Cover -- Half-title -- Ttitle -- Copyright -- Contents -- Figures -- Tables -- Notes on the contributors -- Acknowledgments -- Introduction -- The overall impact -- Regional policies and the structural funds -- The macroeconomic trajectory -- EMU accession -- 1 New Member States: macroeconomic outlook and forecasts -- 1.1 The recent economic recovery in the new Member States -- 1.2 Inflation's temporary resurgence not yet a concern -- 1.3 The rush to the euro: a dose of realism -- 1.4 Fiscal challenges and interest rate convergence -- 1.5 Country overviews -- 1.5.1 Poland's expansion to continue beyond 2005 -- 1.5.2 The Czech Republic to rely on external demand and investment -- 1.5.3 Hungary's manufacturing sector and investment are driving accelerated growth -- 1.5.4 Fiscal reforms place Slovakia as the most progressive country in Central Europe -- 1.5.5 Slovenia looks to net exports to boost growth -- 1.5.6 The Baltic again to set the pace for economic growth among the new Member States -- Estonia -- Latvia -- Lithuania -- 1.5.7 Cyprus and Malta -- Cyprus -- Malta -- 2 The asymmetric impact of enlargement on old and new Member States: a general equilibrium approach -- 2.1 Introduction -- 2.2 The pre-enlargement situation -- 2.3 General equilibrium dimensions of enlargement -- 2.4 From trade liberalization to deep economic integration -- 2.4.1 'Trade liberalization' -- 2.4.2 'Market integration' -- 2.4.3 'Accession' -- 2.4.4 Comparison of dynamics across scenarios -- 2.5 Comparison with other studies using a similar methodology -- 2.6 Conclusions -- References -- 3 Changes in the spatial distribution patterns of European regional activity: the enlargements of the mid-1980s and 2004 -- 3.1 Introduction -- 3.2 Spatial agglomeration models: theoretical aspects and empirical evidence -- 3.2.1 What have we learned from spatial models?.

3.2.2 What does the previous evidence of empirical spatial specialisation suggest? -- 3.3 Defining data and indices -- 3.4 Analysis of the distribution of the evolution of spatial activity, 1985-95 -- 3.5 The effects of the new enlargement on the distribution of activity: from EU-15 to EU-27 -- 3.6 Conclusions -- References -- 4 Forecasting macroeconomic variables for the new Member States -- 4.1 Introduction -- 4.2 Methodology -- 4.2.1 Forecasting models -- 4.2.2 Forecast comparison -- 4.3 The data -- 4.4 Forecasting results -- 4.4.1 The Czech Republic -- 4.4.2 Hungary -- 4.4.3 Poland -- 4.4.4 Slovakia -- 4.4.5 Slovenia -- 4.4.6 The role of Euro area information -- 4.4.7 I(2) prices, wages and money -- 4.5 Conclusions -- References -- 5 The cyclical experience of the new Member States -- 5.1 Introduction -- 5.2 The salience of the topic -- 5.3 Our approach -- 5.4 Application and results -- 5.4.1 Classical cycles -- 5.4.2 Growth rate cycles -- 5.4.3 Deviation cycles -- 5.4.4 Comparison with recent studies -- 5.5 Conclusions -- References -- Appendix: the dating algorithm -- 6 Demand and supply shocks in the new Member States -- 6.1 Introduction -- 6.2 Asymmetric shocks and the Optimum Currency Areas approach -- 6.3 Empirical analysis -- 6.3.1 Some descriptive statistics -- 6.3.2 Demand and supply shocks: the Bayoumi and Eichengreen (1992) model -- 6.3.3 A dynamic analysis of the degree of shock symmetry in the new Member States -- 6.4 Conclusions -- References -- 7 Monetary transmission in the new Member States -- 7.1 Introduction -- 7.2 Review of the empirical literature on monetary transmission in the new Member States -- 7.3 Empirical evidence -- 7.3.1 Methodology and data -- 7.3.2 Monetary transmission in the Euro area -- The basic specification -- Extensions of the basic specification -- Results.

7.3.3 Monetary transmission in the new Member States -- The VAR models -- Results -- Extension of the basic results -- THE INTERACTIONS BETWEEN MONETARY AND FISCAL POLICY -- EVIDENCE ON THE CORRELATION OF MONETARY SHOCKS BETWEEN NEW MEMBER STATES AND THE EURO AREA -- 7.4 Conclusions -- References -- 8 Promoting fiscal restraint in three Central European Member States -- 8.1 Introduction -- 8.2 Background -- 8.3 The weak point of medium-term budgetary planning -- 8.4 Public finance in the pre-accession economic programmes -- 8.5 Scenarios -- 8.5.1 The 'official' scenario -- 8.5.2 The baseline scenario -- 8.5.3 The 'expansion/austerity' scenario -- 8.5.4 The 'fiscal prudence' scenario -- Appendix A: The results of fiscal scenarios for the CE-3 economies -- Appendix B: Country case studies -- Poland -- Czech Republic -- Hungary -- 9 Current account dynamics in the new Member States -- 9.1 Introduction -- 9.2 Basic identities and some stylised facts -- 9.3 How important is the current account? -- 9.4 Methodologies for assessing sustainability -- 9.5 Modelling the current account -- 9.6 A simple econometric model -- 9.6.1 The model -- 9.6.2 Projections -- 9.7 Policy issues -- 9.7.1 Increasing the saving rate? -- 9.7.2 Early adoption of the euro: is it wise? -- 9.8 Conclusions -- References -- Appendix A: Data -- Appendix B: Short-and long-term determinants of the current account -- 10 Challenges to banking sector stability in selected new Member States -- 10.1 Introduction -- 10.2 Progress to date in restructuring the banking sectors -- 10.2.1 Privatisation of the banking sectors -- 10.2.2 Restructuring: the Czech case -- 10.2.3 Restructuring: the Polish case -- 10.2.4 Restructuring: the Romanian case -- 10.2.5 Easing the burden of non‐performing loans -- 10.2.6 Restructuring and concentration in the banking sectors.

10.3 Current indicators of operational efficiency and financial stability -- 10.4 Bank regulation and supervision -- 10.5 Challenges to the banking sectors in the run-up to accession and the euro, and policy implications -- 10.6 Conclusions -- References -- 11 Infrastructure investments as a tool for regional development policy: lessons from the Spanish evidence -- 11.1 Introduction -- 11.2 Model specification -- 11.3 Data and spatial exploratory analysis -- 11.4 Empirical analysis -- 11.5 Conclusions -- References -- 12 TFP, costs and public infrastructure: an equivocal relationship -- 12.1 Introduction -- 12.2 The theoretical framework -- 12.2.1 The Total Factor Productivity approach -- 12.2.2 The production function approach -- 12.2.3 The cost function approach -- 12.3 The data -- 12.3.1 Data sources and definitions -- 12.3.2 Output, private inputs and TFP -- 12.4 The role of public capital -- 12.4.1 Results from growth accounting -- 12.4.2 Results from the production function approach -- 12.4.3 Results from the cost function approach -- 12.4.4 Comparing the results -- 12.4.5 Causality and sensitivity analysis -- 12.5 Conclusions -- References -- Appendix A: The data -- Appendix B: Cobb‐Douglas cost function -- Appendix C: Generalised Leontief cost function -- 13 Regional policies after the EU enlargement -- 13.1 Introduction -- 13.2 Initial conditions and simulations of the future -- 13.2.1 Per capita income and labour productivity -- 13.2.2 Saving and investment -- 13.2.3 Labour market -- 13.2.4 Growth accounting -- 13.2.5 Regional inequalities in the new Member States -- 13.2.6 A simulation exercise -- 13.3 Principles, instruments and jurisdiction -- 13.3.1 Which economic principles? -- 13.3.2 Which policy instruments? -- 13.3.3 Which policies? -- 13.3.4 Which jurisdiction? -- 13.4 Conclusions -- References -- Index.