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In the wake of the financial crisis of 2008, governments worldwide undertook massive fiscal interventions to stave off what otherwise would have likely been a system-wide financial and economic meltdown. The policy responses engendered significant shifts in growth trajectories and debt sustainability outlooks of both mature and developing economies. The magnitude of public liabilities incurred and the uncertainty surrounding the exit from unprecedented discretionary fiscal stimulus have become a major source of concern about a future crisis. Will the current stringent financial conditions lead

Debt relief --- Debts, Public. --- Economic policy. --- Financial crises. --- Monetary policy. --- Monetary management --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Economic nationalism --- Economic planning --- National planning --- State planning --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Economic policy --- Currency boards --- Money supply --- Crises --- Economics --- Planning --- National security --- Social policy --- Debt --- Bonds --- Deficit financing

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"The paper presents a fiscal estimate of Bulgaria's perspective European Union (EU) membership. The projected EU funds have two distinct effects: first, there is the overall effect on the balance of payments of the country; and second, there is the pure effect on the national budget. The paper concludes that Bulgaria is likely to benefit from large net inflows of resources of an average of 3.7 percent of gross domestic product (GDP) in 2007-09. In contrast, its fiscal position is expected to deteriorate by 1.6 percent of GDP on average in 2007-09 if no expenditure restructuring of the fiscal framework is carried out. The expected deterioration of the public finances related to EU accession would be due to co-financing requirements, national contributions to the EU budget, and possible full pre-financing of the EU direct payments to Bulgarian farmers in the first year of accession. However, the above expenditures will be partly offset by the budgetary compensation allocated out of the EU budget, savings from agricultural subsidies, and shifting of certain public expenditures to Cohesion Fund-supported projects. "--World Bank web site.

Balance of payments --- Budget --- European Union

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This paper analyzes the drivers and consequences of sudden stops of capital flows. It focuses on the impact of external vulnerability on the depth and length of sudden stop crises. The authors analyze 43 developing and developed countries between 1993 and 2006. They find evidence that external vulnerability not only significantly impacts the probability of a sudden stop crisis, but also prolongs the time it takes for growth to revert to its long-term trend once a sudden stop occurs. Interestingly, external vulnerability does not significantly impact the size of the instantaneous output effect in case of a sudden stop but prompts a cumulative output effect through significantly diminishing the speed of adjustment of output to its trend. This finding implies that countries financing a large part of their absorption externally do not suffer more ferocious output losses in a sudden stop crisis, but take longer to adapt afterward and are hence expected to suffer more protracted crises periods. Compared with previous literature, this paper makes three contributions: (i) it extends the country and time coverage relative to datasets that have previously been used to analyze related topics; (ii) it specifically accounts for time-series autocorrelation; and (iii) it provides an analysis of the adjustment path of economic growth after a sudden stop.

Adjustment dynamics --- Adjustment path --- Annual growth --- Capital flows --- Currencies and Exchange Rates --- Debt Markets --- Descriptive statistics --- Economic Growth --- Economic growth --- Economic policy --- Economic Theory and Research --- Emerging Markets --- Equilibrium --- Exchange rate fluctuations --- Finance and Financial Sector Development --- Financial crisis --- Growth performance --- Growth rate --- Growth rates --- Inequality --- International financial markets --- Investment and Investment Climate --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Poverty Reduction --- Poverty reduction --- Private Sector Development --- Pro-Poor Growth --- Real exchange rate --- Robustness checks --- Speed of adjustment --- Time horizon --- Trade shocks

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This paper analyzes the drivers and consequences of sudden stops of capital flows. It focuses on the impact of external vulnerability on the depth and length of sudden stop crises. The authors analyze 43 developing and developed countries between 1993 and 2006. They find evidence that external vulnerability not only significantly impacts the probability of a sudden stop crisis, but also prolongs the time it takes for growth to revert to its long-term trend once a sudden stop occurs. Interestingly, external vulnerability does not significantly impact the size of the instantaneous output effect in case of a sudden stop but prompts a cumulative output effect through significantly diminishing the speed of adjustment of output to its trend. This finding implies that countries financing a large part of their absorption externally do not suffer more ferocious output losses in a sudden stop crisis, but take longer to adapt afterward and are hence expected to suffer more protracted crises periods. Compared with previous literature, this paper makes three contributions: (i) it extends the country and time coverage relative to datasets that have previously been used to analyze related topics; (ii) it specifically accounts for time-series autocorrelation; and (iii) it provides an analysis of the adjustment path of economic growth after a sudden stop.

Adjustment dynamics --- Adjustment path --- Annual growth --- Capital flows --- Currencies and Exchange Rates --- Debt Markets --- Descriptive statistics --- Economic Growth --- Economic growth --- Economic policy --- Economic Theory and Research --- Emerging Markets --- Equilibrium --- Exchange rate fluctuations --- Finance and Financial Sector Development --- Financial crisis --- Growth performance --- Growth rate --- Growth rates --- Inequality --- International financial markets --- Investment and Investment Climate --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Poverty Reduction --- Poverty reduction --- Private Sector Development --- Pro-Poor Growth --- Real exchange rate --- Robustness checks --- Speed of adjustment --- Time horizon --- Trade shocks