Suchergebnisse

Many econometric models have been constructed based on various theoretical approaches (neoclassical economics, Keynesian, business cycle, post Keynesian and others) aiming to predict peaks and pitfalls in the economies. But unfortunately many of them were misleading in predicting 2007-2008 financial crisis and long lasting recession afterwards. The literature indicates plenty of negative aspects of recent financial crisis at macro-level including decrease in consumption, aggregate demand and investment, financial markets' stagnation, increase in Government debt and unemployment rate and even more political instability. While effects at micro level encompass the decline in business loans, fall in equity value, property devaluation, decrease in sales, increase in defaults, decrease in investment in R&D and etc. Especially small open economies, like Lithuania, have suffered most in terms of shrinkage of GDP during the 2007-2009 period. Therefore the qualitative approach is valuable in deepening the knowledge about the preconditions and consequences of credit shocks. Thus this study aims to extract the main prerequisites and outcomes for credit shocks and to approve it by the expert opinion. Expert evaluation results indicate that absence of reserve funds was the most important precondition for 2007-2008 crisis and recession. Moreover when the gathered unplanned cyclical income have been wasted and even more the public sector spending has been increased that led to even bigger budget deficit. Also experts unanimously identified the main consequences of credit shock and 2007-2009 crisis including: (1) Decrease in GDP and government revenues, (2) Fall in domestic demand in Lithuania and increase in importance of exports for economic development, (3) The decline in consumption level and the delay of purchase, and (4) Shrinkage of construction sector, and manufacturing and trade of durable goods.

Many econometric models have been constructed based on various theoretical approaches (neoclassical economics, Keynesian, business cycle, post Keynesian and others) aiming to predict peaks and pitfalls in the economies. But unfortunately many of them were misleading in predicting 2007-2008 financial crisis and long lasting recession afterwards. The literature indicates plenty of negative aspects of recent financial crisis at macro-level including decrease in consumption, aggregate demand and investment, financial markets' stagnation, increase in Government debt and unemployment rate and even more political instability. While effects at micro level encompass the decline in business loans, fall in equity value, property devaluation, decrease in sales, increase in defaults, decrease in investment in R&D and etc. Especially small open economies, like Lithuania, have suffered most in terms of shrinkage of GDP during the 2007-2009 period. Therefore the qualitative approach is valuable in deepening the knowledge about the preconditions and consequences of credit shocks. Thus this study aims to extract the main prerequisites and outcomes for credit shocks and to approve it by the expert opinion. Expert evaluation results indicate that absence of reserve funds was the most important precondition for 2007-2008 crisis and recession. Moreover when the gathered unplanned cyclical income have been wasted and even more the public sector spending has been increased that led to even bigger budget deficit. Also experts unanimously identified the main consequences of credit shock and 2007-2009 crisis including: (1) Decrease in GDP and government revenues, (2) Fall in domestic demand in Lithuania and increase in importance of exports for economic development, (3) The decline in consumption level and the delay of purchase, and (4) Shrinkage of construction sector, and manufacturing and trade of durable goods.DOI: http://dx.doi.org/10.5755/j01.ee.27.1.9533

Many econometric models have been constructed based on various theoretical approaches (neoclassical economics, Keynesian, business cycle, post Keynesian and others) aiming to predict peaks and pitfalls in the economies. But unfortunately many of them were misleading in predicting 2007-2008 financial crisis and long lasting recession afterwards. The literature indicates plenty of negative aspects of recent financial crisis at macro-level including decrease in consumption, aggregate demand and investment, financial markets' stagnation, increase in Government debt and unemployment rate and even more political instability. While effects at micro level encompass the decline in business loans, fall in equity value, property devaluation, decrease in sales, increase in defaults, decrease in investment in R&D and etc. Especially small open economies, like Lithuania, have suffered most in terms of shrinkage of GDP during the 2007-2009 period. Therefore the qualitative approach is valuable in deepening the knowledge about the preconditions and consequences of credit shocks. Thus this study aims to extract the main prerequisites and outcomes for credit shocks and to approve it by the expert opinion. Expert evaluation results indicate that absence of reserve funds was the most important precondition for 2007-2008 crisis and recession. Moreover when the gathered unplanned cyclical income have been wasted and even more the public sector spending has been increased that led to even bigger budget deficit. Also experts unanimously identified the main consequences of credit shock and 2007-2009 crisis including: (1) Decrease in GDP and government revenues, (2) Fall in domestic demand in Lithuania and increase in importance of exports for economic development, (3) The decline in consumption level and the delay of purchase, and (4) Shrinkage of construction sector, and manufacturing and trade of durable goods.

Many econometric models have been constructed based on various theoretical approaches (neoclassical economics, Keynesian, business cycle, post Keynesian and others) aiming to predict peaks and pitfalls in the economies. But unfortunately many of them were misleading in predicting 2007-2008 financial crisis and long lasting recession afterwards. The literature indicates plenty of negative aspects of recent financial crisis at macro-level including decrease in consumption, aggregate demand and investment, financial markets' stagnation, increase in Government debt and unemployment rate and even more political instability. While effects at micro level encompass the decline in business loans, fall in equity value, property devaluation, decrease in sales, increase in defaults, decrease in investment in R&D and etc. Especially small open economies, like Lithuania, have suffered most in terms of shrinkage of GDP during the 2007-2009 period. Therefore the qualitative approach is valuable in deepening the knowledge about the preconditions and consequences of credit shocks. Thus this study aims to extract the main prerequisites and outcomes for credit shocks and to approve it by the expert opinion. Expert evaluation results indicate that absence of reserve funds was the most important precondition for 2007-2008 crisis and recession. Moreover when the gathered unplanned cyclical income have been wasted and even more the public sector spending has been increased that led to even bigger budget deficit. Also experts unanimously identified the main consequences of credit shock and 2007-2009 crisis including: (1) Decrease in GDP and government revenues, (2) Fall in domestic demand in Lithuania and increase in importance of exports for economic development, (3) The decline in consumption level and the delay of purchase, and (4) Shrinkage of construction sector, and manufacturing and trade of durable goods.

Many econometric models have been constructed based on various theoretical approaches (neoclassical economics, Keynesian, business cycle, post Keynesian and others) aiming to predict peaks and pitfalls in the economies. But unfortunately many of them were misleading in predicting 2007-2008 financial crisis and long lasting recession afterwards. The literature indicates plenty of negative aspects of recent financial crisis at macro-level including decrease in consumption, aggregate demand and investment, financial markets' stagnation, increase in Government debt and unemployment rate and even more political instability. While effects at micro level encompass the decline in business loans, fall in equity value, property devaluation, decrease in sales, increase in defaults, decrease in investment in R&D and etc. Especially small open economies, like Lithuania, have suffered most in terms of shrinkage of GDP during the 2007-2009 period. Therefore the qualitative approach is valuable in deepening the knowledge about the preconditions and consequences of credit shocks. Thus this study aims to extract the main prerequisites and outcomes for credit shocks and to approve it by the expert opinion. Expert evaluation results indicate that absence of reserve funds was the most important precondition for 2007-2008 crisis and recession. Moreover when the gathered unplanned cyclical income have been wasted and even more the public sector spending has been increased that led to even bigger budget deficit. Also experts unanimously identified the main consequences of credit shock and 2007-2009 crisis including: (1) Decrease in GDP and government revenues, (2) Fall in domestic demand in Lithuania and increase in importance of exports for economic development, (3) The decline in consumption level and the delay of purchase, and (4) Shrinkage of construction sector, and manufacturing and trade of durable goods.

As it is widely agreed in modern scientific literature, governments can influence and amortize the consequences of business cycles to national economies. Grounding on the New-Keynesian point of view the best way of doing it, is implementing the counter-cyclical fiscal policy, i.e. in times of economic slow-down government expenditures and overall tax level diminish and in the period of economic growth government expenditures and taxes simultaneously increase. However, this kind of fiscal policy is subject to adoption not in all countries. The analysis of scientific literature revealed, that economically weaker countries due to various financial limitations are forced to implement the opposite of the counter-cyclical policy – the pro-cyclical policy, which in times of economic slow-down accelerates the negative effects and in most cases results in credit crisis. The aim of the article is to reveal and analyze the core consequences of credit crisis if the country adopts a pro-cyclical strategy. Those include: congelation of all types of credits, difficulties for businesses to obtain credits; declining values in real estate and contraction of the whole construction sector; high loss of property rights (foreclosure) rates and default rates on credits; diminishing consumption of households and businesses; numerous close-downs of small and medium enterprises (SMEs); rise in unemployment; growing emigration, brain-drain and etc. Conducting the analysis of consequences of credit crisis in pro-cyclical economies the methods of comparative analysis and systematization of scientific literature and statistical data were employed. DOI:10.5901/mjss.2013.v4n9p602