Liquidity problems and policy implications during the recent financial crisis in the Baltic-Scandinavian region: ex ante empirical study. Likviidsusprobleemid ning nende majanduspoliitiline käsitlus viimase finantskriisi ajal Balti ja Skandinaavia regioon
Keywords: financial crisis, policy implications, interest rates, liquidity position, stock regulating process, capital flows
AbstractThis article provides an empirical examination of the development and determinants of the liquidity position in the financial sector during the past financial crises in the Baltic-Scandinavian region. We look at fiscal and monetary policy implications of the liquidity problems arising in the crisis, using panel data from Datastream and IFS data collection. The results are consistent with the theoretical predictions for a small open economy with the expected sign of changes and developments in common economic indicators. The main finding is that the changes (and the speed of changes) of interest rates, GDP and money supply have occurred relatively fast, meaning that the rising area of the LM-curve has been shorter than theory would predict. Market reactions took place quickly and relatively simultaneously – there was no time for the slow restructuring, thus liquidity needs were higher than generally. The impact of crises on the liquidity position of the financial sector is also studied.
How to Cite
Karilaid, I., & Talpsepp, T. (1). Liquidity problems and policy implications during the recent financial crisis in the Baltic-Scandinavian region: ex ante empirical study. Likviidsusprobleemid ning nende majanduspoliitiline käsitlus viimase finantskriisi ajal Balti ja Skandinaavia regioon. Estonian Discussions on Economic Policy, 18. https://doi.org/10.15157/tpep.v18i0.874
Articles. Artikeln. Artiklid
Copyright (c) 2016 Estonian Discussions on Economic Policy
This work is licensed under a Creative Commons Attribution 4.0 International License.The publication Estonian Discussions on Economic Policy uses the Creative Commons Attribution 4.0 License. With the delivery of a paper, the author grants to the Board also the right to publish the paper in the journal. The journal has set no obstacles or prohibitions to the authors for the future, and according to the current practice, authors subsequently use their paper as they consider it appropriate. Authors are personally responsible for the content, correct spelling and formatting of their publications.