The world today is facing the most difficult and the most complicated crisis, starting from the time of the Great Depression. The crisis significantly emphasized the role of fiscal policy as important to increase the aggregate demand and to recover the financial sector. We are aware of the biggest coordination of monetary and fiscal policy until today, in which through aggressive monetary and fiscal measures was allowed quicker overcoming of the consequences of the crisis, taking corrective action in the financial architecture, adoption of new rules for the regulation of financial markets and financial institutions, and greater care in handling with complicated and modern financial derivates. The aim of this paper is to realize the most important aspect of the European crisis: the coordination of fiscal and monetary policy and their importance for the transition economies (including Eastern Europe and CIF members). Financial crises have a significant and permanent effect on these countries, lowering long-term output by about 17 percent. The effect is more important in smaller countries, with relative higher dependence on external financing, and in which the banking sector noticed more important financial disequilibria. We also found that fiscal policy measures have been the most efficient tools in dealing with the crises, while the role of monetary policy instruments has been rather blinded. Exchange rate resulted to be more a propagator than a crises absorber, while the IMF credit has been found to have positive (but not significant) impact on growth performance. Finally, the effect for the CEECs is much bigger than in the EU advanced economies, for which we found that financial crises lowers long-term output only by 2 percent. The necessity for fiscal adjustment is required step of fiscal authorities to stabilize the economy and to achieve financial stability and sustainable economic growth in the long term.
Кључне речи :
Тематска област:
Government and economic development
Датум:
01.07.2012.
Бр. отварања:
529
