Capital flow bonanzas and monetary policy in emerging Europe: responses to the global financial crisis

LTReikšminiai žodžiai: Atsakas; Europa; Finansinis pažeidžiamumas; Finansų krizė; Kapitalo srautai; Lengvatos ir pinigų politika; Naujos ES narės; Pasaulinė finansų krizė; Pinigų politika; Capital flows; Europe; Financial crisis; Financial vulnerability; Global financial crisis; Monetary policy; New EU members; Preferences and monetary policy; Response.

ENWe analyse the conduct of monetary policy in some new member states of the EU and some EU candidates over the period 2000–13. We investigate why monetary policy has been ineffective in insulating domestic liquidity from capital inflows and why some countries from emerging Europe have been especially constrained in responding to the crisis. Our contribution is threefold. First, we show that countries with fixed exchange rate regimes have encountered significant obstacles to conducting monetary policy to cope with large capital inflows and credit booms during the period preceding the financial crisis. Second, we illuminate how pegged countries have been more constrained in responding to the global financial crisis than non-pegged economies. Third, countries with high currency mismatch and financial vulnerabilities seem unable to adopt monetary policy dedicated only to macroeconomic stabilisation. [From the publication]