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Adjustment Under a Currency Peg :, Estonia, Latvia and Lithuania During the Global Financial Crisis 2008-09, Catriona Purfield, Christoph Rosenberg

Abstract
The paper traces the Baltics’ adjustment strategy during the 2008-09 global financial crisis. The abrupt end to the externally-financed domestic demand boom triggered a severe output collapse, bringing per capita income levels back to 2005/06 levels. In response to this shock, the Baltics undertook an internal devaluation that relied on unprecedented fiscal and nominal wage adjustment, steps to preserve financial sector stability as well as complementary efforts to facilitate voluntary private debt restructuring. One-and-half years on, the strategy is making good progress but not yet complete. Confidence in the exchange rate was maintained, the banking system was supported by its parent banks, external imbalances and inflation have largely disappeared, competitiveness is improving, and fiscal deficits are gradually being brought back towards pre-crisis levels. However, amid record levels of unemployment, further reforms are needed to foster a return to more balanced growth, fiscal sustainability, and a healthier banking system
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; 1. The Baltic Countries at the Eve of the Crisis; II. From Boom to Bust-A Chronology; A. The Early Transitions; B. The EU Membership Boom; 1. Baltic Boom and Bust, End 2003-09; 2. Financial Sector Developments During the Boom, End 2003-08; C. The Fallout from the Global Crisis; 3. Output Declines in the World, 2008-09; 4. Baltics 5-Year Credit Default Swaps; III. The Baltic Adjustment Strategy; 5. How Policy Challenges Compare Across Baltics, 2004 and 2009; IV. Is It Working? Early Experience Implementing the Baltic Strategy
Language
eng
Literary Form
non fiction
Note
"September 2010."
Physical Description
1 online resource (58 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9780146234866

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