What Bubble?

Image of the day at Bloomberg (growth in Eurozone's M3 since 1978; click for larger view).

Got numbers?

Kenneth Glenn Dau-Schmidt and Carmen L. Brun elaborated a paper dealing with different popularity of law and economics in Europe and USA. Amongst some of the major differences are common-law system, different peer-review tradition (journals reviewed by students), state-oriented (communitarian) society in Europe, rather rare mobility among academics, judiciary and practitioners, and a few other.

Trying to contribute with a nice informative article, I have discovered an additional cause (and effect as well) of the L&E underestimation in Europe (and Slovakia especially) - THE (inaccessibility of) numbers.

Based on the SLOVSTAT data, percentage of the closed cases have declined by 46,6 points from 1989* to 2006. This massive decline made me think about possible causes. I approached Slovak Ministry of Interior with an obvious question: "What was the number of police officers and police budget from 1989 to 2006?"

The answer, dear reader, is confidential (read "lost for good"), apart from years 2005-2007 (where we can observe 94 policemen and 1,025 million crowns salary costs increase) and if we do not want to end up being interrogated like Minin brothers, waiting ten years more seems to be a good idea.

Or maybe we could just develop some false memories about our crime rates. Whatever!

* I did not want to spare you the phony number from 1989. Communist duty to explain every crime committed made all the magic:) - or did you really believe those 46,6 percents? I understand both:).

TFP gaps in manufaturing: China, India & CEE

In their recent NBER paper, Chang-Tai Hsieh and Peter J. Klenow tried to quantify the extent of resource misallocation in the manufacturing sectors of China and India. According to the authors, if capital and labour were reallocated to eqalize their marginal products, the Total Factor Productivity would increase by 25-40% in China and 50-60% in India.

What does this mean for CEE manufacturing? If economic policies of these countries continue to apply the traditional approach to foreign investment (subsidies), it is questionable whether the returns on FDI in these countries together with the benefits of fiscal competition for manufacturing firms will continue to be motivating. While already facing a labour shortage, Central Europe has tough manufacturing competitors in China and India.
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Thanks to František Lipták for this post.

Slovak GDP grew by 9.45% in the last four quarters

Recent Statistical Office's report of 9.4% growth in GDP for 2Q2007 means that Slovakia has been growing at an average pace of 9.45% in the last 12 months (9.8 & 9.6% in 3&42006, and 9.0% in 1Q2007).
At that speed, with the whole EU growing at about 2.9%, Slovakia caught up in a single year more than 4 percentage points in its performance relative to the European Union's average (from about 60 to about 64% of the EU-25 average in GDP per person in PPS).

Catching up and Falling Behind

Eurostat launched a new tool allowing one to graph available data into a map. Here's a map of Europe showing the countries' economic performance between 2002-2006 relative to the EU-25 average (click for larger view).

Portugal, Italy and France have fallen behind relative to other EU member states; countries of the 'New Europe', on the contrary, are catching-up quite quickly.

Macroeconomic stability in the Czech Rep. and Slovakia

Three graphs from my MA thesis.