In this paper, I analyze determinants of carry trade returns in Central and Eastern Europe (CEE). I show that carry trades to CEE were lucrative due to interest rate spreads between the funding and investment currency from 2004 to 2006. They became unprofitable when liquidity risk and exchange...

In this paper I analyze whether carry trades fueled stock markets in Central and Eastern Europe prior to the latest crisis. Empirically, I find that from 1999 to 2009 stock markets hiked when carry trades were lucrative. I argue that it is likely that increased risk-taking via carry trades...

In this paper, I analyze determinants of carry trade returns in Central and Eastern Europe (CEE). I show that carry trades to CEE were lucrative due to interest rate spreads between the funding and investment currency from 2004 to 2006. They became unprofitable when liquidity risk and exchange...