The Credit Boom in the EU New Member States
AbstractIn the past decade, most of the EU New Member States experienced a severe credit-boom bust cycle. This paper argues that the credit boom-bust cycle was to a large extent the result of factors external to the region (â€œbad luckâ€). Rapid credit growth followed from a high liquidity in global markets and the particular attractiveness of â€œnew Europeâ€ for capital flows, while the end of the credit cycle was brought about by a global crisis. However, the fact that some countries managed to avoid most of the excesses, including asset price bubbles and foreign exchange lending, suggests that policies and policy failures (â€œbad policiesâ€)â€”in particular overly expansionary macroeconomic settings and excessively optimistic views on prudential risksâ€”also have played a critical role.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/130.
Date of creation: 01 May 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-17 (All new papers)
- NEP-EEC-2010-07-17 (European Economics)
- NEP-IFN-2010-07-17 (International Finance)
- NEP-MAC-2010-07-17 (Macroeconomics)
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