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Drivers of Output Loss during the 2008–09 Crisis: A Focus on Emerging Europe


  • Jesús Crespo Cuaresma

    () (Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy)

  • Martin Feldkircher

    () (Oesterreichische Nationalbank, Foreign Research Division)


We study empirically the role that initial conditions played in the emergence of cross-country heterogeneity in real output loss during the recent global financial crisis. We use a global sample covering over 150 countries and focus on the differences in the determinants of the crisis in emerging Europe compared to those in the rest of the world. We find that the differences in crisis severity in emerging Europe can only partly be explained by the factors that appear to be important for the global sample. Our results indicate that for the European emerging economies, growth above potential before the crisis coupled with external disequilibria as well as financial openness were particularly important mechanisms that increased the severity of the crisis in terms of output loss. We also find some evidence that pre-crisis FDI inflows softened the negative real output effects of the crisis in the region.

Suggested Citation

  • Jesús Crespo Cuaresma & Martin Feldkircher, 2012. "Drivers of Output Loss during the 2008–09 Crisis: A Focus on Emerging Europe," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 46-64.
  • Handle: RePEc:onb:oenbfi:y:2012:i:2:b:1

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    References listed on IDEAS

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    Cited by:

    1. Mathias Moser & Paul Hofmarcher, 2014. "Model Priors Revisited: Interaction Terms In Bma Growth Applications," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 344-347, March.
    2. Branimir Jovanovic, 2012. "How Policy Actions Affect Short-term Post-crisis Recovery?," CEIS Research Paper 253, Tor Vergata University, CEIS, revised 05 Oct 2012.
    3. Bohl, Martin T. & Michaelis, Philip & Siklos, Pierre L., 2016. "Austerity and recovery: Exchange rate regime choice, economic growth, and financial crises," Economic Modelling, Elsevier, vol. 53(C), pages 195-207.
    4. Branimir Jovanovic & Marjan Petreski, 2012. "Hemlock for policy response: Monetary policy, exchange rates and labour unions in SEE and CIS during the crisis," FIW Working Paper series 081, FIW.

    More about this item


    financial crisis; cross-country analysis; Bayesian model averaging;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


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