Macroeconomic and Financial Stability: Transition and East Asian 'Contagion'

EBRD Working Paper No 28

Posted: 6 Dec 1998

See all articles by Steven Fries

Steven Fries

European Bank for Reconstruction and Development (EBRD)

Martin Raiser

European Bank for Reconstruction and Development

Nicholas Stern

Stern Review on the Economics of Climate Change

Date Written: May 1998

Abstract

The contagion effects emanating from the recent East Asian turmoil provide an interesting test of the strength of the foundations for macroeconomic and financial stability laid by the post-communist transition and how this strength varies across central and eastern Europe and the CIS. The analysis reveals considerable variation across the region with respect to both macroeconomic fundamentals and the ability to withstand shifts in the portfolio allocations of investors. This variation, moreover, has been reflected in the impact of events in East Asia on money and securities markets across the region, although the post communist countries as a whole have withstood these effects fairly well. The relative stability of the region leaves no room for complacency, however. There remain significant macroeconomic imbalances and vulnerabilities. And many of the structural weaknesses observed in East Asia, particularly in its financial sectors and patterns of corporate finance, can be found in the transition economies, albeit on a smaller scale because of the time that has been required to expand finance in the transition.

JEL Classification: E32, F41

Suggested Citation

Fries, Steven M. and Raiser, Martin and Stern, Nicholas, Macroeconomic and Financial Stability: Transition and East Asian 'Contagion' (May 1998). EBRD Working Paper No 28. Available at SSRN: https://ssrn.com/abstract=141809

Steven M. Fries (Contact Author)

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom
+44 20 7338 7004 (Phone)
+44 20 7338 6110 (Fax)

Martin Raiser

European Bank for Reconstruction and Development ( email )

One Exchange Square
London EC2A 2JN
United Kingdom
+44 20 7338 7231 (Phone)
+44 20 7338 6110 (Fax)

Nicholas Stern

Stern Review on the Economics of Climate Change

HM Treasury
1 Horse Guards Road
London SW1A 2HQ
United Kingdom

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