After the buoyancy of stock markets in the late nineties, share prices have generally trended downwards since 2001. By contrast, house prices have continued to increase, rising more rapidly than the general price level in several countries. These developments have led to renewed interest in the impact of asset prices on consumption and overall demand. This paper analyses the roles of household financial wealth and housing wealth across G7 countries (with the exception of Germany), in determining private consumption. It provides some estimates of the sensitivity of consumption to various forms of wealth and tests whether these sensitivities have changed over time. The impacts of recent financial and housing market developments on consumption are also quantified. The main results are, first, that for all countries, wealth channels are identified, second, that these effects vary significantly across countries, and third that for some countries, their importance has tended to rise markedly over the recent past.

This paper reviews the pros and cons of an early EU enlargement towards Central and Eastern European Countries (CEECs hereafter). Firstly, the Maastricht criteria, which cannot be literally assessed during the catching up process, but that nevertheless mirror the huge efforts undertaken in order to (i) stabilise the economies, (ii) converge towards the EU, and then (iii) participate in the EMU, are analysed. Secondly, real convergence is observed to occur at different rates, depending upon the initial conditions faced and the productivity gains realised by each country. Thirdly, computing the correlation of demand and supply shocks in a sample of Euro countries, such as Ireland, Portugal and Spain, at the time when they were entering the EU and the CEECs, gives some indication of the similarity of the business cycles and economic structures of the CEECs on the one hand, and the EU on the other. However, we argue that looking at static correlation only (averaged over the last decade) is too simplistic, as these averages will be blurred by the transition process. Using the Kalman filter, we are able to compute time varying correlation, hence differentiating between the transition and the most recent period. Our results emphasise an ongoing process of demand shocks convergence, but supply shocks divergence. Various exchange rate strategies are then discussed. Abstrakt: Tento èlánek posuzuje pro a proti rozšíøení Evropské Unie do zemí støední a východní Evropy (Central and Eastern European Countries -CEEC -v textu). Zaprvé, jsou analyzována Maastrichtská kriteria, která nemohou být pøíliš literárnì ocenìna bìhem pøechodného procesu, ale která nicménì odráží ohromné snahy pøijaté z dùvodu (i) stabilizace ekonomiky, (ii) smìøování k EU, a (iii) úèast v EMU. Za druhé, reálná konvergence se objevuje v rùzných pomìrech, závisejících na vstupních podmínkách a nárùstech produktivity v každé zemi. Za tøetí, výpoèet korelace šokù poptávky a nabídky v CEEC a ve vybraných Evropských zemích, jako Irsko, Portugalsko a Španìlsko, v dobì, kdy vstupovaly do EU, indikuje podobnost hospodáøských cyklù a ekonomických struktur CEEC a EU. Dále uvádíme argumenty, že pohled pouze na statické korelace (prùmìry za minulé desetiletí) je pøíliš zjednodušený, protože tyto prùmìry jsou zastøeny procesem pøechodu k tržní ekonomice. Užitím Kalmanova filtru jsme schopni vypoèítat korelaci mìnící se s èasem. Z toho vidíme rozlišení výsledkù mezi raným a nedávným obdobím. Naše výsledky ukazují konvergenci šokù poptávky, ale divergenci šokù nabídky. Na závìr jsou diskutovány rùzné strategie smìnných kurzù.

Money demand, Inflation, Wealth, E41, E52,

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