The last shall be the first : the East European financial crisis, 2008-10 /
Ånders Aslund.
Washington, D.C. : Peterson Institute for International Economics, 2010.
xvi, 120 p.
088132521X (pbk.), 9780881325218 (pbk.)
More Details
Washington, D.C. : Peterson Institute for International Economics, 2010.
088132521X (pbk.)
9780881325218 (pbk.)
contents note
Causes and eruption of the financial crisis -- Crisis resolution -- The exchange rate dilemma : euro, ERM II, currency board or inflation targeting -- The banking crisis that never materialized -- The role of international actors : IMF, European Commission, and ECB -- Why is Eastern Europe so responsible? -- Eastern Europe and the fiscal crisis in the Eurozone -- Conclusions for Eastern Europe : European convergence.
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Full Text Reviews
Appeared in Choice on 2011-03-01:
A preeminent scholar of eastern European economics, ^DoAslund (Peterson Institute) has produced a succinct, timely analysis of the financial crisis that spread quickly throughout the ten central and eastern European EU members (CEE-10) starting in late 2007. He strongly argues that extreme current account deficits that were not financed by foreign direct investment precipitated the crisis. The problems caused by these deficits were exacerbated by double-digit inflation resulting from excessive credit expansion and the large share of domestic loans denominated in foreign currencies in the region. The severity of the crisis in all countries depended on financial factors. The countries' actions resulted in a rapid, decisive resolution of the crisis. Early, radical, fiscal austerity action of cutting expenditures while not increasing taxes was the common feature of all countries. Remarkably, none of the ten resorted to currency devaluation. ^DoAslund praises the IMF for its decisive provision of necessary emergency funding to these nations but lambasts the European Central Bank for its inaction. He concludes that the CEE-10 "have emerged as the successful pioneers of a new, more liberal, and fiscally responsible all-European economic system." An excellent companion to Nouriel Roubini and Brad Setser's Bailouts or Bail-Ins? (CH, Mar'05, 42-4158). Summing Up: Highly recommended. Upper-division undergraduates through professionals. D. C. Messerschmidt Lynchburg College
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Table of Contents
Prefacep. ix
Acknowledgmentsp. xiii
Mapp. xvi
Introductionp. 1
What Went Wrong and How It Was Fixedp. 4
Maastricht Citeria and Euro Adoptionp. 8
Parallels to the East Asian Financial Crisis of 1997-98p. 10
Structure of the Bookp. 12
Causes and Eruption of the Financial Crisisp. 13
Causes of the Crisisp. 14
Eruption of the Crisisp. 25
Political Economy of Crisis Resolutionp. 31
Hungary: Straightforward Crisis Resolutionp. 33
Latvia: The most Complex Stabilizationp. 35
Romania: All about Politicsp. 38
Lithuania, Estonia, and Bulgaria: Robust Anticrisis Policy without the IMFp. 40
Poland, the Czech Republic, Slovakia, and Slovenia: No Serious Overheating or Crisisp. 42
Fast Financial Adjustmentp. 43
The Exchange Rate Dilemmap. 53
The Baltic Exchange Rate Conundrump. 56
Why Latvia Did Not Have to Devalue Like Argentinap. 60
Multiple Exchange Rate Options Remainp. 65
The Banking Crisis That Never Materializedp. 67
West European Banks Expand in the Eastp. 67
The Vienna Iniativep. 71
International Cooperation in Crisisp. 75
International Monetary Fund: Financial Saviorp. 75
European Union: The Rookiep. 77
European Central Bank: Voldemortp. 78
The United States: Keeping a Low Profilep. 81
World Bank: The Third Fiddlep. 82
A New Pattern of International Financial Crisis Resolutionp. 83
Why Eastern Europe Acted So Responsibilityp. 85
Strong Center-Right Tendency in Electionsp. 85
Causes of Popular Fiscal Restraintp. 87
Eastern Europe and the Fiscal Crisis in the Eurozonep. 91
The Greek Tragedyp. 93
The Greek Rescue Package of May 2, 2010p. 95
The South European Rescue Package, May 9-10, 2010p. 97
East European Lessons Dawn on the Eurozonep. 98
Toward European Convergencep. 103
Outcome of the Crisis in Eastern Europep. 104
EU Convergence or Divergencep. 107
The Last Shall Be the Firstp. 111
Overview of the CEE-10 countriesp. 4-5
Real GDP growth, 2000-10ep. 15
Real GDP decline, 2009p. 15
Current account deficit as share of GDP, 2006 and 2007p. 17
Gross foreign debt as share of GDP, end 2008p. 17
Real effective exchange rate growth, 1999-2008p. 19
International currency reserves as share of imports, end 2008p. 19
Share of foreign currency loans in total domestic credit, 2007p. 20
Monetary expansion, 2004-08p. 21
Inflation, 2007 and 2008p. 22
Budget balance, 2000-10ep. 23
Public debt as share of GDP, end 2008p. 23
Current account balance, 2008-09p. 44
Inflation, 2009 and 2010ep. 45
Average budget deficit, CEE-10 and PIGS, 2008-10ep. 46
Total general government expenditure, CEE-10 and EU-15, 2004-11fp. 46
Total GDP growth, 2000-10fp. 49
GDP per capita in the CEE-10 as share of average Eu-15 GDP per capitap. 50
Public debt as share of GDP, 2000-09ep. 57
Exposure of West European banks in CEE-10p. 71
Unemployment rate, monthly average, January 2008-June 2010p. 105
The ten Central and East European countries (CEE-10)p. 3
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