European Parliament Library

Finance and Convergence :, What’s Ahead for Emerging Europe?, Philip Schellekens, Rudolfs Bems

This paper singles out the key short-term risks and medium-term challenges related to finance and convergence in emerging Europe. With the help of a general equilibrium theoretical framework, the paper identifies pragmatic directions for policymakers. While the "speed limits" to capital inflows may be hard to determine, the costs of breaking them are likely substantial. To ensure "safe driving," policymakers ought to build buffers and reduce vulnerabilities. Equally important, yet often overlooked, is the need to prepare for "the curve ahead"-the reversal of external current account imbalances. To avoid painful adjustments, flexible factor markets and strong financial systems will be more important than ever
Table Of Contents
Contents; I. Introduction; II. Stylized Features; A. Capital Flows and Consumption Smoothing; B. Diversification and Risk Sharing; Figures; 1. Convergence in Europe, 2000-2006; 2. Current Account Balances and Income Levels in Europe, 2006; Tables; 1. Credit to Nonfinancial Corporations and Households; 3. Share of Foreign Assets and Liabilities in GDP, 2005; C. The Shift Towards Nontradables; 4. Credit to Nonfinancial Corporations, 2000-2006; 5. Credit to Households, 2000-2006; III. A Model of Finance and Convergence; A. Model Setup; B. Definition of Equilibrium
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (43 p.)
Specific Material Designation
Form Of Item

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