Current Account Reversals in Eastern Europe Lead to 2.3% Growth Loss
The study looked at how sudden stops in capital inflows affect economic growth in Central and Eastern European countries. They found that after a sudden stop, the growth rate drops by 1.10 percentage points in the same year. It takes about 3.3 years for the growth rate to return to normal levels. Overall, the countries in this region are able to adjust and reallocate resources relatively well after a sudden stop in capital flows.