1. 16th Dubrovnik Economic Conference June 2010 Athanasios Vamvakidis International Monetary Fund

3.  Fiscal risks to the fore in advanced Europe  When Greece sneezes, who gets a cold?  Can everyone become more competitive?  Don’t forget emerging Europe  Recent policy initiatives in Europe and…  …what else can be done

4. July 2007 May 2010

9. 9 Lower Interest Rates Weaker Currency Higher Exports Top 10 Past AM Consolidations Greece

17. Currency mismatch and long-run growth in emerging economies, 2000-2009 Change in currency mismatch0.03**0.02** (0.01) Initial per capita GDP-1.10-1.04***-1.11**-1.21**-1.68*** (0.68)(0.37)(0.38)(0.47)(0.41) Age dependency ratio -0.10***-0.09*** -0.12*** (0.02) (0.03) Investment/GDP 0.18***0.19*** 0.13** (0.04) (0.05) Trade/GDP -0.01 (0.006) (0.007) Inflation rate 0.030.00-0.010.02 (0.03) (0.05) Growth of terms of trade 0.100.120.08 (0.09) Europe dummy 0.32-0.23 (0.85)(0.95) Change in external debt/GDP 0.02 (0.01) Adjusted R20.10.68 0.670.71 Observations29

18. Growth in Sales and Currency Mismatch: Firm level data Dependant VariableGrowth in Sales between 2001 and 2004 SampleSmall Firms in Non-Tradables Sectors EstimationOLS Currency Mismatch Dummy0.087***0.081**0.088**0.070**0.066**0.070** -0.032 -0.035-0.033 -0.035 Initial Log of Sales (2001)-0.041*** -0.045***-0.019*-0.021*-0.025** -0.0099-0.01-0.011 -0.012 Log of Years in Operation-0.026-0.025-0.018-0.047*-0.045*-0.031 -0.025 -0.027-0.026 -0.028 Initial Labor Productivity -0.062***-0.057***-0.056*** Log(Sales/Employment) in 2001-0.017-0.018-0.02 Share of Foreign Input in Production0.0011*** 0.0012*** -0.00038-0.00041-0.00043 Share of Employees with a University Degree0.0013***0.0013**0.0012** -0.00047-0.0005-0.00054 Share of Skilled Workers0.0240.019-0.0083 -0.047-0.048-0.051 Number of Firms10101008 955953 Adjusted R-squared0.0490.0510.060.0730.0720.081 Country Fixed EffectsYes NoYes No Industry Fixed EffectsNoYesNo YesNo Country-Industry Fixed EffectsNo YesNo Yes * significant at 10%; ** significant at 5%; *** significant at 1%

19.  Front-loaded deficit reduction in affected countries  Extended liquidity support and dollar swaps  ECB securities market program  Emergency loans (EU, IMF): Greece, EFSM, EFSF  Reforms to establish medium-term and long-term fiscal sustainability  Completion of financial sector repair  Structural reforms for growth  Reform of euro area fiscal governance