs' transition, prototype capital-importing region, relation counterpart, trade balance, transformation of Previously Centrally Planned Economies, Western Europe, WP
Pages:
30
Volume:
1994
DOI:
Issue:
157
Series:
Working Paper No. 1994/157
Stock No:
WPIEA1571994
ISBN:
9781451857443
ISSN:
1018-5941
