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Real Output Costs of Financial Crisis on CEE Countries

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  • Emilia-Ancuta Corovei

Abstract

Countries from CEE countries (Bulgaria, Croatia, Czech Republic, Estonia, Germany, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia) experienced systemic banking crisis during the recent turbulence on financial markets. Financial crisis can be very costly due to output losses during and after the crash. This article reviews the methodology for estimating the output losses for this particular group of countries recently affected by adverse economic and financial conditions. This study extend the analyses in two directions: first applying a Hodrick-Prescott filter for various lengths e.g. 10 years, 15 years and 20 years and then using the method proposed by Abiad et al (2009) and establishing the counterfactual trend, ignoring the past 3 years before the beginning of the crisis.

Suggested Citation

  • Emilia-Ancuta Corovei, 2015. "Real Output Costs of Financial Crisis on CEE Countries," Knowledge Horizons - Economics, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 7(1), pages 80-84, March.
    • Handle: RePEc:khe:journl:v:7:y:2015:i:1:p:80-84
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    References listed on IDEAS

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    1. Honohan, Patrick & Klingebiel, Daniela, 2003. "The fiscal cost implications of an accommodating approach to banking crises," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1539-1560, August.
    2. Daniel Kapp & Marco Vega, 2014. "Real output costs of financial crises: A loss distribution approach," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 37(103), pages 13-28, Abril.
    3. Hoggarth, Glenn & Reis, Ricardo & Saporta, Victoria, 2002. "Costs of banking system instability: Some empirical evidence," Journal of Banking & Finance, Elsevier, vol. 26(5), pages 825-855, May.
    4. Caprio, Gerard & D’Apice, Vincenzo & Ferri, Giovanni & Puopolo, Giovanni Walter, 2014. "Macro-financial determinants of the great financial crisis: Implications for financial regulation," Journal of Banking & Finance, Elsevier, vol. 44(C), pages 114-129.
    5. Kapp, Daniel & Vega, Marco, 2012. "The Real Output Costs of Financial Crisis: A Loss Distribution Approach," Working Papers 2012-013, Banco Central de Reserva del Perú.
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    More about this item

    Keywords

    Financial crisis; costs of financial crisis; Hodrick Prescott filter;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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