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The Baltic states and Europe: common factors of economic activity

Author

Listed:
  • 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.

Suggested Citation

  • Ludmila Fadejeva & Aleksejs Melihovs, 2008. "The Baltic states and Europe: common factors of economic activity," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 8(1), pages 75-96, October.
  • Handle: RePEc:bic:journl:v:8:y:2008:i:1:p:75-96
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Soultanaeva, Albina, 2010. "Financial Intermediation and Economic Growth: Evidence from the Baltic countries," Umeå Economic Studies 817, Umeå University, Department of Economics.

    More about this item

    Keywords

    business cycle synchronisation; dynamic factor model; dynamic correlation;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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