Although there is a large body of literature examining the negative effects of the global financial crisis on transition economies, the global financial bubble that preceded the crisis had a large positive impact on the productive capacity of these countries, both by increasing the pace of...

The imputation of reinvested earnings from foreign direct investment (FDI) as a debit in the balance of payments exaggerates the current account deficit. This phenomenon is of major importance for transition economies because they received massive inflows of FDI in the late 1990s. We model the...