Understanding the Crisis in Emerging Europe
European Bank for Reconstruction and Development Working Paper No. 109
24 Pages Posted: 15 Jan 2010
Date Written: November 15, 2009
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: Suggested Citation