Assessing macroeconomic vulnerability in central Europe
The central European transition-accession countries experienced several periods of macroeconomic vulnerability since the end of output declines in early 1990s. Some notable periods, which resulted in a necessity to implement extensive stabilisation measures, are March 1995 in Hungary, May 1997 in the Czech Republic, and September 1998 in the Slovak Republic. This paper shows that the standard early warning indicators provided useful information on macroeconomic vulnerability prior to the crises in central Europe, although this information had been mainly indicative; that is, early warning indicators would not have allowed one to predict the crises and their timing. In particular, the growing gap between current account deficit and foreign direct investment (FDI) in all the analysed countries provided clear early warning of subsequent economic turbulence.
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- Steven Fries & Martin Raiser & Nicholas Stern, 1999. "Stress test for reforms: Transition and East Asian 'contagion'," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 535-567, July.
- Banerjee, Abhijit & Bacchetta, Philippe & Aghion, Philippe, 2001.
"Currency Crises and Monetary Policy in an Economy with Credit Constraints,"
4554218, Harvard University Department of Economics.
- Aghion, Philippe & Bacchetta, Philippe & Banerjee, Abhijit, 2001. "Currency crises and monetary policy in an economy with credit constraints," European Economic Review, Elsevier, vol. 45(7), pages 1121-1150.
- Aghion, Philippe & Bacchetta, Philippe & Banerjee, Abhijit, 2000. "Currency Crises and Monetary Policy in an Economy with Credit Constraints," CEPR Discussion Papers 2529, C.E.P.R. Discussion Papers.
- Philippe Aghion & Philippe Bacchetta & Abhijit Banerjee, 2000. "Currency Crises and Monetary Policy in an Economy with Credit Constraints," Working Papers 00.07, Swiss National Bank, Study Center Gerzensee.
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