AGENDA

 Washington, DC, February 15, 2008

Registration and Breakfast

Opening Remarks – Luca Barbone (Sector Director, World Bank)

Panel 1: (Regional Outlook) What are the sources of macroeconomic risks and vulnerabilities in Europe and Central Asia (ECA)?

 Speakers:
1. Hans Timmer (Manager, World Bank)
2. Fabrizio Coricelli (Director of Policy Studies, EBRD)
3. Sena Eken (Assistant Director, IMF)
Economic Developments, Prospects, and Policy Issues in the Caucasus and Central Asia
4. Gareth Shepherd (Head of Economic and Financial Risk Unit, World Economic Forum)
Reporting Back on Economic Risks at the Davos Annual Meeting 2008

Issues: The ECA region has experienced strong economic growth in recent years alongside steadily falling poverty. However, there have been concerns about significant macroeconomic vulnerabilities among countries in the region. Are there common sources of vulnerabilities and macroeconomic risks in the region (e.g., credit risks, current account imbalances, terms-of-trade shocks, banking sector vulnerability)? What is the magnitude of risk and how should it be measured? Some have compared Eastern European countries in 2007 with East Asian economies circa 1996: is this a useful comparison? How should we think of twin crises? What do we know of household and corporate indebtedness?

Panel 2: (Transmission Channels I) What are the poverty and distributional consequences of a credit crunch?

Speakers:
1. Yasuyuki Sawada (Professor, University of Tokyo)
Qualifying the Impact of Credit Crunch on Household Welfare: Two Case Studies from East Asia
2. Dawid Żochowski (Financial Stability Expert, European Central Bank and Principal Economist [on leave], National Bank of Poland)
Stress Testing Household Indebtedness: Impact of Financial versus Labour Market Shocks
3. Ksenia Yudaeva (Director, Center for Strategic Research, Moscow)
Credit Crunch in Russia: Economic and Social Consequences
4. Santiago Herrera (Lead Economist, World Bank)

Discussants:
1. John Litwack (Lead Economist, World Bank)
2. Martin Raiser (Adviser, World Bank)

Issues: A number of countries in the ECA region have experienced rapid credit growth over the last few years, especially in the nontradables sector; in Latvia and Lithuania, the annual credit growth rate reached close to 60 percent in 2005. Such a credit boom has, in turn, underpinned a sharp boost in domestic demand. In the wake of recent financial market turbulence, however, banking sector fragilities, liquidity problems, and a widespread credit crunch have become major concerns. Prolonged turbulence in financial markets in advanced economies may lead to reductions in lending and exposure to emerging markets in ECA. This session will explore these concerns more fully by addressing the following questions: What are the likely effects of a sharp slowdown in credit growth on labor markets, enterprises and households? What do we know of household indebtedness and vulnerability in ECA? What are the likely poverty and distributional consequences of a credit crunch? How do the effects vary by sector of employment, wealth and asset ownership, geographic location, and other characteristics? What do we know of the microeconomic consequences of a credit crunch in other regions?

Issues: Many countries in the ECA region has experienced rapidly rising food prices in recent months, underpinned by significant droughts in various parts of the world and biofuel production. Oil prices have also risen to record highs in recent months. In some CIS countries, there are also prospects for further rounds of external energy price shocks as Russia moves towards full market pricing for its energy exports. Where large current account imbalances are unsustainable, there could be substantial risks of a currency crisis. This session will explore the following issues: What are the likely poverty and social consequences of such price shocks and relative price changes? How do such changes affect household consumption? What are the likely effects on the profitability of sectors, relative earnings, and employment? What are the lessons from terms-of-trade shocks and currency crises in other regions?

Speakers:
1. Emil Tesliuc (Senior Economist, World Bank)
Social Safety Nets and Macroeconomic Crises: Are ECA Countries Ready?
2. Nora Dudwick (Senior Social Scientist, World Bank)
Coping with risk: An ECA perspective
3. Kalanidhi Subbarao (World Bank)Macro Crises and Safety Nets
4. Charles M. Becker (Research Professor, Duke University)
Micro Responses during the Transition in Kazakhstan, Central Asia, and Armenia

Discussants:
1. Emmanuel Skoufias (Lead Economist, World Bank)
2. Cem Mete (Senior Economist, World Bank)
 Issues: The ECA region is subject to macroeconomic risks which, when fully realized, may translate into adverse social consequences. How well do public social safety nets in the ECA region perform? What do we know of households’ risk-management and risk-coping strategies (including self-insurance, informal insurance, informal risk pooling)? What do we know of households in other regions and are households in ECA similar or systematically different? These issues will be discussed in this session.