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Exchange Rate Policy and Economic Growth after the Financial Crisis in Central and Eastern Europe

Author

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  • Zsolt Darvas

Abstract

In a paper on the effects of the global financial crisis in Central and Eastern Europe (CEE), the author reacts to a paper of Aslund (2011) published in the same issue of "Eurasian Geography and Economics" on the influence of exchange rate policies on the region’s recovery. The author argues that post-crisis corrections in current account deficits in CEE countries do not in themselves signal a return to steady economic growth. Disagreeing with Aslund over the role of loose monetary policy in fostering the region’s economic problems, he outlines a number of competitiveness problems that remain to be addressed in the 10 new EU member states of CEE, along with improvements in framework conditions supporting future macroeconomic growth.

Suggested Citation

  • Zsolt Darvas, 2011. "Exchange Rate Policy and Economic Growth after the Financial Crisis in Central and Eastern Europe," Working Papers 1103, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
  • Handle: RePEc:mkg:wpaper:1103
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    File URL: http://web.uni-corvinus.hu/matkg/working_papers/wp_2011_3_darvas.pdf
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    References listed on IDEAS

    as
    1. Jean Pisani-Ferry & Pavle Petrovic & Michael A Landesmann & Vladimir Gligorov & Daniel Daianu & Torbjörn Becker & Zsolt Darvas & André Sapir & Beatrice Weder di Mauro, . "Whither growth in central and eastern Europe? Policy lessons for an integrated Europe," Blueprints, Bruegel, number 453.
    2. Zsolt Darvas, 2010. "The case for reforming euro area entry criteria," Society and Economy, Akadémiai Kiadó, Hungary, vol. 32(2), pages 195-219, December.
    3. Zsolt Darvas, 2011. "Beyond the Crisis: Prospects for Emerging Europe," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 53(2), pages 261-290, June.
    4. Janos Varga and Jan in 't Veld, 2010. "The Potential Impact of EU Cohesion Policy Spending in the 2007-13 Programming Period: A Model-Based," European Economy - Economic Papers 2008 - 2015 422, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Zsolt Darvas, 2010. "The Impact of the Crisis on Budget Policy in Central and Eastern Europe," OECD Journal on Budgeting, OECD Publishing, vol. 10(1), pages 1-42.
    6. Gabor Hunya & Monika Schwarzhappel, 2010. "FDI in the CEECs Hit Hard by the Global Crisis," wiiw FDI Reports 2010-05, The Vienna Institute for International Economic Studies, wiiw.
    7. Zsolt Darvas, 2009. "The EU's Role in Supporting Crisis-Hit Countries in Central and Eastern Europe," Policy Contributions 368, Bruegel.
    8. Alan Ahearne & Juan Delgado & Jakob von Weizsäcker, 2008. "A tail of two countries," Policy Briefs 6, Bruegel.
    9. Zsolt Darvas, 2009. "The Baltic Challenge and Euro-Area Entry," Policy Contributions 357, Bruegel.
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    Cited by:

    1. Zsombor Z. Méder & András Simonovits & János Vinczeb, 2012. "Tax Morale and Tax Evasion: Social Preferences and Bounded Rationality," Economic Analysis and Policy, Elsevier, vol. 42(2), pages 171-188, September.

    More about this item

    Keywords

    Central and Eastern Europe; Baltic states; exchange rate policy; global financial crisis; floating exchange rate; fixed exchange rate; inflation; internal devaluation; credit boom; overheating economy; current account balance; negative output gap; euro area; unit labour costs; price competitiveness;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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