Abstract:

The occurrence of the most critical international economical and financial crisis of the 21st century brought into the spotlight the damages that crises can bring to our economy. After its burst in the autumn of 2007, the crisis has spread all over the world through the Contagion Effect, and has led to an accelerated and sharp deterioration of economic activity. The effects of the episodes of financial crises have on the real economy seem to be more important and persistent in some specific countries. For this reason we focused our attention upon eight European transition countries and a sample of thirteen financial crises. The aim of this study is to perform an econometric analysis of the effects of episodes of financial crises on real output (GDP) for eight economies from Central and Eastern Europe (CEE) using an ARDL equation and an impulse response function. The main findings of the paper suggest that, in the case of the CEE economies analyzed, financial crises have an important and long-lasting effect, lowering the real output by about 12-14%.