MACROECONOMIC ANALYSIS OF EXTERNAL FINANCING OF THE COUNTRIES OF CENTRAL AND EASTERN EUROPE

Summary
In the article we have examined the influence of external financing: foreign direct and portfolio investment, loans on the dynamics of basic indicators of internal and external equilibrium in some Central and East European countries during 1992-2010 years. According to the results of panel regressions with random effects we can conclude that in EU countries the current account is inversely proportional to portfolio investments, unemployment rate decreases with the increasing of direct and portfolio investment as well as debt inflows. Regarding economic growth, direct and portfolio investments had positive influence, while debt reduction leads to economic growth, foreign direct investment decreases the rate of inflation. In post Soviet countries (Belarus, Russia, Ukraine) foreign debt in long run period will lead to huge devaluation of national currency and external disequilibrium. Portfolio investment reduces the rate of economic growth statistically significant and increases the rate of inflation but statistically insignificant.

Bilenko_Yuriy.pdf