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An Overinvestment Cycle In Central And Eastern Europe?

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  • Andreas Hoffmann

Abstract

Prior to the Asian crisis, easy liquidity conditions contributed to credit expansion and overinvestment in the East Asian economies until they were hit by a deep recession. Similarly to the developments in the tiger economies in the 1990s, Central and Eastern European (CEE) grew rapidly from 2001 to 2007, due to foreign capital inflows. But the current global financial turmoil and economic downswing pulled the CEE economies into the maelstrom of the crisis. With the Asian experience in mind, the aim of this paper is to analyze whether overinvestment due to easy liquidity conditions possibly emerged and contributed to the crisis in CEE.

Suggested Citation

  • Andreas Hoffmann, 2010. "An Overinvestment Cycle In Central And Eastern Europe?," Metroeconomica, Wiley Blackwell, vol. 61(4), pages 711-734, November.
    • Handle: RePEc:bla:metroe:v:61:y:2010:i:4:p:711-734
    DOI: 10.1111/j.1467-999X.2010.04103.x
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian

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