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)| false Hilbers, P., İ. Ötker-Robe, and C. Pazarbasioğlu, 2007, “ Analysis of and Policy Responses to Rapid Credit Growth,” in Rapid Credit Growth in Central and Eastern Europe: Endless Boom or Early Warning? ed.by ( C. Enochand I. Otker-Robe New York: Palgrave Macmillan; and Washington: International Monetary Fund).
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The authors are with the Research and European Departments of the IMF, respectively. This paper provides analytical background to the November 2007 Regional Economic Outlook: Europe. We thank Michael Deppler, Luc Everaert, Daniel Hardy, Alessandro Leipold, İnci Ötker-Robe, Man-Keung Tang, Athanasios Vamvakidis, Edda Zoli, and seminar participants in the European Department for helpful comments. We also thank Pavel Lukyantsau, Dominique Raelison-Rajaobelina, and Thomas Walter for excellent research, administrative, and editorial assistance.
To be precise, there are some cross-sectoral dynamics due to the assumed difference in tradable good intensities in consumption and investment, i.e. ε<γ.
Note that the increase in the relative price of nontradables is passed through to the relative price of the capital good, depending on how nontradable-intensive the production process of the capital good is.
Note that the current account remains here in deficit, even though it is very close to being zero.