Are the Central and Eastern European Transition Countries Still Vulnerable to a Financial Crisis? Results from the Signals Approach

33 Pages Posted: 20 May 2016

See all articles by Axel Brüggemann

Axel Brüggemann

Bank of Finland - Institute for Economies in Transition (BOFIT)

Thomas Linne

Halle Institute for Economic Research

Date Written: 2002

Abstract

The aim of paper is to analyse the vulnerability of the Central and Eastern European accession countries to the EU as well as that of Turkey and Russia to a financial crisis. Our methodology is an extension of the signals approach. We develop a composite indicator to measure the evolutin of of the risk potential in each country. Our findings show that crises in Central and Eastern Europe are caused by much the usual suspects s in others emerging markets. In particular an overvalued exchange rate. Weak exports and dwindling currency reserves have good precictive power for assessing crisis vulnerabilities. Keywords: F31, F47, financial crises, vulnerability indicator, Central and Eastern Europe

Suggested Citation

Brüggemann, Axel and Linne, Thomas, Are the Central and Eastern European Transition Countries Still Vulnerable to a Financial Crisis? Results from the Signals Approach (2002). BOFIT Discussion Paper No. 5/2002, Available at SSRN: https://ssrn.com/abstract=2781910 or http://dx.doi.org/10.2139/ssrn.2781910

Axel Brüggemann (Contact Author)

Bank of Finland - Institute for Economies in Transition (BOFIT) ( email )

Helsinki 00101
Finland

Thomas Linne

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Department of Central and Eastern Europe
D-06017 Halle (Saale)
Germany
+49 345 7753 834 (Phone)

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