Abstract
Is experience of financial imbalances driving intensity of macroprudential policy instruments use? Theoretically - yes, because they support to diminish conflict between price, exchange rate and financial stability. In the same time CEE countries demonstrate more complicated picture. Such countries experienced strong structural determined vulnerability to financial imbalances accumulation. The scale of correction of such imbalances also was tremendous. But empirical analysis doesn’t show that experience of imbalances is a driving force of more intensive use of macroprudential policy instruments. Results of regression analysis based on 18 CEE countries shows that such countries are likely to divide on two groups: those there macroprudential policy is complimenting active structural reforming, and those there such policy is looked like defense reaction on challenges related to general structural weakness.
Highlights
Is experience of financial imbalances driving intensity of macroprudential policy instruments use? Theoretically – yes, because they support to diminish conflict between price, exchange rate and financial stability
It is no coincidence that the Baltic countries underwent shock reforms to correct the financial imbalances caused by the crisis and Slovenia experienced financial stress, most CEE countries went through the global shock wave of 2007-2009 relatively smoothly
In key Eastern EU countries – Poland, Slovakia, Czech Republic, Hungary, Romania, Bulgaria, Slovenia, etc. – the issue of adjusting to post-crisis reality is characterized by further emphasis on building institutions and improving the efficiency of the macro financial stability framework
Summary
The countries of Central and Eastern Europe approaching the qualitative characteristics of the EU, or in other words institutional convergence, can be considered a powerful factor in structural reforms. For Ukraine, as well as for a number of other countries, the global crisis will remain a line in the sand between the trajectories of welfare improvement for a long time. The traditional division into monetary policy and microprudential regulation was based on a series of theoretical imprints that were associated with the new Keynesian approach to macroeconomics and the neoclassical approach to the regulation of the financial sector. It presumed that markets are effective; transparency improves the effectiveness of allocation processes; long-term deviation of prices from equilibrium in the market is impossible; and the behaviour of par-
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