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Assessing macroeconomic vulnerability in central Europe

Author

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  • Libor Krkoska

    (European Bank for Reconstruction and Development)

Abstract

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.

Suggested Citation

  • Libor Krkoska, 2000. "Assessing macroeconomic vulnerability in central Europe," Working Papers 52, European Bank for Reconstruction and Development, Office of the Chief Economist.
    • Handle: RePEc:ebd:wpaper:52
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    More about this item

    Keywords

    Macroeconomic vulnerability; currency crisis; early warning;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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