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    Capital inflows, crisis and recovery in small open economies

    Raza, H. and Zoega, Gylfi and Kinsella, S. (2017) Capital inflows, crisis and recovery in small open economies. Working Paper. Birkbeck, University of London, London, UK.

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    We compare two small open economics, Iceland and Ireland, that experienced a capital inflow through their banking systems in the period preceding the 2008 financial crises but differ in their currency arrangements. Both countries have mostly recovered from their respective crises, but the differences in the way their economies adjusted are interesting. The evidence suggests that changes in the real exchange rate served as the adjusting mechanism for Iceland’s current account while in Ireland domestic demand compression served as the main adjustment mechanism. We also explore the adjustment to the crisis in three other Eurozone economies and find that they were similar to the one in Ireland.


    Item Type: Monograph (Working Paper)
    Additional Information: BWPEF 1709
    Keyword(s) / Subject(s): sudden stop, real exchange rates, demand compression
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 25 Mar 2019 13:33
    Last Modified: 12 Jan 2023 03:56


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