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EXCHANGE RATES AND THE MEASUREMENT OF AGRICULTURAL PRICE DISTORTIONS IN CEECs AND OF CEEC-EU ACCESSION COSTS

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  • Bojnec, Stefan
  • Munch, Wolfgang
  • Swinnen, Johan F.M.

Abstract

Exchange rates were heavily distorted under the central planning system in Central and Eastern Europe and are still adjusting in the transition process. The use of nominal exchange rates introduces a bias for international price comparisons and in calculations based on them. We present various exchange rates and discuss their relevance and usefulness for CEEC economic transition studies. We show that calculations of agricultural price distortions, protection rates and budgetary costs of EU-CEEC accession are sensitive to the exchange rate assumptions. More specifically, our simulations of EU-CEEC integration effects show that net exports are substantially smaller and budgetary costs less under the assumption of continued real appreciation of the CEC-4 currencies. However, the calculations also show that even under the extreme assumption of full adjustment to PPPs, the total budgetary costs remain large and GATT commitments on the maximum quantity of subsidized exports are still prohibiting an introduction of an unreformed CAP in the CEC-4.

Suggested Citation

  • Bojnec, Stefan & Munch, Wolfgang & Swinnen, Johan F.M., 1997. "EXCHANGE RATES AND THE MEASUREMENT OF AGRICULTURAL PRICE DISTORTIONS IN CEECs AND OF CEEC-EU ACCESSION COSTS," PRG Working Papers 31863, Katholieke Universiteit Leuven, LICOS - Centre for Institutions and Economic Performance.
    • Handle: RePEc:ags:kuliwp:31863
    DOI: 10.22004/ag.econ.31863
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    References listed on IDEAS

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    Cited by:

    1. Jason G. Hartell & Johan F.M. Swinnen, 1998. "Trends in Agricultural Price and Trade Policy Instruments Since 1990 in Central European Countries," The World Economy, Wiley Blackwell, vol. 21(2), pages 261-279, March.
    2. M. Bakhshoodeh & K. J. Thomson, 2006. "Social welfare effects of removing multiple exchange rates: evidence from the rice trade in Iran," Agricultural Economics, International Association of Agricultural Economists, vol. 34(1), pages 17-23, January.
    3. Tangermann, Stefan, 1997. "Agricultural Implications of EU Eastern Enlargement and the Future of the CAP," 1997: Economic Transition in Central and East Europe, and the Former Soviet Union: Implications ... Symposium, June 12-14, 1997, Berlin, Germany 50839, International Agricultural Trade Research Consortium.
    4. Swinnen, Johan F.M., 1997. "On Policy Induced Transfers During Economic Transition: The Case Of The Wheat-Flour-Bread Chain In Bulgaria," PRG Working Papers 31888, Katholieke Universiteit Leuven, LICOS - Centre for Institutions and Economic Performance.
    5. Macours, Karen & Swinnen, Johan F. M., 2000. "Causes of Output Decline in Economic Transition: The Case of Central and Eastern European Agriculture," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 172-206, March.
    6. Ciaian, Pavel & Swinnen, Johan F.M., 2007. "Distortions to Agricultural Incentives in Central and Eastern Europe," Agricultural Distortions Working Paper Series 48385, World Bank.
    7. Swinnen, Johan F.M., 1997. "The Political Economy of Agricultural Transition," 1997: Economic Transition in Central and East Europe, and the Former Soviet Union: Implications ... Symposium, June 12-14, 1997, Berlin, Germany 50836, International Agricultural Trade Research Consortium.

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