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An Overinvestment Cycle in Central and Eastern Europe?

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Author Info
Hoffmann, Andreas

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Abstract

Prior to the Asian crisis, benign liquidity conditions contributed to credit expansion and overinvestment in the East Asian economies until they were hit by a deep recession (Saxena and Wong 2002). Similarly to the developments in the tiger economies in the nineties, the CEE economies grew rapidly from 2001 to 2007, due to foreign capital inflows. But the current global financial turmoil and economic downswing also pulled the CEE economies into the maelstrom of the crisis. With the Asian experience in mind, the aim of this paper is to analyze whether overinvestment due to benign liquidity conditions possibly emerged and contributed to the crisis in CEE.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15668.

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Date of creation: 05 Jun 2009
Date of revision: 11 Oct 2009
Handle: RePEc:pra:mprapa:15668

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Related research
Keywords: Overinvestment; Central and Eastern Europe; Boom-and-bust cycles; Financial Crisis;

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
F59 - International Economics - - International Relations and International Political Economy - - - Other
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian

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