In the past decade, most of the EU New Member States experienced a severe credit-boom bust cycle. This paper argues that the credit boom-bust cycle was to a large extent the result of factors external to the region (“bad luckâ€). Rapid credit growth followed from a high liquidity in...

This paper evaluates the role of trade and financial linkages in the decision to enter a monetary union. We estimate a two-country DSGE model for the U.K. economy and the euro area, and use the model to compute the welfare trade-offs from joining the euro. We evaluate two alternative scenarios....

This 2014 Article IV Consultation highlights that Malta’s economy continues to weather the global crisis well. Real GDP growth has been one of the highest in the euro area since the beginning of the crisis, supported by relatively diversified exports, a recent recovery in domestic demand,...

This staff report on Malta’s Article IV Consultation highlights economic development and policies. Risks from the large international bank sector appear contained given limited balance-sheet exposure to the Maltese economy, though continued vigilance is warranted. Regulatory changes to...

This paper focuses on Cyprus’ Fourth Review Under the Extended Arrangement Under the Extended Fund Facility (EFF) and Request for Modification of Performance Criteria. The program remains on track. Fiscal targets for the first quarter were met with considerable margins, domestic payment...

KEY ISSUES Background: The large imbalances that accumulated prior to the global financial crisis culminated in a collapse of the banking sector in early 2013. In response, the authorities took unprecedented measures and adopted an economic adjustment program, supported by official financing,...

This paper discusses Cyprus’ First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria. The program is on track, and ownership by the authorities has improved. Fiscal targets were met with a comfortable margin. All...