BoF Online 11/2012: Experiences of fast adjustment: a snapshot comparison of Iceland, Ireland, Latvia and Estonia
Following the escalation of the global financial crisis in 2008, a number of new experiences of external and internal adjustment motivated by sizable imbalances have appeared. Iceland, Ireland, Latvia and Estonia provide examples of countries that have carried out relatively swiftly and, by any comparison, large turnarounds by rebalancing their pre-crisis excesses in domestic absorption and losses of competitiveness.
The snapshot comparison is organized as follows. Firstly, a small detour is made to list a few similarities and differences between the countries, in order to formulate the overall framework. Secondly, a brief review of some key macroeconomic indicators is carried out. The focus is on core indicators that should depict an overall picture in terms of real outcomes, with less attention being paid to adjustment mechanisms. Finally, some general cross-country conclusions are provided, which may serve as lessons for other adjusting countries as well.