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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 - PowerPoint PPT Presentation
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Policy Response to the Crisis: How National Can It Be in CEE?
Ivan LesayInstitute of Economic Research, Slovak Academy of Sciences Ministry of Finance of the Slovak Republic
Debt, Finance and Economic Crisis: Consequences and SolutionsEurodad-Glopolis International Conference, Prague, June 3, 2013
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Fiscal Profligacy?Government deficit Current Account Financial Account
GR -5,4 PT -9,3 PT 7,9PT -4,2 GR -8,4 GR 7,4IT -2,9 ES -5,8 ES 5,4FR -2,7 IE -1,9 IE 2,4DE -2,3 IT -1,3 IT 1AT -1,6 FR 0,5 FR -0,2NL -0,6 AT 1,7 AT -0,8BE -0,3 BE 3 BE -2,8ES 0,5 DE 3,2 DE -4,1IE 1,5 NL 5,5 FI -4,4LU 2,3 FI 6 NL -4,6FI 4,2 LU 10,6 LU -11
% of GDP, 2000-2007 avg.Eurostat
3
Living Beyond Our Means? I.
DG Ecfin AMECO database
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201395
100
105
110
115
120
125
130
135
140
Nominal ULC
GermanyFranceSlovakiaGISP avg.
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Living Beyond Our Means? II.
DG Ecfin AMECO database
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201390
92
94
96
98
100
102
104
Real ULC
GermanyFranceSlovakiaGISP avg.
5
European Rescue: Public Funds Saving Private Assets
Public intervention makes it easier for private investors to reduce their exposure in the Eurozone peripheries
Greece’s current account deficit and its external financing (cum. 2008-2011, US billion)
International Monetary Fund
6
European Remedy: Austerity and Structural Reforms (4P Report) I.
Michal Polak, MF SR
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European Remedy: Austerity and Structural Reforms II.
Michal Polak, MF SR
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European Remedy: Austerity and Structural Reforms III.
Michal Polak, MF SR
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European Limits to National Anti-Crisis Responses Eurozone MS – missing central bank tools
◦ no exchange rate cushion
◦ no interest rate policy
◦ no last resort lender
◦ ECB: „we don't have a mandate“
EU: Stability and Growth Pact (Six-Pack, Two-Pack)◦ Medium Term Objective
◦ Excessive Deficit Procedure
EU25: TSCG (Fiscal Compact)◦ Automatic Correction Mechanism
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CEE Development Models: SK, SI, EE, CZ Type of capital inflows
◦ SK, CZ productive FDI vs. EE, SI ext. credit to non-tradables Current account position
◦ CZ (-); EE (↑ but risk); SK, SI (balanced) Private indebtedness
◦ SK (↓↓); CZ (↓); EE (↑↑ but adjusted); SI (↑) Financial sector condition
◦ CZ, SK (bailed out); EE (foreign); SI (↓) Dominant sectors in economies
◦ SK, CZ (export ind.); EE (services); SI (inbtw.) Public indebtedness: 50 % GDP (EE 10 %)
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Summary and conclusionsNational anti-crisis responses possible (even
desirable) but...◦National limits – economic development model
path dependence◦ (Eurozone) EU (monetary) fiscal limits
Full-fledged anti-crisis response only if coordinated at the European level◦End austerity, admit the systematic nature of the
crisis◦Ballanced development, productive (green)
investment
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THANK YOU FOR YOUR ATTENTION
