Understanding the Crisis in Emerging Europe

European Bank for Reconstruction and Development Working Paper No. 109

24 Pages Posted: 15 Jan 2010

See all articles by Erik Berglöf

Erik Berglöf

Institute of Global Affairs, London School of Economics and Political Science

Yevgeniya Korniyenko

Bank of England

Jeromin Zettelmeyer

European Bank for Reconstruction and Development (EBRD)

Alexander Plekhanov

European Bank for Reconstruction and Development (EBRD)

Date Written: November 15, 2009

Abstract

Despite the large output declines suffered by emerging Europe in 2008-09, a major currency and banking crisis was avoided. This paper argues that European economic and political integration was a mitigating factor in this. Cross-border banking groups, in particular, seem to have forestalled a sharp reversal in capital flows. Cross-country variations in output decline can be explained by a small set of macroeconomic vulnerabilities.

Keywords: Growth, Financial integration, Capital flows, Emerging Europe

JEL Classification: F43, F36, F34, O57

Suggested Citation

Berglöf, Erik and Korniyenko, Yevgeniya and Zettelmeyer, Jeromin and Plekhanov, Alexander, Understanding the Crisis in Emerging Europe (November 15, 2009). European Bank for Reconstruction and Development Working Paper No. 109, Available at SSRN: https://ssrn.com/abstract=1536645 or http://dx.doi.org/10.2139/ssrn.1536645

Erik Berglöf

Institute of Global Affairs, London School of Economics and Political Science ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Yevgeniya Korniyenko

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Jeromin Zettelmeyer (Contact Author)

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

Alexander Plekhanov

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

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