| Challenges of macroeconomic stability: a speed limit on Croatia's accession to the European Union? (2005) | |||||||
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| Chapter CHALLENGES MACROECONOMIC STABILITY SPEED LIMIT CROATIA ACCESSION THE EUROPEAN UNION Dubravko Mihaljek Bank for International Settlements Basel ABSTRACT This paper analyses three issues that could potentially affect macroeconomic stability and hence the speed Croatia accession the European Union Can the economy continue rely domestic demand the main source growth stronger reliance exports necessary the medium term the external current account deficit Croatia excessive and how have high deficits been corrected the past iii Does the expansion bank credit the private sector carry the seeds macroeconomic instability The paper argues that clearer signs healthier growth have emerged since and that the Croatian economy should able adjust the widening external deficit orderly manner However there are reasons concerned about the expansion private sector credit recently has been financed largely foreign borrowing Large capi The views expressed here are those the author and not necessary represent those the Bank for International Settlements The author taking part this project independent researcher Helpful comments from Ante Sain Andrea Mervar Katarina Ott Sandra Svaljek and two anonymous referees are gratefully acknowledged tal inflows are likely become the main challenges for macroeconomic policy the run Croatia accession Policy makers will particular have address the called Tosovsk dilemma set interest rates appropriate level setting them too high would invite excessive short | |||||||
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