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The Financial Crisis and European Emerging Economies

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Abstract

The crisis has affected all European economies, but it has also brought into relief the substantial differentiation across the region. The authors demonstrate that it has put an increased premium on sound macroeconomic and macroprudential policies: economies with lower inflation, smaller current account deficits, and lower dependence on bank-related capital inflows have fared significantly better. They also show that the crisis has led to the disappearance of the so-called “halo effect”, which was the observation in the pre-crisis period that spreads on sovereign bonds in the new European Union member countries were lower than could be explained by fundamentals.

Suggested Citation

  • Martin Èihák & Srobona Mitra, 2009. "The Financial Crisis and European Emerging Economies," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(6), pages 541-553, December.
  • Handle: RePEc:fau:fauart:v:59:y:2009:i:6:p:541-553
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    File URL: http://journal.fsv.cuni.cz/storage/1174_1174_541-53---cihak-mitra.pdf
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    References listed on IDEAS

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    1. Susan M Schadler & Pipat Luengnaruemitchai, 2007. "Do Economists’ and Financial Markets’ Perspectives on the New Members of the EU differ?," IMF Working Papers 07/65, International Monetary Fund.
    2. Manmohan S. Kumar & Jirí Jonáš & David Hauner, 2007. "Policy Credibility and Sovereign Credit; The Case of New EU Member States," IMF Working Papers 07/1, International Monetary Fund.
    3. Martin Cihak & Wim Fonteyne, 2009. "Five Years After; European Union Membership and Macro-Financial Stability in the New Member States," IMF Working Papers 09/68, International Monetary Fund.
    4. Cappiello, Lorenzo & Gérard, Bruno & Kadareja, Arjan & Manganelli, Simone, 2006. "Financial integration of new EU Member States," Working Paper Series 683, European Central Bank.
    5. Barry Eichengreen & Ashoka Mody, 1998. "What Explains Changing Spreads on Emerging-Market Debt: Fundamentals or Market Sentiment?," NBER Working Papers 6408, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Frait, Jan & Gersl, Adam & Seidler, Jakub, 2011. "Credit growth and financial stability in the Czech Republic," Policy Research Working Paper Series 5771, The World Bank.
    2. Renatas Kizys & Christian Pierdzioch, 2011. "The Financial Crisis and the Stock Markets of the CEE Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(2), pages 153-172, June.

    More about this item

    Keywords

    financial crisis; emerging economies; Europe;

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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