The nature and characteristics of economic fluctuations in Eastern European Centrally Planned Economies are analyzed. When cycles are identified by the deviation from a fitted deterministic trend, they are seen to coincide temporally. This common variation is found for Net Material Product (NMP) and Investment. The implications of the common variation of CPE cycles are discussed. Possible explanations of this phenomenon are discussed with emphasis on a possible link via trade. We then examine the possibility that the time series contain unit roots. We are unable to reject this hypothesis for the variables in question. This suggests using procedures for detrending nonstationary time series suggested by Beveridge and Nelson. Such an analysis is performed and the implications are discussed. We find that there remains some common variation in the cyclical component of output, but to a lesser extent. The implications of these findings for future research on CPE cycles are discussed.

Hierarchical organizations often perform poorly in inducing the adoption of innovations. We examine a principal offering contracts to agents who make unobservable effort and adoption-of-innovation choices (yielding moral hazard), who occupy jobs of differing, unobserved productivities (yielding adverse selection), and who engage in a repeated relationship with the principal (causing a ratchet effect to arise). Increasing the rate of adoption of an innovation in such an organization causes the incentive costs of adoption to increase at an increasing rate. Relatively low rates of adoption may then be a response to the prohibitive incentive costs of higher adoption rates.

We estimate a dynamic two-country model in which economic fluctuations are driven by a worldwide supply shock, country-specific supply shocks, and relative fiscal, money, and preference shocks. Identification is achieved using only long-run restrictions, based on a theoretical model. The main results, are: (i) supply shocks, particularly country-specific ones, are very important in generating international business cycles, (ii) although the post-1973 flexible-exchange-rate period has been inherently more volatile, there are no differences in transmission properties of economic disturbances across exchange-rate regimes for the endogenous variables we focus on.