The prospect of Intermarium integration in the light of consumption risk sharing
DOI:
https://doi.org/10.15678/ZP.2019.49.3.02Keywords:
Economic Integration, Risk-Sharing, European Union, IntermariumAbstract
Objectives: After the collapse of Communism in Central and Eastern Europe, the idea of joining a prosperous bloc, which would provide financial assistance, seemed an opportunity not to be missed. However, with the possibility of the funding drying up, and the initial feeling of euphoria fading, the alignment of CEE and Western Europe on values was put to a test. This gave way to discussions about alternatives to the EU. One of them is Intermarium. This paper examines the potential benefits Intermarium countries could attain in terms of consumption risk sharing.
Aims: The research takes an alternative approach to economic integration, concentrating on economic stability. In particular, it makes an empirical analysis of consumption risk sharing in Intermarium, as well as drawing a comparison with the EU and the euro zone core.
Research Design & Methods: The paper uses method of risk sharing assessment proposed by Kose et al. (2009) extended by the authors to accommodate panel data setting.
Findings: As the empirical results illustrate, the past integration between the old EU and its new member states weakened the Intermarium mechanisms of consumption insurance, especially in comparison to the euro zone countries.
Implications / Recommendations: The potential benefits of Intermarium fall short of the EU alternative.
Contribution / Value added: The paper presents the results of the first examination of the extension of risk sharing in Intermarium countries.
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References
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Beck, K. (2017). Bayesian model averaging and jointness measures: Theoretical framework and application to the gravity model of trade. STATISTICS IN TRANSITION new series, 18(3), 393–412. doi: 10.21307/stattrans-2016-077.
Beck, K. (2019a). What drives business cycle synchronization? BMA results from the European Union. Baltic Journal of Economics, 19(2), 248–75. doi: 10.1080/1406099X.2019.1652393.
Beck, K. (2019b). Decoupling after the crisis: Western and eastern business cycles in the European Union. Eastern European Economics. doi: 10.1080/00128775.2019.1656086.
Beck, K., & Stanek, P. (2019). Globalization or regionalization of stock markets? The Case of central and eastern European countries. Eastern European Economics, 57(4), 317–330. doi: 10.1080/00128775.2019.1610895.
Beissinger, M. (2009). Nationalism and the collapse of Soviet communism. Contemporary Europe an History, 18(3), 331–347. doi: 10.1017/S0960777.309005074.
Boffey, D. (2018). Gay spouses have rights in all EU countries, says European court official. The Guardian, 11 January, accessed on 12.03.2018.
Briancon, P., & Karnitschnig, M. (2018). ‘Angela Merkel dashes Emmanuel Macron’s Eurozone dreams’, https://www.politico.eu/article/an-offeremmanuel-macron-cant-refuse-eurozone-budgetangela-merkel/, accessed on 17.07.2018.
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Cole, H., & Obstfeld, M. (1991). Commodity trade and international risk sharing: How much do financial markets matter? Journal of Monetary Economics, 28(1), 2–24. doi: 10.1016/0304-3932(91)90023-H.
Crucini, M. (1999). On international and national dimensions of risk sharing. Review of Economics and Statistics, 81(1), 73–84. doi: 10.1162/003465399767923836.
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Feenstra, R., Inklaar, R., & Timmer, M. (2015). The next generation of the penn world table. American Economic Review, 105(10), 3150–82. doi: 10.1257/aer.20130954.
Final Report – ERDF and CF Regional Expenditure Contract No 2007’. EU official website, http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/expost2006/expenditure_final.pdf, accessed on 09.07.2008.
Frankel, J., & Rose, A. (2002). An estimate of the effect of common currencies on trade and income. The Quarterly Journal of Economics, 117(2), 1st May, 437–466. doi: 10.1162/003355302753650292.
Fratzscher, M., & Imbs, J. (2009). Risk sharing, finance, and institutions in international portfolios. Journal of Financial Economics, 94(3), 428–447. doi: 10.1016/j.jfineco.2008.12.007.
Kose, M., Prasad E., & Terrones, M. (2009). Does financial globalization promote risk sharing? Journal of Development Economics, 89(2), 258–270. doi: 10.1016/j.jdeveco.2008.09.001.
Levy, J. (2007). The Intermarium: Wilson, Madison & CEEan Federalism. Boca Raton: Dissertation.com.
Lewis, K. (1996). What can explain the apparent lack of international consumption risk sharing? Journal of Political Economy, 104(2), 267–297. doi: 10.1086/262025.
Lewis, K., & Liu, E. (2015). Evaluation international consumption risk sharing gains: An asset return view. Journal of Monetary Economics, 71, 84–98. doi: 10.1016/j.jmoneco.2014.11.010.
McDonald-Gibson, C. (2013). The Intolerant continent: Europe’s shocking attitude creating a climate of fear for gay people. Independent. https://www.independent.co.uk/news/world/europe/the-intolerantcontinent-europe-s-shocking-attitude-creatinga-climate-of-fear-for-gay-people-8824932.html, accessed on 12.12.2018.
‘MFA statement on the European Commission’s decision to launch the disciplinary process against Poland laid out in Article 7 of the TEU’, https://www.msz.gov.pl/en/p/msz_en/news/mfa_statement_on_the_european_commission_s_decision_to_launch_the_disciplinary_process_against_poland_laid_out_in_article_7_of_the_teu, accessed on 12.12.2018.
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Poncela, P., Pericoli, F., Manca, A., & Nardo, M. (2016). Risk sharing in Europe. JRC SCIENCE FOR POLICY REPORT. doi: 10.2791/174718.
Project 28. (2017). ‘Poll 2017’. http://project28.eu/opinions-2017/, accessed on 10.03.2018.
Rangvid, J., Santa-Clara, P., & Schmeling, M. (2016). Capital market integration and consumption risk sharing over the long run. Journal of International Economics, 103, 27–43. doi: 10.1016/j.jinteco.2016.08.001.
Rose, A., & Van Wincoop, E. (2001). National money as a barrier to international trade: The real case of currency union. American Economic Review, 91(2), 386–390.
Sala-I-Martin, X., & Sachs, J. (1991). Fiscal federalism and optimum currency areas: Evidence for Europe from the United States. NBER Working Paper, 3855.
Smith, A. (1997). An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: Chicago University Press.
Snyder, J. (1990). Averting Anarchy in the New Europe. International Security, 15(4), 5–41. doi: 10.2307/2538749.
Sorensen, B., Yosha, O. (1996). International risk sharing and European monetary unification. Journal of International Economics, 45(2), 211–238. doi: 10.1016/S0022-1996(98)00033-6.
‘Speech of the President of the Czech Republic Vaclav Klaus in the European Parliament, EU official website, http://www.europarl.europa.eu/resources/library/media/20090126MLT47169/20090126MLT47169.pdf, accessed on 19.12.2018.
UNHCR. (2015). ‘Hungary urged to refrain from policies and practices that promote intolerance and hatred’, http://www.unhcr.org/news/press/2015/12/5677cf666/hungary-urged-refrainpolicies-practices-promote-intolerance-hatred.html, accessed on 21.12.2018.
Asdrubali, P., & Kim, S. (2004), Dynamic risksharing in the United States and Europe. Journal of Monetary Economics, 51(4), 809–836, https://doi.org/10.1016/j.jmoneco.2003.09.002.
BBC. (2013). ‘Ukraine stages first gay pride march’, https://www.bbc.com/news/world-europe-22667015, accessed on 12.03.2018.
Beck, K. (2011). Akcesja Polski do strefy euro w świetle teorii optymalnych obszarów walutowych – weryfikacja empiryczna. In: S. Lis (Ed.). Kontrowersje wokół akcesji Polski do Unii Gospodarczej i Walutowej (pp. 224–238). Kraków: Wydawnictwo Uniwersytetu Ekonomicznego w Krakowie.
Beck, K. (2013). Determinants of business cycles synchronization in the European Union and the Euro Area. Equilibrium. Quarterly Journal of Economics and Economic Policy, 8(4), 25–48, http://dx.doi.org/10.12775/EQUIL.2013.025.
Beck, K. (2014). Determinanty synchronizacji cykli koniunkturalnych w krajach Unii Europejskiej w latach 1990–2007. Gospodarka w Teorii i Praktyce, 1(34), 5–20.
Beck, K. (2017). Bayesian model averaging and jointness measures: Theoretical framework and application to the gravity model of trade. STATISTICS IN TRANSITION new series, 18(3), 393–412. doi: 10.21307/stattrans-2016-077.
Beck, K. (2019a). What drives business cycle synchronization? BMA results from the European Union. Baltic Journal of Economics, 19(2), 248–75. doi: 10.1080/1406099X.2019.1652393.
Beck, K. (2019b). Decoupling after the crisis: Western and eastern business cycles in the European Union. Eastern European Economics. doi: 10.1080/00128775.2019.1656086.
Beck, K., & Stanek, P. (2019). Globalization or regionalization of stock markets? The Case of central and eastern European countries. Eastern European Economics, 57(4), 317–330. doi: 10.1080/00128775.2019.1610895.
Beissinger, M. (2009). Nationalism and the collapse of Soviet communism. Contemporary Europe an History, 18(3), 331–347. doi: 10.1017/S0960777.309005074.
Boffey, D. (2018). Gay spouses have rights in all EU countries, says European court official. The Guardian, 11 January, accessed on 12.03.2018.
Briancon, P., & Karnitschnig, M. (2018). ‘Angela Merkel dashes Emmanuel Macron’s Eurozone dreams’, https://www.politico.eu/article/an-offeremmanuel-macron-cant-refuse-eurozone-budgetangela-merkel/, accessed on 17.07.2018.
Canava, F., & Ravn M. (1996). International consumption risk sharing. International Economic Review, 37(3), 573–601.
Chodakiewicz, M. (2012). Intermarium: The Land between the Black and Baltic Seas. New York: Routledge.
CNN. (2004). ‘EU welcomes 10 new members’, http://edition.cnn.com/2004/WORLD/europe/04/30/eu.enlargement/, accessed on 8.12.2018.
Cole, H., & Obstfeld, M. (1991). Commodity trade and international risk sharing: How much do financial markets matter? Journal of Monetary Economics, 28(1), 2–24. doi: 10.1016/0304-3932(91)90023-H.
Crucini, M. (1999). On international and national dimensions of risk sharing. Review of Economics and Statistics, 81(1), 73–84. doi: 10.1162/003465399767923836.
Davies, C. (2017). Polish MPs pass judicial bills amid accusations of threat to democracy. The Guardian, December 8.
Eichengreen, B. (1992). Is Europe an Optimum Currency Area? In: S. Borner, & H. Grubel (Eds.). The European Community after 1992 (138–161). London: Palgrave Macmillan.
‘Eurobarometer 62’. (2005). EU official website, http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/search/standard% 20eurobarometer/surveyKy/455, accessed on 05.2018.
‘Eurobarometer 88’. (2017), EU official website, http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/search/eurobarometer%2088/surveyKy/2143, accessed on 12.2018.
Feenstra, R., Inklaar, R., & Timmer, M. (2015). The next generation of the penn world table. American Economic Review, 105(10), 3150–82. doi: 10.1257/aer.20130954.
Final Report – ERDF and CF Regional Expenditure Contract No 2007’. EU official website, http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/expost2006/expenditure_final.pdf, accessed on 09.07.2008.
Frankel, J., & Rose, A. (2002). An estimate of the effect of common currencies on trade and income. The Quarterly Journal of Economics, 117(2), 1st May, 437–466. doi: 10.1162/003355302753650292.
Fratzscher, M., & Imbs, J. (2009). Risk sharing, finance, and institutions in international portfolios. Journal of Financial Economics, 94(3), 428–447. doi: 10.1016/j.jfineco.2008.12.007.
Kose, M., Prasad E., & Terrones, M. (2009). Does financial globalization promote risk sharing? Journal of Development Economics, 89(2), 258–270. doi: 10.1016/j.jdeveco.2008.09.001.
Levy, J. (2007). The Intermarium: Wilson, Madison & CEEan Federalism. Boca Raton: Dissertation.com.
Lewis, K. (1996). What can explain the apparent lack of international consumption risk sharing? Journal of Political Economy, 104(2), 267–297. doi: 10.1086/262025.
Lewis, K., & Liu, E. (2015). Evaluation international consumption risk sharing gains: An asset return view. Journal of Monetary Economics, 71, 84–98. doi: 10.1016/j.jmoneco.2014.11.010.
McDonald-Gibson, C. (2013). The Intolerant continent: Europe’s shocking attitude creating a climate of fear for gay people. Independent. https://www.independent.co.uk/news/world/europe/the-intolerantcontinent-europe-s-shocking-attitude-creatinga-climate-of-fear-for-gay-people-8824932.html, accessed on 12.12.2018.
‘MFA statement on the European Commission’s decision to launch the disciplinary process against Poland laid out in Article 7 of the TEU’, https://www.msz.gov.pl/en/p/msz_en/news/mfa_statement_on_the_european_commission_s_decision_to_launch_the_disciplinary_process_against_poland_laid_out_in_article_7_of_the_teu, accessed on 12.12.2018.
Noack, R. (2017). ‘E.U. pursues unprecedented action against Poland in a sign of escalating tensions’, The Washington Post, https://www.washingtonpost.com/world/europe/eu-pursues-unprecedentedaction-against-poland-in-a-sign-of-escalatingtensions/2017/12/20/a5873e56-e597-11e7-a65d-1ac0fd7f097e_story.html?noredirect=on&utm_term=.04c054214847, accessed on 20.12.2018.
Poncela, P., Pericoli, F., Manca, A., & Nardo, M. (2016). Risk sharing in Europe. JRC SCIENCE FOR POLICY REPORT. doi: 10.2791/174718.
Project 28. (2017). ‘Poll 2017’. http://project28.eu/opinions-2017/, accessed on 10.03.2018.
Rangvid, J., Santa-Clara, P., & Schmeling, M. (2016). Capital market integration and consumption risk sharing over the long run. Journal of International Economics, 103, 27–43. doi: 10.1016/j.jinteco.2016.08.001.
Rose, A., & Van Wincoop, E. (2001). National money as a barrier to international trade: The real case of currency union. American Economic Review, 91(2), 386–390.
Sala-I-Martin, X., & Sachs, J. (1991). Fiscal federalism and optimum currency areas: Evidence for Europe from the United States. NBER Working Paper, 3855.
Smith, A. (1997). An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: Chicago University Press.
Snyder, J. (1990). Averting Anarchy in the New Europe. International Security, 15(4), 5–41. doi: 10.2307/2538749.
Sorensen, B., Yosha, O. (1996). International risk sharing and European monetary unification. Journal of International Economics, 45(2), 211–238. doi: 10.1016/S0022-1996(98)00033-6.
‘Speech of the President of the Czech Republic Vaclav Klaus in the European Parliament, EU official website, http://www.europarl.europa.eu/resources/library/media/20090126MLT47169/20090126MLT47169.pdf, accessed on 19.12.2018.
UNHCR. (2015). ‘Hungary urged to refrain from policies and practices that promote intolerance and hatred’, http://www.unhcr.org/news/press/2015/12/5677cf666/hungary-urged-refrainpolicies-practices-promote-intolerance-hatred.html, accessed on 21.12.2018.
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Published
2019-12-31
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Open Access, licence: CC-BY 4.0
How to Cite
Beck, K., & Shtunderenko, J. (2019). The prospect of Intermarium integration in the light of consumption risk sharing. Journal of Public Governance, 49(3), 20-34. https://doi.org/10.15678/ZP.2019.49.3.02
