Lessons for CESEE Countries
Edited by Ewald Nowotny, Doris Ritzberger-Grünwald and Peter Backé
Chapter 1: Towards a European perspective on financial integration
The purpose of this chapter is to give an introduction to the various interactions of the financial cycle and the real economy both in general terms and more specifically for countries in Central, Eastern and South-Eastern Europe (CESEE). Many countries experienced pronounced boom–bust cycles, which raise questions about the right policy response in the boom phase, but also during the downswing of the financial cycle, after the bubble has burst. The chapter is structured as follows. The next section deals with current developments in Europe, where we see a very gradual and still heterogeneous recovery. Sections 1.3 and 1.4 deal with current policy challenges, namely how to take a European perspective on financial integration issues, and how to get a better understanding of the financial cycle in macroeconomics. The chapter concludes with some open policy questions, which will be dealt with in various contributions throughout this volume.
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