Phoenix from the Ashes: The Recovery of the Baltics from the 2008/2009 Crisis

Bas B. Bakker () and Marta Korczak
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Bas B. Bakker: IMF Regional Office for Central and Eastern Europe
Marta Korczak: IMF Regional Office for Central and Eastern Europe

Comparative Economic Studies, 2017, vol. 59, issue 4, No 5, 520-544

Abstract: Abstract This paper argues that the deep bust and strong recovery of the Baltics were to large extent the result of the sharp adjustment the private sector was forced to go through between 2007 and 2009. When private capital flows suddenly stopped, firms were forced to quickly reduce their net lending gap. They slashed investment and cut costs, including by shedding labor. This led to a deep recession, but also to a sharp improvement in profitability and competitiveness, which set the stage for a subsequent export boom.

Keywords: Baltics; Crisis; Boom-bust; Sudden stop; Capital flows; Currency board (search for similar items in EconPapers)
JEL-codes: E32 F41 G01 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1057/s41294-017-0034-4

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