The TT Index as an Indicator of Macroeconomic Vulnerability of EU New Member States
The TT Index as an Indicator of Macroeconomic Vulnerability of EU New Member States

Summary/Abstract: This paper reviews some of the factors that potentially contribute to macro-prudential weakness, and thus concerns about macroeconomic and financial system health in the new EU member states of Central and Eastern Europe. In general, the consequences of the global 2008 – 2009 crisis were more severe in some of the new EU countries, and it is useful therefore to look at the experiences in the different countries to try and understand the reasons for the different outcomes and look to see what lessons may be learned. One of the factors having an impact on recovery from the crisis is in currency relationships, with Estonia, Latvia, Slovenia and Slovakia being members of the Eurozone, and some other countries in fixed exchange rate relationships. In this paper we present the construction of a new indicator (named the TT index) evaluating macroeconomic vulnerability of the new EU countries, which is based on seven macroprudential indicators and calculated for the years 2008 and 2013.

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