DOCSLIB.ORG

Analyses of the Czech Republic's Current Economic Alignment With

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Analyses of the Czech Republic's Current Economic Alignment With ANALYSES OF THE CZECH REPUBLIC’S CURRENT ECONOMIC ALIGNMENT WITH THE EURO AREA 7 1 0 2 1 Authors: Kateřina Arnoštová A, B Tomáš Adam C, Box 1 Oxana Babecká Kucharčuková 1.1.3, 1.1.4, Box 3 Jan Babecký 1.2.5, Box 5 Vojtěch Belling D Soňa Benecká 1.1.4 Jan Brůha F, Box 2 Martin Gürtler 2.3.1 Tibor Hlédik Box 4 Tomáš Holub A, B, 1.1.1 Eva Hromádková 1.1.2, 2.1.3 Luboš Komárek C, 1.2.5 Zlatuše Komárková 1.2.5 Petr Král A, B Ivana Kubicová 1.2.2, 1.2.3 Filip Novotný 1.1.5 Barbora Malá D Lucie Matějková A, B Renata Pašaličová 1.2.6 Lukáš Pfeifer 1.2.1, 2.4 Luboš Růžička 2.2.1, 2.2.3 Branislav Saxa 1.2.4 Vojtěch Siuda 1.2.1, 2.4 Pavel Soukup 2.1.1, 2.1.2, 2.1.3 Radek Šnobl 2.2.1, 2.2.2, Box 4 Jan Šolc Box 4 Jan Vlček Box 4 Martin Vojta D Mário Vozár 2.2.3 Editors: Lucie Matějková Kateřina Arnoštová Czech National Bank / Analyses of the Czech Republic’s economic alignment with the euro area 2017 CONTENTS 2 A INTRODUCTION ................................................................................................... 5 B SUMMARY ............................................................................................................ 6 C ECONOMIC ALIGNMENT OF EURO AREA COUNTRIES .......................................... 12 Box 1: Cohesion of euro area countries from the perspective of the indicators used in the Macroeconomic Imbalance Procedure ...................................................................... 17 D ECONOMIC POLICY AND INSTITUTIONAL DEVELOPMENTS IN THE EUROPEAN UNION AND THE EURO AREA ............................................................................. 19 E RESULTS OF THE ANALYSES FOR THE CZECH REPUBLIC .................................... 23 1 CYCLICAL AND STRUCTURAL ALIGNMENT ......................................................... 23 1.1 Direct alignment indicators ............................................................................... 23 1.1.1 Real economic convergence ......................................................................... 23 Box 2: The real exchange rate and productivity before and after the recession ............. 26 1.1.2 Correlation of economic activity ................................................................... 28 1.1.3 Structural similarity of the economies ........................................................... 32 1.1.4 Interest rate convergence, analysis of exchange rate volatility and exchange rate alignment ............................................................................................................ 33 Box 3: Correlation between the koruna-dollar and euro-dollar exchange rates before and after the exchange rate commitment ....................................................................... 36 1.1.5 Integration of the economy with the euro area .............................................. 37 1.2 Similarity of monetary policy transmission ......................................................... 40 1.2.1 Financial system ........................................................................................ 41 1.2.2 Structure of financial assets and liabilities of corporations and households ........ 42 1.2.3 Effect of monetary policy on client interest rates ............................................ 45 1.2.4 Inflation persistence ................................................................................... 50 1.2.5 Financial market alignment ......................................................................... 51 1.2.6 Spontaneous euroisation ............................................................................. 52 2 ADJUSTMENT MECHANISMS .............................................................................. 57 2.1 Fiscal policy .................................................................................................... 57 2.1.1 Stabilising function of public budgets ............................................................ 57 2.1.2 Government deficit and debt and the scope for stabilising fiscal policy .............. 59 2.1.3 Government finance sustainability ................................................................ 62 2.2 Labour market flexibility .................................................................................. 64 2.2.1 Unemployment and internal labour market flexibility ...................................... 64 Box 4: Estimate of structural unemployment using the NAIRU and correlation of the cyclical component of unemployment ...................................................................... 68 2.2.2 International labour mobility ....................................................................... 70 2.2.3 Institutional environment of the labour market .............................................. 71 Box 5: Wage rigidity and the use of flexible wage components in 2010–2013: European firm-level survey evidence ..................................................................................... 75 2.3 Product market flexibility ................................................................................. 76 2.3.1 Administrative barriers to entrepreneurship ................................................... 76 2.4 The banking sector and its shock-absorbing capacity ........................................... 79 F THEORETICAL FOUNDATIONS OF THE ANALYSES .............................................. 83 G METHODOLOGICAL PART ................................................................................... 86 H REFERENCES .................................................................................................... 105 Czech National Bank / Analyses of the Czech Republic’s economic alignment with the euro area 2017 TABLES AND CHARTS 3 Table 1: GDP per capita at purchasing power parity ........................................................................ 23 Table 2: Average price level of GDP .............................................................................................. 24 Table 3: Real exchange rate against the euro ................................................................................. 25 Table 4: Three-month ex-post real interest rates ............................................................................ 26 Table 5: Correlation coefficients of economic activity with the euro area ............................................ 30 Table 6: Correlation coefficients of exports to the euro area with euro area GDP ................................. 31 Table 7: Correlations of exchange rates against the US dollar .......................................................... 36 Table 8: Ratios of FDI stock from the euro area to GDP ................................................................... 40 Table 9: Ratios of DI stock in the euro area to GDP ......................................................................... 40 Table 10: Correlation between changes in rates on loans to non-financial corporations (fixed for up to one year) and changes in three-month market rates ............................................................................. 47 Table 11: Correlation between changes in rates on loans for house purchase and in market rates ......... 50 Table 12: Inflation persistence estimates ....................................................................................... 51 Table 13: General government balance (European Commission estimate) .......................................... 59 Table 14: Shares of mandatory state budget expenditure ................................................................ 60 Table 15: Public revenues and expenditures relative to GDP in 2016 ................................................. 61 Table 16: General government debt (European Commission estimate) .............................................. 61 Table 17: Debt service (European Commission estimate) ................................................................. 62 Table 18: Age-related government expenditures ............................................................................. 63 Table 19: Long-term unemployment rate ....................................................................................... 64 Table 20: Rate of economic activity in the 15–64 age category ......................................................... 66 Table 21: Coefficient of variation of the unemployment rate ............................................................. 67 Table 22: Internal migration ........................................................................................................ 67 Table 23: Share of foreign nationals in the population ..................................................................... 70 Table 24: Minimum wage ............................................................................................................. 71 Table 25: Ratio of the minimum wage to the gross monthly wage in selected professions .................... 72 Table 26: Overall labour taxation .................................................................................................. 73 Table 27: Conditions for starting and closing a business .................................................................. 77 Table 28: Non-performing loans ................................................................................................... 81 Table B1: Scoreboard for the early detection of macroeconomic imbalances ....................................... 18 Table B2: Average real appreciation .............................................................................................. 28 Table B3:
Load more

Recommended publications
  • The Scandinavian Argument for Multi-Level Economic and Monetary Union (EMU)
    Running head: THE SCANDINAVIAN ARGUMENT FOR MULTI-LEVEL EMU Looking North: The Scandinavian Argument for Multi-Level Economic and Monetary Union (EMU) Malcolm Thomson University of Victoria Paper Submitted for the “Claremont-UC Undergraduate Research Conference on the European Union” Scripps College, Claremont, California April 5-6, 2018 THE SCANDINAVIAN ARGUMENT FOR MULTI-LEVEL EMU 1 The European Union (EU) is undergoing a significant period in its existence marked by various crises at both member state and supranational levels. While previous literature has stated, “it is difficult to remember a time when the EU or its predecessors were not facing a crisis of one sort or another” (Hodson & Puetter, 2016, p. 365), it can be argued that the various crises that the European Union has faced over the past fifteen years have shifted the collectively-held conception of an integrated and cooperative European Union into a splintered and divided institution. The global financial crisis, the subsequent sovereign debt crisis, and the migrant crisis are causing member states to re-evaluate their position within the EU (Verdun, 2016). This re- evaluation is taking form in multiple iterations and at various levels of intensities, and is forcing the EU to look at ways in which it can adapt and evolve in order better accommodate the quickly changing needs of the elements that compose it. One of the most visible occurrences of this evolution in European integration is seen within the EU’s Economic and Monetary Union (EMU). EMU played a large role in the sovereign debt crisis, as its “incomplete” structure not only helped to create the crisis, but also prevented quicker action from being taken in order to help those most affected (Verdun, 2016, p.
    [Show full text]
  • Project Title: Risk and Uncertainty in Central Bank Communication
    Uncertainty and monetary policy* David Mayes University of Auckland Alberto Montagnoli University of Stirling January 2011 Abstract: Using the minutes of decision-,making committee meetings we analyse how the Bank of England, the Czech National Bank and the Sveriges Riksbank communicate uncertainty in their discussion of the setting of a forward-looking monetary policy. The aim is to test whether information about uncertainty in the minutes helps explain interest rate settings. We find that to show the effect of uncertainty it needs to be clear what the uncertainty is about, output or inflation for example. We also show that there is a relationship between the level of uncertainty expressed and the degree of disagreement in the committees. JEL classification: E43, E52, E58 Keywords: communication, monetary policy, uncertainty, Taylor rule, Bank of England, Czech National Bank, Riksbank * We thank Petra Geraats and Cris Shore for detailed comments and Charlie Fahy for research assistance. We are also grateful to the participants at the seminar at the Europe Institute, University of Auckland at the workshop Central Bank Communication, Decision-Making and Governance for comments and discussions. Montagnoli gratefully acknowledges financial support from the Europe Institute, University of Auckland. 1 1. Introduction There has been growing interest in uncertainty in monetary policy-making, and in the communication of monetary policy. There are many sides to the problem, starting simply with the fact that the future is uncertain. Also central banks in particular (notably the ECB, the Bank of England and the US Fed) have sponsored research into model uncertainty.2 Attention has also been paid to the uncertainty faced by markets to which central banks can contribute by erratic or unclear decision making.
    [Show full text]
  • Features of Governing the Central Banks Candidate to the Eurosystem
    Available online at www.sciencedirect.com ScienceDirect Procedia Economics and Finance 22 ( 2015 ) 522 – 530 2nd International Conference ‘Economic Scientific Research - Theoretical, Empirical and Practical Approaches’, ESPERA 2014, 13-14 November 2014, Bucharest, Romania Features of Governing the Central Banks Candidate to the Eurosystem Adina Cristea* a”Victor Slăvescu” Centre for Financial and Monetary Research, Casa Academiei 13, Calea 13 Septembrie, Building B, 5th floor, Bucharest, 050711, Romania Abstract The complexity of the European integration process consists of three implicative dimensions: the nominal dimension, the real dimension and the institutional dimension. Referring to the last one (the institutional dimension), the present paper aims to analyse the degree of ”convergence” functioning of the National Banks from the Euro Area candidates countries, as to identify some similarities and differences between these institutions. The research methodology consists of displaying some characteristics of the central banks engaged in the process of European monetary integration, taking into account aspects concerning both the attributes of their governance, and their position related to the financial stability objective, an increasingly important parameter to consider after the global financial crisis outbreak (GFC2007). A foothold for the paper is the economic literature which has been formulated some specific criteria for evaluating the elements considered. On the other hand, the institutional convergence does not guarantee the success of the economic integration of the candidate country to the Euro Area, but it could be an important benchmark for making comparison between countries which have been preparing to adopt Euro. © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license © 2015 The Authors.
    [Show full text]
  • 3 Issuing Activity and Currency Circulation
    CHAPTER 3 3 ISSUING ACTIVITY AND CURRENCY CIRCULATION 3.1 CUMULATIVE NET ISSUANCE Euro banknotes accounted for almost the en- tire value of the CNI (98.5%), but only for 19% of The cumulative net issuance (CNI)10 of euro the CNI in terms of volume. Euro coins (includ- banknotes and coins in Slovakia had a total ing euro collector coins) made up the remaining value of €11.02 billion as at 31 December 2016, 81%. with euro banknotes accounting for €10.9 billion of that amount. The CNI increased in The cumulative net issuance as at 31 Decem- 2016 by 7.9% year on year (by €807.2 million), ber 2016 comprised almost 157.2 million euro which represented a slight acceleration com- banknotes and approximately 654 million euro pared with the previous year. The value of the coins, including collector coins. For the first item currency in circulation, corresponding to time, the €100 denomination had the largest Národná banka Slovenska’s allocated share in share of the total number of banknotes includ- the Eurosystem’s production of euro banknotes ed in the CNI, at 24%. The €50 denomination, (Banknote Allocation Key), amounted to around which had held that position in all the previ- €11.4 billion as at 31 December 2016.11 The dif- ous years following Slovakia’s adoption of the ference in value between the euro banknotes euro, saw its share drop to 23%. The coins is- issued in Slovakia and the currency in circulation sued in the highest volumes are the two low- item was €515 million.
    [Show full text]
  • Czech National Bank (CNB) Virtual Web Hosting
    Czech National Bank (CNB) Virtual Web Hosting Data Center and Cloud The CNB is the central bank of the Czech Republic and the supervisor of the Czech financial market. Its primary objective is to maintain price stability. As an independent institution, the CNB sets monetary policy, issues banknotes and coins and manages the circulation of currency, the payment system and settlement between banks. It also performs supervision of the banking sector, the capital market, the insurance industry, pension funds, credit unions and electronic money institutions, as well as foreign exchange supervision. As a central bank the CNB provides banking services to the state and the public sector. The CNB’s headquarters is in Prague. Seven regional branches are located in Prague, Ústí nad Labem, Plzeň, České Budějovice, Hradec Králové, Brno and Ostrava. CNB // The ChalleNge CNB operated an external web with communication issues among the and was not sufficiently flexible content management systems three parties and unclear split for applications with varying on three dedicated servers. of responsibility. requirements. The solution had 2 subcontractors The original solution was not Finally, the system did not give (web servers and WCMS – able to cope with varying loads enough security and control Web Content Management of the web traffic during different over testing and develop- System) and CNB experienced periods of the day /month / year ment environment. Customer reference Why gTS // The SOlUTION GTS // SOlUTION DIagRaM The solution of private virtual data Internet center for Czech National Bank utilizes GTS Virtual Hosting built on the cloud environment of GTS IaaS platforms and existing redundant IPv4/IPv6 infrastructures which Edge router A Edge router B are also components of the cloud environment.
    [Show full text]
  • List of Certain Foreign Institutions Classified As Official for Purposes of Reporting on the Treasury International Capital (TIC) Forms
    NOT FOR PUBLICATION DEPARTMENT OF THE TREASURY JANUARY 2001 Revised Aug. 2002, May 2004, May 2005, May/July 2006, June 2007 List of Certain Foreign Institutions classified as Official for Purposes of Reporting on the Treasury International Capital (TIC) Forms The attached list of foreign institutions, which conform to the definition of foreign official institutions on the Treasury International Capital (TIC) Forms, supersedes all previous lists. The definition of foreign official institutions is: "FOREIGN OFFICIAL INSTITUTIONS (FOI) include the following: 1. Treasuries, including ministries of finance, or corresponding departments of national governments; central banks, including all departments thereof; stabilization funds, including official exchange control offices or other government exchange authorities; and diplomatic and consular establishments and other departments and agencies of national governments. 2. International and regional organizations. 3. Banks, corporations, or other agencies (including development banks and other institutions that are majority-owned by central governments) that are fiscal agents of national governments and perform activities similar to those of a treasury, central bank, stabilization fund, or exchange control authority." Although the attached list includes the major foreign official institutions which have come to the attention of the Federal Reserve Banks and the Department of the Treasury, it does not purport to be exhaustive. Whenever a question arises whether or not an institution should, in accordance with the instructions on the TIC forms, be classified as official, the Federal Reserve Bank with which you file reports should be consulted. It should be noted that the list does not in every case include all alternative names applying to the same institution.
    [Show full text]
  • Monetary Policy of the Czech National Bank
    making at the beginning of February, May, August and November. In the The CNB employs market instruments event of extraordinarily dramatic developments in the economy, however, MONETARY POLICY a new fast-track forecast can also be put together in the interim. in its monetary policymaking The Bank Board, however, holds a meeting regularly eight times a year; To implement its monetary policy decisions the CNB makes use of OF THE CZECH NATIONAL BANK besides already mentioned months also at the end of March, June, “indirect”, non-administrative market instruments. In other words, September and December. In these months, the Situation Report does he CNB makes monetary policy not by means of orders, prohibitions, not contain a new forecast but brings comparison of the latest key limits and suchlike, but by offering banks business transactions and macroeconomic figures with their forecast values, evaluates the situation commercial terms formulated in such a way that those banks in turn with respect to the possible future course of inflation, and updates the offer their partners transactions under terms the CNB views as desirable Principles, procedures, instruments The CNB is an independent at that particular moment. Through this basic mechanism, and via the uncertainties and risks attaching to the most recent forecast. Would you like to know a bit more about the Czech National Bank and open institution channels described earlier (i.e. via client interest rates, the Exchange than what you can find in the newspapers? The following fact sheet The meeting of the Bank Board usually begins at 9 a.m. with a discussion rate, etc.), the CNB’s monetary policy aims gradually spread through In the pursuit of its statutory objective, the CNB has a high degree will guide you around the world of the CNB.
    [Show full text]
  • 235 Million 917 Million Euro Banknotes in Euro Coins in the Bank’S Cumula- Slovakia’S Cumulative Tive Net Issuance Net Issuance
    B Issuing activity 4 and cash circulation more than more than 235 million 917 million euro banknotes in euro coins in the Bank’s cumula- Slovakia’s cumulative tive net issuance net issuance almost 231 million 177 million banknotes euro coins processed processed by NBS by the Bank 6 17,523 precious metal counterfeit euro collector coins banknotes and issued coins recovered by the Bank in Slovakia 73 B Issuing activity 4 and cash circulation 2020 saw a year-on-year increase in euro cash issuance growth and a rise in the number of counterfeit banknotes and coins withdrawn from circulation in Slovakia 4.1 Cumulative net issuance developments Euro cash issuance growth was higher in 2020 than in the previous year In 2020 cash circulation in Slovakia was affected by the COVID-19 pan- demic crisis, which when it broke out in March triggered a brief surge in euro cash issuance. Immediately after Slovakia reported its first case of COVID-19, it saw increasing demand for euro banknotes, mainly for the €200 and €100 denominations. As a result, the cumulative net issuance (CNI)12 of euro in Slovakia increased by €0.8 billion during March. In sub- sequent months, the CNI maintained a steady trend. Once the cash started to be returned from circulation to Národná banka Slovenska, cash circula- tion stabilised. Despite a year-on-year reduction in the volume of the cash cycle (the volume of cash issued and returned from circulation), the value of the CNI of euro in Slovakia in 2020 represented a year-on-year increase of 13.2% (€1.96 billion).
    [Show full text]
  • Analyses of the Czech Republic's Current Economic Alignment with the Euro Area ——— Methodological Annex
    Analyses of the Czech Republic’s Current Economic Alignment with the Euro Area ——— Methodological Annex Analyses the Czechof Republic’s CurrentEconomic Alignment thewith Euro Area ——— Czech National Bank www.cnb.cz A —— Introduction 2 A INTRODUCTION This methodological annex accompanies the main text of the Analyses of the Czech Republic’s current economic alignment with the euro area and presents their theoretical foundations (section B), the motivation for the individual analyses (section C) and the literature used (section D). This annex is available as a separate document on the CNB website at <https://www.cnb.cz/euro-area-accession>. It will be updated as needed, i.e. not necessarily every year. Czech National Bank ——— Analyses of the Czech Republic’s Current Economic Alignment with the Euro Area ——— Methodological Annex B —— Theoretical foundations 3 B THEORETICAL FOUNDATIONS The basic theoretical starting point for examining whether individual countries are good candidates for introducing a single currency is the theory of optimum currency areas.1 In the context of the creation of the single European currency, knowledge of this theory is often used to assess the appropriateness of the adoption of the euro by the existing euro area countries and the rationality of the same step for the new EU Member States.2 Factors that contribute to the benefits of the single currency (compared to a free nominal exchange rate) make up the set of optimum currency area properties. Economists agree on the general fundamental costs and benefits of introducing a single currency, but the significance of the individual arguments may change over time or depending on the specific features of the economies concerned.
    [Show full text]
  • Zdenek Tuma: Present and Future Challenges for the Czech National Bank (Central Bank Articles and Speeches)
    Zdenek Tuma: Present and future challenges for the Czech National Bank Introductory remarks by Mr Zdenek Tuma, Governor of the Czech National Bank, at the CNB Conference: ”Challenges of EU Accession”, Prague, 1 April 2003. * * * Ladies and gentlemen, dear colleagues, It is my pleasure and honour to welcome you here to the Czech National Bank for what I believe will be a very interesting policy-oriented conference. The Czech National Bank is this year celebrating a decade of its existence as the central bank of the Czech Republic. When we look back at that period, we can see many difficult challenges that we had to face in order to facilitate the economic transition and later on to bring our operations into line with best international practices. This experience is similar for all other central banks in the post-communist EU-accession countries. But I do not want to speak about those past challenges today. They are mostly behind us, and our situation is now very different. Therefore, I would like to be forward-looking - as any modern central banker should - and to speak about the challenges that we all share at present and, most importantly, about those that lie ahead. As you all know, the accession treaties will be signed in two weeks. This will be a symbolic milestone in the EU integration process, which has been going on in the economic and political sphere for many years. The implications of this process for monetary policy - and economic policies in general - have been debated extensively on many occasions. These academic discussions have covered the pros and cons of EU and EMU accession, its optimal timing, the associated risks and so on.
    [Show full text]
  • Czech Economic Outlook on Thin Ice
    ECONOMIC & STRATEGY RESEARCH 04 February 2019 Quarterly report Extract from a report Czech Economic Outlook On thin ice © iStock Czech economy set to continue on a sustainable growth path While strong investment drove growth in 2018, we expect much more balanced growth supported by domestic and external demand this year. We expect tension on the labour market to persist, creating more inflationary pressure, keeping inflation above the CNB’s 2% target. CNB to gear down rate hikes We believe the CNB will take a breather from hiking at the beginning of the year, owing to global uncertainty, but we expect two hikes over the year. Koruna set to appreciate gradually Ongoing excess CZK liquidity likely will impede the koruna’s appreciation, especially given external economic weakness and other looming risks. We expect the CZK to reach EUR/CZK25.20 towards end-2019. Yield curve to stay inverted in near future We see only limited potential for an increase in CZK IRS, with the short end supported by CNB hikes in 2019. In 2020, rates are expected to come under pressure again on the back of a global slowdown. Jan Vejmělek Viktor Zeisel Jakub Matějů Jana Steckerová (420) 222 008 568 (420) 222 008 523 (420) 222 008 524 [email protected] [email protected] [email protected] Please see back page for important disclaimer Date and time of the compilation: 4 February 2019, 7:37 AM Economic & Strategy Research Czech Economic Outlook Let’s cross that bridge when we come to it Jan Vejmělek Investors will not exactly remember 2018 as a good year because they had difficulty finding (420) 222 008 568 jan [email protected] assets that could offer a positive full year performance.
    [Show full text]
  • Case Study of Czech and Slovak Koruna
    International Journal of Economic Sciences Vol. VI, No. 2 / 2017 DOI: 10.20472/ES.2017.6.2.002 BRIEF HISTORY OF CURRENCY SEPARATION – CASE STUDY OF CZECH AND SLOVAK KORUNA KLARA CERMAKOVA Abstract: This paper aims at describing the process of currency separation of Czech and Slovak koruna and its economic and political background, highlights some of its unique features which ensured smooth currency separation, avoided speculation and enabled preservation of the policy of a stable exchange rate and increased confidence in the new monetary systems. This currency separation was higly appreciated and its scenario and legislative background were reccommended by the IMF for use in other countries. The paper aims also to draw conclusions on performance of selected macroeconomic variables of the two successor countries with impact on monetary policy and exchange rates of successor currencies. Keywords: currency separation, exchange rate, monetary policy, economic performance, inflation, payment system, central bank JEL Classification: E44, E50, E52 Authors: KLARA CERMAKOVA, University of Economics in Prague, Czech Republic, Email: [email protected] Citation: KLARA CERMAKOVA (2017). Brief History of Currency Separation – Case study of Czech and Slovak Koruna. International Journal of Economic Sciences, Vol. VI(2), pp. 30-44., 10.20472/ES.2017.6.2.002 Copyright © 2017, KLARA CERMAKOVA, [email protected] 30 International Journal of Economic Sciences Vol. VI, No. 2 / 2017 1. Introduction Last decade of 20th century was an important period either from political either from economic aspects. Developed market economies mainly in Western Europe and Northern America were on the margin of recession, and in most centrally planned economies the political regimes were collapsing, starting a period of crucial political changes, which resulted, in some cases, into separation of multinational federations and birth of new states.
    [Show full text]