S. M. Ali Abbas

Jan Gottschalk

Fuad Hasanov

Greetje Everaert

Olivier Basdevant

Mr. Mauricio Villafuerte

Ms. Cemile Sancak

Ricardo Velloso

Stephanie Eble

Junhyung Park

In response to the global financial crisis, governments provided substantial support to the financial and other key sectors. Although this cushioned the adverse effects of the crisis, it is necessary now to articulate a strategy to ensure the sustainability of public finances. This paper discusses the scale and composition of fiscal adjustment that will need to occur once the recovery is securely under way. Although specific country-level circumstances will influence the composition of the adjustment and its political feasibility, in many cases restoring fiscal sustainability will require reforms to reduce spending and increase tax revenue.

Strategies for Fiscal Consolidation in the Post-Crisis World

Christian Saborowski

Bertrand Gruss

Gregorio Impavido

Ms. Natasha Xingyuan Che

Ms. Nan Geng

Yinqiu Lu

Jérôme Vandenbussche

Li Zeng

Countries in Central, Eastern, and Southeastern Europe (CESEE) experienced a credit boom-bust cycle in the last decade. This paper analyzes the roles of demand and supply factors in explaining this credit cycle. Our analysis first focuses on a large sample of bank-level data on credit growth for the entire CESEE region. We complement this analysis by five case studies (Latvia, Lithuania, Montenegro, Poland, and Romania). Our results of the panel data analysis indicate that supply factors, on average and relative to demand factors, gained in importance in explaining credit growth in the post-crisis period. In the case studies, we find a similar result for Lithuania and Montenegro, but the other three case studies point to the fact that country experiences were heterogeneous.

Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe

Greetje Everaert

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