Real Output Costs of Financial Crisis on CEE Countries

Countries from CEE countries (Bulgaria, Croatia, Czech Republic, Estonia, Germany, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia) experienced systemic banking crisis during the recent turbulence on financial markets. Financial crisis can be very costly due to output losses during and after the crash. This article reviews the methodology for estimating the output losses for this particular group of countries recently affected by adverse economic and financial conditions. This study extend the analyses in two directions: first applying a Hodrick-Prescott filter for various lengths e.g. 10 years, 15 years and 20 years and then using the method proposed by Abiad et al (2009) and establishing the counterfactual trend, ignoring the past 3 years before the beginning of the crisis.