Abstract
The issue of financial crisis still remains a matter of concern for Western Balkan countries and Europe as a whole. In moments when the economies of these countries recover from recessions of global financial crisis, a new crisis threatens the region. Indeed, a considerable part of the financial sector of the Western Balkan countries is from the Greek capital, and the economic interdependency among them is relatively great. Therefore, the purpose of this paper is to investigate the probability of a spillover effect of the current Greek crisis to the countries of the Western Balkans. To test for this possibility, the authors make use of a binary logit model after outlining macroeconomic data for the sample countries. The authors conclude by discussing remedies on the impact of the contagion effect on the part of policy makers. The paper provides an interesting approach to a contemporary issue, having attracted little attention in terms of the spillover effect on neighboring countries. How the issue of debt crisis is handled by respective authorities and the European Union and which strategies are followed for crisis alleviation are discussed as well.
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Notes
- 1.
The following countries are included in Western Balkan: Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYROM, Montenegro and Serbia.
- 2.
IMF World Economic Outlook (WEO) (2012) forecast of global economic growth for year 2012.
- 3.
The New York Times, April 8 2012. http://topics.nytimes.com/top/reference/timestopics/subjects.
- 4.
The data are provided by EBRD. The average is calculated as a simple average.
- 5.
Such aspects and comprehensive details on anti-crisis packages are outside the domain of this study.
- 6.
- 7.
There are three generations of early warning models for crises.The first generation developed by Krugman (1979) was focused on macroeconomic indicators and the evolution of international reserves, the budget deficit, current account deficit and credit developments as potential indicators of a crisis. The second generation of models, which could be considered that of Obstfeld (1996), added elements of economic expectations in predicting crises, and the third generation, which was developed in the last two decades, include indicators of financial sector as potential determinants of a crisis.
- 8.
The data for some years and some variables are not available for the Republic of Kosovo, for this reason it is excluded from the sample.
- 9.
It is very difficult, almost impossible, to systematize time series for quarterly or monthly data for all Western Balkan countries, even for some countries, some variables do not exist.
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Sadiku, M., Sadiku, L., Berisha, N. (2014). The Financial Crisis in Greece and Its Impacts on Western Balkan Countries. In: Karasavvoglou, A., Polychronidou, P. (eds) Economic Crisis in Europe and the Balkans. Contributions to Economics. Springer, Heidelberg. https://doi.org/10.1007/978-3-319-00494-5_2
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