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Policy Response to the Crisis: How National Can It Be in CEE?

Policy Response to the Crisis: How National Can It Be in CEE?. Ivan Lesay Institute of Economic Research, Slovak Academy of Sciences Ministry of Finance of the Slovak Republic Debt, Finance and Economic Crisis: Consequences and Solutions

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Policy Response to the Crisis: How National Can It Be in CEE?

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  1. Policy Response to the Crisis: How National Can It Be in CEE? Ivan Lesay Institute of Economic Research, Slovak Academy of Sciences Ministry of Finance of the Slovak Republic Debt, Finance and Economic Crisis: Consequences and Solutions Eurodad-Glopolis International Conference, Prague, June 3, 2013

  2. FiscalProfligacy? Eurostat

  3. LivingBeyondOurMeans? I. DG Ecfin AMECO database

  4. LivingBeyondOurMeans? II. DG Ecfin AMECO database

  5. EuropeanRescue: PublicFundsSavingPrivateAssets • Publicinterventionmakesiteasierforprivateinvestors to reducetheirexposure in theEurozoneperipheries • Greece’s current account deficit and itsexternal financing (cum. 2008-2011,US billion) InternationalMonetaryFund

  6. EuropeanRemedy: Austerity and StructuralReforms (4P Report) I. Michal Polak, MF SR

  7. EuropeanRemedy: Austerity and StructuralReforms II. Michal Polak, MF SR

  8. EuropeanRemedy: Austerity and StructuralReforms III. Michal Polak, MF SR

  9. EuropeanLimits to NationalAnti-CrisisResponses • Eurozone MS – missingcentral bank tools • no exchange rate cushion • no interest rate policy • no last resort lender • ECB: „we don't have a mandate“ • EU: Stability and GrowthPact (Six-Pack, Two-Pack) • Medium Term Objective • Excessive Deficit Procedure • EU25: TSCG (FiscalCompact) • AutomaticCorrectionMechanism

  10. CEE DevelopmentModels: SK, SI, EE, CZ • Type ofcapitalinflows • SK, CZ productive FDI vs. EE, SI ext. credit to non-tradables • Currentaccountposition • CZ (-); EE (↑ but risk); SK, SI (balanced) • Privateindebtedness • SK (↓↓); CZ (↓); EE (↑↑ butadjusted); SI (↑) • Financialsectorcondition • CZ, SK (bailedout); EE (foreign); SI (↓) • Dominantsectorsin economies • SK, CZ (export ind.); EE (services); SI (inbtw.) • Publicindebtedness: 50 % GDP (EE 10 %)

  11. Summary and conclusions • Nationalanti-crisisresponsespossible (evendesirable) but... • Nationallimits– economicdevelopment model pathdependence • (Eurozone) EU (monetary) fiscallimits • Full-fledgedanti-crisisresponseonlyifcoordinatedattheEuropeanlevel • End austerity, admitthesystematicnatureofthecrisis • Ballanceddevelopment, productive (green) investment

  12. Ivan.Lesay@savba.sk, Ivan.Lesay@finance.gov.sk Thankyouforyourattention

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