Speedo LZR Racer

The Speedo LZR Racer is made from a unique lightweight, water repellent, and fast-drying fabric that has been developed to reduce drag and help hold the swimmer’s body in a more streamlined shape. Following three years of research that included input from NASA, tests on more than 100 different fabrics and suit designs and body scans of more than 400 elite swimmers, Speedo has launched its most hydro-dynamically advanced – and fastest – swimsuit to date. The specially engineered, highly flexible fabric called LZR PULSE is ultrasonically welded to appear seamless.It takes about 20 minutes to put the LZR Racer swimsuit on. The material is made to be skin tight on your body making it feel like nothing is pulling you back when swimming. When putting on the suit you have to make sure not to use your fingertips or fingernails also to grip the panels not the fabric. Start of by getting the suit out of the box and starting at the feet. At the bottom of the edges where the feet go flip the inside liner out that is what makes sure that the suit doesn’t ride up when kicking at a fast paced speed.Put a plastic bag over your foot and gradually pull the suit over your foot do the same to the other foot. Inch by inch grip the panels and gradually pull up your body. Once you have it over your knees it will be a lot harder to get over the back side do not grab the sides make sure you scrunch it up on both sides and gently but sternly grip the sides make sure your thumb is not pointed in and slowly move up. As you get over the backside, smooth the bottom making sure the panels are facing forward, and where the V starts it should be right at your hipbone. Next, carefully place your arms through the arm folds.Adjust everything from hip up making sure the front part where the stomach is that they are lined up forward. You will now need to people to help you zipper it up. Grasp the sides of the suit and pull them towards each other from bottom up next have one person grasp both sides of the suit and hold them together closer to each other as the other person pulls the zipper up. Make sure you zip up the back in sections and not all at once and when to let go each time of the zipper to put it facing down so it does not move when re grasping the suits sides. When all the way up make the swimmer end over and run your finger across the zipper teeth making sure there were not any bumps or where the teeth did not grasp together. Check the arm folds and pull them up towards the pit. Make sure everything feels good other than the tightness. Fix the liner part by your feet by making sure the liner is touching you actual skin. The LZR Racer is made to be a tight-skinned lightweight material that makes you repellent in the water the material feels like paper when you touch it but when on its light and breath taking. So when putting it on go from bottom up slowly and gently making it up to top.

Analysis for the Movie ” Up in the Air” Essay

Ryan Bingham works for a company that helps and facilitates companies’ firing some of their worker. He and his colleagues make business trips all over the U.S and do their, in other words, they fire people. Ryan thinks that his job’s best side is to fly. He aims to save his frequent flyer miles until they reach one million miles and get the club card for his loyalty to the airlines. He also makes seminars for, with his words â€Å"awaking† people .He leads people to leave whatever been problem for them. He points out this situation with the example â€Å"backpack†. Ryan asks people to fill and empty the backpacks of their own life as metaphor and wants them to realize how much the problems are heavy. He even thinks about putting people that are one’s around in this backpack if they keep him/her in back or slow him/her down. For that reason most probably, he is not close to his siblings. Ryan’s life changes when the company hires Natalie who offers that instead of business trips for firing people face to face, to make remote computer access. But Ryan thinks that Natalie does not fully understand the nature of the business. For him it is kind of way of life and he does not want to lose his current life style The company’s owner Craig suggests Natalie to accompany Ryan on a business trip. In these trip Ryan meets a woman called Alex and because that their lives are almost the same they are getting along with each other. Alex also travels often and whenever their flight schedules matches they meet. After he tries to show her to difficulties of firing people, Natalie overcomes the difficulties and achieves firing people via remote computer access. Then the company initiates the remote computer access firing system in trail version and calls Ryan back to home like others. Ryan comes back to home and realize how much he is far away from the family. But he finally does something to heal the wounds†¦ American Dream shaped with the ideas of freedom , equality for all , social mobility and opportunities for achievement and success with hard work. The movie points out the American Dream with the character Ryan. The story of movie puts the individualism on the Ryan character and makes him â€Å" man of freedom â€Å" for his entire life . He likes travelling and being alone. He even leads people, in his seminars , to get rid of from their â€Å"weights† in their backpacks. He works too much to achieve his goal and this touches to the one the values of the dream too. Even the movie starts with comic issues which attracts us to story with Ryan’s telling his life story , it can be defined as tragicomedy because of family issues and Ryan’s disappointment towards the end of the movie. Backpack metaphor combined with the life’s weights metaphor shows that people have some barriers which slow down and stop them . The main character Ryan as a speaker wants the people to realize how these weighs are heavy and that’s why puts all these weights in a backpack. Because it is easy for us to remember to carry something with backpack is hard , imagination on that metaphor becomes much more easier. Personally , I don’t admit the hero’s backpack philosophy , because we have people who can help us for these â€Å"weights† , it is just about whether you want to be alone or not ? if you want to be alone all these stuffs in your life becomes â€Å" weight† for you. But if you don’t you can always can find some ones asking you for help. Having a patriarchal cultural background, US have gender roles dominated by man. In the movie characters have strong manners for these roles. Ryan does not give importance to set a family and his behaviors to women show his domination feeling against to women. Alex figure describes Ryan as â€Å"escape†. It is possibly an escape from ordinary mother figure life to free women figure. So it touches to women’s position in the society and reaction to it. References IMDb ( for critics and soundtracks) Wikipedia ( for the values of ‘American Dream’ ) http://ezinearticles.com ( for understanding and reviewing ‘American Identity’ )

Bella

When I think of Bella, I think of dust, for the arid country in which she lived was no friend of the meticulous housewife. And as I begin to feel the swirling dust exfoliate my skin, my right hand automatically, subconsciously drifts to my left wrist, feeling for the plastic bracelet I lost long ago and finding only the memory of its origin. Bella came to me in the summer, when the sun was high and hot, and my hair had begun to turn red with its heat. More factually, I went to Bella, in a group of thirty, on the quintessential summer mission trip to Mexico. Filled with our romantic plans and burdened with craft supplies, we entered a small, worn, and obviously loved gym. Our first project was to advertise, and as we set out into the surrounding neighborhood, I began to miss the smooth pavement of America. The next day, having used my allotted eight minutes of hot water and five minutes of mirror time, my feelings of discomfort were far from alleviated. I was to be a group leader, meaning that I alone would be working with a small group of children whose names were as foreign to me as the wind to a worm. By this time, I was so far from my comfort zone I was beginning to lose sight of it, and a few more steps would put me in danger of getting lost on my way back. This is where Bella floated into my life. As we sat on the gym floor, me trying desperately not to show my fear, Bella and her sister coloring contentedly, my eyes fell on a subject guaranteed to generate conversation: jewelry. Bella had adorned her small wrist with a bracelet woven of thin strips of plastic. It had an unmistakable air of mission trip about it and as I pointed to it and gestured my admiration, I envisioned her sitting on this same hard floor with another girl, one hopefully more adept than I. The thought that Bella had done this before, that she knew the routine made me relax, and after a bit I even found my waxen smile melting into one of genuine pleasure . Over the next four days, Bella became a constant in my life. Every morning, bracelet donned, sister in hand, she marched through the crowd of surging children and found me. She repeated this routine with such a steadfast air, that I felt sure she would have found me had I suddenly relocated home. Her regularity was comforting, and if nothing else, I appreciated that it was me she found, eradicating the possibility of my ending up with a new name and face to learn every day. Bella marched right through the week and ushered in Friday with all the assurance a nine year old commands. We wrapped up the week in true mission trip style: with candy and lots of it. Our fructose-packed handfuls engendered so chaotic a frenzy that when Bella’s turn came I could only manage a quick bye and a smile in the direction of her and her sister before I was again absorbed by the hyped crowd. With a fond smile I watched her small back grow even smaller, and as I turned to focus on the other chi ldren, I had an extra bit of patience to share. Just as I sorted out who had already been given candy from those who had not, I felt a small tap, lighter than the landing of a bumblebee. Resisting the urge to pretend I had not felt anything, I turned. There stood Bella. In one small fist she still held tight to the hand of her sister, never letting anything separate them. In the other fist, the one she was holding out to me, was Bella’s plastic bracelet, the one she had worn every day. Speechless, I took the shyly offered gift, and this time to give her a real hug. Not knowing what I wanted to say, nor how to say it if I had, I could only hug Bella and her sister and murmur thank yous one after the other. Bella soon skipped off again, leaving me with more that a little to ponder. As I fumbled with the plastic laces, I slowly began to realize the magnitude of this gift. I began to remember the homes I had visited that first day. Incredibly small shelters that were once worthy of the title hut, their walls and ceilings were now formed with the things I once used to make forts. Mattresses, scrap wood, wagons and tires were used in place of glass and concrete. Somehow I had removed Bella from the town in which she lived, and in that single second the realization that she lived in one of those achingly mismatched homes threatened to knock me over. It is humorous how quickly my outlook on life was altered. The generosity of one small girl in a village reversed my thought process and sent me from self absorbed and unconcerned to the beginning of conscious member of society. The weight of one small bracelet resting in my palm brought with it a new knowledge and comprehension. I understood for the first time that my small network of contacts was not the only plot line, that my small pool of acquaintances was not the axis of the earth. It was in the few seconds that it took for me to fasten that tired yellow and black bracelet around my wrist, and the several y ears it took me to lose it, that Bella’s gentle unassuming influence altered my life.

Reflective paper on selt- esteem (Social Psychology) Essay

Reflective paper on selt- esteem (Social Psychology) - Essay Example One has to continuously learn and ponder through the thick and thins of life and adjust one self accordingly so as to understand his or her limitations with respect to those very changes and phases of life. Self-awareness is a unique facet of a man’s life and must therefore be considered whenever some major action is being undertaken in life, or for that matter even a minor one. Self esteem has also got a pivotal role in chalking out one’s usage of his or her emotions in crunch and difficult situations as well as the reactions that are involved in the aftermath of some big tragedy that might take place in a person’s life from time to time. The same could be equally true for his or her attaining success in an arena of life, which are also there along with the moments of grief and sorrow. A childs level of self esteem literally impacts every area of his or her life which for that matter might include health, his or her ability to learn, execute different behaviors as well as understand the importance of having jointed relationships, not only with the family members but also with friends and acquaintances. Children and young people who have a high level of self-esteem and self-confidence respond well to others and are surely at a benefit in every field of life, whether it is concerned with the family or cohort relationships like school, sports or organizational activities. Children with a high level of self-esteem are also more likely to lead happy and creative lives whereby they develop a positive attitude as well as an innate drive for self-confidence that will eventually guarantee them the success they desire for in their personal lives as well as in their upcoming careers. If, for instance there is a child having a clear learning difference gets encouragement that is added with a high level of self-esteem, he will in his coming years not only have the courage to stand moments of frustration but also have more patience as

Case study, the business case for happiness Study

, the business for happiness - Case Study Example Also the variation in the mood of the workers, will determine their productivity. A negative attitude influences employees’ thinking, when we feel negative we may become detractor to one another. Negative feeling bring about a combatant mode of thinking. On the other hand, a positive mood has some bearing on people way of thinking to become confident, tolerant, constructive, un-defensive and lateral. Employees are happier if they are guaranteed on the retention of their job, they will not seek a good working environment instead they will make their current working place a better one. Happiness and other positive emotions can undo some of the adverse psychological effects of the negative emotions, such as the effects of adrenaline released in the response to fear or threat. Despite all the efforts to make the employees be happy and work in harmony in the workplace, so as to increase their productivity. Still there is one major limitation to hinder all those efforts. The employees would be happy with the job but still domestic factors may lead to depression which may lead employees, not to be happy in their workplace hence leading to the low productivity. If the employees have martial issues with their spouse, it will affect their mental thinking towards their colleagues of the opposite gender. This is in the regard to the negativity in behavior of their spouses who is of the same gender their co-workers. This will eventually lead to conflicting factors in their

Sports Managers' Tasks Coursework Example | Topics and Well Written Essays - 1000 words

Sports Managers' Tasks - Coursework Example Employees should voluntarily follow the provided directions to guarantee a perfect relationship between them and their managers. Leading includes motivating the employees and assisting them to follow the set objectives for the firm (Daft, 2008). Managers should serve as leaders in an ideal situation and adopt perfect leadership skills (Daft and Marcic, 2013). Various employee cultures affect the leadership styles in an organization. Corporate structures also matter in coming up with leadership skills due to the relationship between the junior and senior staff (Sims and Quatro, 2005).  Sports managers perform various leadership duties during sporting activities. In professional teams, the managers act as leaders that motivate and inspire coaches and players (Watt, 2004). Since most sports managers work for colleges and other social institutions, there is a need for communication between the team. The managers execute leadership functions while conducting both interpersonal and group activities. Sports leaders have to connect socially with the players in order to provide motivation during matches and training sessions. Additionally, some sports clubs are enormous; hence require more attention from the managers. Leaders should first identify what motivates the players and employ the strategies to ensure maximum output from the players (Summers, 2012). Sports managers have to deal with various staff including coaches and trainers that are also issued with roles of passing information to the players.It guarantees the monitoring of the performances of various individuals in the firm (Dyck and Neubert, 2010). The main aim of the controlling function is to ensure that the set aims and objectives are attained. The performance results are weighed against the goals after an evaluation of the firm (Koontz, Weihrich and Aryasri, 2004). Control also depends on the communication channels that assist in the comprehension of the objectives.

Global Context of Business Assignment Example | Topics and Well Written Essays - 750 words

Global Context of Business - Assignment Example iii) Devaluation of domestic currency and thus a fall in profitability of investment ventures. This might restrain many potential investors from pouring their funds in the afflicted nation which can adversely affect the economic growth process. B) Unemployment rate is measured as the percentage of unemployed people in the total labor force. Discouraged workers and people not seeking jobs though belonging to an age group above 16 are not included in the labor force. In the present case, the total labor force comprises of 110 million people and the number of people employed among them is 90 million. This leaves a total of 20 million people jobless, in the total workforce. Thus, the rate of unemployment in the nation is, 3. In economics, domestic aggregate demand is treated at par with the real GDP of an economy. There are three primary sources which sum up to give the aggregate demand in an economy, viz., consumption expenditure, investment expenditure and government expenditure. A fall in any one of the three factors will lead to a fall in total domestic demand and hence the resultant GDP will be affected accordingly When the government decided to implement tax cuts, it led to a rise in the disposable income and an inferred rise in the amount of consumption expenditure. However there was a simultaneous shortfall in the availability of government’s resources to meet its expenses, so that the proportion of government expenditure in aggregate demand depreciated. A rise in one component accompanied by a fall in another left the aggregate demand as well as the real GDP unchanged. With no changes in the domestic money supply, the general price continued at the same level.

Broadband Market in the UK Essay Example | Topics and Well Written Essays - 2000 words

Broadband Market in the UK - Essay Example 4). Nevertheless, broadband services â€Å"can be accessed from the local telephone exchange (either via copper lines or fibre optic cable), a cable television hub and via wireless and satellite technologies† (Downing 2011, p. 4). Broadband services â€Å"is usually described by the amount of data (in bits) that can be transferred† (Downing 2011, p. 4). To give an idea of the required speed that would make data transfer fast and efficient, â€Å"a typical email is thousands of bits (kilobits or kb), a music file can be several million bits (megabits or Mb per second---Mbps) and a firm may be several billion bits (gigabits or GB)† (Downing 2011, p. 4). To enjoy a live stream requires a constant speed of 2Mbps and, in 2009, it was estimated that about 2.75 million people in the UK had broadband speed of less than this (Downing 2011, p. 6). Today, broadband services are highly available on mobile phones. Mobile telephony is â€Å"a largely deregulated market in the UK† and this may be an explanation why broadband services became increasingly available in mobile phones (Downing 2011, p. 12). II. ... 1). Nevertheless, residential fixed broadband customers have been using an average of 17GB of data monthly (Ofcom 2011b, p. 2). Citing data from the London Internet Exchange, Ofcom (2012b, p. 2) reported that internet traffic â€Å"has increased seven fold in the last five years.† The Ofcom estimated that if demand continues to grow at the same pace, new investments have to made (Ofcom 2011b, p. 2). New technologies are being introduced to deliver up to 80 Mbit/s over copper wires and 300Mbit/s over fibre (Ofcom 2011b, p. 2). In the market, there are at least three kinds of internet speed: the headline or the advertised speed, the average speed and the maximum speed (Ofcom 2011c, p. 3-4). 2G. According to UK Ofcom, as of November 2011, â€Å"97% of premises and 66% of the UK landmass can receive a 2G signal outdoors form all four 2G networks.† However, according to the same source, â€Å"approximately 900,000 UK premises do not have a choice of all four 2G mobile netwo rks.† The 2G coverage is mostly voice and SMS. The so-called 2G refers to â€Å"second generation of mobile telephony systems† (UK Ofcom 2011b, p. 101). The 2G â€Å"uses digital transmission to support voice, low-speed data communications, and short messaging services† (UK Ofcom 2011, p. 101). Ofcom calculates that for 2G, 99% of England, 92% of Wales and Northern Ireland and 98% of Scotland have broadband coverage (Downing 2012, p. 13). 3G. Meanwhile only â€Å"73% of premises and just 13% of the UK’s land mass receive a signal outdoors from all five 3G networks, with lower coverage in less densely populated areas† (UK Ofcom). Thus, â€Å"approximately 7.7 million UK premises do not have a choice of all five 3G mobile networks† (UK Ofcom 2011a).

Art History Essay Example | Topics and Well Written Essays - 1000 words

Art History - Essay Example This was followed by the High Renaissance to Early Modern Art period from 1400-1880; which included 1400 to the1500s – there was the Fifteenth-Century Italian Art; from 1495 to1527 - The High Renaissance; from 1520 to1600 – The Mannerism era; followed by The Renaissance in Northern Europe from 1325 to 1600, which had Baroque Art, The Rococo, Neo classicism / Romanticism, Realism and Impressionism. Lastly, this led to Modern art (1880- to the present time). Each period of Art reflects not only the growth in intellect but also the evolution of techniques which were honed to change the expression of art. The three types of art which will be discussed are Renaissance, as a whole from the 1200 to the 1600, which was the most exciting time for art. Romanticism marked another change in the art movement, where concepts and perceptions took a new turn. The third type of art is Impressionism, which began looking at things in a new light. Firstly, renaissance era is considered the renewal of interest in the lost arts of Greece and Rome. The birth place of the renaissance era is considered to be Italy. The art of the renaissance era shows the revival of the Romanesque and Gothic art forms. The Renaissance era is important because of the colossal change that occurred during this time, as it marks the start of an intellectual movement and the realization of a knowledge based change in perceptions. The changes in artistic perceptions were showed the drastic change in themes which occurred and the objective changed to an individual’s display of superiority. In the middle ages there was more focus on religious art forms, which was not really swayed from, but with this new breed of educated artists which were emerging were bringing about a change in artistic movement, setting new standards and reaching new heights. During this time, there was a change in the artists’ mentality and their own perceptions about themselves, where they adopted new styles w hich showed their own artistic individuality, particularly in sculptures which were made at that time. Because of the increase in trading in areas, and the new found wealth, the people had a very high standard of living at that time, because of which, the people aspired to acquire knowledge in different fields and it was described as a time of increased growth, as there were new ideas which were thought of and new applications being used. There was a great influx in the building of many educational institutions in the area. There was a class of scholars who had a variety of interests in science, philosophy and mathematics. Because of this newfound need for knowledge, there was a drastic change in the styles of art seen during that period. The use of mathematics, in order to improve the accuracy of figures being painted, was also seen for the first time in this era. What is ironic to know is that these practical mathematical techniques applied to art, were born during this period, wh ich today, we take and use for granted. The study of humanistic characteristics was also initiated in this era. With the discoveries being made while studying the human anatomy, again found its use of this knowledge, which was the new craze at that time, to improve the human figures which were painted to make them look as real as possible. Prior to the renaissance era, the art forms were not as life like or even close, with human forms being depicted with disproportionate use of lines. But this new era brought about for the first

Foreign policy issue Essay Example | Topics and Well Written Essays - 750 words

Foreign policy issue - Essay Example It became USA’s foreign concern as it holds the mandate to safeguard world peace with its permanent status at the United Nation Security Council States. The major concern of the United States government is the chemical weapon aspect. In a survey by special united nation chemical weapon department, it was evident Syria is involved in chemical warfare. As part of the united nation resolution, the country had to intervene. The stability of Syria will ensure a step forward towards war on terrorism as the instability creates a breading ground for terrorist, this is evident in other countries including Somalia where the civil war has resulted to emergence of Alshabaab a terror militant group allied to the al-Qaida (Global Research, 2013). Any security threat to the world usually affects the USA, which has been under threat of terrorist and other attacks since their entrance in Afghanistan and Iraq. In ensuring world peace, potential threats must be dealt with in accordance to the signed agreements of the United Nation Security Council signatories. As the interference with matters in Syria, the states government has elicit mixed reaction and brushed shoulders with countries in Asia and Eastern Europe. Russia and Turkey, according to CNN(2013) has termed USA planned invention to the Syrian state as disrespectful. The main problem with the upraising is that USA has had to leave with the fear of breaking ties with its allies and conflict between them and Russia. Domestically there has been divided opinion on measures to take while tackling the Syrian issues. The opposition had voted and suggested for military intervention towards the Syrian matter, which the democrats suggests for a diplomatic approach. With the threat of chemical warfare, there is need for actions in regards to the Syrian issues, as its impact is always catastrophic as was the case of Hiroshima and Nagasaki. While seeking a permanent

Hume vs Kant Causality Essay Example for Free

Hume vs Kant Causality Essay Humes ultimate goal in his philosophic endeavors was to undermine abstruse Philosophy. By focusing on the aspect of reason, Hume shows there are limitations to philosophy. Since he did not know the limits, he proposed to use reason to the best of his ability, but when he came to a boundary, that was the limit. He conjectured that we must study reason to find out what is beyond the capability of reason. Hume began his first examination if the mind by classifying its contents as Perceptions. Here therefore [he divided] all the perceptions of the mind into two classes or species. (27) First, Impressions represented an image of something that portrayed an immediate relationship. Secondly, there were thoughts and ideas, which constituted the less vivid impressions. For example, the recalling of a memory. From this distinction, Hume decreed that all ideas had origin within impressions. From the distinction of perceptions, Hume created his ? microscope in order to trace all ideas back to impressions. He did this to search for the limits. If an idea could not be traced back to its impression, it was too abstruse. Hume separated the objects of human reason into two categories. First, the relation of ideas, which represented all that is ? a priori. Secondly, he created the category of matters of fact. Matters of fact made up the ? a posteriori piece of the spectrum of reason. Matters of fact are contingent, meaning they could be otherwise. In order to go beyond the objects of human reason, Hume proposed that reasoning was based upon cause and effect. Causal relations help us to know things beyond our page 2 immediate vicinity. All of our knowledge is based on experience. Therefore, we need experience to come to causal relationships of the world and experience constant conjunction. Hume stated that he shall venture to affirm, as a general proposition which admits no exception, that the knowledge of this relation is not in any instance, attained by reasonings ? a priori, but arises entirely from experience. (42) Unfortunately, our experience of constant conjunction only tells us about the past. Rationally, that is all it tells us. We can expect the effect to follow the cause, but it is not a sufficient basis to assume the effect will come from the cause in the future. These things are contingent- they could be different. The connection between these two propositions is not intuitive? it is always inferred. (480) Hume asserted that the future will resemble the past. This is the assumption underlying all our ideas of causality. If the future does not resemble the past, then all our reason based on cause and effect will crumble. When Hume proposed questions such as Is there any more intelligible proposition then to affirm that all trees will flourish in December and January, and will decay in May and June? (49), Hume demonstrates that it is not a relation of ideas that future will resemble the past; it is possible that the course of nature will change. Therefore, what happens in the future is neither a relation of ideas, nor a matter of fact. It is impossible, therefore, that any arguments from experience can prove this resemblance of past to future, since all these arguments are founded on the supposition of that resemblance. (51) Now Hume proposed that all inferences come from custom, not reasoning. Through custom or habits, we have become accustomed to expect an effect to follow a page 3 cause. This is not a rational argument. This argument centers on the theory of constant conjunction, which does not fall under either fork of reason. All inferences from experience, therefore, are effects of custom, not reasoning. (57) Hume analyzed the idea of causality by emphasizing the three demands that can be verified through observation. First he argued the aspect of constant conjunction. In this aspect, the cause and effect must be spatially and constantly existent. Secondly, he asserted that it must have temporal priority, in that, the cause had to precede the effect. Lastly, the event must have a necessary connection- we must develop an understanding of why a cause produces a certain effect. Humes critique of causation is that we cannot see it, we must infer it. For example, two billiard balls, one moving toward the next demonstrate temporal priority because one ball is moving first. Secondly, constant conjunction occurs because the balls exist together spatially and constantly. But, there is no necessary reason why this happens. Hume asserted that we can imagine a world in which the effect would be different. He then concluded that we cant get an impression of a necessary connection, we can only experience constant conjunction and temporal priority. Experience only teaches us how one event constantly follows another, without instructing us in the secret connection which binds them together. (77) We therefore conclude that reason is a limited faculty and that we have no reason to trust our common methods of argument or to think that our usual analogies and probabilities have any authority. (83) In conclusion, Hume asserted that since we do not have any impression of necessary connections, it is our expectation that believes the effect will follow the cause. page 4 The appearance of a cause always conveys the mind, by a customary transition, to the idea of the effect. (87) Since we are trained to expect the impression of necessary connection, the idea of it comes from our minds. Therefore, our belief in necessary connections of the universe is based on a rational facts. Immanuel Kant, a philosopher after Hume, sets out to reform metaphysics. Kant believed that if Hume was right, metaphysics would be impossible. But, Kant was unwilling to surrender to Humes skeptical argument, so Kant sets out to do a critique in order to explore the possibilities and reform metaphysics. Kant begins his critique searching for ? a priori knowledge within philosophy. Kant began to search for the ? a priori principles that were rationally deductible in order to explain why we perceive the things we cannot perceive. Kant believed that the only way that we could get to things necessary and universal was through ? a priori. Kant found that the concept of the connection of cause and effect was by no means the only concept by which the understanding thinks the connection of things ? a priori, but rather that metaphysics consists altogether of such concepts. (8) Kant began to examine pure ? a priori reason by establishing his critique. He stated that there are boundaries and contents. He set out to find what is inside the limitations and what is outside. Kant examined the three bodies of knowledge: math, physical science and metaphysics. Kant said that science must have necessity and universality. This places math and science within reason. Kant first divided judgement into two kinds of knowledge- analytic and synthetic. In the Prolegomena, Kant criticized Hume for having regarded mathematical judgements as analytic. Had he realized that page 5 they were synthetic, Hume would have been able to conclude that some synthetic judgements can be made ? a prior. Kant concluded that math and science fell under ? a priori synthetic judgements. This gives us universality, but it also tells us something. For Kant, knowledge must be necessary and universal qualities must come from ? a priori synthetic judgements. They have to tell us something we dont know, something completely independent of experience. This idea of Kants, completely contradicts Hume. Hume had asserted that anything based on empirical facts had no necessity, and therefore was contingent. Hume also stated that empirical facts couldnt give us universality either, because we cant know future will resemble the past. Kant stated that all Humes beliefs centered upon the fact that nothing but experience could furnish us with such connections. (24) For Hume, all science was empirical, and we could only know what happened so far. In contrast, for Kant, he said that scientific laws claim necessity and universality. It is only from ? a priori that we get universality and necessity. Kant then continued his critique to decipher if metaphysics is possible. Kant separated the faculties of the mind and the way it thinks into three distinctive categories. First, he stated that math was exhibited through intuition. The forms of intuition were ? a priori and had two capacities. First, intuition gave us space and time through pure intuition, and sensory data through empirical intuition. Then, Kant set up a metaphysical distinction between numena and phenomena. Numena represents the things in themselves, while phenomena represents the things for us. In this dichotomy we have no page 6 access to numena. The only way we can get to things outside us is through intuition, but intuition has these forms. This shows our limitations. Mathematics is not applicable to numena. We can have mathematical knowledge of phenomena. From this we can infer we have inter-subjective knowledge. Kant has given us universal and necessary knowledge in the phenomenal realm. Kant points out that the error may arise owing to an illusion, in which [he proclaim] to be universally valid what is merely a subjective condition of the intuition of thing and certain only of all objects of senses, namely for all possible experience. (39) Kant has just suggested that the error and base for all metaphysics is not distinguishing between phenomena and numena. Finally, Kant explained that everything is a distinction of phenomena and numena. We receive necessity and universality through this distinction and also from the projection that phenomena comes from certain ? a priori aspects. Therefore, the future will resemble the past, because we make it resemble the past. Kant used understanding, the second faculty of the mind to explain causality. As the understanding stands in need of categories for experience, reason contains in itself the source of ideas. (76) The function of understanding is thinking, and thinking must use concepts to be an objective thought. The presence of this objective thought verifies its actuality. Therefore, causality, for Kant, was the way in which mind puts together experiences to understand them. Kant found many problems within Humes account. Through his endeavors to prove that metaphysics is possible, and his analyzing of causality, Kant solved the problems he saw within Humes account. Specifically, in the Prolegomena, Kant stated page 7 that Hume justly maintains that we cannot comprehend by reason the possibility of causality. (57) Kant also attacked Humes ideas by describing Humes treatment of the concept of causality to be a bastard of the imagination, impregnated by experience. (5) Kant succeeded in re- establishing the objectivity of causality, a task that Hume had rejected as impossible.

File Systems and Permissions Summary

File Systems and Permissions Summary John David Woody chmod -rwxr-xr-1 instruct staff 270311 Aug 11 2009 install.sh I will attempt explain the best I can. Chmod, on linux or unix like operating systems, there are a set of rules for each file which defines who can access that file and how they can access it. The at position 0 denotes the type of file, it is either a d if the item is a directory or l if it is a link or it could just be a regular file. The symbols in the positions 1 thru 3 rwr are permissions for the owner of the file and the symbols in position 4 thru 6 r-x are positions for a group, the remaining positions 7 thru 9 r-1 are permissions for anyone else. The rwx shows that owner has read (r), write (w) and execute (x) permission. The shows the permissions for the group to which the file belongs. The r-xr represents that has permission to read (r) and execute (x) and, read permissions without write permission. The last xr-1 set of characters, represents the permissions for everybody else. The octal numbers 270311 each have individual meanings for permissions. I researched this at, the WEB site below on the reference page. Now, 2 is for write, the 7 where my confusion stepped in is the numeric mode from one to four octal digits which are derived by adding up the bit values, so 4 is for read , 2 for write, and 1 is for execute when added equals 7 so all access is allowed. The 0 from what I read has no permissions. The 3 is for write and execute and the 1s only can execute. How the commands and the octal numbers relate requires me to do more homework. The remaining items below 2 -5 and 1 4, will be described and follow the same patterns as above. I just hope Im explaining things correctly. Chmod -rw-rr1 instruct staff 348039 Aug 12 2008 User_Guide.txt Chmod, on linux or unix like operating systems, there are a set of rules for each file which defines who can access that file and how they can access it. The at position 0 denotes the type of file, it is either a d if the item is a directory or l if it is a link or it could just be a regular file. The symbols in the positions 1 thru 3 rw- are permissions for the owner of the file and the symbols in position 4 thru 6 r are positions for a group, the remaining positions 7 thru 10 r1 are permissions for anyone else. Now, this textual representation consist of 10 characters but from what I have read the rules still apply. The octal numbers 348039 each again have individual meanings for permissions. Now, 3 is for write, the 4 is for read, 8 again confusion stepped in until I will research this more. The 0 is for denial, 3 again is for write and of course there is a 9 Ill also have to look into. Chmod -rw-r1 instruct staff 635106 Aug 12 2009 Admin_Guide.txt Chmod, on linux or unix like operating systems, there are a set of rules for each file which defines who can access that file and how they can access it. The at position 0 denotes the type of file, it is either a d if the item is a directory or l if it is a link or it could just be a regular file. The symbols in the positions 1 thru 3 rw- are permissions for the owner of the file and the symbols in position 4 thru 6 r are positions for a group, the remaining positions 7 thru 10 1 are permissions for anyone else. Now, this textual representation consist of 10 characters but from what I have read the rules still apply. The octal numbers 635106 each again have individual meanings for permissions. Now, 6 is for read/write, the 3 is for write, 5 is for read/execute. The 1 is for execute only, 0 all access denied and 6 read/write. Chmod drwxr-xr-x 4 instruct staff 144 Aug 12 2009 Documents Chmod, on linux or unix like operating systems, there are a set of rules for each file which defines who can access that file and how they can access it. The d at position 0 denotes the type of file, it is either a d if the item is a directory or l if it is a link or it could just be a regular file. Well this is a directory. The symbols in the positions 1 thru 3 rwx are permissions for the owner of the file and the symbols in position 4 thru 6 -x4 are positions for a group. The octal numbers 144 each again have individual meanings for permissions. Now, 1 is for execute only. The two 4s are read only access. chmod -rwsr-x 1 nobody nobody 169202 Aug 11 2009 httpd Chmod, on linux or unix like operating systems, there are a set of rules for each file which defines who can access that file and how they can access it. The at position 0 denotes the type of file, it is either a d if the item is a directory or l if it is a link or it could just be a regular file. The symbols in the positions 1 thru 3 rws are permissions for the owner of the file and the symbols in position 4 thru 7 r-x1 are positions for a group. The octal numbers 169202 each again have individual meanings for permissions. Now, 1 is for execute only. The 6 is for read/write allowed, the 9 I still have not figured out yet, but I will. The 2 is for write access only, the 0 means all access denied, again the 2 is write access only. Metacharacters/Regular Expressions * Matches zero or more occurrences of the previous character ? The preceding item is optional and will be matched, at most, once. ^ The caret ^ is an anchor that indicates the beginning of a line. $ The asterisk is a modifier and also an anchor. In a regular expression it specifies that a previous character set can appear any number of times, that includes a zero. [0-9] Matches any one of the numbers given within chars, where chars Is a sequence of characters. [a-z] Matches any one of the characters given within chars, where chars Is a sequence of characters. Regular expressions to match the following All files that end in txt ls -1 grep *.txt Files that have a second character of a and end in sh ls -1 | grep *.sh Any file that starts with a number ls -l | grep [0-9] A blank line ls -l | grep [] A traditional 10-digit U.S.-based phone number, in the following format: (407) 555-1212 ls -l | grep [(0-3)] [0-3]-[0-4] Note: Not quite sure about this one but I tried. Reference www.computerhope.com/unix/uchmod.htm

Benefits of Financial Liberalisation

Benefits of Financial Liberalisation A EUROPEAN POLICY ABSTRACT: This paper extends to test if the short and in the long run. Weak indica- the same short-run increase in cyclical tions are found that this may happen par- volatility arising from financial integration tially due to the anchoring of expectations is observed in this specific sample of â€Å"emerg-provided by the EU Accession, and to the ing markets. This work finds signs that, more robust institutional framework contrary to other emerging markets, this imposed by this process onto the countries in does not happen: for the future Member question. States, financial integration, similarly to the KEY WORDS: Enlargement, European outcome observed in mature market Union, financial liberalization, booms, 81 economies, reduces cyclical volatility both in busts, cycles, volatility. 1. INTRODUCTION Financial and capital flows liberalization can play a fundamental role in increasing growth and welfare. Typically, emerging or developing economies seek foreign savings to solve the inter-temporal savings-investment problem. On the other hand, current account surplus countries seek opportunities to invest their savings. To the extent that capital flows from surplus to deficit countries are well intermediated and, therefore, put to the most productive use, they increase welfare. Liberalization can, however, also be dangerous, as has been witnessed in many past and recent financial, currency and banking crises. It can make countries more vulnerable to exogenous shocks. In particular, if serious macroeconomic imbalances exist in a recipient country, and if the financial sector is weak, be it in terms of risk management, prudential regulation and supervision, large capital flows can easily lead to serious financial, banking or currency crises. A number of recent crises, like those in Ea st Asia, Mexico, Russia, Brazil and Turkey (described, for example, in IMF (2001)), and, to some extent, the Argentinean episode of late 2001, early 2002, have demonstrated the potential risks associated with financial and capital flows liberalization. Central and Eastern Europe has a somewhat different experience, when compared to other emerging regions, concerning the financial liberalization process, as the process there seems to have been much less crisis-prone than in, for instance, Asia or Latin America. This maybe, at least partially, because the current high degree of external and financial liberalization in the Central Eastern European countries (CEECs), beyond questions of economic allocative efficiency, must be understood in terms of the process of Accession to the European Union. The EU integration process implies legally binding, sweeping liberalization measures-not only capital account liberalization, but investment by EU firms in the domestic financial services, and the maintenance of a competitive domestic environment, giving this financial liberalization process strong external incentives (and constraints). Those measures were implemented parallel to the development of a highly sophisticated regulatory and supervis ory structure, again based on EU standards. This whole process happened also with the EUs technical and financial support, through specific programs-like the PHARE one, for these so-called Accession, and the TACIS, for the former Soviet Union ones- and direct assistance from EU institutions, like the European Commission, the European Parliament and the European Central Bank (also, on a very early stage of the transition process, the influence of the IMF in setting up policies and institutions in several countries in the region-an intervention widely considered to haven been successful-was important: see Hallerberg et al., 2002). Additionally, EU membership seems to act as an anchor to market expectations (see Vinhas de Souza and Hà ¶lscher, 2001), limiting the possibilities of self- fulfilling financial crises and regional contagion (see Linne, 1999), which had the observed devastating effects in both Asia and Latin America (even a major event, like the Russian collapse of 1998, had very reduced regional side effects). Several regional episodes of financial systems instability did happen (see Vinhas de Souza, 2002(a) and Vinhas de Souza, 2002(b)), but none with the prolonged negative consequences observed in other region (which was also due to the effective national policy actions undertaken after those episodes). This studys main aim is to expand the Kaminsky and Schmukler database (see Kaminsky and Schmukler, 2003), from now on indicated as KS, to include the Accession and Acceding Countries from Eastern Europe (namely, for Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania , Slovakia and Slovenia). In their original work, KS build an extensive database of external and financial liberalization, which includes both developed countries and countries from emerging regions (but not from Eastern Europe). With that, they create different indexes of liberalization (capital account, banking and stock markets: see Table I below) and using them individually and in an aggregate fashion, test for the effects and causality of this process on financial and real volatility, for the existence of differences between regions, and for the effects of the ordering of the liberalization process. One underlying hypotheses of this work is that the existing regulatory and institutional framework in Eastern Europe, plus a more sustainable set of macro policies, played an important role in enabling liberalization to largely deliver the welfare enhancing outcomes that it is supposed to. Such an â€Å"anchoring role of the European Union in the CEECs, through the process of EU membership, and through the effective imposition of international standards of financial supervision and regulation, may indicate that, beyond multilateral organizations like the IMF or the OECD, a greater, pro-active regional stabilizing role in emerging markets by regional actors, for instance, the United States, or by some regional sub-grouping, like Mercosur, may also be welfare enhancing for other â€Å"emerging regions. 2. CAPITAL ACCOUNT The achieving of capital account liberalization happened rather swiftly in most of the countries in our sample: by the mid 1990s, all bar Bulgaria and Romania had been declared Article VIII compliant (for those two countries, this happened in 1998: see Table II below). One of the main driving forces behind this was the process of European Integration, for which external liberalization is a pre-requisite: in the early to mid-1990s, all the countries had signed Association Agreements with the European Union (frequently preceded by trade liberalization agreements with the EU, also called â€Å"Europe trade agreements, usually with years given to the countries to prepare for their full implementation) and formally applied for EU membership. Another additional factor supporting liberalization was IMF and OECD membership: four of the larger countries in our sample became OECD members during the second half of the 1990s. Another factor to be considered, is the endogenous decision process to liberalize in a sustainable fashion. 3. BANKING SECTOR Financial integration, in the form of the opening up the banking sector to foreign banks, is seen as being positive, on a micro level, as foreign banks are usually better capitalized and more efficient than their domestic counterparts (of course, the domestic banking sector eventually catches-up: for an indication of this process at the ACs, see, among others, Tomova et al., 2003). Also from a macroeconomic perspective, financial integration maybe positive for the Eastern European countries, both for long run growth and, as there are indications that foreign banks do not contract either their credit supply nor their deposit base, in helping to smooth the cycle (see de Haas and Lelyveld, 2003: they find some indication that this is linked to the better capitalization base and prudential ratios, as better capitalized domestic banks behave similarly to foreign banks). Given the bank-centered nature of virtually all the financial systems of the future Member States, this is particularly important for them. In most of the member states, the initial stage of the creation of the two-tier banking system, modeled on the Western European â€Å"universal bank system, was characterized by rather liberal licensing practices and limited supervision policies (aimed at the fast creation of a de novo commercial, private banking sector: see Fleming et al., 1996, Balyozov, 1999, Enoch et al., 2002, Sà ¶rg et al., 2003). This caused a mushrooming of new banks in those countries in the early 1990s. Parallel to this, a series of banking crises, of varied proportions, affected most of those de novo banking systems, due to this lax institutional framework, inherited fragilities from the command economy period (the political need to support state-owned, inefficient industries, with the consequent accumulation of bad loans and also the financing of budget deficits), macroeconomic instability, risky expansion and investment strategies and also sheer inexperience, both from the investor s and from regulators. Progressively, the re-capitalization, privatization and internationalization of the banking system (mostly into the hands of EU financial conglomerates), coupled with the implementation of a more robust, EU-modeled institutional framework, did away with most of those problems. Two of the worst cases where the set of Baltic banking crises and the Bulgarian episode, which are described in more detail below. Other smaller banking crises happened in Estonia in 1994 and 1998, and in Latvia in 1994. Caprio and Klingebiel, 2003, report smaller episodes of â€Å"financial sector distress in the Czech Republic (94-95), Hungary (93), Poland (91-93), Romania (98-00), Slovakia (97) and Slovenia (92-94). The initial proliferation of banks was, quite naturally, followed by a process of consolidation and strengthening-parallel to the privatization of the remnant state-owned components of the financial system- of the banking sector in most of those economies (in Bulgaria, from 81 banks in 1992 to 35 in 2001, in the Czech Republic from 55 in 1995 to 38 in 2001, Estonia, from 42 in 1992 to 7 currently, while Hungary had 33 banks in 2002, showing only a very slight decrease from the early 1990s, Latvia from 56 in 1994 to 23, Lithuania from 27 in 1993 to 13, in Poland from 8 1 in 1995 to 71 in 2001, in Romania from 45 in 1998 to 41 in 2001, in Slovakia from 22 in 2000 to 19 in 2001, and in Slovenia, where the number fell from 25 to 21 during 2001 alone). This consolidation process was frequently led by foreign companies, which now hold the majority of the assets of the banking system in virtually all of them-contrary to the situation in the current EU Member States-bar Slovenia. This process now has a component of regional expansion of the Eastern European banks themselves, or, more precisely in most cases, the regional expansion of Western banks via some of their locally-owned subsidiaries (see Sà ¶rg et al., 2003, ibid). The share of banking assets to GDP, nevertheless, is still far below the Euro area average (which stood at around 265% of GDP by end 2001), compared with 47% in Bulgaria, 136% in the Czech Republic, 72% in Estonia and Latvia, 32% in Lithuania, 63% in Poland, 60% in Hungary, 30% in Romania, 96% in Slovakia and 94% in Slovenia (data also for 2001). Another peculiar feature of the banking system in the region is that foreign currency lending -usually euro-denominated-to residents is very high, especially in the Balti c republics: with 80% of total loans in Estonia, 56% in Latvia and 61% in Lithuania. Also, the Baltic countries have substantial shares of deposits by non-residents, with over 10% in Estonia and Lithuania and close to 5% in Latvia (Latvia, with its close trading ties to Russia, has a particular strategy of selling itself as a stable financial services center to CIS depositors: see IMF, 2003(b), ibid). The supervision system has also substantially improved, and, following recent international-and EU- best practice, is now centered in independent universal supervisory agencies in the most advanced of those countries (Reininger et al., 2002, ibid., estimate that the formal regulatory environment for the Czech Republic, Hungary and Poland is actually above the EU, and that its actual enforcement level is at its average;Liive, 2003, gives a description of the Estonian experience that culminated in the creation of the EFSA -Estonian Financial Supervisory Authority- in January 2002). 3.1 BANKING CRISES IN EASTERN EUROPE The Baltic bank crises were, to different degrees, linked to liquidity difficulties related tolerations with Russia (in the November 1992 Estonian case, by the freezing of assets held by some Estonian banks in their former Moscow headquarters, while the Latvian and Lithuanian episodes of, respectively, March and December 1995, were caused by the drying-up of lucrative trade-financing opportunities with Russia, whose export commodities, at that time, were still below world price levels) and regulatory tightening (Latvia, Lithuania), compounded by the elimination of credit opportunities with the implementation of the Estonian and Lithuanian CBAs (Currency Board Arrangements). In Lithuania, as in Bulgaria, the financing of the budget deficit also played a role. In the Estonian and Latvian cases, around 40% of the assets of the banking system where compromised, in the Lithuanian and Bulgarian cases, around a third. The Bulgarian 1996-1997 crisis eliminated a third of its banking sector, and led the country to hyperinflation (reaching over 2000% in March 1997, see Yotzov, 2002). Its roots lie in the political instability that preceded it (which, on its turn, led to inadequate real sector reform, with state-owned, loss making enterprises being financed via the budget deficit or through arrears with the, at the time, still mostly state-owned part banking sector: those arrears were, in turn, partially monetized by the Bulgarian National Bank -BNB- and the largest state bank, the State Savings Bank -SSB). Periodic foreign exchange crises (March 1994, February 1997) and bank runs (late1995, late 1996, early 1997) were part of this picture. The implementation of tighter supervisory procedures during 1996 (giving the BNB the power to close insolvent banks), and a tightening of policy actually led to more bank runs. A caretaker government in February 1997 (before a newly elected government took power in May) paved the way to longer lasting reform and the implementation of t he CBA, with its tighter budget constraints towards both the government and the banking sector. This reform process happened with the support from multilateral institutionsamely, (namely the IMF). 4. STOCK MARKETS The existence of stock markets is assumed to be beneficial for economic performance. In principle, it provides a way for companies to raise capital at lower costs than through simple banking intermediation, and because it is not as restricted a source of capital as internal financing. Also, it is assumed that the existence of alternative modes of finance may reduce the likelihood of credit crunches caused by problems with the banking sector (see Greenspan, 2000). Additionally, the existence of external ownership is (or was, given the recent problems with market-based governance in the US and the EU, and the shift towards a more regulated environment) assumed to provide better governance for the management of firms. The majority of economic analyses seem to support the position that a diversified financing mix is positive for economic growth and stability. As described in the previous section, all the financial sectors in the Member States are bank-centered, with stock markets playing marginal roles in most of them (and, in some, a very marginal role: in Bulgaria, Slovakia and Romania, their average market capitalization in GDP terms is below 5%: see Figure I below). All of these countries had (re-)established stock markets by the mid-90s (see Table III above). About half of the future Member States used them to drive the initial process of re-privatization, either via mass issues of voucher certificates for residents (the most famous case of this strategy was the Czech Republic), or via IPOs (Initial Public Offerings) re-privatization processes, to lock-in domestic and foreign strategic investors (see Claessens at al., 2000). In the voucher-driven privatization, the initial large number of investors and traded stocks in those stock markets was soon concentrated in a rather limited number of institutional investors-domestic and foreign- and â€Å"blue chip stocks. In the IPO-driven markets, the number of stocks and investors actually tended to increase with time, albeit from a rather concentrated base. Even in the largest ones, nevertheless, market capitalization, as a GDP share, was and remains rather low (see Figure I below), and far below the EU average (around 72% of GDP). Only in the Czech Republic, Estonia, Hungary and Slovenia the average market capitalization is above a 20% GDP share, while in Romania is below 1% in several years. Also, the average market turnover is equally below the one observed in comparable EU economies. Similarly to what is observed in the banking sector, the initial regulatory environment was deliberately lax, and the regulators were plagued by much the same problems of inexperience and limited number of staff and resources. This does not mean that domestic agents in those countries lack access to the financial services supposed to be provided by stock markets: the very process of opening up, the increase in cross-border trade in financial services, the harmonization of rules for capital trading with the EU (including the ongoing efforts of the Lamfalussy Committee towards a single European market for securities: according to the current proposal, small and medium size firms would be able to use a simplified prospectus valid throughout the EU and choose the country of its approval), plus the development of information technology, all imply that is not actually necessary-nor economically optimal, given economies of scale-for each individual country to have its own separate stock market. One must also recall that the current national stock markets in the mature developed economies are themselves the result of process of consolidation-and closing-of smaller regional stock markets (as was observed in Bulgari a in the early 1990s), which still today coexist with larger, dominant national stock exchanges even in some mature markets, like Germany and the US. Nevertheless, the observed tendency of domestic larger companies, with presumed better growth prospects, to list abroad (see Table IV below), due to the obvious cost and liquidity advantages of the larger international stock markets, does seems, on balance, to deprive those stock markets of liquidity (see Claessens at al., 2003). On the other hand, nonresidents seem to play a major role in most of those markets (accounting for 77% of the capitalization in Estonia, 70% in Hungary and half of the free-float capitalization in Lithuania). All the specific questions described above concerning the way those stock exchanges were founded and their later developments, plus their relative smallness and shallowness, affect the dynamics of their stock market indexes (SMI), and are clearly reflected by them (as one may see in Figure II, below). This, coupled with the rather limited duration of the series, may affect their adequacy as proxies of financial cycles. Source: Datastream, modified by the authors. The price indexes here were converted to US Dollars and re-based to a common reference period were they equal 100, May of 1998. The country codings are as described in the Annexes. 5. ESTIMATED INDEXES The construction of the index for this new sample of countries was the core of this work. A comprehensive effort was done to crosscheck the information collected from papers and publications with national sources. Below we present the estimated monthly index, for the period January 1990 to June 2003 (see Figure III). The base data for its construction was collected from IMF and EBRD publications, and then exhaustively verified both with national sources and with works written about the individual countries and the region. This is an index that falls with liberalization, where maximum liberalization equals one and minimum three (in this sense, one could actually see it as an index of financial repression). As an additional robustness check, the year-end value of the index here constructed was regressed on the combined EBRDs yearly indexes of banking sector reform and non-banking financial sector reform. The results from a panel regression with the index constructed here on the LHS and the EBRD index on the RHS yield a coefficient of .60, and correlations among the individual country- specific index series range from -0.91 to -0.35. As one may see from Figure III above, the process of integration and liberalization was almost continuous throughout the 1990s and early 2000s. The spikes in the â€Å"Full Liberalization Index in the early 1990s do not indicate reversals: the merely reflect the entry into the sample of the newly independent Baltic republics. As former members of the Soviet Union, they â€Å"enter the world as highly closed economies, but those countries introduced liberalization reforms almost immediately from the start. After this, a slight increasing trend, that does reflect a mild liberalization reversal, is observed, starting mid-1994 and lasting until early 1997, from when a continuous liberalization trend is observed. Noteworthy here is the fact that virtually none of the obvious candidates for a reversal of liberalization (the 1997 Asian Crisis, the collapse of the Czech monetary arrangement in 1997, the collapse of the Bulgarian monetary arrangement in 1996/97, the 1998 Russian Crisis, the 1999-2001 oil price shocks-as all those economies are highly dependent of imported energy sources) seems to have driven these mild liberalization reversals. Comparing the Full Index constructed here with the one constructed by KS, for similar time samples, one may observe that the ACs start substantially below the average level of other emerging markets- i.e., they are more liberalized, but both the â€Å"entry of the initially less liberalized former Soviet republics, plus continuous liberalization efforts in the emerging market KS set reverse this situation. A similar liberalization reversal trend in both the ACs and the merging market set is observed from early 1994, but it is actually slightly stronger on the ACs sample, until its reversal in 1996. By the end of our sample, the ACs are clearly below the final value for the emerging set in KSs sample. This sort of remarkably fast pattern of the ACs â€Å"leapfroging towards best international practice is also observed in several types of institutional frameworks, like, for instance, monetary policy institutions and instruments (see Vinhas de Souza and Hà ¶lscher, 2001): a process that virtually took decades for Western central banks was compressed in a half a dozen years in the Future Member States. Nevertheless, by the end of the sample, both emerging and ACs are still above the level of mature, developed economies. Analyzing the individual components of the index (see Figure V), one may see that, abstracting again from the initial spikes in the index, which are, as explained above, caused by the addition of new countries to the sample, the 1994/1997 reversal of liberalization was essentially driven by the Financial Sector liberal ization component. As will become clear with the country specific analysis below, this was related, in most cases, to-and here it must be stressed that those were rather limited reversals-to the banking crises that plagued several countries in our sample in the early to mid 1990s. Comparing now the individual components of the Full Index constructed here with the ones from KS, again for emerging and mature economies, it becomes clear that the reversals observed in Figure IV were driven by different sources in the emerging set (increase in capital account restrictions) and ACs set (financial sector): see Figure VI. All the indexes for mature economies are, again as one would expect, substantially lower. One could, in principle, aggregate the countries in our sample in three different groups: rapid liberalizers (the ones that followed a â€Å"big bang early approach, without major reversals: Bulgaria, Estonia, Latvia, Lithuania), consistent liberalizers (the ones that followed a more delayed path, but also without major roll backs: the Czech Republic, Hungary, Poland) and cautious liberalizers (the ones whose liberalization path was either openly inconsistent or downright mistrustful: Romania, Slovakia, Slovenia). 5.1 COUNTRY-BY-COUNTRY LIBERALIZATION PATH. In Bulgaria, virtually no sign of a liberalization reversal is observed, even during the substantial stress experienced by the country during the banks runs of 1996/97 and the ultimate collapse of the floating regime in 1997 (beyond ad hoc restrictive measures adopted by the banks themselves). As in most of the countries in my sample, the stock market is the last one to liberalize, but does so in a faster fashion. Nevertheless, this is in most cases a data quasi-artifact that arises from the later (re-)constitution of the stock exchange itself. In the Czech Republic, a limited reversal of the financial sector liberalization is observed from late1995 to late 1997, namely, via the imposition of limits on banks short-term open positions towards on-residents, as a way to limit the exposure of the financial sector to the inflows brought about by the hard peg and the potential gains with interest rate differentials. After the peg was replaced by the current float regime, this restriction i s duly removed. In Estonia, again, virtually no sign of a liberalization reversal is observed, even during the bank runs of the early 1990s, the unwinding of the 1997 bubble, nor during the 1998 Russian crisis. Again, the stock market is the last one to liberalize, but one more time, this arises from the later constitution of the stock exchange. In Hungary, also no signs of any liberalization reversal are observed. Hungary was an early reformer, introducing some liberalization measures already during the late 1980s, but the profile of its reform path is much more discounted through time, as compared, for instance, with the Baltic countries. In Latvia, a rather limited reversal of the financial sector liberalization is observed from mid 1996all the way to early 2003: resulting from the 1996 banking crisis, specific aggregate lending limits to regions (i.e., limits on exposure to non-OECD countries, bar the other Baltic republics) are imposed. In Lithuania, a limited reversal of the f inancial sector liberalization is observed from early 1998, also resulting from the experienced banking crisis: reserve requirements on deposits on foreign accounts by non-resident are introduced; In Poland, no signs of any liberalization reversal are observed. Similarly to Hungary, the profile of its reform path is much more discounted through time; In Romania, no signs of any liberalization reversal are observed, but the reform path is a decidedly slow and cautious one: at the end of the sample, it has the highest (i.e., less liberalized) score for the â€Å"Full Index of all countries in the sample: 1.60 (see Table V). In Slovakia, no signs of any liberalization reversal are observed. Here, the reform path is characterized by a broad stagnation since the Czechoslovak partition till 1998/1999, when, after a change in the political leadership, reforms are re-started, reaching after that levels similar to the other â€Å"Vise grad countries in a rather quick fashion. In Slovenia, one of the most consistently cautious Member States concerning the advantages of integration and liberalization, reversals are indeed observed in all three indexes, since early 1995in the capital account and financial sector components, and from early 1997 in the stock market one. Since early 1999, with the entry in effect of the EU Association Agreement, across-the-board further (re)liberalization measures have been introduced. 6. FINANCIAL CYCLES AND LIBERALIZATION The financial cycle coding which is used by KS defines cycles as a at least twelve month-long strictly downwards (upwards) movement, followed by a equally upwards (downwards) 12-month movement from the through (peak) of a stock market index, measured in USD, as they should reflect returns from the point of view of an international investor. As described in the stock market section of this work, one must be warned that there are specific factors in the countries in our sample that may affect the effectiveness of a stock market index as an adequate proxy of financial cycles, at least for the sample here considered. Beyond that, these series have a rather limited time extension (our sample covers the 01:1990-06:2003 period). Adapting KS criteria to the limited time dimension of our sample, we use a less stringent definition of â€Å"cycle, the same algorithm as above but with a 3-month window for the cycle (Edwards et al., 2003, use a 6-month window). With this we get 118 observations for all countries in our sample. Of these 118 cycles, 61 are upward, with an average of 7.51 months duration, and 57 are downward, with an average of 8.20 months of duration. 7. CONCLUSION The main aim of this paper was to extend the index developed by Kaminsky and Schmukler, 2003, for a specific sample of countries, namely, the previously centrally planned economies from Central and Eastern Europe, and to perform a similar analysis on them. Our results do lend some support to the basic assumption of this study: in spite of all the limitations of the time series used (their shortness, the fact that they were buffeted by several country-specific and common shocks), a re-estimation of KSs core regressions strongly supports the notion that financial liberalization does generate benefits both in the short and in the long run, measured via the extension of the amplitude of upward cycles and its reduction for downward cycles of stock market indexes. Importantly, these results diverge from KS, as in their work â€Å"emerging markets experience a relative short run increase in the amplitude of downward cycles. Another noteworthy feature is that only minor liberalization rever sals, led by the financial sector component, were observed in the aggregate index. Also, those reversals do not seem to be driven by â€Å"contagion from shocks in other emerging markets (like the Asian or Russian crisis), but reflect country-specific shocks. When considering the individual components of the index separately, again signs of minor reversals in financial sector liberalization are observed, related to temporary reactions to the several banking crisis observed in the region. Concerning the importance of institutions and of the EU Accession, this papers initial assumption was that the mostly positive results above would come about due to the anchoring of expectation provided by the perspective of entry into the EU already by mid-2004 (or 2007, in the case of Bulgaria and Romania) for the countries here analyzed, and by the imposition of a more robust macro and institutional framework by the requirements of the Accession process itself. Signs of this are not found in the KS regressions, perhaps because the liberalization index itself captures the effects of the EU Accession process. Finally, using a different framework than KSs to assess the affects of liberalization on financial, real and nominal volatility, most of the econometric results seem to support the previous ones, but they seem to indicate that the capital account liberalization is the element that most consistently and significantly reduces volatility. On this final section, the majority the econometric results seem to support some specific role for the EU Enlargement process in reducing volatility. Benefits of Financial Liberalisation Benefits of Financial Liberalisation A EUROPEAN POLICY ABSTRACT: This paper extends to test if the short and in the long run. Weak indica- the same short-run increase in cyclical tions are found that this may happen par- volatility arising from financial integration tially due to the anchoring of expectations is observed in this specific sample of â€Å"emerg-provided by the EU Accession, and to the ing markets. This work finds signs that, more robust institutional framework contrary to other emerging markets, this imposed by this process onto the countries in does not happen: for the future Member question. States, financial integration, similarly to the KEY WORDS: Enlargement, European outcome observed in mature market Union, financial liberalization, booms, 81 economies, reduces cyclical volatility both in busts, cycles, volatility. 1. INTRODUCTION Financial and capital flows liberalization can play a fundamental role in increasing growth and welfare. Typically, emerging or developing economies seek foreign savings to solve the inter-temporal savings-investment problem. On the other hand, current account surplus countries seek opportunities to invest their savings. To the extent that capital flows from surplus to deficit countries are well intermediated and, therefore, put to the most productive use, they increase welfare. Liberalization can, however, also be dangerous, as has been witnessed in many past and recent financial, currency and banking crises. It can make countries more vulnerable to exogenous shocks. In particular, if serious macroeconomic imbalances exist in a recipient country, and if the financial sector is weak, be it in terms of risk management, prudential regulation and supervision, large capital flows can easily lead to serious financial, banking or currency crises. A number of recent crises, like those in Ea st Asia, Mexico, Russia, Brazil and Turkey (described, for example, in IMF (2001)), and, to some extent, the Argentinean episode of late 2001, early 2002, have demonstrated the potential risks associated with financial and capital flows liberalization. Central and Eastern Europe has a somewhat different experience, when compared to other emerging regions, concerning the financial liberalization process, as the process there seems to have been much less crisis-prone than in, for instance, Asia or Latin America. This maybe, at least partially, because the current high degree of external and financial liberalization in the Central Eastern European countries (CEECs), beyond questions of economic allocative efficiency, must be understood in terms of the process of Accession to the European Union. The EU integration process implies legally binding, sweeping liberalization measures-not only capital account liberalization, but investment by EU firms in the domestic financial services, and the maintenance of a competitive domestic environment, giving this financial liberalization process strong external incentives (and constraints). Those measures were implemented parallel to the development of a highly sophisticated regulatory and supervis ory structure, again based on EU standards. This whole process happened also with the EUs technical and financial support, through specific programs-like the PHARE one, for these so-called Accession, and the TACIS, for the former Soviet Union ones- and direct assistance from EU institutions, like the European Commission, the European Parliament and the European Central Bank (also, on a very early stage of the transition process, the influence of the IMF in setting up policies and institutions in several countries in the region-an intervention widely considered to haven been successful-was important: see Hallerberg et al., 2002). Additionally, EU membership seems to act as an anchor to market expectations (see Vinhas de Souza and Hà ¶lscher, 2001), limiting the possibilities of self- fulfilling financial crises and regional contagion (see Linne, 1999), which had the observed devastating effects in both Asia and Latin America (even a major event, like the Russian collapse of 1998, had very reduced regional side effects). Several regional episodes of financial systems instability did happen (see Vinhas de Souza, 2002(a) and Vinhas de Souza, 2002(b)), but none with the prolonged negative consequences observed in other region (which was also due to the effective national policy actions undertaken after those episodes). This studys main aim is to expand the Kaminsky and Schmukler database (see Kaminsky and Schmukler, 2003), from now on indicated as KS, to include the Accession and Acceding Countries from Eastern Europe (namely, for Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania , Slovakia and Slovenia). In their original work, KS build an extensive database of external and financial liberalization, which includes both developed countries and countries from emerging regions (but not from Eastern Europe). With that, they create different indexes of liberalization (capital account, banking and stock markets: see Table I below) and using them individually and in an aggregate fashion, test for the effects and causality of this process on financial and real volatility, for the existence of differences between regions, and for the effects of the ordering of the liberalization process. One underlying hypotheses of this work is that the existing regulatory and institutional framework in Eastern Europe, plus a more sustainable set of macro policies, played an important role in enabling liberalization to largely deliver the welfare enhancing outcomes that it is supposed to. Such an â€Å"anchoring role of the European Union in the CEECs, through the process of EU membership, and through the effective imposition of international standards of financial supervision and regulation, may indicate that, beyond multilateral organizations like the IMF or the OECD, a greater, pro-active regional stabilizing role in emerging markets by regional actors, for instance, the United States, or by some regional sub-grouping, like Mercosur, may also be welfare enhancing for other â€Å"emerging regions. 2. CAPITAL ACCOUNT The achieving of capital account liberalization happened rather swiftly in most of the countries in our sample: by the mid 1990s, all bar Bulgaria and Romania had been declared Article VIII compliant (for those two countries, this happened in 1998: see Table II below). One of the main driving forces behind this was the process of European Integration, for which external liberalization is a pre-requisite: in the early to mid-1990s, all the countries had signed Association Agreements with the European Union (frequently preceded by trade liberalization agreements with the EU, also called â€Å"Europe trade agreements, usually with years given to the countries to prepare for their full implementation) and formally applied for EU membership. Another additional factor supporting liberalization was IMF and OECD membership: four of the larger countries in our sample became OECD members during the second half of the 1990s. Another factor to be considered, is the endogenous decision process to liberalize in a sustainable fashion. 3. BANKING SECTOR Financial integration, in the form of the opening up the banking sector to foreign banks, is seen as being positive, on a micro level, as foreign banks are usually better capitalized and more efficient than their domestic counterparts (of course, the domestic banking sector eventually catches-up: for an indication of this process at the ACs, see, among others, Tomova et al., 2003). Also from a macroeconomic perspective, financial integration maybe positive for the Eastern European countries, both for long run growth and, as there are indications that foreign banks do not contract either their credit supply nor their deposit base, in helping to smooth the cycle (see de Haas and Lelyveld, 2003: they find some indication that this is linked to the better capitalization base and prudential ratios, as better capitalized domestic banks behave similarly to foreign banks). Given the bank-centered nature of virtually all the financial systems of the future Member States, this is particularly important for them. In most of the member states, the initial stage of the creation of the two-tier banking system, modeled on the Western European â€Å"universal bank system, was characterized by rather liberal licensing practices and limited supervision policies (aimed at the fast creation of a de novo commercial, private banking sector: see Fleming et al., 1996, Balyozov, 1999, Enoch et al., 2002, Sà ¶rg et al., 2003). This caused a mushrooming of new banks in those countries in the early 1990s. Parallel to this, a series of banking crises, of varied proportions, affected most of those de novo banking systems, due to this lax institutional framework, inherited fragilities from the command economy period (the political need to support state-owned, inefficient industries, with the consequent accumulation of bad loans and also the financing of budget deficits), macroeconomic instability, risky expansion and investment strategies and also sheer inexperience, both from the investor s and from regulators. Progressively, the re-capitalization, privatization and internationalization of the banking system (mostly into the hands of EU financial conglomerates), coupled with the implementation of a more robust, EU-modeled institutional framework, did away with most of those problems. Two of the worst cases where the set of Baltic banking crises and the Bulgarian episode, which are described in more detail below. Other smaller banking crises happened in Estonia in 1994 and 1998, and in Latvia in 1994. Caprio and Klingebiel, 2003, report smaller episodes of â€Å"financial sector distress in the Czech Republic (94-95), Hungary (93), Poland (91-93), Romania (98-00), Slovakia (97) and Slovenia (92-94). The initial proliferation of banks was, quite naturally, followed by a process of consolidation and strengthening-parallel to the privatization of the remnant state-owned components of the financial system- of the banking sector in most of those economies (in Bulgaria, from 81 banks in 1992 to 35 in 2001, in the Czech Republic from 55 in 1995 to 38 in 2001, Estonia, from 42 in 1992 to 7 currently, while Hungary had 33 banks in 2002, showing only a very slight decrease from the early 1990s, Latvia from 56 in 1994 to 23, Lithuania from 27 in 1993 to 13, in Poland from 8 1 in 1995 to 71 in 2001, in Romania from 45 in 1998 to 41 in 2001, in Slovakia from 22 in 2000 to 19 in 2001, and in Slovenia, where the number fell from 25 to 21 during 2001 alone). This consolidation process was frequently led by foreign companies, which now hold the majority of the assets of the banking system in virtually all of them-contrary to the situation in the current EU Member States-bar Slovenia. This process now has a component of regional expansion of the Eastern European banks themselves, or, more precisely in most cases, the regional expansion of Western banks via some of their locally-owned subsidiaries (see Sà ¶rg et al., 2003, ibid). The share of banking assets to GDP, nevertheless, is still far below the Euro area average (which stood at around 265% of GDP by end 2001), compared with 47% in Bulgaria, 136% in the Czech Republic, 72% in Estonia and Latvia, 32% in Lithuania, 63% in Poland, 60% in Hungary, 30% in Romania, 96% in Slovakia and 94% in Slovenia (data also for 2001). Another peculiar feature of the banking system in the region is that foreign currency lending -usually euro-denominated-to residents is very high, especially in the Balti c republics: with 80% of total loans in Estonia, 56% in Latvia and 61% in Lithuania. Also, the Baltic countries have substantial shares of deposits by non-residents, with over 10% in Estonia and Lithuania and close to 5% in Latvia (Latvia, with its close trading ties to Russia, has a particular strategy of selling itself as a stable financial services center to CIS depositors: see IMF, 2003(b), ibid). The supervision system has also substantially improved, and, following recent international-and EU- best practice, is now centered in independent universal supervisory agencies in the most advanced of those countries (Reininger et al., 2002, ibid., estimate that the formal regulatory environment for the Czech Republic, Hungary and Poland is actually above the EU, and that its actual enforcement level is at its average;Liive, 2003, gives a description of the Estonian experience that culminated in the creation of the EFSA -Estonian Financial Supervisory Authority- in January 2002). 3.1 BANKING CRISES IN EASTERN EUROPE The Baltic bank crises were, to different degrees, linked to liquidity difficulties related tolerations with Russia (in the November 1992 Estonian case, by the freezing of assets held by some Estonian banks in their former Moscow headquarters, while the Latvian and Lithuanian episodes of, respectively, March and December 1995, were caused by the drying-up of lucrative trade-financing opportunities with Russia, whose export commodities, at that time, were still below world price levels) and regulatory tightening (Latvia, Lithuania), compounded by the elimination of credit opportunities with the implementation of the Estonian and Lithuanian CBAs (Currency Board Arrangements). In Lithuania, as in Bulgaria, the financing of the budget deficit also played a role. In the Estonian and Latvian cases, around 40% of the assets of the banking system where compromised, in the Lithuanian and Bulgarian cases, around a third. The Bulgarian 1996-1997 crisis eliminated a third of its banking sector, and led the country to hyperinflation (reaching over 2000% in March 1997, see Yotzov, 2002). Its roots lie in the political instability that preceded it (which, on its turn, led to inadequate real sector reform, with state-owned, loss making enterprises being financed via the budget deficit or through arrears with the, at the time, still mostly state-owned part banking sector: those arrears were, in turn, partially monetized by the Bulgarian National Bank -BNB- and the largest state bank, the State Savings Bank -SSB). Periodic foreign exchange crises (March 1994, February 1997) and bank runs (late1995, late 1996, early 1997) were part of this picture. The implementation of tighter supervisory procedures during 1996 (giving the BNB the power to close insolvent banks), and a tightening of policy actually led to more bank runs. A caretaker government in February 1997 (before a newly elected government took power in May) paved the way to longer lasting reform and the implementation of t he CBA, with its tighter budget constraints towards both the government and the banking sector. This reform process happened with the support from multilateral institutionsamely, (namely the IMF). 4. STOCK MARKETS The existence of stock markets is assumed to be beneficial for economic performance. In principle, it provides a way for companies to raise capital at lower costs than through simple banking intermediation, and because it is not as restricted a source of capital as internal financing. Also, it is assumed that the existence of alternative modes of finance may reduce the likelihood of credit crunches caused by problems with the banking sector (see Greenspan, 2000). Additionally, the existence of external ownership is (or was, given the recent problems with market-based governance in the US and the EU, and the shift towards a more regulated environment) assumed to provide better governance for the management of firms. The majority of economic analyses seem to support the position that a diversified financing mix is positive for economic growth and stability. As described in the previous section, all the financial sectors in the Member States are bank-centered, with stock markets playing marginal roles in most of them (and, in some, a very marginal role: in Bulgaria, Slovakia and Romania, their average market capitalization in GDP terms is below 5%: see Figure I below). All of these countries had (re-)established stock markets by the mid-90s (see Table III above). About half of the future Member States used them to drive the initial process of re-privatization, either via mass issues of voucher certificates for residents (the most famous case of this strategy was the Czech Republic), or via IPOs (Initial Public Offerings) re-privatization processes, to lock-in domestic and foreign strategic investors (see Claessens at al., 2000). In the voucher-driven privatization, the initial large number of investors and traded stocks in those stock markets was soon concentrated in a rather limited number of institutional investors-domestic and foreign- and â€Å"blue chip stocks. In the IPO-driven markets, the number of stocks and investors actually tended to increase with time, albeit from a rather concentrated base. Even in the largest ones, nevertheless, market capitalization, as a GDP share, was and remains rather low (see Figure I below), and far below the EU average (around 72% of GDP). Only in the Czech Republic, Estonia, Hungary and Slovenia the average market capitalization is above a 20% GDP share, while in Romania is below 1% in several years. Also, the average market turnover is equally below the one observed in comparable EU economies. Similarly to what is observed in the banking sector, the initial regulatory environment was deliberately lax, and the regulators were plagued by much the same problems of inexperience and limited number of staff and resources. This does not mean that domestic agents in those countries lack access to the financial services supposed to be provided by stock markets: the very process of opening up, the increase in cross-border trade in financial services, the harmonization of rules for capital trading with the EU (including the ongoing efforts of the Lamfalussy Committee towards a single European market for securities: according to the current proposal, small and medium size firms would be able to use a simplified prospectus valid throughout the EU and choose the country of its approval), plus the development of information technology, all imply that is not actually necessary-nor economically optimal, given economies of scale-for each individual country to have its own separate stock market. One must also recall that the current national stock markets in the mature developed economies are themselves the result of process of consolidation-and closing-of smaller regional stock markets (as was observed in Bulgari a in the early 1990s), which still today coexist with larger, dominant national stock exchanges even in some mature markets, like Germany and the US. Nevertheless, the observed tendency of domestic larger companies, with presumed better growth prospects, to list abroad (see Table IV below), due to the obvious cost and liquidity advantages of the larger international stock markets, does seems, on balance, to deprive those stock markets of liquidity (see Claessens at al., 2003). On the other hand, nonresidents seem to play a major role in most of those markets (accounting for 77% of the capitalization in Estonia, 70% in Hungary and half of the free-float capitalization in Lithuania). All the specific questions described above concerning the way those stock exchanges were founded and their later developments, plus their relative smallness and shallowness, affect the dynamics of their stock market indexes (SMI), and are clearly reflected by them (as one may see in Figure II, below). This, coupled with the rather limited duration of the series, may affect their adequacy as proxies of financial cycles. Source: Datastream, modified by the authors. The price indexes here were converted to US Dollars and re-based to a common reference period were they equal 100, May of 1998. The country codings are as described in the Annexes. 5. ESTIMATED INDEXES The construction of the index for this new sample of countries was the core of this work. A comprehensive effort was done to crosscheck the information collected from papers and publications with national sources. Below we present the estimated monthly index, for the period January 1990 to June 2003 (see Figure III). The base data for its construction was collected from IMF and EBRD publications, and then exhaustively verified both with national sources and with works written about the individual countries and the region. This is an index that falls with liberalization, where maximum liberalization equals one and minimum three (in this sense, one could actually see it as an index of financial repression). As an additional robustness check, the year-end value of the index here constructed was regressed on the combined EBRDs yearly indexes of banking sector reform and non-banking financial sector reform. The results from a panel regression with the index constructed here on the LHS and the EBRD index on the RHS yield a coefficient of .60, and correlations among the individual country- specific index series range from -0.91 to -0.35. As one may see from Figure III above, the process of integration and liberalization was almost continuous throughout the 1990s and early 2000s. The spikes in the â€Å"Full Liberalization Index in the early 1990s do not indicate reversals: the merely reflect the entry into the sample of the newly independent Baltic republics. As former members of the Soviet Union, they â€Å"enter the world as highly closed economies, but those countries introduced liberalization reforms almost immediately from the start. After this, a slight increasing trend, that does reflect a mild liberalization reversal, is observed, starting mid-1994 and lasting until early 1997, from when a continuous liberalization trend is observed. Noteworthy here is the fact that virtually none of the obvious candidates for a reversal of liberalization (the 1997 Asian Crisis, the collapse of the Czech monetary arrangement in 1997, the collapse of the Bulgarian monetary arrangement in 1996/97, the 1998 Russian Crisis, the 1999-2001 oil price shocks-as all those economies are highly dependent of imported energy sources) seems to have driven these mild liberalization reversals. Comparing the Full Index constructed here with the one constructed by KS, for similar time samples, one may observe that the ACs start substantially below the average level of other emerging markets- i.e., they are more liberalized, but both the â€Å"entry of the initially less liberalized former Soviet republics, plus continuous liberalization efforts in the emerging market KS set reverse this situation. A similar liberalization reversal trend in both the ACs and the merging market set is observed from early 1994, but it is actually slightly stronger on the ACs sample, until its reversal in 1996. By the end of our sample, the ACs are clearly below the final value for the emerging set in KSs sample. This sort of remarkably fast pattern of the ACs â€Å"leapfroging towards best international practice is also observed in several types of institutional frameworks, like, for instance, monetary policy institutions and instruments (see Vinhas de Souza and Hà ¶lscher, 2001): a process that virtually took decades for Western central banks was compressed in a half a dozen years in the Future Member States. Nevertheless, by the end of the sample, both emerging and ACs are still above the level of mature, developed economies. Analyzing the individual components of the index (see Figure V), one may see that, abstracting again from the initial spikes in the index, which are, as explained above, caused by the addition of new countries to the sample, the 1994/1997 reversal of liberalization was essentially driven by the Financial Sector liberal ization component. As will become clear with the country specific analysis below, this was related, in most cases, to-and here it must be stressed that those were rather limited reversals-to the banking crises that plagued several countries in our sample in the early to mid 1990s. Comparing now the individual components of the Full Index constructed here with the ones from KS, again for emerging and mature economies, it becomes clear that the reversals observed in Figure IV were driven by different sources in the emerging set (increase in capital account restrictions) and ACs set (financial sector): see Figure VI. All the indexes for mature economies are, again as one would expect, substantially lower. One could, in principle, aggregate the countries in our sample in three different groups: rapid liberalizers (the ones that followed a â€Å"big bang early approach, without major reversals: Bulgaria, Estonia, Latvia, Lithuania), consistent liberalizers (the ones that followed a more delayed path, but also without major roll backs: the Czech Republic, Hungary, Poland) and cautious liberalizers (the ones whose liberalization path was either openly inconsistent or downright mistrustful: Romania, Slovakia, Slovenia). 5.1 COUNTRY-BY-COUNTRY LIBERALIZATION PATH. In Bulgaria, virtually no sign of a liberalization reversal is observed, even during the substantial stress experienced by the country during the banks runs of 1996/97 and the ultimate collapse of the floating regime in 1997 (beyond ad hoc restrictive measures adopted by the banks themselves). As in most of the countries in my sample, the stock market is the last one to liberalize, but does so in a faster fashion. Nevertheless, this is in most cases a data quasi-artifact that arises from the later (re-)constitution of the stock exchange itself. In the Czech Republic, a limited reversal of the financial sector liberalization is observed from late1995 to late 1997, namely, via the imposition of limits on banks short-term open positions towards on-residents, as a way to limit the exposure of the financial sector to the inflows brought about by the hard peg and the potential gains with interest rate differentials. After the peg was replaced by the current float regime, this restriction i s duly removed. In Estonia, again, virtually no sign of a liberalization reversal is observed, even during the bank runs of the early 1990s, the unwinding of the 1997 bubble, nor during the 1998 Russian crisis. Again, the stock market is the last one to liberalize, but one more time, this arises from the later constitution of the stock exchange. In Hungary, also no signs of any liberalization reversal are observed. Hungary was an early reformer, introducing some liberalization measures already during the late 1980s, but the profile of its reform path is much more discounted through time, as compared, for instance, with the Baltic countries. In Latvia, a rather limited reversal of the financial sector liberalization is observed from mid 1996all the way to early 2003: resulting from the 1996 banking crisis, specific aggregate lending limits to regions (i.e., limits on exposure to non-OECD countries, bar the other Baltic republics) are imposed. In Lithuania, a limited reversal of the f inancial sector liberalization is observed from early 1998, also resulting from the experienced banking crisis: reserve requirements on deposits on foreign accounts by non-resident are introduced; In Poland, no signs of any liberalization reversal are observed. Similarly to Hungary, the profile of its reform path is much more discounted through time; In Romania, no signs of any liberalization reversal are observed, but the reform path is a decidedly slow and cautious one: at the end of the sample, it has the highest (i.e., less liberalized) score for the â€Å"Full Index of all countries in the sample: 1.60 (see Table V). In Slovakia, no signs of any liberalization reversal are observed. Here, the reform path is characterized by a broad stagnation since the Czechoslovak partition till 1998/1999, when, after a change in the political leadership, reforms are re-started, reaching after that levels similar to the other â€Å"Vise grad countries in a rather quick fashion. In Slovenia, one of the most consistently cautious Member States concerning the advantages of integration and liberalization, reversals are indeed observed in all three indexes, since early 1995in the capital account and financial sector components, and from early 1997 in the stock market one. Since early 1999, with the entry in effect of the EU Association Agreement, across-the-board further (re)liberalization measures have been introduced. 6. FINANCIAL CYCLES AND LIBERALIZATION The financial cycle coding which is used by KS defines cycles as a at least twelve month-long strictly downwards (upwards) movement, followed by a equally upwards (downwards) 12-month movement from the through (peak) of a stock market index, measured in USD, as they should reflect returns from the point of view of an international investor. As described in the stock market section of this work, one must be warned that there are specific factors in the countries in our sample that may affect the effectiveness of a stock market index as an adequate proxy of financial cycles, at least for the sample here considered. Beyond that, these series have a rather limited time extension (our sample covers the 01:1990-06:2003 period). Adapting KS criteria to the limited time dimension of our sample, we use a less stringent definition of â€Å"cycle, the same algorithm as above but with a 3-month window for the cycle (Edwards et al., 2003, use a 6-month window). With this we get 118 observations for all countries in our sample. Of these 118 cycles, 61 are upward, with an average of 7.51 months duration, and 57 are downward, with an average of 8.20 months of duration. 7. CONCLUSION The main aim of this paper was to extend the index developed by Kaminsky and Schmukler, 2003, for a specific sample of countries, namely, the previously centrally planned economies from Central and Eastern Europe, and to perform a similar analysis on them. Our results do lend some support to the basic assumption of this study: in spite of all the limitations of the time series used (their shortness, the fact that they were buffeted by several country-specific and common shocks), a re-estimation of KSs core regressions strongly supports the notion that financial liberalization does generate benefits both in the short and in the long run, measured via the extension of the amplitude of upward cycles and its reduction for downward cycles of stock market indexes. Importantly, these results diverge from KS, as in their work â€Å"emerging markets experience a relative short run increase in the amplitude of downward cycles. Another noteworthy feature is that only minor liberalization rever sals, led by the financial sector component, were observed in the aggregate index. Also, those reversals do not seem to be driven by â€Å"contagion from shocks in other emerging markets (like the Asian or Russian crisis), but reflect country-specific shocks. When considering the individual components of the index separately, again signs of minor reversals in financial sector liberalization are observed, related to temporary reactions to the several banking crisis observed in the region. Concerning the importance of institutions and of the EU Accession, this papers initial assumption was that the mostly positive results above would come about due to the anchoring of expectation provided by the perspective of entry into the EU already by mid-2004 (or 2007, in the case of Bulgaria and Romania) for the countries here analyzed, and by the imposition of a more robust macro and institutional framework by the requirements of the Accession process itself. Signs of this are not found in the KS regressions, perhaps because the liberalization index itself captures the effects of the EU Accession process. Finally, using a different framework than KSs to assess the affects of liberalization on financial, real and nominal volatility, most of the econometric results seem to support the previous ones, but they seem to indicate that the capital account liberalization is the element that most consistently and significantly reduces volatility. On this final section, the majority the econometric results seem to support some specific role for the EU Enlargement process in reducing volatility.