The role of interest rates during the transition to a market economy

We construct a simple two period model of an economy in transition from being centrally planned to being market oriented. Using this model, we draw certain positive conclusions about economic policies that reduce distortions during the transition period. In particular, we focus on the role of interest rates, a market parameter that has previously been almost entirely ignored in planned economies. Using stylized data derived from Czechoslovakia, we show that increase in nominal interest rates can actually be welfare-improving by partially compensating for the distortions induced by the transition process. The model is sufficiently general to be applied to a number of transition economies, and we use the cases of Czechoslovakia, the USSR, and China as examples of some of the phenomena that we are trying to explain. We show that the model generates a constrained, suboptimal equilibrium. In particular, we see that raising interest rates during the transition period reduces repressed savings, brought about by shortages in the controlled market. An improvement in consumer utility can therefore be brought about.     

Political memoirs

Books reviewed in this article:
Butler, R. A. The Art of the Possible: The Memoirs of Lord Butler
Clark, Alan Diaries
Heseltine, Michael Life in the Jungle
Lamont, Norman In Office
Lawson, Nigel The View from No. 11: Memoirs of a Tory Radical
Major, John The Autobiography
Rawnsley, Andrew Servants of the People: The Inside Story of New Labour
Thatcher, Margaret The Downing Street Years     

Mapping Human Rights, Reading the European Union

Abstract: The EU's human rights policy has provoked increasing scholarly attention over the last decade. Yet rarely has it been subjected to rigorous analysis in the context of any integration theory. This article is an attempt to rectify the omission. By building on the approach of historical institutionalism, whilst at the same time recognising its analytical deficiencies, a method of reading the EU and interpreting its human rights policies is promoted. Specifically, the article contends that an analysis based on the textual nature of the EU and the configuration of this text through ‘institutional narrative’ will enable a better understanding of the institutional logic behind the construction of human rights policy. An agenda for research and analysis is thus suggested that might map the development of human rights in the EU and predict the compass of future policy direction more effectively.