Finding a Balance between Growth and Vulnerability Trade-Offs : Lessons from Emerging Europe and the CIS

Ghosh, Swati; Sugawara, Naotaka; Zalduendo, Juan

dc.creator	Ghosh, Swati
dc.creator	Sugawara, Naotaka
dc.creator	Zalduendo, Juan
dc.date	2012-03-19T18:01:26Z
dc.date	2012-03-19T18:01:26Z
dc.date	2011-03-01
dc.date.accessioned	2023-02-17T20:55:39Z
dc.date.available	2023-02-17T20:55:39Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110328114049
dc.identifier	http://hdl.handle.net/10986/3380
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/244344
dc.description	This paper examines the growth patterns of emerging Europe and the Commonwealth of Independent States (CIS) countries prior to the global financial crisis. The aim is to draw lessons on what policies can best position these countries going forward to enjoy growth without a buildup in macro and financial vulnerability. Cluster analysis is used to classify these countries across the growth and vulnerability dimensions; namely, a classification into low or high growth outcomes, each of which may occur with low or high vulnerability features. The vulnerability indicators used are multifaceted, covering both the domestic and the external dimensions that have been identified in previous studies as being good indicators of likelihood of crisis -- itself understood as multidimensional. Based on multinomial logit regressions, the initial conditions and the economic policies that might affect the probabilities of being in each of the four possible cluster combinations are examined. Many (if not most) of the countries in the sample experienced very large capital inflows relative to their gross domestic product prior to the crisis, which can complicate macroeconomic management and lead to a buildup of vulnerability. These large inflows were partly due to the high liquidity in global markets and, at least for some countries in the country sample, the particular attractiveness of "new Europe and emerging countries in the region" in the eyes of foreign investors. Nonetheless, the analysis finds strong evidence that the macroeconomic and structural policies that over time influence the structure of the economy, can play a significant role in explaining (and, going forward, in influencing) the different growth and vulnerability patterns experienced by the countries covered in this paper.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5592
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	AGGREGATE DEMAND
dc.subject	AMERICAN ECONOMIC REVIEW
dc.subject	ASSET PRICES
dc.subject	ASSETS
dc.subject	BALANCE OF PAYMENTS
dc.subject	BALANCE SHEET
dc.subject	BALANCE SHEETS
dc.subject	BANKING SECTOR
dc.subject	BANKING SECTOR DEVELOPMENTS
dc.subject	BROAD MONEY
dc.subject	BUSINESS CYCLE
dc.subject	CAPITAL ACCOUNT
dc.subject	CAPITAL ACCOUNT LIBERALIZATION
dc.subject	CAPITAL ACCOUNT OPENNESS
dc.subject	CAPITAL CONTROLS
dc.subject	CAPITAL FLOWS
dc.subject	CAPITAL INFLOWS
dc.subject	CAPITAL MARKET
dc.subject	CAPITAL OUTFLOWS
dc.subject	CAPITAL TRANSACTIONS
dc.subject	CHECKS
dc.subject	COLLATERAL
dc.subject	COMMERCIAL BANKS
dc.subject	CREDIT BOOM
dc.subject	CREDIT BOOMS
dc.subject	CREDIT GROWTH
dc.subject	CURRENT ACCOUNT
dc.subject	CURRENT ACCOUNT DEFICIT
dc.subject	CURRENT ACCOUNT DEFICITS
dc.subject	CYCLICAL FACTORS
dc.subject	CYCLICAL FISCAL POLICY
dc.subject	DEBT DATA
dc.subject	DEBT RATIOS
dc.subject	DEPENDENT VARIABLES
dc.subject	DEPOSIT
dc.subject	DESCRIPTIVE STATISTICS
dc.subject	DEVELOPMENT ECONOMICS
dc.subject	DEVELOPMENT POLICY
dc.subject	DIVERSIFICATION
dc.subject	DOMESTIC CREDIT
dc.subject	DOMESTIC DEMAND
dc.subject	ECONOMETRIC EVIDENCE
dc.subject	ECONOMIC ACTIVITY
dc.subject	ECONOMIC CONDITIONS
dc.subject	ECONOMIC DEVELOPMENT
dc.subject	ECONOMIC GROWTH
dc.subject	ECONOMIC OUTLOOK
dc.subject	ECONOMIC OVERHEATING
dc.subject	ECONOMIC POLICIES
dc.subject	ECONOMIC SLOWDOWN
dc.subject	ECONOMIC STRUCTURE
dc.subject	EMERGING MARKETS
dc.subject	EMPIRICAL REGULARITIES
dc.subject	EMPIRICAL RESULTS
dc.subject	ESTIMATED COEFFICIENT
dc.subject	ESTIMATED COEFFICIENTS
dc.subject	ESTIMATION RESULTS
dc.subject	EXCHANGE ARRANGEMENTS
dc.subject	EXCHANGE RATE
dc.subject	EXCHANGE RATE ARRANGEMENTS
dc.subject	EXCHANGE RATE FLEXIBILITY
dc.subject	EXCHANGE RATE POLICIES
dc.subject	EXCHANGE RATE REGIME
dc.subject	EXCHANGE RATE REGIME CLASSIFICATION
dc.subject	EXCHANGE RESTRICTIONS
dc.subject	EXPERIENCE OF COUNTRIES
dc.subject	EXPORT PERFORMANCE
dc.subject	EXTERNAL ASSETS
dc.subject	EXTERNAL DEBT
dc.subject	EXTERNAL IMBALANCES
dc.subject	EXTERNAL POSITIONS
dc.subject	EXTERNAL SHORT-TERM DEBT
dc.subject	EXTERNAL VULNERABILITY
dc.subject	FINANCIAL CRISES
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL DEVELOPMENT
dc.subject	FINANCIAL OPENNESS
dc.subject	FINANCIAL SECTOR
dc.subject	FINANCIAL VULNERABILITY
dc.subject	FISCAL BALANCE
dc.subject	FISCAL BALANCES
dc.subject	FISCAL DEFICIT
dc.subject	FISCAL DEFICITS
dc.subject	FISCAL POLICIES
dc.subject	FISCAL POLICY
dc.subject	FLEXIBLE EXCHANGE RATES
dc.subject	FOREIGN ASSETS
dc.subject	FOREIGN DIRECT INVESTMENT
dc.subject	FOREIGN EXCHANGE
dc.subject	FOREIGN EXCHANGE RESERVE
dc.subject	FOREIGN EXCHANGE RESERVES
dc.subject	FOREIGN INVESTORS
dc.subject	FOREIGN LIABILITIES
dc.subject	FOREIGN RESERVES
dc.subject	GDP
dc.subject	GLOBAL CONDITIONS
dc.subject	GLOBAL LIQUIDITY
dc.subject	GLOBAL MARKETS
dc.subject	GOVERNMENT EXPENDITURE
dc.subject	GROSS DOMESTIC PRODUCT
dc.subject	GROWTH DETERMINANTS
dc.subject	GROWTH IMPACT
dc.subject	GROWTH MODEL
dc.subject	GROWTH RATE
dc.subject	GROWTH RATES
dc.subject	HIGH GROWTH
dc.subject	HISTORY OF EXCHANGE RATE
dc.subject	IMBALANCES
dc.subject	IMPORT
dc.subject	IMPORT GROWTH
dc.subject	IMPORTS
dc.subject	INCOME
dc.subject	INCOME LEVEL
dc.subject	INDEPENDENT VARIABLES
dc.subject	INDIVIDUAL COUNTRIES
dc.subject	INFLATION
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL MONETARY FUND
dc.subject	INVESTMENT RISKS
dc.subject	LEVEL OF DEVELOPMENT
dc.subject	LEVEL OF INCOME
dc.subject	LIQUIDITY
dc.subject	LOAN
dc.subject	LOCAL CURRENCY
dc.subject	MACROECONOMIC MANAGEMENT
dc.subject	MACROECONOMIC OVERHEATING
dc.subject	MARKET UNCERTAINTY
dc.subject	MARKET VOLATILITY
dc.subject	MATURITY
dc.subject	MONETARY CONDITIONS
dc.subject	MONETARY FUND
dc.subject	MONETARY POLICIES
dc.subject	MONETARY POLICY
dc.subject	NATIONAL BANK
dc.subject	NEGATIVE IMPACT
dc.subject	NEGATIVE IMPACT ON GROWTH
dc.subject	NOMINAL EXCHANGE RATE
dc.subject	OIL PRICES
dc.subject	OVERVALUATION
dc.subject	POLICY ANALYSIS
dc.subject	POLICY MAKERS
dc.subject	POLICY RESEARCH
dc.subject	POLICY VARIABLES
dc.subject	POVERTY REDUCTION
dc.subject	PRIVATE LOAN
dc.subject	PRIVATE SECTOR
dc.subject	PRIVATE SECTOR CREDIT
dc.subject	PRODUCTIVE INVESTMENTS
dc.subject	PUBLIC EXPENDITURE
dc.subject	PUBLIC FINANCES
dc.subject	PUSH FACTORS
dc.subject	RAPID GROWTH
dc.subject	REAL EFFECTIVE EXCHANGE RATE
dc.subject	REAL EXCHANGE RATE
dc.subject	REAL EXCHANGE RATE OVERVALUATION
dc.subject	REAL GDP
dc.subject	REAL INTEREST
dc.subject	REAL INTEREST RATES
dc.subject	RECESSION
dc.subject	RECESSIONS
dc.subject	REGRESSION ANALYSIS
dc.subject	RELATIVE IMPORTANCE
dc.subject	RISK AVERSION
dc.subject	SHORT TERM DEBT
dc.subject	SHORT-TERM DEBT
dc.subject	STANDARD DEVIATION
dc.subject	STANDARD ERRORS
dc.subject	STRUCTURAL POLICIES
dc.subject	TOTAL EXPORTS
dc.subject	TRADE BALANCE
dc.subject	TRADE OPENNESS
dc.subject	TRANSITION COUNTRIES
dc.subject	TRANSITION PATH
dc.subject	TROUGH
dc.subject	UNCERTAINTY
dc.subject	UPWARD PRESSURES
dc.subject	VOLATILITY
dc.title	Finding a Balance between Growth and Vulnerability Trade-Offs : Lessons from Emerging Europe and the CIS
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	Europe and Central Asia
dc.coverage	Europe and Central Asia