Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/226163
Authors: 
Gligorov, Vladimir
Year of Publication: 
2016
Series/Report no.: 
wiiw Balkan Observatory Working Papers No. 125
Abstract: 
How to deal with significant external imbalances due to persistent cross-border financial flows which eventually dry out while accumulated foreign debts need to be financed from increased exports? Keynes and Ohlin, primarily, debated an apparently more specific issue of unilateral transfers in the case of German reparations after the World War I and that debate has had lasting influence on the theory of trade and international finance and even on the understanding of the dynamics of exchange rates in financial and fiscal adjustment. These issues have resurfaced in the discussions of financial crisis in a monetary union, like that of the euro area. The aim of this essay is to use the arguments presented in this debate and in subsequent clarifications and extensions to understand the development of external imbalances in the Balkans and the prolonged adjustment in the context of the financial crisis after 2008. The motivation is that this is an important topic in international macroeconomics and a recurrent problem in this region, though I will look more thoroughly only into the last episode of the financial crisis from 2008 onwards. The essay follows the arguments advanced in this classic debate and applies them to examples of post-crisis adjustment in the Balkans (not just in the post-socialist countries, but also looking at the problems that Greece is having with servicing its large foreign debt). The essay should provide the framework for the understanding of Balkan problems of adjustment to outward transfers to service in some cases of unsustainable foreign debts. It also seeks to develop hypotheses that invite a detailed look at the data and their assessment by somewhat more in depth discussion of particular cases.
Subjects: 
macroeconomic imbalances
current account adjustment
debt problems
Greece
Balkans
Keynes
JEL: 
E12
E44
F32
F34
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.