Financial Liberalization and Business Cycles: The Experience of Countries in the Baltics and Central Eastern Europe

Lucio Vinhas de Souza ()

No 2004,23, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank, Research Centre

Abstract: This paper extends the work of Kaminsky and Schmukler (2003) to the Baltic and Central Eastern European future Member States of the European Union, to test if the same short-run increase in cyclical volatility arising from financial integration is observed in this specific sample of ?emerging markets?. This work finds some signs that, contrary to other emerging markets, this does not happen: for the future Member States, financial integration, similarly to the outcome observed in mature market economies, reduces cyclical volatility both in the short and in the long run. Weak indications are found that this may happen partially due to the anchoring of expectations provided by the EU Accession, and to the more robust institutional framework imposed by this process onto the countries in question. --

Keywords: Enlargement; European Union; financial liberalization; booms; busts; cycles; Bry-Boschan; volatility (search for similar items in EconPapers)
JEL-codes: F34 F02 F30 F33 F32 F36 G15 P20 (search for similar items in EconPapers)
Date: 2004

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Persistent link: http://EconPapers.repec.org/RePEc:zbw:bubdp1:2289

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