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Are the Central and Eastern European transition countries still vulnerable to a financial crisis? Results from the signals approach

Author

Listed:
  • Brüggemann, Axel
  • Linne, Thomas

Abstract

The aim of paper is to analyse the vulnerability of the Central and Eastern European accession countries to the EU as well as that of Turkey and Russia to a financial crisis. Our methodology is an extension of the signals approach. We develop a composite indicator to measure the evolutin of of the risk potential in each country. Our findings show that crises in Central and Eastern Europe are caused by much the usual suspects s in others emerging markets. In particular an overvalued exchange rate. Weak exports and dwindling currency reserves have good precictive power for assessing crisis vulnerabilities.

Suggested Citation

  • Brüggemann, Axel & Linne, Thomas, 2002. "Are the Central and Eastern European transition countries still vulnerable to a financial crisis? Results from the signals approach," BOFIT Discussion Papers 5/2002, Bank of Finland Institute for Emerging Economies (BOFIT).
    • Handle: RePEc:zbw:bofitp:bdp2002_005
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    More about this item

    Keywords

    financial crises; vulnerability indicator; Central and Eastern Europe;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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