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The relationship between external factors and economic growth: Differences between the global financial crisis and the COVID-19 pandemic from a Granger causality perspective

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  • Alexandra CHEPTIS
  • Cristina BEJENARU
  • Miruna-Mihaela VASILCA
  • Alin-Ioan VID

Abstract

The paper investigates the causal relationship between external factors and economic growth in three countries from Central and Eastern Europe and contains a series of complex analyses on the study of typologies of economic crises. The study includes Markov-Switching Autoregressive (MS-AR) models for characterizing business cycles, and the Granger causality technique is used to analyze the relationship between external shocks and economic growth, separately during financial and pandemic crises. The results indicated that, in the case of Romania, the global financial crisis has a longer period of negative growth rates, but a faster recovery from health crisis. It is also noted that the Czech Republic and Hungary have a more stable economic evolution over time. In addition, the causality test indicates unidirectional causality between external factors and the GDP growth rate during financial and pandemic crises.

Suggested Citation

  • Alexandra CHEPTIS & Cristina BEJENARU & Miruna-Mihaela VASILCA & Alin-Ioan VID, 2025. "The relationship between external factors and economic growth: Differences between the global financial crisis and the COVID-19 pandemic from a Granger causality perspective," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(642), S), pages 125-134, Spring.
    • Handle: RePEc:agr:journl:v:xxxii:y:2025:i:1(642):p:125-134
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    References listed on IDEAS

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    1. Marta Gómez-Puig & Simón Sosvilla-Rivero, 2015. "“On the bi-directional causal relationship between public debt and economic growth in EMU countries”," IREA Working Papers 201512, University of Barcelona, Research Institute of Applied Economics, revised May 2015.
    2. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    3. Hsueh, Shun-Jen & Hu, Yu-Hau & Tu, Chien-Heng, 2013. "Economic growth and financial development in Asian countries: A bootstrap panel Granger causality analysis," Economic Modelling, Elsevier, vol. 32(C), pages 294-301.
    4. Mr. Sebastian Sosa, 2008. "External Shocks and Business Cycle Fluctuations in Mexico: How Important are U.S. Factors?," IMF Working Papers 2008/100, International Monetary Fund.
    5. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2015. "The causal relationship between debt and growth in EMU countries," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 974-989.
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