Publication

This paper uses a Markov regime-switching model to assess the vulnerability of the Czech Republic, Hungary, the Slovak Republic, Russia and Ukraine during the period of 1993-2004. The authors show that for the new EU member states in Central and Eastern Europe the majority of crises can be explained by inconsistencies in the domestic policy mix and by the deterioration of macroeconomic fundamentals. As for Russia and Ukraine, financial vulnerability type indicators are the most relevant.