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The Baltic states and Europe: common factors of economic activity

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  • Ludmila Fadejeva

    ()
    (Division of Monetary Research and Forecast, Monetary Policy Department, Bank of Latvia)

  • Aleksejs Melihovs

    ()
    (Division of Monetary Research and Forecast, Monetary Policy Department, Bank of Latvia)

Abstract

Participation in the European Economic Area (EEA) and the intention to join the monetary union increased the motivation of the new Member States to achieve a high level synchronisation of economic activity with the euro area. This paper aims to characterise fluctuations of economic activity that are common for the Baltic States, Central and Eastern European (CEE) countries, euro area countries, and Russia. For analysis of real standardised GDP growth, the dynamic factor model is employed. The results of the study show that the Baltic economies are similar in economic development and share a common factor. After 2000, GDP growth between the Baltic States and the main euro area countries indicates growing synchronisation of economic development between these country groups.

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Bibliographic Info

Article provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.

Volume (Year): 8 (2008)
Issue (Month): 1 (October)
Pages: 75-96

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Handle: RePEc:bic:journl:v:8:y:2008:i:1:p:75-96

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Keywords: business cycle synchronisation; dynamic factor model; dynamic correlation;

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References

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Cited by:
  1. Soultanaeva, Albina, 2010. "Financial Intermediation and Economic Growth: Evidence from the Baltic countries," UmeÃ¥ Economic Studies 817, Umeå University, Department of Economics.
  2. Zuzana Brixiova & Margaret H. Morgan & Andreas Wörgötter, 2010. "On The Road to Euro: How Synchronized Is Estonia with the Euro zone?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(1), pages 203-227, June.

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