Poland on the road to the euro: How serious is the risk of boom-bust cycles after the euro adoption? An empirical analysis
The goal of this paper is, firstly, to determine which structural characteristics of an economy make it more (or less) prone to macroeconomic booms and busts and, secondly, to empirically assess the risk of a boom-bust cycle in Poland after the euro adoption. We start from identifying booms and busts in private consumption and investment in fourteen “old” EU member states and then we seek to explain the identified boom and bust series using panel probit and pooled probit models. We then use the estimated equations to assess the probability of booms and busts in Poland over the period 2004 to 2009. Our results suggest that credit developments have been the most important driving force of booms and busts in EU-14. The relevance of international capital flows as a boom-bust transmission channel and of the cyclical heterogeneity of countries which undergo a process of monetary integration is also confirmed. We also find evidence that the fiscal channel boils down to a crowding-out effect: a reduction in the general government expenditure “makes room” for a boom in the private expenditure, and the reverse holds for busts. In turn, our results for Poland are inconclusive, which probably means that the models estimated for EU-14 are not adequate to predict the probabilities of booms and busts in this country.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0-22) 653 10 00
Fax: (0-22) 620 85 18
Web page: http://www.nbp.pl/Homen.aspx?f=/en/publikacje/materialy_i_studia/informacja_en.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ivanna Vladkova Hollar & Giovanni Dell'Ariccia & Carlo Cottarelli, 2003.
"Early Birds, Late Risers, and Sleeping Beauties; Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans,"
IMF Working Papers
03/213, International Monetary Fund.
- Cottarelli, Carlo & Dell'Ariccia, Giovanni & Vladkova-Hollar, Ivanna, 2005. "Early birds, late risers, and sleeping beauties: Bank credit growth to the private sector in Central and Eastern Europe and in the Balkans," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 83-104, January.
- Michał Brzoza-Brzezina & Pascal Jacquinot & Marcin Kolasa, 2011.
"Can we prevent boom-bust cycles during euro area accession?,"
National Bank of Poland Working Papers
79, National Bank of Poland, Economic Institute.
- Michał Brzoza-Brzezina & Pascal Jacquinot & Marcin Kolasa, 2014. "Can We Prevent Boom-Bust Cycles During Euro Area Accession?," Open Economies Review, Springer, vol. 25(1), pages 35-69, February.
- Brzoza-Brzezina, Michał & Jacquinot, Pascal & Kolasa, Marcin, 2010. "Can we prevent boom-bust cycles during euro area accession?," Working Paper Series 1280, European Central Bank.
- Filipa Sá & Tomasz Wieladek, 2011.
"Monetary policy, capital inflows, and the housing boom,"
Globalization and Monetary Policy Institute Working Paper
80, Federal Reserve Bank of Dallas.
- Sá, F. & Wieladek, T., 2011. "Monetary Policy, Capital Inflows, and the Housing Boom," Cambridge Working Papers in Economics 1141, Faculty of Economics, University of Cambridge.
- Sa, Filipa & Wieladek, Tomasz, 2010. "Monetary policy, capital inflows and the housing boom," Bank of England working papers 405, Bank of England.
- Jan Kakes & Cees Ullersma, 2003. "Financial stability in low-inflation environments," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 355-367 Bank for International Settlements.
- Agnello, Luca & Schuknecht, Ludger, 2009.
"Booms and busts in housing markets: determinants and implications,"
Working Paper Series
1071, European Central Bank.
- Agnello, Luca & Schuknecht, Ludger, 2011. "Booms and busts in housing markets: Determinants and implications," Journal of Housing Economics, Elsevier, vol. 20(3), pages 171-190, September.
- Gourinchas, Pierre-Olivier & Landerretche, Oscar & Valdés, Rodrigo, 2001.
"Lending Booms: Latin America and the World,"
CEPR Discussion Papers
2811, C.E.P.R. Discussion Papers.
- Pierre-Olivier Gourinchas & Rodrigo Valdes & Oscar Landerretche, 2001. "Lending Booms: Latin America and the World," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Ben S. Bernanke & Mark Gertler, 1995.
"Inside the Black Box: The Credit Channel of Monetary Policy Transmission,"
NBER Working Papers
5146, National Bureau of Economic Research, Inc.
- Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
- Bernanke, Ben & Gertler, Mark, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Working Papers 95-15, C.V. Starr Center for Applied Economics, New York University.
- Martin, Reiner & Schuknecht, Ludger & Vansteenkiste, Isabel, 2007. "The role of the exchange rate for adjustment in boom and bust episodes," Working Paper Series 0813, European Central Bank.
- Michael D. Bordo & Olivier Jeanne, 2002.
"Boom-Busts in Asset Prices, Economic Instability, and Monetary Policy,"
NBER Working Papers
8966, National Bureau of Economic Research, Inc.
- Bordo, Michael D & Jeanne, Olivier, 2002. "Boom-Busts in Asset Prices, Economic Instability and Monetary Policy," CEPR Discussion Papers 3398, C.E.P.R. Discussion Papers.
- Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 2012.
"Understanding booms and busts in housing markets,"
CQER Working Paper
2012-02, Federal Reserve Bank of Atlanta.
- Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 2011. "Understanding Booms and Busts in Housing Markets," NBER Working Papers 16734, National Bureau of Economic Research, Inc.
- Burnside, Craig & Eichenbaum, Martin & Rebelo, Sérgio, 2011. "Understanding Booms and Busts in Housing Markets," CEPR Discussion Papers 8232, C.E.P.R. Discussion Papers.
- Sergio Rebelo & Martin Eichenbaum & Craig Burnside, 2012. "Understanding Booms and Busts in Housing Markets," 2012 Meeting Papers 114, Society for Economic Dynamics.
- Hausman, Jerry A, 1978.
"Specification Tests in Econometrics,"
Econometric Society, vol. 46(6), pages 1251-71, November.
- Corsetti, Giancarlo & Devereux, Michael P. & Guiso, Luigi & Hassler, John & Saint-Paul, Gilles & Sinn, Hans-Werner & Sturm, Jan-Egbert & Vives, Xavier, . "EEAG Report on the European Economy 2010," Monographs in Economics, University of Munich, Department of Economics, number 20108.
- Luc Laeven & Fabian Valencia, 2010. "Resolution of Banking Crises; The Good, the Bad, and the Ugly," IMF Working Papers 10/146, International Monetary Fund.
- Eichengreen, Barry & Steiner, Katharina, 2008.
"Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption?,"
CEPR Discussion Papers
7027, C.E.P.R. Discussion Papers.
- Barry Eichengreen & Katharina Steiner, 2008. "Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption?," NBER Working Papers 14438, National Bureau of Economic Research, Inc.
- International Monetary Fund, 2005. "Adopting the Euro in Central Europe; Challenges of the Next Step in European Integration," IMF Occasional Papers 234, International Monetary Fund.
- Harding, Don & Pagan, Adrian, 2002.
"Dissecting the cycle: a methodological investigation,"
Journal of Monetary Economics,
Elsevier, vol. 49(2), pages 365-381, March.
- Don Harding & Adrian Pagan, 2000. "Disecting the Cycle: A Methodological Investigation," Econometric Society World Congress 2000 Contributed Papers 1164, Econometric Society.
- Brzoza-Brzezina, Michal, 2005. "Lending booms in the new EU Member States: will euro adoption matter?," Working Paper Series 0543, European Central Bank.
- Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003.
"Testing for unit roots in heterogeneous panels,"
Journal of Econometrics,
Elsevier, vol. 115(1), pages 53-74, July.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
- Tom Doan, . "IPSHIN: RATS procedure to implement Im, Pesaran and Shin panel unit root test," Statistical Software Components RTS00098, Boston College Department of Economics.
- Brixiova, Zuzana & Vartia, Laura & Wörgötter, Andreas, 2010. "Capital flows and the boom-bust cycle: The case of Estonia," Economic Systems, Elsevier, vol. 34(1), pages 55-72, March.
- Michael Brei & Almira Buzaushina, 2015. "International Financial Shocks in Emerging Markets," EconomiX Working Papers 2015-11, University of Paris West - Nanterre la Défense, EconomiX.
When requesting a correction, please mention this item's handle: RePEc:nbp:nbpmis:103. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ewa Szymecka)
If references are entirely missing, you can add them using this form.