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An Overinvestment Cycle in Central and Eastern Europe?

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  • Hoffmann, Andreas

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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Bibliographic Info

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
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Handle: RePEc:pra:mprapa:15668

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

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Citations

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Cited by:
  1. Hoffmann Andreas, 2013. "The Euro as a Proxy for the Classical Gold Standard? Government Debt Financing and Political Commitment in Historical Perspective," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 19(1), pages 41-61, November.
  2. Andreas Hoffmann & Gunther Schnabl, 2011. "National Monetary Policy, Internatinal Economic Instability and Feeback Effects - An Overinvestment View," Global Financial Markets Working Paper Series 19-2011, Friedrich-Schiller-University Jena.
  3. Andreas Hoffmann, 2014. "Zero-Interest Rate Policy and Unintended Consequences in Emerging Markets," ICER Working Papers 02-2014, ICER - International Centre for Economic Research.
  4. Hoffmann, Andreas, 2011. "Determinants of carry trades in Central and Eastern Europe," Working Papers 102, University of Leipzig, Faculty of Economics and Management Science.

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