Work

The real effect of financial crises in the European transition economies1

Year: 2010

Type: article

Abstract: The aim of this work is to assess the impact of financial crises on output for 11 European transition economies (CEECs). The results suggest that financial crises have a significant and permanent effect, lowering long-term output by about 12–17 percent. The effect is larger in smaller countries in which the banking sector presented more important financial disequilibria. We also found that fiscal policy has been the most efficient tool in dealing with the crises, whereas the effect of monetary policy has been rather modest. Flexible exchange rates are found to attenuate the impact of the crises in the short and medium term, but to amplify the effect in the long run. International Monetary Fund support is found to moderate the effect in the long run. Finally, the effect in the CEECs is considerably larger than in the EU advanced economies.

Source: Economics of Transition

DOI: 10.1111/j.1468-0351.2010.00395.x

Authors: Davide Furceri, Aleksandra Zdzienicka

Institutions: Organisation de Coopération et de Développement Economiques, University of Palermo, Centre National de la Recherche Scientifique, Université de Lyon, Groupe d'Analyse et de Théorie Economique Lyon St Etienne

Language: English

Topic: Global Financial Crisis and Policies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W3021976864

FWCI: 20.06

Cites: 38

Cited by: 72

Related to: 10