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Vulnerabilities in Emerging Southeastern Europe--How Much Cause for Concern?

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Author Info
Andrea M. Maechler
Bas Berend Bakker
Christoph Duenwald
Piritta Sorsa
Andrew Tiffin
Abstract

While large inflows of capital into Southeastern Europe (SEE) have raised incomes, this has increased vulnerability to financial risks, which, if realized, can lead to costly adjustments. Traditional vulnerability indicators in SEE have reached levels that in other countries have not been sustainable, and sectoral analysis shows rising imbalances and raises questions about efficient use of the inflows. While factors related to EU integration mitigate these vulnerabilities, weaker institutions reduce these benefits in SEE compared to more advanced European emerging markets. To insure against setbacks to income convergence, SEE policymakers should take measures to reverse the buildup of vulnerabilities.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/236.

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Length: 44 pages
Date of creation: 15 Oct 2007
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Handle: RePEc:imf:imfwpa:07/236

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Keywords: Working Paper ; Economic indicators ; Europe ; Capital inflows ; Emerging markets ; Adjustment process ; Crisis prevention ;

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  22. repec:rus:hseeco:316808 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrea M. Maechler & Srobona Mitra & DeLisle Worrell, 2007. "Decomposing Financial Risks and Vulnerabilities in Eastern Europe," IMF Working Papers 07/248, International Monetary Fund. [Downloadable!]
  2. Dumitru, Ionut & Dumitru, Ionela, 2009. "An Assessment of the Current Account Sustainability in Romania – An Inter-temporal Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(2), pages 23-41, June. [Downloadable!]
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