Financial Cycles and the Real Economy
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Financial Cycles and the Real Economy

Lessons for CESEE Countries

Edited by Ewald Nowotny, Doris Ritzberger-Grünwald and Peter Backé

What is the link between the financial cycle - financial booms, followed by busts - and the real economy? What is the direction of this link and how salient is this connection? This unique book examines these fundamental questions and offers a paramount contribution to the debate surrounding the recent financial and economic crisis.
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Chapter 4: Economic convergence across Central, Eastern and South-Eastern Europe: achievements and challenges

Jörg Asmussen


I would like to share some thoughts on the region on which the Oesterreichische Nationalbank (OeNB) has developed analytical excellence that is beneficial to the entire euro system. I will focus my remarks on selected experiences of countries in Central, Eastern and South-Eastern Europe on their path of economic and institutional convergence towards the rest of Europe. I will argue that both the successes and the challenges associated with the convergence process point to two basic lessons: first, that we should never relax in the pursuit of domestic policies oriented towards financial stability and sustainable growth; and second, that we need not just more, but also better, European integration. In what follows, I will use the term ‘Western Balkans’ to refer to the six European Union (EU) candidate and potential candidate countries in the region: Albania, Bosnia and Herzegovina, Kosovo, the Former Yugoslav Republic of Macedonia, Montenegro and Serbia. I will use the term ‘Central and Eastern European countries’ to refer to seven EU member states outside the euro area, namely Bulgaria, Croatia, the Czech Republic, Hungary, Lithuania, Poland and Romania. And I will refer to the two groups of countries taken together as ‘Central, Eastern and South-Eastern Europe’.

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