The Credit Boom in the EU New Member States: Bad Luck or Bad Policies?
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 (“bad luck”). Rapid credit growth followed from a high liquidity in global markets and the particular attractiveness of “new Europe” 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 (“bad policies”)—in particular overly expansionary macroeconomic settings and excessively optimistic views on prudential risks—also have played a critical role.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/130.
Date of creation: 01 May 2010
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
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)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ostry, Jonathan D. & Ghosh, Atish R. & Chamon, Marcos & Qureshi, Mahvash S., 2012. "Tools for managing financial-stability risks from capital inflows," Journal of International Economics, Elsevier, vol. 88(2), pages 407-421.
- Yuko Kinoshita, 2011. "Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe," IMF Working Papers 11/123, International Monetary Fund.
- Mahvash S. Qureshi & Jonathan D. Ostry & Atish R. Ghosh & Marcos Chamon, 2011.
"Managing Capital Inflows: The Role of Capital Controls and Prudential Policies,"
NBER Working Papers
17363, National Bureau of Economic Research, Inc.
- Mahvash S. Qureshi & Jonathan D. Ostry & Atish R. Ghosh & Marcos Chamon, 2011. "Managing Capital Inflows: The Role of Capital Controls and Prudential Policies," NBER Chapters, in: Global Financial Crisis National Bureau of Economic Research, Inc.
- Jan Babecky & Ales Bulir & Katerina Smidkova, 2011.
"Sustainable Real Exchange Rates in the New EU Member States: What Did the Great Recession Change?,"
2011/01, Czech National Bank, Research Department.
- Jan Babecky & Ales Bulir & Katerina Smidkova, 2012. "Sustainable Real Exchange Rates in the New EU Member States: What Did the Great Recession Change?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(3), pages 226-251, July.
- Katerina SmÃdkovÃ¡ & Jan Babecky & Ales Bulir, 2010. "Sustainable Real Exchange Rates in the New EU Member States: What did the Great Recession Change?," IMF Working Papers 10/198, International Monetary Fund.
- Furceri, Davide & Guichard, Stéphanie & Rusticelli, Elena, 2012.
"The effect of episodes of large capital inflows on domestic credit,"
The North American Journal of Economics and Finance,
Elsevier, vol. 23(3), pages 325-344.
- Davide Furceri & Stéphanie Guichard & Elena Rusticelli, 2011. "The Effect of Episodes of Large Capital Inflows on Domestic Credit," OECD Economics Department Working Papers 864, OECD Publishing.
- PIROVANO, Mara, 2013.
"Household and firm leverage, capital flows and monetary policy in a small open economy,"
2013014, University of Antwerp, Faculty of Applied Economics.
- Mara Pirovano, 2013. "Household and firm leverage, capital flows and monetary policy in a small open economy," Working Paper Research 246, National Bank of Belgium.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.